Private regulatory capture via harmonization: An analysis of global retailer regulatory intermediaries

Abstract

Studies using the Regulatory–Intermediary–Target (RIT) framework have examined a variety of forms of regulatory capture, including how targets capture intermediaries (T➔I) and how intermediaries capture regulators (I➔R). Little attention has been paid to why and how regulators themselves might engage in capture. Yet such a scenario is likely in transnational governance settings characterized by regulatory competition and conflict, as well as power differentials between different types of private regulators (non‐governmental organizations, multinational corporations, and business associations). This paper elucidates why and how a private regulator might capture another private regulator via a regulatory intermediary: R1➔I➔R2. Drawing on interview and archival data, I examine three industry‐driven regulatory intermediaries created to harmonize private labor codes of conduct and ethical audit processes. These are founded and governed by a small group of retail trade associations and global retailers who also fulfill the role of private regulators (R1). My analysis reveals that the creation of these intermediaries is driven by global retailers’ reliance on standardization, low transaction costs, and regulatory harmonization across all aspects of their operations. It further reveals how the harmonization platforms are designed to leverage global retailers’ market power and evolve from regulatory intermediaries into de facto regulators that supplant existing private regulators (R2), and thereby capture transnational governance of consumer product supply chains. The article concludes by discussing contributions, implications, and avenues for future research.

Captura ou não captura? Perspectivas analíticas no estudo de políticas regulatórias

“…Além disso, normalmente examina-se a relação entre duas partes apenas -regulador e regulado. Não obstante, pesquisas recentes apontam que a atividade regulatória, muitas vezes, conta com a ação de uma terceira parte, um intermediário (Abbott, Levi-Faur & Snidal, 2017;Marques, 2019).…”

“…Essa perspectiva de análise é apresentada pela literatura como o modelo regulator-intermediarytarget (RIT) e explora tanto a captura dos intermediários pelas empresas quanto a captura dos governos pelos intermediários e vice-versa (Abbott et al, 2017). Para essa corrente da literatura, existiria um nível de meta-governança nas relações comerciais e, nesse contexto, as estratégias de captura são ainda mais diversas, como a captura por harmonização -uma forma de convergência regulatória transnacional por ação de grandes empresas (Fransen, 2015;Marques, 2019).…”

Exploring Supplier Sustainability Audit Standards: Potential for and Barriers to Standardization

“…Given the noteworthy increase in the focus on SC sustainability and companies' general preference for a voluntary approach to sustainability self-regulation [27,71,72], it is not surprising that there has been a corresponding increase in audit activity, voluntarily commissioned by focal companies [1,[38][39][40]73,74]. The multiplicity of standards and assessments that confront supplier factories can lead to "audit fatigue" [27,38,40,41]. To gain an appreciation of the vast amount of supplier sustainability audit activity occurring, consider that an ethical trade service provider, Sedex, reported having conducted nearly 300,000 audits by 2018 [75].…”

“…Companies join such 'strategic alliances' [31][32][33] for a number of reasons, including to pool resources, increase the scope and reach of their SCM sustainability activities, share sustainability risk management efforts, reduce the redundancy and costs and correspondingly improve the efficiency of such activities [30,[34][35][36][37][38]. In the context of SSCM, such initiatives also point to the urgent need to redress supplier assessment fatigue, and specifically audit fatigue [27,36,[38][39][40][41]. Qualitative, empirical research on the practices and activities of these private strategic alliances for supply chain sustainability are lacking.…”

Global Value Chains and Intermediaries in Multi‐stakeholder Initiatives in Pakistan and India

“…At the same time, many giant retailers and brands have institutionalized sustainability concerns as part of the core business of marketing their products, managing business risks in their value chains (for example, the risk of child labour), and ensuring the sustainability of their supply of raw materials in an era dominated by increasing water shortages, flooding, declining soil quality and climate change (Alexander, 2019; Ponte, 2019). This upscaling of ‘sustainable commodity production and trade’, the proliferation of MSIs, and sustainability becoming a part of ‘business as usual’ for many giant retailers/brands, have led to an increase in demand for local‐level intermediary organizations that facilitate the implementation and upscaling of sustainable commodity production (Marques, 2019; Munir et al., 2018).…”