Transnational Governance PDF
Transnational Governance PDF
Transnational Governance PDF
BAS55110.1177/00076503124626
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Business & Society
2016,Vol. 55(1) 90129
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DOI: 10.1177/0007650312462666
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Transnational Governance,
Deliberative Democracy,
and the Legitimacy of
ISO 26000: Analyzing
the Case of a Global
Multistakeholder Process
Abstract
Globalization arguably generated a governance gap that is being filled by
transnational rule-making involving private actors among others. The democratic legitimacy of such new forms of governance beyond nation states is
sometimes questioned. Apart from nation-centered democracies, such governance cannot build, for example, on representation and voting procedures
to convey legitimacy to the generated rules. Instead, alternative elements of
democracy such as deliberation and inclusion require discussion to assess
new instruments of governance. The recently published standard ISO 26000
is an interesting example of transnational governance. ISO 26000 was developed in a lengthy multiorganizational process for the purpose of giving guidance on the social responsibility of organizations. By assessing the specific
case of ISO 26000, this study sheds light on the question of how legitimacy
beyond nation-state democracy is ensured or constricted. Centering on the
idea of deliberate democracy and democratic legitimacy, the study offers
in-depth insights on the normative legitimacy of the development process of
1
Corresponding Author:
Rdiger Hahn, Universitt Hohenheim, Faculty of Business, Economics and Social Sciences,
70599 Stuttgart, Germany.
Email: [email protected]
The article was accepted during the editorship of Duane Windsor.
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ISO 26000. Positioned on the interface of business studies and public policy,
this article contributes to the academic literature on transnational governance and on the role of multistakeholder processes in shaping the role of
business in society.
Keywords
standardization, transnational governance, organizational responsibility, ISO
26000, legitimacy, deliberative democracy
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by transnational rule-making and institution-building as the number and proliferation of different kinds of standards demonstrates (Gilbert, Rasche, &
Waddock, 2011). Such standards are often regarded as new governing mechanisms involving private, civil society, and state actors and they play an
important role in international business relations to overcome the institutional
barriers of single nation states (Palazzo & Scherer, 2006; Wieland, 2007).
Other than laws and regulations, the resulting norms and guidance documents
are usually voluntary in use, not legally binding, and not enforceable (Fransen
& Kolk, 2007). Many scholars share a concern that new modes of governance
do not always sit easily within traditional conceptions of (democratic) legitimacy and accountability (Klijn & Skelcher, 2007; Quack, 2010; Srensen &
Torfing, 2005; Zrn, 2004). Some even suggest that there might be a severe
mismatch between new forms of governance on one hand and traditional
representative institutions on the other (Skelcher, 2007). Such critical views
point to the managerial relevance of the present topic: Organizations (and
especially private businesses) are increasingly expected to actively participate in shaping the rules of society. However, it is sometimes feared that
transnational governance might threaten traditional representative democracy since it would undermine the distinction between state and society (e.g.,
Srensen & Torfing, 2007). Therefore, the development process of ISO
26000 proves to be an interesting object of study since it not only deals with
an intensely debated field in international business (namely, the SR of organizations). Its mode of finding consensus in a multiorganizational, multistakeholder process is particularly suitable for a legitimacy assessment in
light of the previously highlighted issues of transnational governance.
Since traditional elements conveying legitimacy (such as elections, democratic representations, and public control) do not apply to the novel elements
of governance in question, new ways of establishing democratic procedures
granting legitimacy are being discussed. Within this context, this study
reverts to the concept of deliberative democracy (Dryzek, 2000, 2001;
Habermas, 1994, 1996, 2003) that focuses on open and inclusive deliberation
instead of democratic representation and elections. Based on this thinking,
the general conditions as well as the open and more subtle elements of deliberation in the development process of ISO 26000 are analyzed in this article.
The aim is to shed light on the question of how legitimacy beyond nationstate democracy is ensured or constricted. The analysis of the unique ISO
26000 development process thus contributes to the scholarly conversation on
transnational governance and on the standardization of SR. It provides
insights on the prospects and limitations of using (and analyzing) elements of
deliberative democracy and normative legitimacy for standardization
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Research Background
The ISO 26000s lengthy and intensive development process comprising
several stages of drafting and consensus-finding among different groups of
society can be regarded as a prominent example of transnational governance
in a field that has seen much discussion and little consensus so far (Crane,
Matten, et al., 2008). Former research in managerial and in political science
has dealt with adjacent issues within the realm of transnational governance.
