Achilles' heels of governance: Critical capacity deficits and their role in governance failures

This article assesses the usefulness of conceptions of policy capacity for understanding policy and governance outcomes. In order to shed light on this issue, it revisits the concept of governance, derives a model of basic governance types and discusses their capacity pre‐requisites. A model of capacity is developed combining competences over three levels of activities with analysis of resource capabilities at each level. This analysis is then applied to the common modes of governance. While each mode requires all types of capacity if it is to match its theoretically optimal potential, most on‐the‐ground modes do not attain their highest potential. Moreover, each mode has a critical type of capacity which serves as its principle vulnerability; its “Achilles' heel.” Without high levels of the requisite capacity, the governance mode is unlikely to perform as expected. While some hybrid modes can serve to supplement or reinforce each other and bridge capacity gaps, other mixed forms may aggravate single mode issues. Switching between modes or adopting hybrid modes is, therefore, a non‐trivial issue in which considerations of capacity issues in general and Achilles' heel capacities in particular should be a central concern.     

Regulatory capabilities: A normative framework for assessing the distributional effects of regulation

This paper develops the normative concept of “regulatory capabilities.” It asserts that nobody – individuals, groups, or entities – should be subjected to a regulatory regime without some freedom to determine its nature. Self‐determination in this context means the ability to accept or reject a regulatory regime imposed by others or to develop viable alternative approaches. We use the term “regulatory capabilities” to capture the importance of enabling conditions for regulatory self‐determination. This is particularly important in the transnational context where private, hybrid public–private, and public actors compete for influence, shape domestic regulation, and, in doing so, limit the scope for democratic self‐governance. In short, this paper seeks to contribute to the general debate on the normative foundations of and the requisite conditions for transnational regulation and governance.     

Out of tune or well tempered? How competition agencies direct the orchestrating state

This article analyzes the impact competition agencies have on the orchestrating role of states in domestic private regulation. I argue that these agencies can significantly affect interactions in the governance triangle through the way they apply a “logic of the market” to evaluate agreements between firms. The regulatory framework of European Union competition law has increasingly constrained the ability of firms to take into account broader interests when making agreements to foster social objectives. This logic of the market clashes with the ever‐increasing emphasis governments place on enabling firms to enter into such agreements. I analyze this tension through a case study of a pact of Dutch retailers to collectively introduce higher animal welfare standards for poultry. Using regulatory network analysis I trace the governance interactions between the governance triangle on the one hand (government, non‐governmental organizations, and firms), and the Dutch competition authority, Autoriteit Consument en Markt (ACM) and the European Commission on the other hand. Attempts by the Dutch government to instruct the ACM to be more lenient toward private regulation were blocked twice by the European Commission. As a result, the Dutch government abandoned private regulation as the preferred mode and proposed a bottom‐up process that would generate public regulation as a way to avoid conflict with competition policy. I argue that paradoxically enough the intervention of these non‐majoritarian competition agencies against the “will” of the governance triangle has potentially increased the effectiveness and legitimacy of orchestration processes.     

Globalization and Governance Capacity: Explaining Divergence in National Forest Programs as Instances of “Next‐Generation” Regulation in Canada and Europe

New policy initiatives are increasingly embedded in novel governance strategies. These new modes of governance differ from existing policy mixes in that they are specifically designed to reduce the number of instances of counterproductive policy instrument use; to function effectively and meet public policy goals in an era of decreased national state capacity and autonomy; and rely much more heavily than existing instrument mixes have done on the involvement of private actors in both policy formulation and implementation. These instances of contemporary policy design require careful analysis in order to understand where and when such designs may be adopted and, more importantly, prove effective. This article examines efforts made in Europe and Canada to develop “next‐generation” forest policy strategies and finds considerable divergence in the new regulatory processes put into place in different countries. Following Knill and Lehmkuhl, this divergence is attributed to changing patterns of domestic actor capacities in the face of weak international regimes.     

