Making the World a Better Place: Cascade Effects in Consumer Boycotts under Social Group Identity

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http://hdl.handle.net/10138/232978
Julkaisun nimi: Making the World a Better Place: Cascade Effects in Consumer Boycotts under Social Group Identity
Tekijä: Kanniainen, Vesa
Kuuluu julkaisusarjaan: HECER, Discussion Paper No. 425
ISSN: 1795-0562
Tiivistelmä: Consumer boycotts help in supporting established social norms. Their effectiveness as a disciplinary mechanism in guiding corporate ethics has, however, been questioned. The paper considers three unexplored mechanisms, pointing to a more optimistic view, i.e. a group identity effect, anticipatory effects, and a firm size effect in global markets. The first set of results is related to the need of people to belong to groups with a social mission. It is shown that powerful cascade effects arise on the industry structure in equilibrium when the group dependency dominates among consumers. Less dramatic cascades arise with more independent consumers in the formation of ethical values as opportunist free riding becomes an option. Second, the development of modern information technology facilitates efficient monitoring of corporate ethics of large global firms resulting in potentially efficient means of disciplining. By implication, the consumer boycotts can lead to the evolution of the industry structures in favour of large firms. Success of consumers’ impact is, however, hard to test as firms can ex ante anticipate the risk of becoming the subject of a boycott if caught.
URI: http://hdl.handle.net/10138/232978
Päiväys: 2018-02
Avainsanat: consumer boycotts
social identity
cascade effects
market opportunism


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