The international organization of production in the regulatory void

• 成果类型: Article
• 署名作者: Herkenhoff, Philipp; Krautheim, Sebastian
• 署名单位: Johannes Gutenberg University of Mainz; University of Passau; Leibniz Association; Ifo Institut
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2022.103572
• 发表日期: 2022
• 关键词: International outsourcing; intrafirm trade; Property-rights theory; environmental regulation; Ethical production; Consumer boycotts; ngos

摘要

In recent decades, many leading firms in a diverse set of industries have faced consumer boycotts and NGO campaigns based on allegations of 'unethical' practices along their international value chains. The large number of campaigns triggered by actions of independent suppliers points at a link between (un)ethical practices and the organization of production. We construct a measure of potential cost savings of unethical production at the industry-country level and show that it indeed correlates positively with international outsourcing rather than integration. To rationalize our finding and to investigate the issue further, we introduce a cost-saving 'unethical' technology and consumer boycotts into a standard property-rights model of the international organization of production. In equilibrium, the supplier's (un)ethical technology choice interacts with the headquarter's novel unethical outsourcing incentive. In line with our empirical findings, we show that the headquarter tends to keep an unethical supplier at arm's length. (C) 2022 Elsevier B.V. All rights reserved.