Form Of Private Governance Research Articles

How domestic contexts shape international private governance: The case of the European Accord and American Alliance in Bangladesh

AbstractThe international nature of supply chains has led to the rise of private authority in regulating the environmental and social impacts of production, which companies frequently address through corporate social responsibility (CSR) in the form of private governance (PG). Despite its claim to establish “global” rules, PG usually has national origins, and multiple efforts to address the same issue from different national perspectives frequently coexist. Numerous studies have explored the impact of national business systems on companies' domestic CSR practices, yet little is known about what factors shape CSR practices like PG internationally. Therefore, this study seeks to understand how differing domestic contexts shape approaches to CSR in the form of PG in host countries. I explore this empirically through the comparative case study of competing PG initiatives in the post‐Rana Plaza Bangladesh garment industry, uniquely conceived to govern companies' practices rather than certify products. It combines empirical findings with the comparative CSR literature to hypothesize about ideal types of PG organizing in US and European contexts. It extends the analysis to also account for other influential factors, such as stakeholder pressure, thus demonstrating how institutional and agentic factors amalgamate to shape firms' choices. By explicating linkages between international PG and its domestic context, as well as between the comparative CSR and PG literature studies, this study extends our understanding of how and why international PG practices and preferences vary for firms originating from different environments.

Embryonic forms of private environmental governance in Northeast Asia

This article provides empirical evidence of the emergence of new private governance forms through three case studies: transboundary air pollution, green supply chain, and energy transition in Northeast Asia. This article also refers to private governance theories discussed in the context of global environmental governance. Consistent with the private authority theory, entrepreneurs with vast expertise and capacity to provide useful information and practices have emerged. They allow stakeholders to cooperate in regional environmental sustainability under the conditions of weak or no focal institutions and heterogeneous state preferences. This observation is consistent with the global trend of environmental governance, which is shifting from regulatory-based to goal-setting governance. As global partnership theory suggests, hybrid forms of private governance, including various local- to global-level public–private partnerships, emerge across the cases. However, these forms of governance are still in the embryonic stage, where their functions of private authority are not fully developed. These insights challenge the predominant view on the limited roles of nonstate actors in building regional environmental governance in Northeast Asia as discussed in the existing literature.

‘Authority Shifts’ in Global Governance: Intersecting Politicizations and the Reform of Investor–State Arbitration

<p>The global investment regime is a prime example of the so-called ‘politicization beyond the state.’ Investment agreements with an Investor–State Dispute Settlement (ISDS) mechanism have become contested in several corners of the globe, triggering a widespread reform process encompassing national, regional and multilateral levels. This article examines the consequences of this confluence of politicization processes, focusing on the European Union (EU) and two key venues of ISDS reform: the United Nations Commission on International Trade Law (UNCITRAL) and the Energy Charter Treaty (ECT). Combining different strands of politicization literature in International Relations and Political Science, the article advances a nuanced conceptualisation of the institutional consequences of politicization that goes beyond a deepening/decline dichotomy. Instead, the article examines whether and how politicization generates ‘authority shifts,’ either through a vertical move between international and national levels; and/or through a horizontal recalibration between public and private forms of governance. The article argues that although the EU’s initiative for global ISDS reform intended to rebalance public and private authority while strengthening its international character, the on-going reform processes at the UNCITRAL and the ECT may eventually lead to a (partial) dismantling of international authority.</p>

Navigating Input and Output Legitimacy in Multi-Stakeholder Initiatives: Institutional Stewards at Work

Multi-stakeholder initiatives (MSIs) are a form of private governance sometimes used to manage the social and environmental impacts of supply chains. We argue that there is a potential tension between input and output legitimacy in MSIs. Input legitimacy requires facilitating representation from a wide range of organizations with heterogeneous interests. This work, however, faces collective action problems that could lead to limited ambitions, lowering output legitimacy. We find that, under the right conditions a relatively small group of motivated actors, who we call institutional stewards, may be willing to undertake the cost and labor of building and maintaining the MSI. This can help reconcile the tension between input and output legitimacy in a formal sense, though it also results in inequalities in power. We test this claim using a case study of organizations’ activities in the Roundtable on Sustainable Palm Oil (RSPO). We find that a small group of founding members—and other members of long tenure—account for a disproportionate level of activity in the organization.

