The Regulatory Power of Business Norms: A Call for a New Research Agenda1

Abstract

What role do international business norms play in regulating the behavior of firms? Despite growing acceptance of the constructivist claim that norms play an important role in international life and an increased interest in private authority by international relations (IR) scholars, surprisingly little research in the field has explored the extent or mechanisms by which norms influence the behavior of firms. I argue this oversight has more to do with the bias in political science against viewing firms as social or socializable institutions than with the applicability of constructivist theory to firms or markets. To make this argument I examine the spread of sustainability norms across transnational business networks and illustrate how theories of socialization developed by IR constructivist scholars can help explain the rapid spread of these norms and the effects they have on corporate environmental governance. The paper ends with a call for more research on the effects of international business norms and makes several suggestions for how to counteract the bias in political science against doing so.