A robust stream of research focuses on assessing the functionality and effectiveness of decentralized and nonbinding modes of self- or soft regulation on
the level of single actors, industries, or technologies by means of conceptual
and empirical research (e.g., Fransen & Kolk, 2007; King & Lennox, 2000;
Koutalakis, Buzogany, & Brzel, 2010; Lyon & Maxwell, 2001). In a global
business context, the ISO and its numerous national standardization organizations can be characterized as the most important institution(s) for voluntary technical and nontechnical standards. Thus it is not surprising that
different ISO standards have gained extensive recognition within managerial
research (e.g., Beck & Walgenbach, 2005; King, Lennox, & Teerlak, 2005;
Tamm Hallstrm, 2004; Terlaak, 2007). Brzel and Risse (2010) indicate
that various forms of transnational governance can indeed potentially replace
hierarchical governance. However,
like governments, whose coercive capacity is reinforced by their
legitimacy, non-state market driven systems require legitimacy to justify policy development . . . Unlike sovereign states, which by definition possess legitimate authority, . . . non-state market driven systems
must actively achieve political legitimacy. (Bernstein & Cashore,
2007, p. 351)
This article specifically aims at fostering the understanding of the (potential)
legitimacy of such forms of international standardization on a normative
level. To achieve this goal, the specific case of ISO 26000 is discussed.
Such aspects of legitimacy are indeed an intensely discussed field in contemporary research (see Ansell, 2008; Quack, 2010). Wolf (2006), Risse
(2006), or Bernstein and Cashore (2007), for example, explored aspects of
legitimacy within transnational governance with a distinct focus on political
science. Other than the present study, however, previous scholarship concentrates on deriving an initial analytical framework rooted in a political
science background. Empirical research on different transnational governance has emerged only recently so that Meidinger (2008) as well as
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Sundstrm, Furusten, and Soneryd (2010) still identify a shortage of empirical studies on participation and legitimacy. The present article complements
this stream of research by means of an in-depth analysis based on a single
case study building on concepts from different scholarly disciplines. It puts
a special emphasis on political science, social philosophy, and jurisprudence
by applying these insights to the field of transnational governance and international business.
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democracy. Barker (2007), for example, argues that deliberative democracy [. . . has] been developed in part to remedy the deficiencies of democracy (p. 25) and he adds that
there is a difference between a government that stands above and
beyond subjects, and a process of rule deliberation and rule-making in
which all those affected by the rules are involved. Simple representative government does not provide the latter. Democracy as a feature of
politics does. (p. 27)
The same applies to transnational governance: International norm setters
such as the ISO rely on voluntary involvement in norm development processes and on voluntary adherence to the norms. Consequentially, they build
on deliberative processes to underpin the authority of their products
(Higgins & Tamm Halmstrm, 2009, p. 995) or put differently, any norm
derived from such a governance process has to prove that it can be considered
justified by being tested in a deliberative process with the affected parties
(Scherer & Palazzo, 2007). Such testing places extensive demands on the
governance processes to include criteria of deliberative democracy to gain
democratic legitimacy as will be discussed in greater detail below.
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question centers around the aspect of how to define the notion of the people
in transnational governance. Because transnational governance crosses the
border of nation states, the answer goes beyond the simple question of citizenship. Instead, the main issue from the perspective of deliberate democracy
is whether the interests of all the relevant actors are sufficiently considered
(i.e., is the governance process outcome based on the approval of the direct
addressees and of those additional potential actors who are indirectly concerned). When examining transnational governance and in particular international standardization, it is necessary to consider whether the standard is
derived directly or indirectly from the authentic preferences and needs of the
parties concerned, and whether it appropriately considers the demands and
preferences of the rule addressees (Matz, 2005; Scharpf, 1997). To elaborate,
this aspect deals with the key participants of the rule-generating and decisionmaking processes. To achieve democratic legitimacy, those who are affected
by a decision must be able to take part in the preceding governance processes
and have an equal opportunity to engage in the discourse (Deitelhoff &
Mller, 2005; Risse, 2006). The underlying rational is that a broad inclusion
of constituents contributes to rationality and stability of the process due to a
more extensive articulation of reasons (Scherer & Palazzo, 2007).
Significantly, effective deliberative processes rely on the meaningful input of
the participants so that the qualification or expertise of those included in public consultation can be included as additional criterion (Quack, 2010).
