Does California need Delaware? Explaining Indonesian, Chinese, and United States support for legality compliance of internationally traded products

Benjamin Cashore and Michael W. Stone

Regulation & Governance, 2014, vol. 8, issue 1, 49-73

Abstract: The purpose of this paper is to shed light on the emergence and institutionalization of a unique form of transnational business governance (TBG): legality verification (LV) systems, which track products along global supply chains. Instead of imposing wide ranging global standards commonly applied through “gold standard” certification systems, LV helps domestic governments enforce their own laws. Three processes help explain why Indonesia (as a producer), China (as a manufacturer) and the United States (as a consumer) moved, in the 2000s, from lukewarm interest or opposition to formalized support: how triggers enabled by economic interdependence are pulled; how ceding of instrument/process state sovereignty may reinforce substantive sovereignty; and historical institutional processes that shift organizational interests and problem definitions. Looking backward, the empirical results are consistent with a “Delaware effect” in which economic globalization is asserted to lead to a “ratcheting down” of environmental and social standards. Looking forward, we theorize about, and identify the conditions through which, widespread coalitions in support of the institution of LV, may pave the way for a “ratcheting up” process that is consistent with, but nuances, Vogel's “California effect.”

Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:wly:reggov:v:8:y:2014:i:1:p:49-73

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