Corporate-NGO partnerships through sustainability labeling schemes: Motives and risks

Abstract

This article examines the development of partnerships between multinational companies (MNCs) and large nongovernmental organizations (NGOs) through voluntary product labeling schemes. First, the economics, management, and business literature are reviewed to highlight cross-checking, consistencies, and complementarities among these disciplines to identify and analyze the motives of partnering via voluntary product labeling. This analysis shows that, through such partnerships, companies and NGOs share similar objectives, viability and visibility and exchange essential resources, information and legitimacy. The development of shared goals and the complementarity of resources are the basis for successful partnerships, but they also create a phenomenon of blurred roles between companies and NGOs. Each partner enters the other's sphere, which allows for better communication among partners, a clear and common vision of the partnership, a mutual trust, and a symmetric commitment of partners, necessary conditions for successful partnerships. However, I show that this phenomenon also leads to new risks for partners: competition, "NGO-capture", and inconsistency.