Transnational Private Governance Research Articles

Subcontracted capitalism and the polemical verification of rights: a Rancièrian interpretation of the politics of transnational private governance in Nike’s global production network

ABSTRACT While some scholars dismiss transnational private governance instruments, such as codes of conduct, social auditing and monitoring initiatives, as an instrument of corporate power, propaganda and control, others provide a positive assessment. This paper criticises both approaches by applying concepts developed by the French philosopher Jacques Rancière. Against the background of worker-driven discontent in the Nike supply chain, the paper argues why a Rancièrian reading may offer an alternative way of conceptualising the politics of transnational private governance, one that provides a more promising way to ‘ground’ it in both conceptual and empirical terms.

Local Grounding of Transnational Private Governance Authority: Translation, Contestation, Legitimation and Communities of Practice

ABSTRACT Scholars emphasise the constitutive ambiguity of transnational private standards and the importance of global-local interactions in their implementation. Yet how this ambiguity and these interactions shape the legitimation of transnational private governance, especially in the norm formation phase, remain open questions. The conceptual metaphor of ‘grounding’ offers a promising perspective on these questions. This article conceptualises the grounding of transnational private governance in terms of practices of translation by which transnational standard-setting is grounded in receptive local contexts; practices of contestation by which it runs aground on local resistance; and communities of practice that shape the normative grounds for legitimate standard-setting authority. An illustrative example of local Colombian reactions to the development of the global social responsibility guide ISO 26000 suggests that a basic principle of private standardisation, that standards are developed through a consensus process in which all concerned interests are effectively represented, is not as important to the legitimation of standards as many suppose, and that membership in two overlapping communities of practice—standardisation and corporate social responsibility—explains why actors legitimise standard-setters that do not fulfill a legitimacy criterion they purport to consider crucial.

Grounding the Politics of Transnational Private Governance: Introduction to the Special Section

ABSTRACT With a focus on the concept of grounding, this special section argues that the politics of transnational private governance should be understood in the double meaning of, on the one hand, its local implementation and, on the other hand, practices of political contestation and translation. The concept of grounding thus allows for a localised focus on practices used by actors in transnational private governance. By doing so, we hope to make three contributions to the current debate. The first is to never lose sight that governance is first and foremost about politics; the second is to provide a conceptual framework making more explicit the intrinsic limits of transnational private governance efforts; the third is about the form of power exercised by transnational private regulatory initiatives in global production networks. This introduction provides historiographical and conceptual background to this special section, which brings in scholars across social sciences, including political science, sociology, law and philosophy. It introduces the contributions from research communities that usually remain separate in their analysis of standards used in global production networks in the domain of labour, environment, and human rights.

Grounding transnational business governance: A political‐strategic perspective on government responses in the Global South

AbstractRecent scholarship on transnational business governance has begun to examine public‐private interactions and the active role of governments. We make two key contributions that integrate and expand this literature. First, in juxtaposition to functionalist accounts, we foreground the fundamentally political and often contentious character of these interactions. As private transnational governance schemes and standards “hit the ground,” private‐public interactions, we argue, are embedded in national political arenas and tied to domestic distributional struggles among competing regulatory coalitions. Building upon multiple empirical streams of research, we develop a political‐strategic framework that maps the diversity of Southern government responses (substitute, adopt, repurpose, replace, or reject) to transnational private governance. Our framework shows that government responses are a function of both strategic fit with domestic industrial capabilities and structures, and strength of developmental state capacity. Second, our proposed framework adopts the vantage point of Global South governments and industries, particularly how development challenges and strategic options within global value chains affect their understanding of, and responses to, transnational schemes and standards. This is an important corrective to a Northern bias in the private governance literature.

