Parallel Trajectories: Business Regulatory Platforms Move Away from Unified Global Rules

The authors deal with globalization as a multifaceted phenomenon, being aware of its multiple histories, among which the contemporary episode stands out for the intensification of exchange processes with 'rapid formalization, codification, standardization and depersonalization of the rules of the game' (125).  Critical about linear predictions of trends leading to global convergence (Fukuyama, Friedman), they see the current blockages in the multi-lateral system as only one side of the coin, insofar as the 'stalling of the international system ... coevolves with an intensification of transnational cooperation among a broad range of actors.' (127)
 

Djelic, Marie-Laure and Quack, Sigrid (2018). Globalization and Business Regulation, Annual Review of Sociology 44: 123–143.

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Transnational business regulation encompasses a multiplicity of forms of cross-border regulation with an increasing density. Many of these are not legally binding, but shape economic behaviour through a variety of means such as incentives, socialization or peer pressure. The authors discuss a broad range of so-called “soft-law” technologies of regulation, including standards, guidelines, certification, and codes of conduct. While these forms of rule-making do not fit standard legal categories, they nevertheless contribute to an increasingly dense transnational (legal) ordering that also impacts on national regulatory frameworks.

The authors identify a number of distinct features of this expansion of a transnational 'law of rules': a multiplicity of private, civil and public actors is involved. Transnational rule-making is also often expert-driven. Still, the authors highlight the state does not disappear nor dissolve in the complex 'ecology of actors' but figures prominently, often facilitating processes dependent on pre-existing state rules and infrastructure. (131) In a multi-stakeholder approach, transnational platforms are conceptualized in which private and public actors engage with each other. Looking at transnational regulatory networks, expert networks ('epistemic communities') are a special case contributing background processes necessary for the construction of common transnational ‘rules of the game’. In terms of the nature of the rules, soft law has a flexibility that distinguishes it from codified law. In general, there is more of an appeal to comply than an enforceable obligation to do so, which blurs the line between regulators and regulatees. The literature considers this openness for compliance as a potential source of competition and even 'regulatory races', but also as a source of partial convergence of regulatory platforms and solutions. (129)

Despite the multiplicity and plurality of regulatory platforms and products that have emerged over time, the authors find evidence in the literature of common patterns of field structuration. While there is an increasing functional differentiation between different issue fields, they nevertheless remain connected through and embedded in a larger world polity. The authors identify three parallel trajectories of transnational governance that evolve and stabilize over time, driven by recurrent tensions between differentiation and isomorphic pressures. While monopolistic trajectories are shaped by a single, unchallenged rule-setting organization or by a successful standard-setter successfully outcompeting others, trajectories with coordinated plurality encompass different standard and rule-setters who champion their own sets of rules while recognizing each other in the pursuit of shared values and a common long-term project. Yet, the literature also points towards a third trajectory in which contentious competition leads to persisting fragmentation of rules. Across these different trajectories, the literature review furthermore suggests that there is very little evidence of global models and templates imposing themselves in a homogenous manner on different local contexts. In contrast, the authors see an increasing focus on issues of adaptability, contextualization, translation and creolization of global rules in local contexts.

Following this line of argument, the authors finally reflect on politicization, legitimacy and effectiveness of global business regulation. Compliance, they indicate, is widely discussed from a normative stance but still under-researched from an empirical angle. A sociological understanding of legitimacy may help to make sense of the increasing politicization of transnational governance, which generates pressure on expert-driven and technocratic fields, where actors 'not only struggle to impose their rule-setting authority but also need to obtain and sustain their epistemic legitimacy' (137). Expertise can be found on both sides, invoked to underwrite or challenge existing governance schemes. This review discerns increasing agreement in the literature that private regulation cannot be considered a substitute for or isolated from state authority. What rather matters is the interplay and combination of different types of regulation – a key issue for future research on transnational governance and global cooperation.

Djelic, Marie-Laure and Quack, Sigrid (2018). Globalization and Business Regulation, Annual Review of Sociology 44: 123–143.