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About the Lecture

'The Relative Effectiveness of Exit and Voice Strategies'

In recent years, companies have come under increasing stakeholder pressure to pursue environmental and social goals. At the same time a growing academic literature has argued that the usual presumption that firms should maximize profit or market value is no longer valid in a world where, as result of political failures either at the national or international level, externalities are not well-controlled. In his talk, Prof. Hart considered the relative effectiveness of exit (divestment and boycott) and voice (engagement) strategies in promoting socially desirable outcomes in companies. He argued that in a competitive world exit is less effective than voice in pushing firms to act in a socially responsible manner. He also discussed what social and legal considerations might sometimes make exit preferable to voice.

The talk was based on the ECGI Working Paper 694/2020: Eleonora Broccardo, Oliver Hart, Luigi Zingales Exit vs. Voice (01 Sep 2020) Available at ECGI: /working-paper/exit-vs-voice

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