I recently read Competition and convergence in private governance: a political-institutional analysis of transnational labor standards regulation, a thought provoking paper on how disparate private sectors efforts to improve labor conditions can lead to unintended negative consequences such as increased complexity of policy requirements, confusion among stakeholders and increased regulatory risks.
The author indicates that the garment industry has been trying to converge various, individual labor standards into one clear and effective standard in recent years. However, despite working towards this goal, little has been implemented. He then presents the following alternative approaches to the development of private governance in the context of establishing a common code within an industry:
- Economic-institutional approach views private governance as a response to a collective action problem. Private firms work in a collective manner or take collective action towards a program to deal with the identified problem.
- Idealistic-institutional approach is an optimistic approach that emphasizes process dynamics that may lead to desired collective outcomes. It is thought that an interactive process will bring social interaction benefits such as knowledge sharing and a stronger common understanding of each others' perspectives and needs.
- Political-institutional approach shapes private governance politically by groups with different and counter problem definitions, views on solutions and organizational agendas. Organizations built using this model are a product of political negotiations, their functioning is often based on the power among interest groups which can have political consequences.
Though each approach has its strengths and weaknesses the greater challenge may lie in the differing views stakeholder or industry groups have on the intent of private governance. While some may view it as an end in itself, others may see it as a stepping stone to regulation or a barrier to it. Gaining consensus amongst groups with such differing opinions can jeopardize the creation of effective outcomes. Furthermore, the control of the implementation and enforcement aspects of a code that must be determined can suffer from divergent political, practical and ideological agendas.
Addressing labor issues in manufacturing remains a challenge for the garment industry. Perhaps if industry players were more engaged in the code developed process some of the conditions noted above - differing political and ideological agendas, opposing endpoints, implementation and enforcement power - could be alleviated. While I believe these challenges can be overcome, and common codes and solutions created to have a positive impact, it will require true and sincere leadership from the players most affected - regardless of the approach taken.
Do you agree that engagement by the industry would be productive? Why / why not?