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Social responsibility scandals and trade

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  • Pamina Koenig

    (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université)

  • Sandra Poncet

    (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique)

Abstract

This paper studies the effect of social responsibility scandals on the imports of consumer products, by focusing on an event which generated massive consumer mobilization against neglecting firms, namely the collapse of the Rana Plaza building affecting the textile industry in Bangladesh. We investigate the import repercussions of this major shock in the perceived quality of clothing producers sourcing in Bangladesh. In line with the well-documented home bias in trade and home-country media slant, we assume that consumers' reaction will be stronger when domestic firms are named and shamed. Our empirical strategy uses a difference-in-difference approach that compares imports from Bangladesh of countries according to whether some of their companies were directly associated with the collapse of the Rana Plaza. Our results are consistent with demand being sensitive to social responsibility scandals. While aggregate imports from Bangladesh continue to increase during the whole period (2010–2016), there is a marked disruption that affects countries whose brands were named and shamed by activists and the media after the disaster. In addition, the decline in imports is all the greater as the number of NGO campaigns on the misbehavior of national textile retailers is high.

Suggested Citation

  • Pamina Koenig & Sandra Poncet, 2019. "Social responsibility scandals and trade," Post-Print halshs-02301100, HAL.
  • Handle: RePEc:hal:journl:halshs-02301100
    DOI: 10.1016/j.worlddev.2019.104640
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-02301100
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    References listed on IDEAS

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    Cited by:

    1. Pamina Koenig & Sandra Poncet, 2019. "Reputation and (un)fair trade: Effects on French importers from the Rana Plaza collapse," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-02350112, HAL.
    2. Pamina Koenig & Sandra Poncet, 2019. "Reputation and (un)fair trade: Effects on French importers from the Rana Plaza collapse," Post-Print halshs-02350112, HAL.
    3. Judah Brown & Brandon J. Sheridan, 2020. "The Impact of National Anthem Protests on National Football League Television Ratings," Journal of Sports Economics, , vol. 21(8), pages 829-847, December.

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