The hidden costs of law in the governance of global supply chains: the turn to arbitration

This paper makes an important and unique contribution to the Special Issue by problematizing the neglected role of law in the governance of global supply chains and the hidden costs resulting from this neglect. In Part I we argue that existing efforts within domestic and international law are ineffectual in holding transnational corporations accountable along their supply chains. The turn to private transnational mechanisms of governance, such as arbitration, is a direct response to this governance gap. However, in Part II we criticize international investment law and arbitration for their one-sided nature that privileges corporations over states and civil society. Adopting a critical political economy approach, this paper examines how efforts to address corporate social responsibility through international investment law and arbitration do not substantively uproot dominant ontologies or restructure power relations between corporations, states, and civil societies. Instead, we argue that these reforms contain hidden costs to transparency, participation, and accountability by empowering private transnational governance through arbitration, while further locking-in states to the operations of foreign corporations and the dictates of transnational capitalism.

A comparative capitalism perspective on the privatization of governance: Business power, nonbusiness resistance and state enforcement in Germany, 2000–2010

Abstract The privatization of governance including the institution of nonbinding corporate social responsibility (CSR) frameworks to govern the social and economic conduct of large corporations is a controversial global process, which unfolds between and within nations. Studies of transnational private governance suggest that CSR frameworks reflect bargains between business and nonbusiness actors, reached on the background of the unfeasibility of intergovernmental binding regulation. But what explains the rise of such multi-stakeholder initiatives on the national level—and particularly in European coordinated market economies—where public forms of governance are historically well-institutionalized and more feasible? Based on our power resource theory (PRT)-informed study of Germany’s adoption of a national CSR framework, we argue that such settings motivate nonbusiness actors to resist, rather than engage in, business-driven processes of the privatization of governance. The struggle is decided by the state, which in Germany used its public power to enforce multi-stakeholder consensus around privatized forms. Our findings thus extend scholarly recognition of the role played by public authority in the privatization of governance. More generally, we promote a comparative capitalism perspective for the study of the politics of private governance.

Finding International Law in Private Governance: How Codes of Conduct in the Apparel Industry Refer to International Instruments

Multinational enterprises increasingly use Codes of Conduct to govern the conditions of labor and production among their suppliers’ operations around the globe. These Codes of Conduct, produced unilaterally by companies as well as by multistakeholder bodies, often include references to public international law instruments. This article takes a closer look at thirty-eight Codes of Conduct from the global apparel industry and uses social network analysis to identify the patterns in these Codes and how they refer to international legal instruments. Although some international legal instruments stipulate rules that can be directly transposed into the private context of supply chains, this study instead finds that the global apparel industry’s Codes of Conduct are more likely to refer to instruments that only stipulate rules that pertain to public authorities. The findings call into question the legitimizing role that international law plays as it is transposed into transnational private governance.

Private governance schemes for green bond standard: influence on public authorities’ policy making

This paper considers the guiding impact of private governance schemes on public authorities' policy-making through a case study on green bond standard. Based on theoretical review of the institutional interplay and private governance scheme, two hypotheses are proposed in this paper: horizontal interplay between transnational private governance schemes can make a particular framework prevalent in given governance area; and prevalent private governance scheme can influence policy making of public authorities through vertical institutional interplay. The argument in this paper supports that internationally-accepted private governance schemes could be in a position to influence policy-making by public authorities. Horizontal interplay in the form of alignment between the Green Bond Principles (GBP) and other private green bond standards reinforces the credibility of the overlapping elements of the private standards. As for vertical level, this paper finds that public authorities at national and regional levels take advantage of the private governance scheme, especially GBP, when developing their own standards and policy frameworks. Private institution's expertise on green bond standards effectively function to help develop coherent green bond standards globally by helping with public authorities' policy development. GBP eventually serves as a model regulation for policy makers as public authorities regard them as market best practice. This further strengthens the credibility of GBP since private governance schemes could attract more users by making it clear that those voluntary private standards are linked with standards and policy frameworks created by public authorities.

