Transnational Multi‐Stakeholder Standardization: Organizing Fragile Non‐State Authority

Citation

Sethi, S.P. (2012), "Transnational Multi‐Stakeholder Standardization: Organizing Fragile Non‐State Authority", Corporate Governance, Vol. 12 No. 5, pp. 708-709. https://doi.org/10.1108/14720701211275622

In their book, Transnational Multi‐Stakeholder Standardization: Organizing Fragile Non‐State Authority, the authors, Professors Kristina Tamm Hallstrom and Magnus Bostrom, address an important issue of emerging societal concern, i.e. to bridge the gap between the rise of multinational corporations and the relative weakness of international governance arrangements to provide a semblance of oversight that would protect the commons and minimizes negative externalities inflicted on society by profit making commercial organizations. The concept is that of voluntary self‐regulation wherein different stakeholders, whether representing constituencies of people, e.g. unions, employers; or constituencies of societal concerns, e.g. protection of human rights, prevention of environmental degradation.

The last two decades have seen a plethora of initiatives with varying level of sponsorship, vested interests, and perceived goals of enhanced common good. These voluntary codes of conduct could be universal in character, e.g. United Nations Global Compact, industry‐based initiatives, e.g. Extractive Industry Transparency Initiative (EITI), ICTI Care (toy industry), or cross‐industry codes that aim to set standards and certify corporate compliance with those standards.

The Hallstrom and Bostrom book addresses the third variant of voluntary self‐regulation, i.e. creation and operation of standard setting organizations. The discussion in the book is centered on three such organizations, i.e. Forest Stewardship Council, Marine Stewardship Council, and, ISO 26000, a recently enacted standard for corporate social responsibility and sponsored by the International Organization for Standardization (ISO).

The authors provide an elegant analytical framework to explain the process by which non‐state, i.e. private organizations, can create universal standards and obligate members to adhere to those standards. The two dimensions of the framework pertain to power and legitimacy and how they impact authority for “standard setting” and implementation. The authors demonstrate extensive knowledge of relevant literature and its relevance to their framework.

This discussion is followed by three short chapters that proffer examples of the applicability of the analytical framework for examining the functioning of standard setting organizations. These are: ISO 26000 and its formative process during the years 2002‐2004, Forest Stewardship Council, and Marine Stewardship Council. These chapters are quite short and bare‐bone descriptive.

The last four chapters provide the authors' analysis as to the process by which the standard setting process was developed, put to practice and implemented. These chapters deal with issues of: Actors and Capabilities in the Regulatory Space; Dynamics of Preferences of Participation; Power and Actor Categories; Legitimacy in the Making, and, Fragile Non‐State Authority: The Long and Winding Road to Legitimate Power.

These chapters analyze various aspects of legitimacy, authority, and power and how they give shape to the operations of the three entities, i.e. ISO 26000, Forest Stewardship Council and Marine Stewardship Council. The relevant issues are dealt thoroughly, incisively and in considerable detail. However, they suffer from two flaws:

1. 1.

   A great deal of time and space is allocated to a discourse of how events transpired and the views (from interviews) of various participants. While these discussions are often engaging, and quite relevant, they seem to have been overused and thus become more of a story telling then providing a context for the discussion.

2. 2.

   The integration of their analysis in these chapters ‐ in the context of the actual cases presented in the earlier chapters – could use greater coherence. A better approach would be to integrate parts of these chapters into the earlier chapters where a framework was presented while the remaining materials could be absorbed in the chapters where actual cases were discussed.

Finally, I also wish the authors had been bold enough to offer their conclusions as to the extent the two well established standard setting systems, e.g. Forest Stewardship Council and Marine Stewardship Council, have been effective in achieving their desired objectives, where the short‐falls have occurred, the reasons for those short‐falls, and they might be improved in the future. Clearly, they have demonstrated their deep understanding of the issues and were in a good position to provide some practical advice.

This issue is even more important in the case of ISO 26000, which is, by its very nature, quite difficult to organize in the form of standards. It is for this reason that the organization has refused to create any certification scheme, or qualifying standard for measuring compliance. In this area, it would be quite useful to examine the large gap that currently pervades most such universal or industry‐wide codes of conduct, e.g. the United Nations Global Compact and Kimberley Process Certification Scheme.