Second, throughput legitimacy builds on a given input legitimacy and
covers the precise features of decision making within the governance process. It asks which conditions need to be fulfilled when taking decisions (i.e.,
does the outcome rest on fair procedures of decision making) and thus deals
with the procedural level of discoursive decision making (Matz, 2005). The
central question addresses the way in which decisions are made (Rapkin &
Braaten, 2009). Throughput legitimacy focuses on how the aggregation of
individual preferences is established and in how far the rule-making actors
are accountable for their actions toward the rule-following actors (Bckstrand,
2010). In democratic governmental systems, rulers are accountable to citizens through mechanisms of representation and elections. In transnational
governance, however, no conventional electoral procedures guarantee a legitimate representation. In deliberative democracy instead, legitimacy is gained
through procedures of deliberation in a public sphere (Habermas, 1996). As a
result, the analysis focuses on the modalities of communication and decision
making as well as the transparency of the process and its underlying rules.
Process transparency is regarded as an enabling factor of accountability
influencing democratic legitimacy. The argument is that the chance of
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established the SR Trust Fund. This fund covered the main costs for participating at the WG meetings of eligible individuals to increase and broaden a
balanced stakeholder involvement (ISO, 2008b). Additionally, ISO member
bodies from developing countries could obtain support from the ISO/
DEVCO committee. Thus a number of institutional arrangements were
made to lower potential barriers for participating at the WG meetings. This
support enhanced the potential of personal communication within the development process and thereby strengthened opportunity for a balanced and
inclusive deliberation.
Beyond physical WG meetings and mirror committees, the participating
actors could submit their particular standpoints on any topic of the development process and thus have it (potentially) included into the discussions. Just
as with the year 2000 revision of the OECD Guidelines for Multinational
Enterprises, these comments were made publicly available. With the publication on the ISO online area Livelink they can be regarded as part of the
discourse process that potentially additionally allowed for a monitoring of
the involved parties by outside actors. The fact that several thousand written
comments were submitted and published before each meeting indicates that
this communication channel was actively used. However, active commenting
is not sufficient to justify a conclusion of legitimate decision-marking processes. First, a key question is whether these comments were heard, discussed, and incorporated in the subsequent decisions. The multistakeholder
WG conferences and the different task groups facilitated discussions and
incorporation of comments into the various drafts. In addition, they provided
abundant opportunities for further formal and informal consultation (van
Huijstee & Glasbergen, 2008). A survey by Schmiedeknecht (2008) already
indicated that the participants themselves mostly perceived the decisions to
be the output of inclusive and transparent stakeholder discussions. For obvious reasons however, the previously mentioned informal consultations in
particular represented a black box for this study.
Notwithstanding, language as another practical aspect of communication,
can be analyzed. Just like in every other ISO standard development process,
English was the official language. While taskforces provided translations of
the most important documents (in particular in Spanish and French) no simultaneous translation took place at the WG meetings. Missing translation proves
a potential impediment to democratic legitimacy during the development
process since it excluded those experts who lacked sufficient knowledge of
English from participating effectively in direct communication (Tamm
Hallstrm & Bostrm, 2010). In summary, this analysis of the communication procedures concludes that the procedures of the ISO 26000 development
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Stage
Preparatory
Stage
Commiee
Stage
Enquiry
Stage
Approval
Stage
Document
Working
Dra1 - 4
Commiee
Dra
Dra InternaInterna
onal Standard
Mode of
DecisionMaking for
Approval
Judgement by
leadership
-majority of
vong P-members;
Backing of D-liaisons
-majority of
vong P-members;
-majority of all
vong members;
Backing of D-liaisons
-majority of
vong P-members;
-majority of all
vong members;
Backing of D-liaisons
Figure 1. Stages and modalities of decision making in the ISO 26000 development
process.