The instrumental power of transnational private governance: Interest representation and lobbying by private rule‐makers

AbstractWhile scholars have researched transnational private governance for over two decades, we still know little about some of the specific political activities in which private rulemaking schemes engage. This article addresses this topic by bringing together hitherto separate literatures on private governance and interest groups. I argue that examining private governance's instrumental power, and interest representation and lobbying specifically, complements the literature's dominant focus on the structural and discursive power of private governance. The article makes three contributions. First, it conceptualizes private governance schemes as interest organizations by analyzing similarities and differences with traditional interest groups. Second, the article examines instrumental power empirically by assessing the participation of 48 transnational private governance schemes in the European Union's lobby register and variation among private governance schemes in this respect. Finally, the article contributes to developing a new research agenda to continue bridging the gap between the private governance and interest group literatures.

Structure, path dependence, and adaptation: North-South imbalances in transnational private fisheries governance

Transnational private governance schemes, like other global rule-making arenas, are confronted with the challenges of North-South imbalances. Through their standards and certification processes, private governance schemes aim to control access to the market for sustainably certified products and may consequently generate or perpetuate global inequalities. Are these imbalances inevitable and likely to persist? This article explores North-South imbalances in the operations of the Marine Stewardship Council (MSC), a leading standard-setting and certification scheme for capture fisheries. We examine whether the scheme's Northern-dominated origins reflect pre-existing structural imbalances, persist through path-dependent processes, or can be addressed by scheme adaptations. Our analysis uses data on the 312 fisheries that have engaged with the MSC from 1999 to 2015. We find evidence that imbalances in the MSC reflect corporate power and structures of power in the global fisheries sector, but that path dependence has also elevated the power of unexpected countries. Adaptations to date have been less successful as a means to lessen Northern dominance.

On Tim Bartley’s, Rules without Rights: Land, Labor and Private Authority in the Global Economy, Oxford, Oxford University Press, 2018

Correspondence: Sigrid.quack@uni-due.de Rules without Rights by Tim Bartley is a comprehensive and deeply researched book, building on more than 15 years of research on the development of transnational private governance of forests and labor in different world regions, including the USA, Europe and Asia. Today the topic of the book is even more salient than when Bartley started it with a lot of foresight. The growing economic interdependence of the global economy makes it increasingly impossible for national states to regulate the negative externalities of transnational companies’ production models in isolation from each other; yet, multi-lateral governance has been facing stalemate in many policy fields for more than a decade. In this situation, transnational private governance has been considered, promoted and established by some as one possible avenue to harness and combat negative effects on the environment and on the working conditions of labor in global production chains. But to what extent is it able to deliver the promised results?

Toward “hardened” accountability? Analyzing the European Union's hybrid transnational governance in timber and biofuel supply chains

AbstractThe voluntary/mandatory divide is a constant feature of scholarly debates on corporate accountability for sustainability in global supply chains. A widely held assumption is that the addition of state authority to private transnational governance in global supply chains will “harden” accountability and, thus, promote more sustainable production. The state's ability to set legally binding requirements is expected to coerce companies into complying. The hybridization of private and state authority is seen to strengthen good practice in private authority. This empirical study questions these assumptions based on an analysis of two hybrid governance arrangements for sustainability in global supply chains: the EU's Timber Regulation (EUTR) and Renewable Energy Directive (RED). The results demonstrate that both EUTR and EU‐RED yield sector wide efforts of compliance and to this extent can be seen as enhancing accountability in the sense of answerability. At the same time, we find that the policies in both cases are not more demanding, nor enforced strictly, the latter putting into question their potential to coerce companies. Further, a “hardening” of accountability is at least obscured as both EUTR and EU‐RED have stripped private authority they employ in their hybrid transnational governance from the need to establish legitimacy with a broader audience. This makes legal compliance and cost‐effectiveness the core factor for companies’ efforts to demonstrate compliance. Our findings hence question whether the EUTR and EU‐RED have led to “hardened” accountability compared to private transnational governance, and ask for an empirical, more nuanced understanding of what there is to gain or lose from hybridizing private and state authority in transnational governance.

