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Mapping research topics and theories in the literature on private regulation for sustainability in global… Wahl, Antje; Bull, Gary 2013

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Private regulation for sustainability Mapping research topics and theories in the literature on private regulation for sustainability in global value chains  Areas: Corporate Responsibility, Sustainability Abstract The globalization of production and trade has contributed to the rise to complex global value chains where the reach of state regulation is limited. Private regulation, developed and administered by companies, industry associations and non-governmental organizations, has emerged to safeguard economic, environmental and social sustainability in producer countries and along the value chain. The academic literature on private regulation in global value chains has grown over the last decade, but few major reviews of the research to date have been undertaken. This paper examines peer-reviewed research in the relevant disciplines published in academic journals up to December 2011. The goal is to identify and classify the topics and theories in the literature. We conclude that the number of articles that examine private regulation explicitly in a value chain context is relatively small when considering the importance and growth of global value chains in the world’s economy. Agriculture, forestry and apparel manufacturing are the most often studied sectors of the economy. Other sectors, such as the production of electronics, with complex global value chains and often problematic environmental and social conditions are understudied.  Key words Corporate responsibility, ethical trade, global value chains, private regulation, sustainability  1 Introduction Corporate and academic interest in private initiatives for global environmental and social sustainability has risen considerably in recent years, at the same time as the globalization of the economy and outsourcing of production and services intensified (Scherer & Palazzo, 2010; Seuring, 2011). Since the reach of state regulation is limited in complex global production and distribution chains (Scherer & Palazzo, 2010), private regulation has emerged in the form of codes and standards developed and administered by companies, industry associations and non-governmental organizations (NGOs). Organic agriculture and fair trade movements began in the 1960s (Daviron & Vagneron, 2011), while global certification schemes for forestry and apparel emerged in the 1990s (Bartley, 2003). Now, private regulation exists in many industries and the World Bank estimated already in 2003 that about one thousand private codes and standards existed (Smith & Feldman, 2003, p. 2).  Regulation is usually the imposition of rules on individuals and companies by government, but regulation is also adopted on a voluntary basis by companies, industry associations and professions to maintain, for example, reputation or ethical standards (Khemani & Shapiro, 1993, p. 73). Such non-legally binding regulation or soft laws can include the participation of government participation: “Forms of soft law range from private and voluntary codes and certification and labeling systems to transparency obligations on the part of governments. Its defining feature is that compliance depends on the voluntarily supplied participation, resources, and consensual actions of governments and/or firms” (Vogel, 2008, p. 264). Vogel points out that the boundaries are not always clear-cut between private, voluntary, non-state regulation on the one hand and public, mandatory, state regulation on the other. In this review we use the term private regulation because some schemes initiated by companies and non-governmental organizations may not be entirely voluntary or self-imposed when governments set de facto requirements for adherence to, for example, labor codes or the certification of fisheries. The types of private initiatives included in this review are described in more detail in the methods section.  The value chain concept became known through Porter’s book ‘Competitive advantage’ (1985) where he described the role of value in corporate competitive strategies. Moving from concept to definition, Kaplinsky (2004) describes a value chain as “the full range of activities which are required to bring a product or service from conception, through the intermediary phases of production (involving a combination of physical transformation and the input of various producer services), delivery to final consumers, and final disposal after use”. While this sounds similar to a supply chain, the focus of supply chain management is efficiency and cost reduction in the flow of materials, information and finance between actors in the chain, while the focus of value chains is the value added throughout the chain and delivered to the consumer (Feller, Shunk, & Callarman, 2006; International Trade Centre, 2011a). In this review we use the broader term value chain.  The academic literature on private regulation in global value chains generally comes from two fields of management research: corporate social responsibility (CSR) and supply chain management. The number of published articles on private regulation in global value chains has grown over the last decade, but few major reviews of the literature to date have been presented. For those reviews that were undertaken, the reviews have been limited to specific journals or publication periods in order to limit the otherwise large volume of literature on the subject.   Recent reviews of the CSR literature (Egri & Ralston, 2008; Etzion, 2007; Lockett, Moon, & Visser, 2006; Scherer & Palazzo, 2010; Taneja, Taneja, & Gupta, 2011) reveal that although private regulation is a significant topic in the literature, the relation with global value chains is not explicitly analyzed. The reviews of the supply chain management literature primarily examined sustainability in supply chains (Beamon, 2008; Carter & Easton, 2011; Halldórsson, Kotzab, & Skjøtt-Larsen, 2009; Kleindorfer, Singhal, & Wassenhove, 2005; Sarkis, Zhu, & Lai, 2011; Seuring & Müller, 2008; Srivastava, 2007), and did not investigate private regulation specifically, rather they focused on topics such as green design and operations.  