By Matthew Potoski, Aseem Prakash
A conceptual framework and empirical case reviews of the coverage influence of voluntary courses backed by means of undefined, govt, and nongovernmental agencies.
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Additional resources for Voluntary Programs: A Club Theory Perspective
Externalities can have the attributes of private goods (a club obligating participating ﬁrms to pay higher wages), public goods (a club obligating participating ﬁrms to reduce greenhouse gas emissions), or even club goods (a club prescribing participating forestry ﬁrms from harvesting a forest revered by an aboriginal group). This distinction in the nature of externality beneﬁts is critical because it sheds light on the external actors (and their motivations) that are likely to pressure ﬁrms to join a club.
Suppose a group of ﬁrms joins a voluntary program that requires it to produce some social externality. Some ﬁrms in this group might fail to live up to their obligations, either by intention or ignorance, yet these ﬁrms would continue to receive the beneﬁts of program membership simply because outside stakeholders could not differentiate the shirking ﬁrms from the nonshirkers. This problem has serious implications for voluntary programs. Nonshirker members would be less inclined to continue with the program.
As the ‘‘credible commitment’’ literature suggests (North and Weingast 1989), of course, actors can devise mechanisms for tying their hands—that is, credibly committing to upholding the rule system and not opportunistically changing it. Nevertheless, it is fair to say that as an institutionalized governance system, clubs enjoy a degree of legitimacy that an average ﬁrm alone may ﬁnd difﬁcult to acquire. By joining a club whose rules they cannot change easily in the short run, ﬁrms credibly signal their commitment to producing positive externalities.
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