Why Do Private Governance Organizations Not Converge? A Political-Institutional Analysis of Transnational Labor Standards Regulation

Abstract

Voluntary governance arrangements focusing on responsible business behaviour have proliferated over the past decades and in many sectors of industry different governance organizations now compete for business participation. This private governance competition has negative consequences for the effective functioning of these arrangements. In the literature up until now, optimism prevails on how a process of policy convergence between organizations may come about that would solve some of the problems that arise because of this competition. It is remarkable however that in one of the key industries referred to in this literature, the garments industry, convergence is virtually absent. This paper explains why this is so and suggests that next to three existing approaches to the evolution and possible convergence of private governance organizations, actually a fourth, pessimist type should be introduced, taking into account the evolution and perseverance of political difference between interest groups creating and supporting private governance arrangements.

Keywords: private governance, regulatory competition, convergence, globalization, labor standards, corporate social responsibility

JEL Classification: A13, F55