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Assurance Services as a Substitute for Law in Global Commerce

50 Pages Posted: 3 Apr 2007  

Margaret M. Blair

Vanderbilt University - Law School

Cynthia A. Williams

York University - Osgoode Hall Law School

Li-Wen Lin

University of British Columbia (UBC), Faculty of Law

Date Written: March 28, 2007

Abstract

In this article we examine the rapid emergence and expansion of a private-sector compliance and enforcement infrastructure that we believe may increasingly be providing a substitute for public and legal regulatory infrastructure in global commerce, especially in developing countries where rule of law is weak and court systems are absent or inadequate. This infrastructure is provided by a proliferation of performance codes and standards, and a rapidly-growing global army of privately-trained and authorized inspectors and certifiers that we call the "third-party assurance industry." The growth in the third party assurance business has been phenomenal in the last decade. The business first developed to facilitate making and carrying out private contracts, but in recent years, assurance services are being deployed for purposes that are more appropriately seen as regulatory in nature. Third-party assurance may thus be providing a new institutional structure through which private commercial exchange is being harnessed and regulated for essentially public purposes.

Keywords: Business norms, certification, contracts, contract enforcement, corporate social responsibility, global governance, globalization, incomplete contracts, ISO, ISO 9000, law and development, norms transmission, outsourcing, rule of law, supply chains, theory of the firm, third-party assurance

JEL Classification: A13, F15, F20, F23, G30, K22, K32, L14, L22, M14

Suggested Citation

Blair, Margaret M. and Williams, Cynthia A. and Lin, Li-Wen, Assurance Services as a Substitute for Law in Global Commerce (March 28, 2007). Vanderbilt Law and Economics Research Paper No. 07-06. Available at SSRN: https://ssrn.com/abstract=976895 or http://dx.doi.org/10.2139/ssrn.976895

Margaret M. Blair (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States
615-322-6087 (Phone)

Cynthia A. Williams

York University - Osgoode Hall Law School ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
416-736-5545 (Phone)

Li-Wen Lin

University of British Columbia (UBC), Faculty of Law ( email )

1822 East Mall
Vancouver, British Columbia V6T 1Z1
Canada

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