Top‐Down Self‐Organization: State Logics,Substitutional Delegation,and Private Governance in Russia

This study investigates the counterintuitive emergence of self‐regulation in the Russian construction sector. Despite its proclivity for centralizing political authority, the government acted as the catalyst for the delegation of regulatory powers to private industry groups. The article argues that a factor little considered in extant literature—namely, a weak and corrupt bureaucracy—is key to explaining why the normally control‐oriented executive branch began to promote private governance despite industry's preference for continued state regulation. The article's signal contribution is to theoretically explain and empirically demonstrate how a government's prior inability to establish intrastate control over an ineffective and bribable public bureaucracy creates incentives for political authorities to search for alternative means for policy implementation outside of existing state agencies. These findings are important for understanding the impetus and logic behind particular regulatory shifts in countries where the state apparatus is both deficient and corrupt.     

Fragmented or cohesive transnational private regulation of sustainability standards? A comparative study

Literature on private regulation recognizes the proliferation of competing regulatory organizations and approaches in various industries. Studies analyzing why fragmentation arises so far focus on single‐case studies, the exploration of single variables, or variation in types of fragmentation. This article analyzes why in certain industries and for certain issues regulatory organizations proliferate, while in others a single regulatory organization emerges which covers the entire industry. Through a comparative case study of private regulation of sustainability standards in the forestry, clothing, IT‐electronics, and chemicals industries, we show how a combination of low industrial concentration, civil society involvement in governance, and stringent standards of a first‐moving regulator offer the strongest explanation for a fragmented private regulatory field, while high industrial concentration, business‐driven governance, and lenient standards of a first‐moving regulator lead to cohesive regulation.     

National cyber crisis management: Different European approaches

Cyber crises, as new forms of transboundary crises, pose serious risks to societies. This article investigates how different models of public–private partnerships shape cyber crisis management in four European countries: the Netherlands, Denmark, Estonia, and the Czech Republic. Using Provan and Kenis's modes of network governance, an initial taxonomy of cyber governance structures is provided. The Netherlands have created a participant‐governed network, characterized by trust and equality. The Czech and Estonian models resemble a network administrative organization, with an enforcement role for their national cyber security centers. Denmark has adopted a lead‐agency model. The article concludes that countries face two binary choices when organizing cyber defense and crisis management. First, national computer emergency response teams/computer security incident response teams can be embedded inside or outside the intelligence community. Second, cyber capacity can be centralized in one unit or spread across different sectors. These decisions fundamentally shape information‐sharing arrangements and potential roles during cyber crises.     

Counting on codes: An examination of transnational codes as a regulatory governance mechanism for nanotechnologies

This article examines the rise of nanotechnology‐specific codes of conduct (nano‐codes) as a private governance mechanism to manage potential risks and promote the technology. It examines their effectiveness as well as their legitimacy as regulatory instruments in the public domain. The study first maps the rise of voluntary nano‐codes and the roles played by different actors. Focusing on five specific nano‐codes, the article then discusses their adequacy in terms of scientific uncertainty, gaps in existing regulatory regimes, and broader societal concerns. It concludes that these voluntary nano‐codes have weaknesses including a lack of explicit standards on which to base independent monitoring, as well as no sanctions for poor compliance. At the same time it also highlights the potential power of these governance mechanisms under conditions of uncertainty and co‐regulation with government. It is likely that nano‐codes will become the “first cut” of a new governance regime for nanotechnologies.     

Can non‐state global governance be legitimate? An analytical framework

In the absence of effective national and intergovernmental regulation to ameliorate global environmental and social problems, “private” alternatives have proliferated, including self‐regulation, corporate social responsibility, and public–private partnerships. Of the alternatives, “non‐state market driven” (NSMD) governance systems deserve greater attention because they offer the strongest regulation and potential to socially embed global markets. NSMD systems encourage compliance by recognizing and tracking, along the market’s supply chain, responsibly produced goods and services. They aim to establish “political legitimacy” whereby firms, social actors, and stakeholders are united into a community that accepts “shared rule as appropriate and justified.” Drawing inductively on evidence from a range of NSMD systems, and deductively on theories of institutions and learning, we develop an analytical framework and a preliminary set of causal propositions to explicate whether and how political legitimacy might be achieved. The framework corrects the existing literature’s inattention to the conditioning effects of global social structure, and its tendency to treat actor evaluations of NSMD systems as static and strategic. It identifies a three‐phase process through which NSMD systems might gain political legitimacy. It posits that a “logic of consequences” alone cannot explain actor evaluations: the explanation requires greater reference to a “logic of appropriateness” as systems progress through the phases. The framework aims to guide future empirical work to assess the potential of NSMD systems to socially embed global markets.     

