When Institutions Fail: Legitimacy, (De)legitimation, and the Failure of Private Governance Systems

Abstract

Why do institutions fail? With a focus on non-state market-driven governance, this paper explores the failures of the Flower Label Program and the Marine Aquarium Council. To date, research on private governance has tended to focus on the most robust and ‘successful’ cases of non-state institution-building. While it makes sense to study the most developed systems, we posit that much can be learned by examining failed institutions and an analysis of these ‘non-cases’ is long overdue. In developing our argument about institutional failure, we draw on previous efforts examining the legitimation dynamics surrounding private forestry governance. The central argument of our framework is that processes of delegitimation can lead to institutional failure if they deprive private governance systems of key resources and competencies that they require to attain their stated goals. We show that poorly executed legitimation strategies in combination with inhospitable institutional environments are important factors causing delegitimation and ultimately institutional failure.