Fishery Improvement Projects as a governance tool for fisheries sustainability: A global comparative analysis.

Fishery Improvement Projects (FIPs) are a form of private governance using seafood supply chains to reduce environmental impacts of fishing in some of the most challenged fisheries. Some FIPs are industry-led, others are championed by NGOs. They range across many different fishery types, in both high- and low-income settings. Their diversity is notable, and their proliferation remarkable. This rapid growth suggests FIPs are becoming a key feature of the fisheries governance landscape globally. Based on a global sample of 107 FIPs, we systematically examined their reported actions, the actors involved, and their achievements in terms of policy and practice outputs. The most common actions were dialogues with policy stakeholders, data collection, and educational efforts directed at fishers. Common policy outputs included development of management plans and/or a management body, and rules for limiting entry and increasing compliance. Practice related outputs were dominated by gear changes, and observer and traceability programs. Only crab and lobster FIPs engaged in sustained policy conversations as one of the most common actions. Shrimp and tuna fisheries report more engagement in testing and implementing changes to fishery practices. While supply chain actors are involved in all FIPs, retailers and 1st tier suppliers are relatively absent from FIP activities, and are primarily involved in rallying financial support or some policy engagement. Based on our analysis we discuss the opportunities and challenges FIPs will likely need to engage with to contribute to a global transition to more socially and environmentally sustainable fisheries. We outline key areas where further work is needed to understand how FIPs can improve their contribution to global fisheries governance in the future.

A ‘Decent Cuppa’: Worker Power and Consumer Power in the Sri Lankan Tea Sector

AbstractConsumers are increasingly seen as playing an important role in global labour governance through the establishment of voluntary certification programmes that promise better economic and social conditions for workers in global value chains. In the Sri Lankan tea sector, however, these private forms of governance (Rainforest Alliance (RA), UTZ Certified and the Ethical Tea Partnership (ETP)) at best have no effect and at worst are associated with indecent forms of work. Rather, conditions of work are defended by powerful trade unions that exercise structural power via their strategic position in the value chain and associational power through links with political parties and residual ethnic ties within and between nation‐states. It is evident that through close collaboration between the International Labour Organization (ILO) and the tea sector unions, workers are able to leverage institutional power through both national and international labour standards to reinforce decent work for those at the very bottom of the global value chain.

The Meaning of “Private Governance” in Urban China: Researching Residents’ Preferences and Satisfaction

ABSTRACTThe existing literature suggests that gated communities and master-planned estates represent a form of private governance. They are a response to the state’s retreat from providing public goods. In post-reform China, newer residential development projects also take the form of gated neighbourhoods. To what extent do these neighbourhoods represent a new form of “private governance”? Results from the perspective of residents reveal that the meaning of “private governance” refers to services delivered by private organisations rather than self-governance. Gated neighbourhoods in urban China are a response to the state’s intention to retreat from serviced land provision while retaining neighbourhood control.

CSR in Comparison. Institutional Determinants of Mirroring, Substitution and Irresponsibility

Corporate social responsibility (CSR) has emerged as a ubiquitous new form of private governance. A key issue is how CSR initiatives by firms relate to traditional governance institutions, such as state regulation and social partnership. This paper discusses cross-country patterns of corporate responsibility with an interface to the literature on comparative capitalism, and explores how corporate responsibility mirrors or substitutes for institutionalized forms of coordination. The paper uses a statistical analysis of listed corporations in 24 OECD countries during the years 2008 – 2014. We apply a more disaggregated view on the institutional context beyond a pure differentiation between LMEs and CMEs. This seems especially appropriate due to the inconclusive results of former studies and institutional differences in similar countries and various political shifts in the recent years discussed in the more recent literature on comparative capitalism. Moreover, we differentiate in our analysis between corporate responsibility and irresponsibility. The results show that corporate responsibility both mirrors institutionalized forms of business coordination, as well as substitutes for the absence of coordination depending on the institutional arena under observation. Moreover, the paper examines differences in the quality of CSR across institutions and questions the assumption of functional equivalence.