Probably the most thorough review of private regulation in value chains is a literature review series published by the International Trade Centre, a joint agency of the World Trade Organization and United Nations. The reviews published to date have focused on the impacts of private standards on the value chains themselves (International Trade Centre, 2011a) and the impacts on the producers in developing countries (International Trade Centre, 2011b). While the literature reviews are systematic, they are not peer-reviewed and the topics are limited to those of interest to the International Trade Centre’s main constituents.  With increasing demands by NGOs and society that companies take responsibility for upstream and downstream processes (Scherer & Palazzo, 2010) that are expanding globally, a comprehensive review is needed that assesses the literature on private regulation in global value chains. We attempt to include research in critical disciplines and applied fields that are relevant to private regulation. The objective of this review is to examine how the academic literature on global value chains has addressed the recent rise in private regulation initiatives, in terms of topics investigated and the theories developed and used. The specific steps in this review are to: 1. Carry out a descriptive analysis of the literature; 2. Identify the sectors of the economy studied in the literature; 3. Identify and classify the research topics; and 4. Characterize the theoretical approaches and place them in a framework.  2 Methods The review was carried out by (1) defining, collecting and screening the literature, and (2) identifying the main topics and theories and synthesizing the literature. Each step is described in more detail below.  2.1 Defining, collecting and screening the literature A wide range of private regulation initiatives were included in the review, from codes of conduct to standards. The types of initiatives included are shown in italics in Table 1, using Nadvi and Waeltring’s (2004, p. 61) typology for global standards. The review excludes the following literature: 1. Research on company-internal standards, codes and best practices that do not affect other actors in the value chain;  2. Articles on the corporate reporting or labelling aspects if they did not examine the role of standards in value chains; and 3. Voluntary health and safety standards and place of origin-labeling, which are commonly used in the food industry for consumer safety and marketing.  Table 1 The search for literature was conducted through both keyword and thesaurus searches in two large multi-disciplinary article databases, Academic Search Complete and Web of Science. The databases’ thesaurus was used in addition to keyword searches since it usually yields more citations (Fink, 2010, p. 26). The databases were selected based on the comprehensiveness of journals covered in the fields of agriculture, business, economics, forestry, geography and sociology. References in the articles and database citations were used to identify additional articles (Fink, 2010, p. 37). The keywords used in the database search are listed in Table 2. Both databases offer the option to search for related words (‘Apply related words’ in Academic Search Complete and ‘lemmatization’ in the Web of Science), which was also used in the search. The last search for papers was conducted in February 2012 for literature published up to December 2011.  Practical screening criteria were applied to the preliminary literature search results to include only relevant articles (Fink, 2010, p. 5). Articles published in English-language, peer-reviewed academic journals were included in the search, including proceedings papers published in peer-reviewed journals. Editorials and book reviews were excluded from the review.  The article titles and abstracts from the preliminary literature search were read and articles that fit the following criteria were included in the review: 1. Private environmental or social regulation are the main topic of the inquiry; and 2. The article examines standards that span the operations of more than one company in the value chain. Table 2 These criteria are based on this study’s objective to examine how the academic literature on global value chains has addressed the recent rise in private regulation initiatives. The literature search identified 188 articles that matched the search and screening criteria.  2.2 Identifying research topics and theories and synthesizing the literature The literature was synthesized in three ways:  By the amount of research by publication year, journal, journal subject area and economic sector studied;  By research topic; and  By the theoretical concepts and their application to private regulation in global value chains.  The journal subject areas are from the Web of Science database classification of journals. Each article abstract was read to identify and classify the primary topical area of the article. Some articles include more than one topic in the abstract or have no abstract, and in these cases, the full article was read to identify the primary research topic.   To identify the theories used or developed in the literature, the full text of the articles was examined for references to theories, including theoretical frameworks, models or other theoretical foundations. Only articles where the authors make explicit references to theories were included in this part of the review. For example, if a case study deals with aspects of stakeholder involvement but makes no reference to or use of stakeholder theory, the study will not be included in the review of theories. We did not apply a methodological screen to the literature collected that may have excluded articles with weak methodologies. The review aims to be as comprehensive as possible within the published peer-reviewed literature in terms of describing the amount of literature and the topics and theories covered. At the same time, when synthesizing the theoretical concepts we attempted to rely more on high-quality studies by using the following of Fink’s (2010, p. 132) criteria for methodological quality:  Researchers explain their perspectives, methods of inquiry and biases;  Methods of analysis are clearly explained;  Study’s methodological limitations are discussed; and  Interpretations are based on the data collected for the study.  