Transnational Private Authority and Corporate Governance

Abstract

Global economic governance does not only consist of traditional intergovernmental regulation in form of international organizations and regimes such as the World Bank, the International Monetary Fund (IMF) or the World Trade Organization (WTO). A radical departure from the conventional inter-governmental model lies in the evolution of ‘private authority in international affairs’ (Cutler et al. 1999a). Here, firms (and other non-state actors) cooperate transnationally to establish rules and standards of global commerce, without directly involving governments at all. International or, more appropriately, transnational private authority may be empirically identified based on three criteria: ‘First, those subject to the rules and decisions being made by private sector actors must accept them as legitimate, as the representations of experts and those “in authority”. Second, there should exist a high degree of compliance with the rules and decisions. Third, the private sector must be empowered either explicitly or implicitly [emphasis in original] by governments with the right to make decisions for others’ (Cutler et al 1999b: 19).

This contribution has been written in the context of the research proposal ‘The Transnational Political Economy of Corporate Governance Regulation’ (NWO Programme ‘Shifts in Governance’). 1 am heavily indebted to my colleages Henk Overbeek and Bastiaan van Apeldoorn for numerous contributions. An earlier version was presented at the ‘Global Economic Governance’, conference of the section for International Relations of the German Political Science Association (DVPW) in Arnoldshain, 10-12 April, 2003. I am grateful to the participants for their helpful comments, especially to Stefan Schirm.