Washington U. in St. Louis, Olin Business School, United States
We investigate the effectiveness of multi-stakeholder initiatives (MSIs) as a governance mechanism in tackling global sustainability challenges, focusing on the Extractive Industries Transparency Initiative (EITI). We evaluate whether MSIs, seen as an alternative to industry self-regulation, lead firms to commit to and achieve higher social or environmental standards. We explore the symbolic versus substantive nature of these voluntary commitments and their actual impact on social outcomes. By examining the EITI, which aims to reduce corruption in extractive industries through payment transparency, we assess the impact of EITI membership on transparency performance and local perceptions of corruption. Utilizing data on the staggered adoption of mandatory disclosure by firms in Europe and Canada, we find that EITI-supporting firms show better transparency. Additionally, geo-coded survey data from Africa reveals that local perceptions of corruption decrease near areas of new investments by EITI-supporting firms. These findings indicate that self-regulation initiatives can yield positive social outcomes. The study contributes to the debate on the social impact of private-sector CSR initiatives and the effectiveness of MSIs in addressing sustainability challenges.