2.3 Limitations Both the selection of the papers included in the literature review and their analysis involve an amount of judgment. The process was made as reliable as possible by defining criteria for the selection and analysis of the literature, but the wide scope of disciplines and topics in the area of private standards initiatives and value chains makes it difficult to completely eliminate subjective assessments. The review covers the majority of journals in the field by using two comprehensive databases and the references listed in articles, but some articles may not be included due to the limitations of the databases.  3 Journals of publication The literature search found a total of 188 articles matching the search criteria. The articles were published in 102 different peer-reviewed journals, with the earliest article published in 1999. Many earlier articles on CSR are excluded from this review because they focus on codes of conduct within multi-national companies and not the companies’ suppliers or its value chain. The number of articles published grew at a fairly constant rate in most years, except for a large jump in 2005, which can be partly explained by a special issue on certification in the Journal of Rural Studies. More than forty percent of the total literature was published between 2009 and 2011.  Table 3 shows the number of articles published by journal category as assigned to the journals by Thomson Reuters. The journal categories range from business to engineering to sociology, demonstrating the interdisciplinary nature of the research. Business journals published the highest number of articles (thirty-nine). Economics and planning and development journals had the next highest number of articles at thirty-one each. Ethics journals published twenty-five articles and management journals twenty-one articles. The journals with the most articles published that matched the literature search criteria were the Journal of Business Ethics (twenty-three articles), World Development (nine articles), Journal of Rural Studies (six articles), Development in Practice and Journal of Cleaner Production (five articles each). All other journals published four or fewer articles each.  Economic sectors The majority of articles examined private regulation in specific economic sectors and industries. The three most studied sectors were agriculture, forestry and apparel (Table4). Sectors related to natural resources (agriculture, forestry, fisheries and mining) account for more than half of the research. Within agriculture, coffee production and trade is particularly well studied because it is a valuable, highly traded commodity in international markets and a significant export product from developing countries.Table4 also shows that research on agriculture accounts for much of the increase in total articles published in the last four years. Research interest in forestry remains high, even though forestry was at the outset of the trend towards global private regulation when the Forest Stewardship Council Table 3 Table 4 certification system was established in 1993. Six articles on forest certification and global value chains were published in 2011, the highest in a year to date.  With the exception of apparel manufacturing, private regulation in manufacturing garnered relatively little attention from researchers. Manufacturing in general, electronics, retail and logistics combined was studied by just seventeen articles in total. Research on private regulation in general, not specific to any sector, accounts for 24% of all articles and it peaked in 2009 with twelve published articles.  When comparing Table 3 and 4, it is notable that most of the sector-specific research was not published in journals in the corresponding category of applied research. For example, the majority of research in agriculture and forestry was not published in agriculture and forestry journals, but in business and economics journals. Even in natural science journals, far more articles were published in general science journals (environmental science, environmental studies and geography) than in agriculture and forestry journals.  4 Research topics The research topics were classified into four areas: development of private regulation, adoption and implementation, effect, and private regulation as an institution. Table 5 shows the research topic classification. Most of the research was in the three latter areas while research on the development of codes and standards accounts for just ten percent of all articles. Judging by the number of articles published, the corporate buyers’ challenges in adopting and implementing codes and standards, and their effects on the farmers, workers and economies in developing countries were equally studied.  Research on the effects of private regulation showed the most significant growth in recent years, led by research on the effect on economic conditions in producing countries. This is in contrast to research on development of private regulation, which fluctuated from year to year (given the relatively small number of publications in this area), but overall it shows no increase over the last ten years.  The following topics were most often examined (see also Table 5): the role of value chains in private regulation, in particular governance (twenty-six articles), the effect of private regulation on economic conditions in producing countries (twenty-one articles), and the management of private regulation, usually by the buyer or lead company in a developed country (nineteen articles).There are several interesting findings when looking at the topics studied within the four research areas.  