54 How does the SRT vary by industry?

The stakeholder retaliation threshold, or SRT, varies between industries. Industries on which people depend for basic needs may often have a high SRT, because customers need the goods in order to survive. For example, electricity providers, grocery stores, and water utility providers represent industries that have relatively high SRTs. If only a sole electricity provider services an area, as is often the case, customers cannot switch servicers if they dislike the practices of the company.

Next, industries in which there exists high information asymmetries between customers and companies will have high SRTs. If consumers cannot easily tell when CSR / ESG principles are being violated, they cannot respond. The greater the information asymmetry between company and consumer, the higher the SRT. Conversely, the lower the amount of information asymmetry, the lower the SRT. For example, consider the provision of health care. Health care is a basic need, so we would expect the SRT to be higher than in other industries. Then, health care is also an industry characterized by a great amount of information asymmetry. Customers may not know the prices of procedures, may not know which procedures are necessary, and have little idea of competitive prices for those procedures. These high information asymmetries mean a higher SRT.

This similar principle applies to areas like investment banking versus community banking (do many consumers understand sophisticated investment vehicles?), warehouses versus retailers (it is easier to tell how employees are treated when their interactions with management are observable by customers), and international versus local firms (it is easier to examine local behavior than that done internationally).

Next, the greater the market power in the industry, the higher the SRT, because consumers have fewer options. Conversely, the lower the market power, the lower the SRT, because consumers have many options. Market power is higher when few substitutes for the good exist, and if there are barriers to entry into the market. It may be relatively easy to enter the market for app development, and hard for manufacturing automobiles. We might thus expect the SRT to be higher for car manufacturers than app developers, for instance.

Finally, cultural expectations have a significant impact on the SRT. Some nationalities have different priorities, as do groups within nations. Examples include chlorine-washed chicken in the United States versus Europe and employment law in the United States versus Japan.^[1]