Contested compliance regimes in global production networks: Insights from the Bangladesh garment industry

This article reports the findings of a field study on the emergence of collective agreements led by global brands enacting compliance measures to improve safety and working conditions in the Bangladesh garment industry. We explore how key actors in the Bangladesh garment sector who constitute the local production system of the global supply chain experienced the implementation of global agreements on factory safety. We argue that global safety compliance measures through multi-stakeholder initiatives provide legitimacy to multinational corporations and their global brands but do little to address the structural problems arising from exploitative pricing and procurement practices, which are the key reasons for deplorable working conditions in garment factories. Our findings indicate that neoliberal development policies of the state, where local economies are incorporated into global production networks, resulted in differential treatment and regulation of specific populations that comprise garment factory workers. The reconfiguration of state power to meet the demands of global supply chains also involved use of state violence to suppress dissent while undermining labour rights and working conditions. Our article contributes to the politicization of multinational corporations in global production chains by showing how contestations between workers, factory owners, the state, trade unions and multinational corporations create new private forms of governance and new regimes of compliance in the industry.

Explaining the Growth of CSR within OECD Countries: The Role of Institutional Legitimacy in Resolving the Institutional Mirror vs. Substitute Debate

Two strands of literature have emerged to explain the rise of a new form of private governance, Corporate Social Responsibility (CSR). One camp argues that CSR expansion is likely during periods of economic liberalization because CSR tends to substitute for growing institutional voids and a lack of social regulation. The other camp argues that CSR is likely to diffuse within coordinated economies because it mirrors these institutional settings. While both camps find empirical support for their arguments, no one has yet managed to combine both perspectives. In our study, we develop three hypotheses based on two (rationalist and constructivist/sociological) strands of institutional theory. Based on a new dataset comprising the corporate membership in business-led CSR organizations in over thirty countries from 1981 to 2008, we show that economic liberalization has a strong effect on CSR expansion when the legitimacy of CSR is low. However, when the practice has achieved substantial cultural acceptance, economic liberalization no longer drives CSR expansion. In this setting, CSR expansion is most likely to occur within socially regulated economic contexts.

Indigenous – corporate private governance and legitimacy: Lessons learned from impact and benefit agreements

This paper argues that impact and benefit agreements (IBAs) between Indigenous groups and resource companies are properly understood as a form of private governance. Viewing IBAs through a private governance lens generates important insights for both governance scholars and for scholars interested the structuring of Indigenous-corporate relations in the context of resource development. In order to develop this argument, we present a case study of a specific arrangement between a Canadian First Nation and a multi-national mining company with a particular focus on the governance elements of the contract and the implications for legitimacy that arise from the arrangement. Our central claim is that IBAs, as a form of private governance, require a theory of legitimacy that goes beyond contractual consent, but must account for both procedural and substantive legitimacy demands. We then identify the key lessons that can be taken for indigenous law and governance scholars and private governance scholars from our analysis.

Contextualising compliance: hybrid governance in global value chains

ABSTRACTWidespread disappointment with compliance auditing in supply chains has led to a search for new governance solutions in global industries. Recent scholarship on labour standards in supply chains emphasises the need for complementarity between public and private forms of governance, and the importance of local contexts in shaping compliance outcomes. This paper, in contrast, argues that the distinction between public and private governance belies the complex interaction of regulatory forms and industry dynamics in global production networks. It develops this argument via an analysis of the International Labour Organisation Better Work programme, which, over the last decade, has metamorphosed from a country-specific monitoring programme into a unique model of hybrid governance that has been implemented in a half dozen countries in Asia, Africa and Latin America. Drawing from field research conducted on Nicaragua’s Better Work programme, it examines the achievements and limitations of hybrid governance, and proposes that these can best be understood when the global value chain for apparel is seen as a transnational field within which relational struggles between different stakeholders at the global and national levels shape the political contexts within which particular governance solutions are pursued.