Research on development and content of private regulation focused on improving women’s rights, although no articles on this topic were published in the last three years. The other leading topic in this area is the role of producers and stakeholders in developing countries, why and how they should be included in the development of standards.  The majority of research topics on adoption and implementation of private regulation were on the operational level: what motivates companies to adopt private regulation, how to manage private regulation in global value chains, and how to monitor compliance. Few articles dealt with corporate strategies in private regulation, even though strategy is an important topic in the general CSR literature.  There is a notable difference in the number of studies on the effect of private regulation on what is commonly called the three pillars of sustainability. The Table 5 effects on economic, labor and social conditions were studied much more often than the effect on the environment. Only two articles examined how economic, social and environmental performance can be integrated in private codes and standards.  Important topics in research on the institution private regulation, besides value chain governance, are the historical perspective (emergence) of private regulation and the role of the state in private regulation.  5 Theoretical approaches The majority of the articles reviewed focused on the practical implications of environmental and social standards in global value chains and not on the theoretical underpinnings and contributions. The literature that did discuss theory had a range of perspectives originating in three key disciplines: economics, political science and sociology. A common theme from these disciplines was the institutional perspective of private regulations. Therefore the next section begins with an introduction to institutional theory, followed by the main concepts and theories used in the literature reviewed. Finally, we discuss the application of theory to private regulation in global value chains.  5.1 Levels of institutions The definition of institutions and their role in society varies by academic discipline and theoretical orientation. A comprehensive description is given by Scott: “Institutions are comprised of regulative, normative and cultural-cognitive elements that, together with associated activities and resources, provide stability and meaning to social life” (Scott, 2008, p. 48).  A range of frameworks and theories have been developed by researchers in economics, political science and sociology to study the development and role of institutions. The field is often labeled neoinstitutional theory, especially in economics, to distinguish from the early institutionalists at the beginning of the 20th century (Scott, 2008, p. 26).Williamson (1998), a new institutional economist, depicts the range of perspectives as different levels in the economics of institutions: embeddedness, institutional environment, institutions of governance, and resource allocation and employment (Figure 1). Institutions change over time and the frequency of change varies from continuous on the level of resource allocation and employment to hundreds or thousands of years on the level of embeddedness, which has “a pervasive influence upon the long-run character of economies” (North, 1991, p. 111).  Figure 1 places the theoretical concepts used in the literature on private regulation in relation to the levels of institutions and the prevalent academic discipline at each level. Most concepts originate in economics or at the intersection of economics with sociology or political science. While Williamson’s approach has been criticized for retaining the neoclassical economics idea of opportunistic, atomistic individuals (Granovetter, 1985; Scott, 2008, p. 29), his levels in the economics of institutions provide a useful structure for almost all theories and concepts used in the literature reviewed. Not included in Williamson’s four levels are the influence of culture and structure of organizations on individual preferences, and the process of why and how governance structure emerge and change (Scott, 2008, p. 29). The latter is an important topic in private regulation, where research focuses on processes, many of them economic, and on learning by the actors in global value chains. While emergence is not explicitly mentioned, Williamson did include the factor ‘frequency of change’, which can be understood to include why and how governance structures emerge and change. Theoretical articles that examine the emergence of private regulation were therefore assigned to the level of ‘institutional environment’.   Figure 1 also shows that the literature on private regulation in value chains is primarily located on the second and the third level, the institutional environment and the institutions of governance, although some authors have also addressed embeddedness, for example Blowfield (2004) and Taylor (2005a). The private regulation literature (and new institutional economics in general) is usually not concerned with the fourth level, resource allocation and employment, which is the domain of neoclassical economics and agency theory, and where companies are viewed as production structures, not governance structures (Williamson, 1998).  Theories and concepts used in the private regulation literature (see Figure 1) are described in the remainder of this section using the findings from selected articles. The review starts with embeddedness, the top level in Williamson’s economics of institutions, and proceeds to the levels of institutional environment and governance. Within levels 2 and 3, we place more emphasis of to the research concepts of stakeholder analysis and global value chain analysis because they are the most prevalent in the literature on private regulation in global value chains.  