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Inefficient NGO labels: Strategic proliferation and fragmentation in the market for certification
Author(s) -
Heyes Anthony,
Martin Steve
Publication year - 2017
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/jems.12236
Subject(s) - competitor analysis , certification , scope (computer science) , sustainability , business , competition (biology) , fragmentation (computing) , barriers to entry , industrial organization , suite , welfare , economies of scope , niche market , social welfare , marketing , market structure , economics , market economy , economies of scale , political science , management , ecology , computer science , law , biology , programming language
Nongovernmental organization (NGO) certification is a prerequisite for corporate engagement in enhanced social behaviors in many settings. Labels with broad scope (like “sustainability”) coexist with niche competitors much narrower in scope (like “bird‐friendliness”). When NGOs compete for adoptions, the wrong suite of schemes emerges, providing a rationale for regulation. An incumbent NGO may strategically narrow the breadth of its label to deter entry of competing schemes, reducing welfare. Even when entry is accommodated, welfare is compromised. Modeling multi‐issue competition between NGOs allows us to be the first to analyze label fragmentation and provide a novel perspective on proliferation that has frustrated practitioners.