Reputation and (un)fair trade: Effects on French importers from the Rana Plaza collapse

Pamina Koenig and Sandra Poncet
2019
#Trade and FDI
#Corporate responsibility and lead firms

Additional info: Revise and resubmit at the Journal of International Economics. Updated version: https://www.parisschoolofeconomics.eu/docs/koenig-pamina/manuscript_rana.pdf

This paper analyzes the effects of a major reputational shock affecting textile importers fromBangladesh. The collapse of the Rana Plaza building in April 2013 generated a surge of activismand media coverage specifically targeting the firms that sourced from the factories affected bythe disaster. Using monthly firm-level import data from French Customs, we ask whether therewas any disruption in these firms’ imports from all origins, and specifically from Bangladesh.We use a difference-in-differences approach and control for common determinants of supply anddemand. French textile imports from Bangladesh rose continuously after the shock, and theoverall imports of retailers sourcing from the Rana Plaza show no drop after the event. Howeverour results do reveal a relative decline in Bangladeshi imports for those retailers sourcing fromthe factories in the collapsed building. Last, this effect is mirrored by a relative increase in theseexposed firms’ imports from three particular countries, all of which are non-Asian and locatedclose to the Mediterranean area.

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