5.2 Embeddedness At the top level, Level 1, embeddedness describes the extent to which economic behavior is embedded in structures of social relations (Granovetter, 1985). The two extremes of embeddedness are the purely rational, self-interested individual behavior that is assumed in traditional economic theory, and at the other end, behavior guided only by social norms and structures.  Sociologist Granovetter challenges both extremes and argues that “most behavior is embedded in networks of interpersonal relations” (Granovetter, 1985, p. 504), while it is still rational or instrumental. Embeddedness was first described by Polanyi in 1944 as the economy subordinate to society instead of the other way around (Polanyi, 2001, Chapter 5), instead of looking at individual economic behavior like Granovetter.  The concept of economic sociology embeddedness is used by Taylor (2005a) to examine and compare governance structures in certification systems for coffee and timber. Adding embeddedness to the global value chain analysis approach allows Taylor to examine how certification systems do (or do not) challenge mainstream market’s assumptions and cultural conventions. In a study of Indonesian cocoa and timber chains Blowfield (2004) found that ethical trade standards only acknowledge social constructs and values accepted by the more powerful actors in the value chain, or if standards accept alternative social constructs, they are too simplified, such as the Forest Stewardship Council principles on indigenous people.  Blowfield asserts that standards and other CSR concepts like stakeholder engagements are not value-neutral as commonly assumed, which limits their efficacy in global trade. Operating alternative systems like Fair Trade in conventional global markets also requires a balancing act since both the alternative systems and the conventional markets are socially embedded and have different governance forms (Taylor, 2005a).  5.3 Institutional environment: Advocacy coalition framework and collective action At the next level, Level 2, the institutional environment comprises the rules and requirements within which organizations and economic activity are organized (Williamson, 1998) and which according to Scott (2008, p. 48), “provide stability and meaning to social life”. Understanding the institutional environment and why and how it changes is primarily the domain of political science and sociology, although economics (for example, of property rights) also plays a role (Williamson, 1998). The following three concepts used in the literature reviewed can be assigned to the level of the institutional environment: advocacy coalition framework, collective action and stakeholder analysis. Stakeholder analysis is frequently used in the literature reviewed and it is presented separately in the next section.  The advocacy coalition framework was developed primarily by Sabatier and Jenkins-Smith (1993) to understand the complex process of policy changes that span longer time periods of one or more decades: An advocacy coalition consists of actors from a variety of public and private institutions at all levels of government who share a set of basic beliefs (policy goals plus causal and other perceptions) and who seek to manipulate the rules, budgets and personnel of governmental institutions in order to achieve these goals over time (Sabatier & Jenkins-Smith, 1993, p. 5).  Collective action in political science and economics was first described in detail by Olson (1965). The collective action problem describes the situation in which “rational, self-interested individuals will not act to achieve their common or group interests” (Olson, 1965, p. 2). Cooperation or collective action has a cost which, when taken to achieve a superior outcome for everybody, is shared by the individuals in the group.  Bernstein and Cashore (2007) used the advocacy coalition framework to examine a specific aspect of private regulation as an institution: how do private regulation initiatives gain legitimacy? They identified policy learning as one important step for initiatives to become legitimate, and the advocacy coalition framework introduces ‘policy-oriented learning across coalitions’. This policy learning can produce not only a better understanding among the groups involved with a private regulation initiative, but it can also improve trust and perceptions of procedural fairness, which in turn increases the legitimacy of the initiative development process (Bernstein & Cashore, 2007).  Why private regulation, especially certification, and not other forms of governance has become so prevalent in dealing with sweatshops, illegal logging and other problems associated with global trade was examined by Bartley (2007) using the collective action approach. While private regulation is the outcome of political conflicts involving states, NGOs, other non-market actors and companies, they solve collective action problems: the company’s reputation, providing consumers with information and the loss of competitiveness if one company employs better environmental and social practices than its competitor (Bartley, 2007). Both the collective action approach and the advocacy coalition framework have helped analyze why and how private regulation has emerged to support economic, environmental and social sustainability in global value chains.  5.4 Institutional environment: Stakeholder theory A stakeholder is “any group or individual who is affected by or can affect the achievement of an organization’s objectives” (Freeman, 1984, p. 46). The process and outcome of relationships between stakeholders and organizations is the subject of stakeholder theory (Jones & Wicks, 1999). Research on CSR contributed much to the normative aspects of stakeholder theory, recommending the moral reasons why and how organizations should consider stakeholders (Freeman & McVea, 2001). A significant portion of the literature on private regulation in global value chains also focuses on the normative aspects, but it also includes descriptive (how do organizations take stakeholder interests into account?) and instrumental (why is it in the interest of organizations to engage with stakeholders?) viewpoints, a distinction first described by Donaldson and Preston (1995).  