Private Governance

by

Liliana B. Andonova, Yixian Sun

• LAST REVIEWED: 27 June 2017
• LAST MODIFIED: 27 June 2017
• DOI: 10.1093/obo/9780199756223-0216

Introduction

Since the late 1990s, social science researchers have witnessed an upward trend in the exercise of political power by private actors—business and civil-society organizations—to produce decisions that have abiding effects and reduce actors’ autonomy. Even more remarkable, in many cases such rules aim to provide public goods by addressing collective-action problems without being associated with public government institutions. While this nascent trend was mainly driven by private actors in industrial economies in the first place, the related rules often address negative social and environmental externalities in global supply chains, and thus are gradually introduced to the rest of the world. In line with theories of governance beyond government, this phenomenon has triggered abundant research, as it challenges a state-centric view in political science that emphasizes public institutions’ privilege for the provision of public goods. Political scientists began to examine the issue at the turn of the 21st century by using different terms: “private regulation,” “private regimes,” “transnational governance,” or “voluntary programs.” Incorporating perspectives drawn from various disciplines, including economics, sociology, and law, this scholarship looks at dynamic interactions among different actors, as well as broader institutional contexts, to understand the politics in the establishment and operations of private regulation. Most studies are from scholars in the field of international relations, as private regulation is most salient at the global or transnational level, where government arrangements are often lacking. This article includes the literature explaining different aspects of private regulation initiated in advanced industrial democracies, from its emergence to its organizational development, from its legitimacy to its diffusion beyond industrialized societies and impacts. In accordance to the prominence of private regulation of environmental and labor impacts of firms, the literature here gives a special emphasis on, but not limited to, research on these two issue areas. The article starts with an overview of seminal work that conceptualizes and investigates diverse types of private regulations. A discussion of academic journal publication on private governance and a review of influential research analyzing the rise of private regulation follow. We then introduce some classical case studies with an issue-area focus before presenting research on private regulation’s legitimacy and diffusion beyond developed countries. Finally, it is necessary to review studies on the interaction of private regulation with public policy as well as questions of the sources and limits in effectiveness.

General Overviews

After the concept of “global governance” received increasing attention among political scientists in the late 1990s, two edited volumes focusing on private authority in international politics—Cutler, et al. 1999 and Hall and Biersteker 2002—have provided early, yet comprehensive, examination on causes and consequences of global governance led by private actors. While the analyses in Cutler, et al. 1999 focus on business actors, Hall and Biersteker 2002 also considers authority exercised by civil-society organizations and illicit organizations. However, both volumes show that these non-state actors possess institutionalized expressions of power in certain issue areas, without involving formal governments. The review article Vogel 2008 draws an overall picture of this relatively new literature on private regulation, a literature that also indicates different types of private regulation and outlines a research agenda. Along with the development of private regulation in the real world, scholars examine the emergence of private regulation through different theoretical perspectives. Mattli and Woods 2009 proposes a theoretical framework and demonstrates examples in different issue domains to examine global regulatory outcomes through the interaction between institutional contexts and demand of different actors for regulatory changes. Building on this framework, the special issue Büthe 2010 further distinguishes three major groups of stakeholders, which may overlap, to examine private regulation: rule demanders, rule makers, and targets; the articles demonstrate the functioning of private regulation in various issue areas such as carbon emissions, food security, and electronic products. A different approach based on the economic theory of clubs is developed by Potoski and Prakash 2009, which views private regulation as rule systems generating excludable brand benefits; the volume analyzes both theoretically and empirically the uptake and efficacy of different voluntary programs. Another overview, Avant, et al. 2010, focuses rather on the relationships among governors and between governors and governed. This theoretical framework, together with related empirical chapters, provides important insight into the authority and outcomes of private regulation in various arenas of global governance. Finally, Hale and Held 2011 provides a large picture of transnational governance with a survey of numerous regulatory initiatives led by private actors.

• Avant, Deborah D., Martha Finnemore, and Susan K. Sell, eds. Who Governs the Globe? Cambridge Studies in International Relations 114. Cambridge, UK, and New York: Cambridge University Press, 2010.

  Symposium that aims to explain emergence and evolution of global governance arrangements by focusing on governors’ relationships with key constituencies and with one another. Although the analyses are not confined to private actors, this theoretical approach and empirical examples in various policy arenas together advance our understanding about private regulation.

• Büthe, Tim, ed. Special Issue: Private Regulation in the Global Economy. Business and Politics 12.3 (2010).

  Brings together in-depth case studies of transnational private regulation, including standards on carbon emissions, electrical and electronical products, kosher food, forestry, and rules of commercial arbitration. The analyses concern not only the rule making by private bodies, but also compliance with private regulation and relationship between public and private governance. Available online by subscription.

• Cutler, A. Claire, Virginia Haufler, and Tony Porter, eds. Private Authority and International Affairs. Albany: State University of New York Press, 1999.

  Pioneering study criticizes state-centric perspectives in international relations, and incorporates theoretical, empirical, and normative analyses on private norms and rules in different industries and issues of global economy. It argues that cooperation among firms can become government-like because of their perceived expertise, historical practice, or delegation by the state.

• Hale, Thomas, and David Held, eds. Handbook of Transnational Governance: Institutions and Innovations. Cambridge, and Malden, MA: Polity, 2011.

  Presents fifty-two global governance mechanisms different from intergovernmental institutions, placing private regulation in the broader context of transnational governance. By briefly documenting the emergence and evolution of various private schemes and evaluating their effectiveness and legitimacy, the handbook provides a large picture of private regulation in diverse issue areas.

• Hall, Rodney Bruce, and Thomas J. Biersteker, eds. The Emergence of Private Authority in Global Governance. Cambridge Studies in International Relations 85. New York: Cambridge University Press, 2002.

  Expansion of Cutler, et al. 1999 to study issue areas beyond the realm of international political economy by comparing three prototypes of private authority: market authority of business actors, moral authority of nongovernmental organizations or transnational religious networks, and illicit authority of mafias and mercenaries.

• Mattli, Walter, and Ngaire Woods, eds. The Politics of Global Regulation. Princeton, NJ: Princeton University Press, 2009.

  Develops a theory that explains that institutional openness and actors’ information, interests, and ideas together account for different arrangements of global regulation, including schemes set or implemented by private actors. Cases studies include regulation on sovereign debts, human rights, corporate production, shipping, and trade.

• Potoski, Matthew, and Aseem Prakash, eds. Voluntary Programs: A Club Theory Perspective. Cambridge, MA: MIT, 2009.

  Drawing upon theories of collective action and institutional design, the volume explores a deductive approach considering the trade-offs between private regulation’s stringency and its ability to attract participants. This framework is then applied to explain the efficacy of regulation programs varying across issue areas, sponsorship, and object of governance.

• Vogel, David. “Private Global Business Regulation.” Annual Review of Political Science 11.1 (2008): 261–282.

  DOI: 10.1146/annurev.polisci.11.053106.141706

  Comprehensive and critical review of the literature about “global civil regulation”—regulation governing the social and environmental impacts of firms and markets without state enforcement. The essay also identifies the shortcomings in this literature and suggests a research agenda. Available online by subscription.