Missing the Bigger Picture: A Population-level Analysis of Transnational Private Governance Organizations Active in the Global South

This article conducts a population-level analysis of transnational private governance organizations (TPGOs) that develop standards for sustainable commodity production in the Global South. Our point of departure is the observation that despite the rapid growth in the number of TPGOs active in developing countries the extant scholarship remains focused on a small set of well-studied programs. To address this imbalance, this article brings much needed empirical breadth to current debates on the proliferation, inclusivity, and distributional consequences of transnational sustainability governance. Analyzing 47 TPGOs and their operations in 12 export-oriented commodity sectors and the 10 largest developing country producers of these commodities, our explorations reveal signs of a worrying “bigger picture”. The highly unequal geographic and sectoral distribution of TPGOs, the lack of inclusion of producers in their central decision-making bodies, and the prevalence of problematic cost sharing arrangements limit the potential of this mode of governance to contribute to sustainable commodity production in developing countries.

Hybrid Production Regimes and Labor Agency in Transnational Private Governance

Little consensus exists about the effectiveness of transnational private governance in domains such as labor, the environment, or human rights. The paper builds on recent scholarship on labor standards to emphasize the role of labor agency in transnational private governance. It argues that the relationship between transnational private regulatory initiatives and labor agency depends on three competences: first, the ability of workers’ organizations to gain access to processes of employment regulation, implementation, and monitoring; second, their ability to insist on the inclusion of employers and state agencies within such processes; and third, the ability of workers to effectively exercise leverage in pursuit of particular goals. The paper develops a framework, called hybrid production regime, for examining how workers’ capacity to act at the local level depends on how these three collective competences are addressed in the institutionalization of capital–labor relations between the transnational and national levels.

Transnational Private Governance as a Developmental Driver in Southeast Asia: The Case of Sustainable Palm Oil Standards in Indonesia and Malaysia

abstractThis paper explores why and how voluntary private sustainability governance initiated by corporations and non-governmental organisations (NGOs) extends its regulatory purview to incorporate developmental strategies aimed at upgrading smallholder practices. Using the case of palm oil in Indonesia and Malaysia and by extending insights from club theory, global production networks, and developmental states, the paper identifies the conditions under which private regulatory standards catalyse private developmental interventions that are nevertheless analogous to the industrial policies, financial incentives, and institutions of the classic developmental states. It was when the credibility of private sustainability standards was challenged by the low-yielding and environmentally-unsustainable cultivation practices of smallholder growers of palm oil that private governors and globally-oriented palm oil corporations who depend on smallholder suppliers worked with NGOs to support smallholder agricultural upgrading, in turn enhancing productivity, sustainable cultivation practices, and livelihoods. Such private developmental interventions involve supply chain mapping, knowledge service partnerships, and brokered overarching meta-partnerships that may be regarded as functional analogues of classic developmental state practices and institutions, namely performance monitoring, technological support, and coordination of multiple actors to form wider innovation networks.

Assessing the institutionalization of private sustainability governance in a changing coffee sector

AbstractThe potential of transnational private governance initiatives to constitute effective alternatives to state‐led regulation of global value chains rests on their ability to scale up and become institutionalized in a given sector. This study examines whether such institutionalization has occurred in the coffee sector, the commodity with the most widespread adoption of certified products and over 30 years’ experience of private governance, and tests hypotheses on facilitating and inhibiting conditions. It finds that while norm generation around responsible supply chain management and the organizational institutionalization of standard‐setting bodies is well advanced, the practice of internalizing social and environmental externalities through the routinized production and purchase of higher priced certified goods continues to be questioned by industry actors. Indeed, conditions that favored normative and organizational institutionalization, such as high levels of industry concentration, product differentiation, and deliberative interaction, are shown to represent barriers to the practice‐oriented institutionalization of market‐driven regulatory governance.

