Creating Social Legitimacy through Private Governance? Peter Knorringa ISS, Erasmus University Rotterdam DSA workshop London 3 November 2012

Introduction Private Governance Social Legitimacy Where and when can private governance make a difference? Inherent limitations Bloated expectations Baby and bathwater?

Challenges in the private governance debate Need for empirically grounded re-politicization Neo-liberal Moralization of markets vs Inevitable Collaborative Global Governance Need to move beyond case studies, and beyond treating private governance in isolation... to identify patterns in where and when which combinations of private self-regulation, public regulation and civil society soft power can enhance pro-developmental outcomes Need to include the largest part of the global production system which operates out of the limelight of brand sensitive consumer goods

Social legitimacy profiles Value creation Brand protection

Social legitimacy profiles Value creation Brand protection Abide by the law Formal firms Informal firms

Major trends and dynamism in pyramid Short vs Longer-term time horizons Only firms in top layers can afford longer-term strategies Global value chains and subcontracting Interconnections to exploit cost differences are key to global production Norms and business-society expectations change over time Norm Life Cycle model to look at longer-term dynamics in social legitimacy expectations

Interim conclusion on social legitimacy in pyramid Incentives for investing in social legitimacy differ across the pyramid Bite of private governance in isolation pre- dominantly in top layers Key point: breakthroughs by selective & temporary hybrid private-public-civic configurations in all layers of pyramid

Standards as major tool Criticism on practices also in top of the pyramid how to get from ticking the boxes to real content: from accountability to commitment approach in top layer, and how to address widespread fraud in middle layers certification fatigue, too complicated procedures, too many different standards: GSCP for harmonisation, but up-scaling means social sub-ordinated to environmental and search for lower common denominator PPPs and MSIs for market transformation: norm internalization of higher social legitimacy profiles become normal, but how far do they reach?

Game changer: Rising Powers: states, firms, consumers Social legitimacy perceptions: similar or different? No convincing hypotheses on consumer preferences of New middle class Private governance: What is private in China? Interconnections public-private-civic governance may well follow distinct patterns in Rising Powers vs OECD On standards: from standard takers to standard makers? Standard convergence or divergence in new markets and with new competitors?

Conclusion Identify incentives for firms to invest in social legitimacy profiles Research private governance in its inter- connections with public & civic governance Look for patterns and include lower layers in pyramid Debate to become re-politicized and more empirically grounded, with major attention to Rising Power actors