Strategies of legitimation: MNEs and the adoption of CSR in response to host-country institutions

Drawing on institutional theory, this study examines the question of how host country institutions affect corporate social responsibility (CSR) adoption by multinational enterprises (MNEs). I propose that CSR encompasses a set of practices that MNEs draw on to signal legitimacy in different kinds of institutional contexts – contexts that vary in how they shape issue salience and stakeholder power in a given issue field. Building on ideas related to field opacity and the managerial implications of CSR, I study why MNEs adopt two distinct types of CSR policies: standards-based CSR in response to contexts marked by issue salience, and rights-based CSR in response to contexts marked by stakeholder power. To test these hypotheses, I use subsidiary and firm-level data from a sample of 540 Western European MNEs in the issue field of labor rights. Results show that MNEs strategically adopt these CSR policies related to their presence in distinct institutional contexts. The study offers implications for how MNEs manage the legitimacy of their global operations and how CSR, as a form of private governance, can emerge as both a substitute and complement to regulatory institutions.

Non-state governance and climate policy: the fossil fuel divestment movement

This article charts the evolution of the divestment movement, a transnational advocacy network that uses a range of strategies to shame, pressure, facilitate, and encourage investors in general, and large institutional investors in particular, to relinquish their holdings of fossil fuel stocks in favour of climate-friendly alternatives. It describes the movement's central characteristics and the strategies it employs, it maps its basic architecture and the potential role it plays in the broader climate change regime complex, and shows how it represents a novel form of private investor-targeted climate change governance, operating primarily through symbolic political action and as a norm entrepreneur. Given the potential importance of the movement, the model it may provide for other forms of private governance, and the paucity of analysis of its implications for climate change mitigation, this article addresses an important descriptive and analytical gap in the climate policy literature.Policy relevanceThe early success and rapid growth of the divestment movement suggests it may play a significant role within the broader sphere of climate change policy. This article shows how the movement has used the aggregation, packaging, and dissemination of scientific fact and moral argument, and local and international campaigning, direct action, lobbying, and knowledge construction to steer the actions of investors. More broadly it demonstrates how shaming, persuasion, and empowerment can be used as strategies to bring about economic and political change and to catalyse the ‘energy revolution’ that many see as the essence of effective climate change mitigation. In so doing, the article indicates how climate policy can be advanced by novel forms of private governance, and (so its proponents would argue) how more might be achieved by unconventional means and leveraging the private sector than governments have managed by conventional means in some two decades.

Homeowner associations and neighborhood governance in Guangzhou, China

Drawing on a large-scale household survey and in-depth interviews in Guangzhou, China, this research closely examines the formation and operation of homeowner associations (HOAs) and their governance efficacy in urban neighborhoods. This study examines the application of theories on private governance and collective action in the Chinese context and integrates the empirical analyses into a general discussion of state–market–society interactions. The HOA concept in China is far from a form of private governance by Western definition. On the contrary, it generates a societal force to counterbalance the market force brought by property management companies and the state power enforced by the residents’ committee to address homeowners’ political and material needs. Collective action theory is a useful explanatory tool for the HOA’s governance efficacy in China. Yet, the state power and market force also bring a strong imprint on the decision-making of collective action in terms of determining organizational arrangements, the availability and quality of information, and the benefits of collective action.

Non-State Governance and Climate Policy: The Fossil Fuel Divestment Movement

This article charts the evolution of the divestment movement, a transnational advocacy network that uses a range of strategies to shame, pressure, facilitate, and encourage investors in general, and large institutional investors in particular, to relinquish their holdings of fossil fuel stocks in favour of climate-friendly alternatives. It describes the movement’s central characteristics and the strategies it employs, it maps its basic architecture and the potential role it plays in the broader climate change regime complex, and shows how it represents a novel form of private investor-targeted climate change governance, operating primarily through symbolic political action and as a norm entrepreneur. Given the potential importance of the movement, the model it may provide for other forms of private governance, and the paucity of analysis of its implications for climate change mitigation, this article addresses an important descriptive and analytical gap in the climate policy literature.

