The Efficacy of Private Voluntary Certification Schemes: A Governance Costs Approach

24 Pages Posted: 29 Oct 2014

See all articles by Thomas Dietz

Thomas Dietz

University of Muenster; University of Oxford, Institute of European and Comparative Law

Jennie Auffenberg

University of Bremen; Bremen International Graduate School of Social Sciences (BIGSSS)

Date Written: October 22, 2014

Abstract

What are the conditions under which private, voluntary certification programs like the Rainforest Alliance or Fairtrade can successfully promote environmental and social standards? We propose that the efficacy of a certification program depends on three variables: its sustainability standards, enforcement mechanisms and its market proliferation. The stricter the standards, the better the enforcement systems and the bigger the market share, the higher will be the factual impact of a particular certification program. We develop an index to systematically compare the strengths of norms and enforcement systems across a selection of important certification schemes in the global coffee industry and collect data about their market shares. We use a qualitative comparative analysis (QCA) to analyze these data. Our results show: certification schemes with strict standards and enforcement systems possess only insignificant market shares. Certification schemes with more significant market shares have either loose standards and/or ineffective enforcement systems. We develop a governance costs approach to explain these findings. Stricter standards and enforcement systems lead to an increase of production costs. The extents to which these costs can be shifted to the market are limited. Certification schemes therefore have incentives to reduce these costs in order to increase their market shares. The results confirm that the capacity of voluntary governance schemes is systematically restricted.

Keywords: corporate social responsibility, sustainability, global value chains, transnational regulation, qualitative comparative analysis

JEL Classification: J50, K33, L51, M14, Q20

Suggested Citation

Dietz, Thomas and Auffenberg, Jennie, The Efficacy of Private Voluntary Certification Schemes: A Governance Costs Approach (October 22, 2014). ZenTra Working Paper in Transnational Studies No. 39 / 2014, Available at SSRN: https://ssrn.com/abstract=2513254 or http://dx.doi.org/10.2139/ssrn.2513254

Thomas Dietz (Contact Author)

University of Muenster ( email )

Schlossplatz 2
Muenster, D-48149
Germany

University of Oxford, Institute of European and Comparative Law ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Jennie Auffenberg

University of Bremen ( email )

Universitaetsallee GW I
Bremen, D-28334
Germany

Bremen International Graduate School of Social Sciences (BIGSSS) ( email )

Wiener Strasse
FVG-West
Bremen, DE 28215
Germany

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