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Abstract: Setting standards for business conduct in an era of globalization has become a hotly contested area of international governance. Since the late 1980s, critics have called for controls to limit the adverse effect of business operations in numerous issue areas –- including worker rights, human rights, environmental protection and corruption -– often with broad public support. Yet business has generally resisted additional government regulation. One result of this controversy has been an upsurge in innovative forms of standards governance distinct from traditional state regulation. As detailed in this paper, these include international organization norms and procedures that directly target business firms rather than states; firm and industry self-regulatory schemes; and a range of voluntary multi-stakeholder standards institutions.
This paper forms part of a larger study of these innovative arrangements. The overall goal of our study is to determine whether, and under what conditions, voluntary private, public and multi-stakeholder standards schemes can be effective substitutes for “hard” law and mandatory state regulation of business practices. Here we lay the groundwork for that assessment.
We first analyze the setting in which standards issues unfold, emphasizing the incentive structures that influence firm behavior and the forms of business organization that voluntary standards must address. We then analyze the governance process involved in setting and applying transnational business standards. In the empirical section of the paper, we analyze several prominent standards schemes.
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