Why Do Foundations Follow the Law? Evidence from Adoption of the Uniform Prudent Management of Institutional Funds Act

Employing a large panel of over one million firm‐years, I find evidence consistent with widespread compliance with law among U.S. private foundations despite the absence of many formal deterrence mechanisms. The research design exploits rolling state adoption of the Uniform Prudent Management of Institutional Funds Act, which lifted some existing limits on firm spending for a fraction of firms within each state. This allows the use of triple‐difference estimates that control for changes in local norms and economic conditions. UPMIFA increases firm spending, on average, implying that firms were complying with the pre‐UPMIFA regime. Interacting the triple‐difference factors with other predictors of compliance reveals no correlation between compliance and enforcement intensity, but some evidence that compliance is correlated with firm culture and reliance on accountants. These findings have potentially important implications for the governance of charitable organizations, and may speak more generally to drivers of compliance among other organizational forms.     

Regulating the Internet infrastructure: A comparative appraisal of the legitimacy of ICANN,ITU, and the WSIS

How to generate legitimate forms of governance beyond the nation state is often considered a central question in contemporary world politics. To proceed in theory‐building, scholars need to systematically assign the theory‐driven assumptions on legitimate forms of governance beyond the nation state with the various, already observable, forms of global governance. This article aims to conduct a comparative appraisal of the legitimatory quality of different patterns of governance by applying a framework of indicators for their assessment. The indicators are selected from the scholarly debate within International Relations on the legitimacy of global governance arrangements and structured by a multidimensional concept of legitimacy (input, throughput, and output dimensions). This framework is then applied to international, transnational, and private forms of global governance in the field of Internet regulation in order to show how each of them tries to produce and maintain legitimacy, which strategies it applies, and in how it interacts with its stakeholders.     

Can private governance boost public policy? Insights from public–private governance interactions in the fisheries and electricity sectors

Based on the inductive analysis of two parallel cases of private environmental governance – private, market-driven fisheries governance and private, market-driven governance for electricity decarbonization – this paper uncovers a trigger for positive public policy spillovers from private environmental governance. It identifies circumstances that prompt groups of business actors working as private regulators to also take on a role as public policy advocates and supporters, revealing a potential for private governance initiatives that are targeted at a particular environmental problem to serve as a bolster for the public regulatory governance of that problem as well. Both private governance cases at the basis of this analysis feature groups of business actors seeking to meet voluntary sustainability goals through the tools of private governance (specifically, through flexing buyer power and private authority in an effort to reform environmentally problematic practices among particular groups of suppliers). In both cases, the business's inability to attain private sustainability goals though private governance means alone has given rise to business demand for facilitative public environmental policy and regulation. The analysis presented in this paper thus points to the occurrence of a particular and intriguing pattern of complementarity between private authority and public policy – one where public policy is called on to fill gaps left by private environmental governance and authority. And it identifies key conditions for such private-governance-driven recentering of public policy to occur, namely the presence of private supply chain greening goals and commitments that are economically, reputationally, and/or competitively critical for businesses to attain, combined with shortfalls in the capacity of businesses' private authority to bring about such attainment. The two case analysis further suggests the importance of ENGOs in identifying and activating some of the opportunities for leveraging shortfalls in private environmental governance to the advantage of public environmental policy and regulation.     

