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• Report n°2: An integrated approach to economic and social contestability in business

Report n°2: An integrated approach to economic and social contestability in business

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The threat of contestation through defection in the context of social opposition to the business activity

For the established recycling operator, the intangible asset that prevents a contestation through defection by the suppliers is an informal mechanism involving the reputation required to underpin good-quality transactions with the collectors. This mechanism overcomes the mistrust that may arise because of the gap in expertise between the recycler and the collectors. In practice, once active, defection strategies result in risky practices with an increased probability of cheating on quality, and increased nuisance both to the residents and to the recycling operator or the operators downstream of him. Where the situation is already sensitive and displays the symptoms of challenging vigilance, the occurrence of more incidents can foster a situation of social contestation. Such a threat can call into question the very legitimacy of the business. If available information - even unconfirmed information - points on risks to the community whose nature and extent are still not known, but are directly attributable to the business enterprise, then the threat increases further.

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