Social movement NGOs and the comprehensiveness of conflict mineral disclosures: evidence from global companies

Abstract

Conflict minerals refer to raw materials associated with conflicts and human rights violations in conflict zones around the world. Concern about the lack of transparency in the mineral supply chains of global corporations has led to increased stakeholder concern and pressure through protest action. In particular since 2009, numerous public-private collaborations, including collaborations with NGOs and industry-led initiatives, have sought greater transparency in companies' sourcing from conflict mineral zones. This has led to the enactment of the ‘Dodd-Frank Act’ in the US to regulate the disclosure of involvement in conflict minerals. This requirement suggests that corporate obligations now go beyond their own operations and that companies are held accountable for the actions of their suppliers with regards to their supply chains.While the act requires minimum disclosure by companies, we hypothesise that companies’ collaboration with social movement NGOs and activist protests against companies will influence the comprehensiveness of their conflict mineral disclosures. Our hypothesis is grounded in social movement theory and the theory of collaboration. We test our hypothesis by focusing on a sample of global electronic reliant companies from 20 countries. Consistent with our expectations, we find that collaboration with NGOs (as social movement organizations) and activist protest lead to more comprehensive, and therefore more transparent, disclosures. Our findings suggest that in the presence of activist protest, NGO collaboration with corporations has a higher impact on the comprehensiveness of conflict mineral disclosures. Furthermore, the marginal effects on disclosure are more strongly driven by NGO collaboration than activist protest. Our findings have practical and policy implications in that improved corporate transparency is the result of social movement actions via NGOs, i.e., regulation on its own may not result in comprehensive disclosures.