The Evolution of a Global Labor Governance Regime

During the last decade, the approach by businesses and governments toward labor and social issues at the global level has fundamentally changed. Industrial relations are rapidly internationalizing by developing new actors and forms of governance to deal with the regulation of labor. This article looks at the evolution of self‐regulatory standards in the global labor governance debate. Key is that notwithstanding problems with the lacking legal framework of global regulation and enforceability, patterns of local self‐regulation, norm‐setting, and international codes lead not only to higher expectations of the behavior of transnationally operating firms but also to an indirect pattern of regulation. The article argues that particularly the adoption of the core labor standards by the International Labour Organization (ILO) and the setup of the Global Compact by the UN serve as points of convergence. A plethora of voluntarist initiatives that converge over time toward a shared understanding of labor standards is part of the transformation of global labor governance institutions.     

Gorillas in the closet? Public and private actors in the enforcement of transnational private regulation

This paper examines to what extent the background presence of state regulatory capacity – at times referred to as the “regulatory gorilla in the closet” – is a necessary precondition for the effective enforcement of transnational private regulation. By drawing on regulatory regimes in the areas of advertising and food safety, it identifies conditions under which (the potential of) public regulatory intervention can bolster the capacity of private actors to enforce transnational private regulation. These involve the overlap between norms, objectives, and interests of public and private regulation; the institutional design of regulatory enforcement; compliance with due process standards; and information management and data sharing. The paper argues that while public intervention remains important for the effective enforcement of transnational private regulation, governmental actors – both national and international – should create the necessary preconditions to strengthen private regulatory enforcement, as it can also enhance their own regulatory capacity, in particular, in transnational contexts.     

Governance conditions,roles and capacity‐building needs in the rebel‐held areas of Southern Sudan

An assessment is made of the state of sustainable human development (SHD) and the institutions of governance that are in the process of being established in the rebel‐held areas of Southern Sudan. The development roles of the main governance actors—government, civil society and the private sector—are examined and capacity‐building needs are described. The importance of good leadership, institutionalised partnerships between government and national and international NGOs, and capacity building for transparency and accountability is stressed. Most pointedly, the risks of allowing governance practices, suited to the management of a liberation struggle, to spill over into the civil administration of a peaceful state are emphasised. The conditions necessary for the institutionalisation of sound governance practices are discussed. Of particular importance are a genuine desire on the part of the leadership to establish such conditions and a willingness on the part of external donors to address issues of accountability and transparency openly in collaboration with the leadership. The data are also suggestive of broad development strategies that address the bases of SHD and empowerment. These broad strategies are designed to improve the very low levels of health and education that exist in the Southern Sudan, and thereby empower people to engage in economic activity and in governance decision‐making. Rehabilitation and maintenance of the physical infrastructure underlies all development activity. The findings highlight the governance difficulties faced by war‐torn societies, the challenges facing post‐crisis administrations and (confirming Caplan 2002) the need for such administrations to possess sufficient executive authority to be able to perform effectively in situations of ‘pre‐state, post‐imperial chaos’. Most critical of all, however, is the genuine interest of the major powers in doing more than—when it suits them—extinguishing the flames of conflict or establishing acquiescent political regimes following the military pacification of ‘rogue’ or anarchic states. Effective post‐crisis administration and development calls for much greater commitment of resources from the major powers than has been forthcoming to date, reflecting a belief among them that equitable and sustainable global development is the preferred route to the prevention of such crises. Copyright © 2003 John Wiley & Sons, Ltd.     

Parallel Systems and Human Resource Management in India's Public Health Services: A View from the Front Lines

There is building evidence in India that the delivery of health services suffers both from an actual shortfall in trained health professionals and from unsatisfactory results of existing service providers working in the public and private sectors. This study focuses on the public sector and examines de facto institutional and governance arrangements that may give rise to well‐documented provider behaviors such as absenteeism that can adversely affect service delivery processes and outcomes. We analyze four human resource management (HRM) subsystems: postings, transfers, promotions and disciplinary practices from the perspective of front‐line workers—physicians working in rural healthcare facilities operated by two state governments. We sampled physicians in one “post‐reform” state that has instituted HRM reforms and one “pre‐reform” state that has not. The findings are based on both quantitative and qualitative measurements. The results show that formal rules are undermined by a parallel modus operandi in which desirable posts are often determined by political connections and side payments. The evidence suggests an institutional environment in which formal rules of accountability are trumped by a parallel set of accountabilities. These systems appear so entrenched that reforms have borne no significant effect. Copyright © 2015 John Wiley & Sons, Ltd.     

