Watchdogs of the Invisible Hand: NGO monitoring and industry equilibrium

Gani Aldashev, Michela Limardi, Thierry Verdier

Research output: Contribution to journalArticle

Abstract

Globalization has been accompanied by rising pressure from advocacy non-governmental organizations (NGOs) on multinational firms to act in socially-responsible manner. We analyze how NGO pressure interacts with industry structure, using a simple model of NGO-firm interaction embedded in an industry environment with endogenous markups and entry. We explain three key empirical patterns in developing-country industries under activist pressure: the degree of exit under more intense activist pressure, the differential response of industries to NGO activism, and the general rise of NGO activism following globalization.

Original languageEnglish
Pages (from-to)28-42
Number of pages15
JournalJournal of Development Economics
Volume116
DOIs
Publication statusPublished - 1 Sep 2015

Keywords

  • Globalization
  • Monopolistic competition
  • NGOs
  • Private regulation

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