Local Global Watchdogs: Trade, Sourcing and the Internationalization of Social Activism

Abstract

International NGO campaigns criticizing firms for infringements along their internationalized value chains are a salient feature of economic globalization. We argue that understanding the international patterns of NGO campaigns requires accounting for the geography of their targets' economic activities. We propose a model of global sourcing and international trade in which heterogeneous NGOs campaign against heterogeneous firms in response to infringements along their international value chains. We find that campaigns are determined by a triadic gravity equation where all three bilateral trade costs matter for NGO campaigns. Importantly, the sourcing trade costs between the supplier and the firm, which do not involve the country of the NGO, shape the patterns of NGO campaigns through their effect on the sourcing decision of firms. We use recently available data on NGO campaigns to estimate our triadic gravity equation and find strong support for this prediction.

Corporate Social Responsibility along the global value chain

“…Hatte and Koenig (2020) use recently available data on NGO campaigns to carry out a gravity analysis of international NGO campaigns. Koenig et al (2021) build on this approach and explicitly link it to the internationalization of production. Alfaro-Ureña et al (2021) develop a quantitative general equilibrium model to study the effects of responsible sourcing in origin countries.…”

Responsible Sourcing? Theory and Evidence from Costa Rica

“…Herkenhoff and Krautheim (2022) introduce cost savings from unethical practices in a model of global sourcing decisions with incomplete contracts. Koenig et al (2021) study the geography of international NGO campaigns against unethical practices in a model of international trade.…”