implemented. To complete this stage and finalize the Working Draft, a judgment by the WG leadership determined whether a consensus among the participating experts was reached so that the development process entered the
Committee Stage (ISO, 2008d). This second stage is regarded as the principle stage of the process since it included the first robust draft of ISO 26000
(ISO, 2004a). While it was made clear from the beginning, that there will be
no voting in the WG (ISO, 2005a, p. 5) compiling the Working Drafts, the
decision-making modality for completing the Committee Draft changed to
a two-thirds majority vote of the national member bodies who actively participated in the development process (so called P-members; ISO, 2004a,
2009e). Clearly, since it is no longer based on finding an overarching consensus, such voting abandons the idea of an ideal discourse. On the other hand,
whereas decisions solely stemming from the ideal speech situation are arguably too idealistic (Habermas, 1994, p. 4), decisions should at least be
based on mutual understanding of the participants positions and values
(Dryzek, 2000). This approach generally allows a deviation from a strong
consensus principle. In the committee draft stage, each P-member was supposed to represent a national consensus of all participating stakeholder categories (ISO, 2008c). Additionally, the backing of the D-liaison organizations
was requested and could be expressed through comments on the Committee
Draft. However, these comments were not counted as formal votes (ISO,
2007b). In March 2009, the second stage was completed after about 70% of
all P-members agreed to the Committee Draft and 75% of the D-liaison organizations expressed their support (ISO, 2009a). Beyond the official ISO rules,
however, these results offer some leeway for interpretation: When the 14
P-members who officially abstained from voting or did not react to vote are
included into the calculation, the active supportive votes account for 58% of
all member bodies entitled to vote. Hence, whether this formal agreement
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of the consensus principle (Tamm Hallstrm & Bostrm, 2010). Since it was
apparently not communicated clearly in advance it restricted the requirements of deliberate democracy.
Apart from the internal transparency regarding procedures and processes,
one of the most important steps to ensure transparency affecting throughput
legitimacy was the publication of the voting results and comments in a nonanonymous manner, that is, relating them to the respective organizations and
member bodies (ISO, 2009a, 2009b). Such a procedure is in line with the
principles of an open expression of opinions in deliberative democracy in
which the importance of a public sphere is highlighted (Habermas, 1996).
However, it does not follow democratic practices of secret ballots. On one
hand, this forces the different stakeholders and actors at least partially out of
their anonymity thus potentially hampering freedom of expression if such a
public naming reduces an expression of opinions. On the other hand, such
publicity potentially improves the possibilities to exchange ideas and thoughts
while also limiting the options to revert to dogmatic positions which might
hamper deliberations by assigning each comment or vote to a specific stakeholder or institution. This approach of publicity is in line with the idea of
consensus finding as expressed by the ISO. Since all of the involved actors
with their related votes and comments (including the final approval of ISO
26000 as an official ISO guidance document) are public, they can also be
held accountable for their decisions within the process as well as for possible
contrary behavior afterwards. This last point becomes highly relevant when
applying ISO 26000. By allowing for monitoring by external third parties, the
overall transparency of the project thus adds to its democratic legitimacy.
Interestingly, whereas aspects such as comments, votes, and procedures were
extensively and transparently documented, the physical meetings of the WG
instead used a closed-door-policy excluding, for example, media attendance.
Apparently, albeit not supported by all of the groups involved (see Tamm
Halmstrm & Bostrm, 2010), this approach was chosen to foster an open
communication within the WG itself to avoid strategic arguing. In sum, this
multifaceted approach seems to be a suitable compromise as foundation for
reasonably transparent and at the same time open communication.
In conclusion it can be assessed that a largely robust general development
framework generating throughput legitimacy was in place. However, in the
end, the responsibility lay with the participating actors themselves to use this
framework to generate throughput legitimacy through consultation and open
discourses. Here, the intensive involvement (with several thousand comments and a rather active expression of opinion) can be regarded as a positive
indicator. Indeed, the participants themselves already confirmed at an early
116
stage of the development process that they generally regarded the process as
inclusive, fair, legitimate, and transparent (Schmiedeknecht, 2008). However,
as discussed above, some participants also mentioned a perceived uneven
distribution of influence of different stakeholder groups contrary to the
intended balanced stakeholder representativeness. Nevertheless, such aspects
may have resulted from the participants own behavior rather than from an
insufficient institutional framework.
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Authors Note
Earlier versions of this article were presented at the 51st International Studies
Association Annual Convention 2010 and at the Academy of Management Annual
Meeting 2011.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.
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Author Biographies
Rdiger Hahn is a full professor of business, esp. sustainability management, at the
Universitt Hohenheim, Germany. His research interests include, for example, sustainability management, CSR, sustainability reporting, and international & strategic
management in developing countries. He recently published in internationally
renowned journals such as, for example, Business Strategy and the Environment,
International Business Review, Journal of Business Ethics, Journal of Business
Research, and Organization & Environment.
Christian Weidtmann graduated from the Heinrich-Heine-Universitt Dsseldorf
(Germany). He is an auditor at an international multisector retailing group. His field
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