There Is No Planet B: Aligning Stakeholder Interests to Preserve the Amazon Rainforest

Anita M. McGahan () and Leandro S. Pongeluppe ()
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Anita M. McGahan: Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada
Leandro S. Pongeluppe: Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104

Management Science, 2023, vol. 69, issue 12, 7860-7881

Abstract: How do firms address complex collective action problems effectively? Institutional and stakeholder research suggests that firms may avoid the tragedy of the commons by aligning the interests of critical proximate stakeholders in ways that governments cannot accomplish. This phenomenological paper investigates this possibility by analyzing Amazon rainforest preservation by Natura, a Brazilian cosmetics company. The results indicate that Natura internalized environmental externalities by linking ecologically conscious consumers with rural Amazonian communities. A differences-in-differences analysis compares forest preservation and fire activity in the municipalities that Natura entered with those in which it did not enter. Natura’s impact is identified through an instrumental variable analysis using missing satellite images, which Natura relied upon to decide which municipalities to enter. Quantitative results tie Natura’s entry into municipalities with forest preservation. Analysis of three mechanisms associates Natura’s involvement with stakeholder decisions to cultivate diverse forest-generated crops instead of clearing the land for conventional agriculture. This study contributes to the management literature by suggesting how firms can address important global challenges, such as rainforest preservation, by investing in stakeholder capability development and by creating institutional arrangements in line with those envisioned elsewhere.

Keywords: Coasean arrangements; new stakeholder management; satellite imagery; Amazon rainforest; sustainable development goals (SDGs) (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:69:y:2023:i:12:p:7860-7881

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