Public Procurement and Private Certification: The Case of the UK TPP

Forestry certification schemes have been considered the paradigmatic instance of a new form of private governance that may challenge state-centered authority and public policy-making. Although governments and intergovernmental organizations are certainly not the schemes' main architects, they are more involved in the overall effects of forestry certification than is often emphasized, notably through procurement policies. This paper examines a particular interaction of private and public governance organizations, in the realm of forestry certification, among the UK government’s Timber Procurement Policy (TPP), a governmental demand-side policy tool, and two major certification schemes – the Forest Stewardship Council (FSC) and the Program for the Endorsement of Forest Certification (PEFC). The analysis applies a broadly conceived framework of supply and demand to consider how the TPP interacts with these private schemes to impact both markets for certified timber and the private schemes’ substantive and procedural content. This framework illustrates how the UK government relies on predominantly private regulation -- for expertise, convenience and advantages in terms of international trade law -- as well as influencing it through both the TPP and more traditional regulation. It is shown that a restricted approach to public procurement can enhance the overall quality of this inter-institutional regulatory framework.

Private Governance, Hegemonic Struggles, and Institutional Outcomes in the Transnational Cotton Commodity Chain

Transnational firms have rolled out new forms of private governance at the same time as the rise of new economic powerhouses like China has fomented growing inter-state tensions. This points to critical questions: how does inter-state competition shape private governance of transnational commodity chains and how does private governance shape inter-state rivalries? I explore these questions by tracing the construction and dissolution of sectoral hegemonic coalitions that govern commodity chains. Drawing on the case of cotton quality governance from 2000-2012, I argue that a coalition of the U.S. state and transnational merchants has reconstituted its sectoral hegemony to allow expanded accumulation and accommodate their main rival~China. The U.S. state created standards with Chinese characteristics, while transnational merchants made the authority structure of their institutions more inclusive. However, this reconstituted hegemony remains unstable. Facing continued regulatory competition from China, the U.S. state has constructed new forms of meta-governance that could facilitate a shift to Chinese-led sectoral hegemony but under U.S. oversight. Moreover, these sectoral hegemonic struggles compelled Western transnational merchants to fracture their long-standing relationship with the U.S. state in the hegemonic coalition in order to position their private institutions as geopolitically neutral and thus compatible with the hegemonic leadership of either the U.S. or Chinese states in the sector. By tracing struggles among coalitions of leading firms and states for hegemony over the institutions governing particular commodity chain sectors, we can shed light on possible trajectories within broader world-system level hegemonic struggles that at once constitute and are constituted by these sectoral dynamics.

Mixed Signals: NGO Campaigns and Non-state Market Driven (NSMD) Governance in an Export-Oriented Country

In the past two decades, non-governmental organizations (NGOs) have targeted international customers of Canadian staples, intent on cajoling and coercing them to favour exporting firms certified as practising responsible fisheries and forestry management. The link between these campaigns and the adoption of these non-state market driven (NSMD) mechanisms is, however, more complex than often portrayed. There is an uneasy tension between demands favouring NSMD as a new form of private governance that will vary its own stewardship standards according to scientific information, multi-stakeholder deliberations, and price signals; and traditional demands that focus on a specific behaviour of a specific firm over a specific, albeit narrow, environmental problem. Indecision on the part of NGOs about the approach to take creates mixed signals, affecting firm decisions (purchasers and producers) in ways that can reduce the institutionalization of private authority. We examine these dynamics by unpacking the campaigns and their implications for the potential and consequences of NSMD governance.

Benchmarking International, Transnational, and Private Governance in the Forest Sector

The question of how to overcome the democratic deficits of global forms of governance has led to a pretentious academic debate. To proceed in theory-building, we need to assign systematically the theory-driven assumptions on legitimate forms of governance beyond the nation-state with the various, already observable forms of global governance. Thereto, the paper is aiming at a systematic comparative appraisal of the legitimatory quality of different patterns of governance by applying suitable indicators for their measurement. The innovative potential of this paper is the application of a structured, focused comparison that interconnects a multi-dimensional concept of legitimacy (input-, throughput- and outputdimension) with the triad of international, transnational and private forms of governance. As far as the chosen indicators show a legitimizing effect, they should serve as a standard for upcoming research studies and, by this, contribute to further systematization of studies on global governance. At least, the analysis of the constitutive criteria of cross-border governance arrangements in a legitimacy-based theoretical perspective shall also help to identify their discrete potential for legitimacy and indicate ways for their institutional safeguard and transformation to other arrangements. The conceptual outline will be completed by a case study on forest governance.