The politics of resonance: Transnational sustainability governance in Argentina

Why do private governance initiatives trigger greater participation in one country than another? This article examines the domestic dimension of transnational regulation through a case study of private sustainability governance in Argentina. Drawing from theories of contentious politics, the argument poses that the resonance of transnational private governance is shaped by the semantic compatibility of “incoming” sustainability programs against national political culture. Analyzing the limited participation of Argentine actors in contemporary sustainability initiatives, the article claims that the validity and relevance of sustainability programs is affected by three dimensions of national political culture accentuated over the last decade: a politicized model of state‐society relations, the low visibility of environmental matters, and a widespread anti‐corporate culture. By examining the ideational fundamentals of the “politics of resonance” in Argentina, the article makes a relevant and original contribution to transnational regulation literature, highlighting the need for theoretical accounts and empirical analyses that address domestic and cultural variables as fundamental pieces in transnational norm diffusion and effectiveness.     

The effectiveness of NGO self‐regulation: theory and evidence from Africa

Non‐governmental organizations (NGOs) play an increasingly important role in public service provision and policy making in sub‐Saharan Africa, stimulating demand for new forms of regulatory oversight. In response, a number of initiatives in NGO self‐regulation have emerged. Using cross‐national data on 20 African countries, the article shows that self‐regulation in Africa falls into three types: national‐level guilds, NGO‐led clubs and voluntary codes of conduct. Each displays significant weaknesses from a regulatory policy perspective. National guilds have a broad scope, but require high administrative oversight capacity on the part of NGOs. Voluntary clubs have stronger standards but typically have much weaker coverage. Voluntary codes are the most common form of self‐regulation, but have the weakest regulatory strength. This article argues that the weakness of current attempts to improve the accountability and regulatory environment of NGOs stems in part from a mismatch between the goals of regulation and the institutional incentives embedded in the structure of most self‐regulatory regimes. The article uses the logic of collective action to illustrate the nature of this mismatch and the tradeoffs between the potential breadth and strength of various forms of NGO self‐regulation using three detailed case studies. Copyright © 2008 John Wiley & Sons, Ltd.     

Assessing the institutionalization of private sustainability governance in a changing coffee sector

The potential of transnational private governance initiatives to constitute effective alternatives to state‐led regulation of global value chains rests on their ability to scale up and become institutionalized in a given sector. This study examines whether such institutionalization has occurred in the coffee sector, the commodity with the most widespread adoption of certified products and over 30 years’ experience of private governance, and tests hypotheses on facilitating and inhibiting conditions. It finds that while norm generation around responsible supply chain management and the organizational institutionalization of standard‐setting bodies is well advanced, the practice of internalizing social and environmental externalities through the routinized production and purchase of higher priced certified goods continues to be questioned by industry actors. Indeed, conditions that favored normative and organizational institutionalization, such as high levels of industry concentration, product differentiation, and deliberative interaction, are shown to represent barriers to the practice‐oriented institutionalization of market‐driven regulatory governance.     

Adversarialism versus legalism: Juridification and litigation in corporate governance reform

Recent reforms of corporate governance law and related litigation rules in the US and in Germany indicate that reports of the spread of adversarial legalism are greatly exaggerated. Politics and legislation in the US since the mid‐1990s have turned quite decisively against shareholder litigation even as corporate governance and securities law reforms have expanded the role and scope of the regulatory state. Germany's extraordinary expansion of financial and corporate governance regulation since the early 1990s exemplifies juridification. Although these reforms included some liberalization of shareholder litigation rules, the changes reflected skepticism towards private litigation and imposed new constraints on the most prevalent forms of shareholder suits. Marketization of economic relations and the era of finance capitalism have produced far more legalism than adversarialism, more regulation than judicialization, and more ex ante transparency rules than ex post litigation remedies.