The governance triangle: Regulatory standards institutions and the shadow of the state

Since the 1980s, numerous non-state and public-private governance arrangements have been created to set and implement voluntary standards for global production in areas including worker rights, human rights, and environmental protection. We call this process “regulatory standard-setting” (RSS), as these standards are designed to address externalities, not to promote technical coordination. To be effective and legitimate regulators, RSS schemes require competencies including expertise, operational capacity, independence, and representativeness. Collaboration among business, civil society, and state actors is essential to assemble the full suite of competencies. Yet most RSS schemes involve a single actor type, and thus lack important competencies. We analyze this pattern in terms of distributive bargaining. Firms, nongovernmental organizations, and other actors pursue their special interests and values with differential power, based on their competencies. They bargain implicitly, through individual actions to control the regulatory space, and explicitly, in collaborative schemes. The results of this decentralized process may or may not serve the public interest. Yet states and international organizations can promote outcomes closer to the public interest by legitimating and supporting appropriate RSS schemes, and by reinforcing the bargaining power of weaker actors.