Voluntary business initiatives can reduce public pressure for regulating firm behaviour abroad

Abstract

Almost all regulatory policy stops at the national border. Thus, when conducting business abroad, the behaviour of firms is regulated by their host, not home country. Yet, international institutions have issued (non-binding) codes of conduct on social/environmental aspects of firm behaviour, and various high-income countries discuss how to improve extraterritorial firm behaviour – with high political contestation over the appropriate mix of state intervention and corporate self-regulation. Exploiting a unique national referendum on this issue in Switzerland, we investigate how these interact from a public opinion standpoint. Based on a nationally representative survey experiment (N=1564) we find that while baseline support for state intervention is high (approx. 60%), corporate self-regulation decreases such support. However, only credible voluntary business initiatives lead to substantial reductions. Our results speak to a broad policy debate in European countries and the EU on how to ensure compliance of firms with human rights and environmental standards.

Public Demand for Extraterritorial Environmental and Social Public Goods Provision

“…As indicated by Figure A.7 in the Online Appendix, comparing a measure of environmental concern from this survey to a high-quality address-based random sample of the Swiss population (Rudolph et al 2020a) yields a comparable distribution. 14 Survey respondents were exposed to a second experimental setting, which explored preferences on private vs. public regulation of global supply chains (Kolcava, Rudolph and Bernauer 2021). The order of exposure to the survey experimental conditions was randomized.…”

Policy framing, design and feedback can increase public support for costly food waste regulation

“…Building on this literature, our key argument is that policy framing [15][16][17][18][19][20] and design 12,17,[21][22][23] are essential factors through which policymakers and the private sector can influence public support for ambitious but costly food waste regulation. At the same time, we argue that potential feedback effects from voluntary food waste reduction initiatives (i.e., private sector policies) [24][25][26][27][28][29][30][31][32][33] do not crowd-out but potentially crowd-in public support for governmental food waste regulation.…”

“…It is of particular interest, therefore, to explore whether such voluntary industry initiatives crowd-out or crowd-in public demand for ambitious state-led food waste reduction regulation. While traditionally policy feedback research has focused on how earlier public policies influence latter public policies [44][45][46][47] , more recently research has started to also investigate how earlier voluntary industry initiatives (i.e., private sector policies) impact subsequent public policy-making 25,26,33 . An argument in this line of environmental policy literature 24,25,48,[26][27][28][29][30][31][32][33] is that firms use voluntary initiatives as a political strategy to prevent stricter governmental regulations, and that even unambitious voluntary measures can crowd-out public demand for governmental interventions.…”

“…While traditionally policy feedback research has focused on how earlier public policies influence latter public policies [44][45][46][47] , more recently research has started to also investigate how earlier voluntary industry initiatives (i.e., private sector policies) impact subsequent public policy-making 25,26,33 . An argument in this line of environmental policy literature 24,25,48,[26][27][28][29][30][31][32][33] is that firms use voluntary initiatives as a political strategy to prevent stricter governmental regulations, and that even unambitious voluntary measures can crowd-out public demand for governmental interventions. In contrast to the existing literature, we propose that voluntary industry food waste reduction initiatives do not crowd-out but rather crowd-in public support for governmental food waste regulation.…”

Global Markets, Corporate Assurances, and the Legitimacy of State Intervention: Perceptions of Distant Labor and Environmental Problems

“…Yet some studies show that private regulation can affect popular perceptions, at least in particular policy domains and when highlighted for respondents. In Switzerland, respondents became less supportive of government regulation of companies’ foreign activities when told that Swiss commodity producers had “voluntarily committed themselves to protect people and the environment” abroad, although only when this included oversight by “independent non-profit organizations” as a sign of credibility (Kolcava, Rudolph, and Bernauer 2021:A5). In the United States, support for environmental regulation (e.g., banning genetically modified foods or the sale of bluefin tuna) declined when respondents were told of firms’ voluntary efforts, especially when more firms participated but regardless of the depth of the voluntary action (Malhotra et al 2019).…”