The International Organization of Production in the Regulatory Void

Corporate Social Responsibility along the global value chain

“…Failure to assure sufficient levels of CSR in supplier factories can result in reputational damage or even lead to consumer boycotts. These boycotts go against leading firms in a diverse set of industries and are often triggered by misconduct of international suppliers (for examples, see Baron, 2016, or Herkenhoff andKrautheim, 2020). The case of the "sweatshop campaign" against Nike in the 1990s is probably the best documented and most researched case in point.…”

“…They use detailed data on affiliates of multinationals in Costa Rica to provide evidence on the effects of responsible sourcing rollouts, and calibrate the model for counterfactual analysis. The most related paper in this context is Herkenhoff and Krautheim (2020) who, starting from Antràs (2003) and the related empirical literature, show that the possibility of unethical production affects the international organization of production, linking integration to ethical and outsourcing to unethical production.…”

“…Closest in this respect is recent work byHerkenhoff and Krautheim (2020) who introduce (un)ethical production and consumer boycotts into theAntràs (2003) framework and establish a link between offshoring and unethical production both theoretically and empirically.…”

Responsible Sourcing? Theory and Evidence from Costa Rica

“…Using a synthetic control approach, they find that working conditions improved whereas female wages decreased. 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.…”