Community structure and the behavior of transnational sustainability governors: Toward a multi‐relational approach

AbstractHundreds of transnational private governance organizations (TPGOs) have emerged in recent decades to govern social and environmental conditions of production using voluntary standards. A debate persists over whether the ties among different TPGOs and other organizations create a professional community that affects the behavior of TPGOs. To help resolve this debate, we analyze multiple ties among agriculture TPGOs to offer a more robust exploration of community structures and their potential effects for three forms of TPGO behavior – coordination, collaboration, and isomorphism. Our aggregate measure of ties reveals a thin community dominated by older TPGOs and TPGOs advancing a broad notion of sustainability that were created by Solidaridad, the World Wildlife Fund, and/or Unilever. The clearest community structures are built from ties that exhibit the potential for not actual collaboration, coordination, and isomorphism. Thus, while there exists convergence toward an emergent TPGO‐community, obstacles remain to more intense behavioral effects for TPGOs.

New Constellations of Social Power: States and Transnational Private Governance of Palm Oil Sustainability in Southeast Asia

ABSTRACTThis article considers whether private sustainability standards can lead to lasting change in corporate and state agricultural practices implicated in the environmental damage and social conflicts caused by oil palm cultivation in Indonesia and Malaysia by examining in detail the social processes through which non-state actors engage in governance. Sceptics of private regulation point to the powerful state–business patronage networks in these countries as structural impediments to reforming this sector. Drawing on the literature on global production networks, I show how producers deeply embedded within such supportive local political economies nevertheless choose to comply with stringent global private standards to reduce risks to their global operations. It was the renewed emphasis on supply chain “traceability” to demonstrate responsible corporate behaviour to investors, buyers and consumers that served to embed globally-oriented palm oil plantation firms and their upstream suppliers into emerging ethical supply chains. Embedding occurs through three social processes – surveillance, normalising judgement and knowledge transfer. The private regulatory developments analysed in this article, though relatively recent, are supported by a diverse transnational coalition of principled and instrumental interests and have created significant openings for a new, or at least, parallel, and more progressive, private regulatory order in Malaysia and Indonesia.

Does transnational private governance reduce or displace labor abuses? Addressing sorting dynamics across global supply chains

AbstractThe attention of practitioners and scholars of private regulation of working conditions is focused on whether and how corporate buyers can help improve labor and safety standards in the factories that supply them by adopting codes of conduct, joining social certification schemes, participating in social audit processes, and financing safety improvements. I argue that more attention should be paid to the possibility that private regulation schemes – whatever degree of compliance they achieve – mostly result in a displacement effect or sorting dynamic that leaves the overall level of working conditions unchanged. I sketch a research agenda aimed at identifying the conditions under which a sorting dynamic can occur and at conceiving innovative private governance designs that could avoid it.

Field Recognition and the State Prerogative: Why Democratic Legitimation Recedes in Private Transnational Sustainability Regulation

Like any regulatory effort, private transnational standard-setters need to legitimate themselves to the audiences from which they seek support or obedience. While early scholarship on private transnational governance has emphasized the centrality of <em>democratic</em> legitimation narratives in rendering private governance socially acceptable, evidence from more recent standard-setting schemes suggests a declining relevance of that narrative over time. In my analysis of private sustainability regulation, I identify a combination of two factors that jointly contribute to this diminished role of democratic legitimation. First, private transnational governance has become a pervasive phenomenon. This means that new entrants to the field no longer face the same liability of newness that required first movers to make an extra effort in legitimation. Second, private standard-setting has moved from areas characterized by ‘governance gaps’ to areas in which meaningful intergovernmental regulation already exists. In these areas, however, the ‘state prerogative’ in legitimating governance holds. As a result, transnational standard-setters rely not so much on stressing their democratic credentials, but instead emphasize their contribution to achieving internationally agreed goals.