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The informational role of nongovernmental organizations to induce self-regulation: Cheering the leaders or booing the laggards?

  • Matthieu Glachant

    ()

    (CERNA - Centre d'économie industrielle - Mines ParisTech)

  • Gabrielle Moineville

    ()

    (CERNA - Centre d'économie industrielle - Mines ParisTech)

Non-governmental organizations (NGOs) play a key role in creating incentives for firms to develop a Corporate Social Responsibility (CSR) policy by disclosing publicly self-regulatory corporate efforts. Their informational behavior is heterogeneous: Some NGOs mostly disclose information on firms that do not behave responsibly (e.g., Greenpeace). Others are specialized in revealing firms that are socially or environmentally responsible (e.g., the Marine Stewardship Council). We develop a model describing the interactions between a NGO, a continuum of firms and a representative stakeholder to explain what drives the NGO communication choice and its impact on the level of self-regulation. We show that the NGO specializes in equilibrium: depending on the size of its budget, it either chooses to cheer the leaders or to boo the laggards. We extend the model to the case with multiple NGOs. We also introduce the possibility of NGO corporate partnerships and derive policy implications.

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Paper provided by HAL in its series Working Papers with number hal-00716864.

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Date of creation: 11 Jul 2012
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Handle: RePEc:hal:wpaper:hal-00716864
Note: View the original document on HAL open archive server: http://hal-ensmp.archives-ouvertes.fr/hal-00716864
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  1. Thomas P. Lyon & John W. Maxwell, 2006. "Greenwash: Corporate Environmental Disclosure under Threat of Audit," Working Papers 2006-07, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  2. Heinkel, Robert & Kraus, Alan & Zechner, Josef, 2001. "The Effect of Green Investment on Corporate Behavior," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 36(04), pages 431-449, December.
  3. Lucie Bottega & Jenny De Freitas, 2009. "Public, private and nonprofit regulation for environmental quality," DEA Working Papers 33, Universitat de les Illes Balears, Departament d'Economía Aplicada.
  4. David P. Baron, 2001. "Private Politics, Corporate Social Responsibility, and Integrated Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 7-45, 03.
  5. Timothy J. Feddersen & Thomas W. Gilligan, 2001. "Saints and Markets: Activists and the Supply of Credence Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 149-171, 03.
  6. Heyes, Anthony G., 2005. "A signaling motive for self-regulation in the shadow of coercion," Journal of Economics and Business, Elsevier, vol. 57(3), pages 238-246.
  7. Mark Bagnoli & Susan G. Watts, 2003. "Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(3), pages 419-445, 09.
  8. Brekke, Kjell Arne & Nyborg, Karine, 2008. "Attracting responsible employees: Green production as labor market screening," Resource and Energy Economics, Elsevier, vol. 30(4), pages 509-526, December.
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