Gilbert and Rasche (2008) examined standardized ethics initiatives in terms of descriptive, instrumental and normative aspects in stakeholder theory. The opportunities and problems Gilbert and Rasche identified through descriptive stakeholder theory mirror many of the case study results in the literature reviewed, including the importance of appropriate stakeholder representation in code development and standard-setting organizations (for example, Bacon, 2010; Barrientos, 2008; Yu, 2009) and of overcoming power imbalances between participants (Tallontire et al., 2005). Therefore standards need to be specific about who to include in stakeholder dialogues and how companies need to communicate with stakeholders (Gilbert & Rasche, 2008).  From an instrumental stakeholder theory perspective, implementing private regulation can benefit companies through reduced long-term costs and higher productivity, although the cost of implementation and stakeholder engagement can be disadvantageous, especially for small companies and companies in developing countries (Gilbert & Rasche, 2008). Private regulation can also pose a market access barrier for companies in developing countries or compromise their competitive position because they have less experience and support for stakeholder engagement (Gugler & Shi, 2009).   The normative stakeholder theory approach offer additional insights for private regulatory initiatives in global value chain. Embeddedness on Level 1 (discussed earlier) influences the normative perspectives, which guide the behavior of value chain actors and which are developed through stakeholder communication during the standard setting process. For instance, standards in Indonesian cocoa and timber supply chains failed to address many of the issues that local communities and workers found important because their norms and values were not adequately addressed in the standards (Blowfield, 2004). For standards to be well accepted by all affected parties in global value chains, the standard setting process needs to include communication among the parties to promote ‘norm-development’ (Gilbert & Rasche, 2008).  Taken together, the descriptive, instrumental and normative approaches in stakeholder theory provide companies and standard setting organizations with guiding principles on how to successfully engage with global value chain stakeholders in private regulation initiatives.  5.5 Governance: Convention theory At the next level, Level 3, of the economics of institutions, three concepts examine the institutions of governance: convention theory, global value chain analysis and transaction cost economics. Convention theory explains coordination of actors in value chains and networks, especially when price alone is not enough to express the products’ quality and characteristics (Eymard-Duvernay, 1989). Eymard-Duvernay contends that socially defined rules (conventions) help coordinate activities, and the market is only one of several types of conventions.   Ponte and Gibbon (2005) used convention theory concepts to better understand governance in global value chains. Standards and certification systems identify and manage environmental and socio-economic quality attributes, which allows global value chains to become more loosely coordinated (‘hands-off’), even though at the same time larger buyers increasingly drive the activities in the value chains. Bitzer et al. (2008) found quality conventions to be important in standards and codes of conduct in the coffee trade, but overall the conventions did not benefit coffee producers.   Baird and Quastel (2011) analyzed conventions, institutions and the issue of scale in networks in the dolphin-safe tuna certification, explaining the challenges of the United States-based certification system when it expanded certification to Thailand. The narrowly defined environmental conventions that the certification system attempted to impose on the tuna value chain and the failure to incorporate civic conventions based on Thai concerns contributed to the program’s challenges (Baird & Quastel, 2011). The above literature shows that certification systems, standards and other private regulation initiatives contain conventions that facilitate coordination in global value chains, but they do not necessarily benefit all value chain actors, especially producers, or do not function well if conventions are imposed.  5.6 Governance: Global value chain analysis The next concept on Level 3 of the economics of institutions is global value chain analysis. Global value chain analysis is commonly used in the private regulation literature because it explains how governance and institutions influence the allocation and flow of financial, material and human resources along the chain. Global value chain analysis rests primarily on an industrial organization viewpoint of value chain actors, while the stakeholder analysis described earlier came out of management practice according to Freeman and McVea (2001), since managers needed to strategically manage various groups and relationships to ensure the long-term success of the company.  Global value chain analysis originates from the global commodity chain framework developed in the 1990s, which links the concept of value adding along a supply chain with global industrial organization. A commodity chain is “a set of interorganizational networks clustered around one commodity or product” (Gereffi, Korzeniewicz, & Korzeniewicz, 1994, p. 2). Most relevant for the private regulation literature are the framework’s contributions to understanding institutional and governance structures. Gereffi et al. distinguished between buyer-driven global commodity chains and vertically integrated producer-driven chains; in buyer-driven chains powerful buyers at the end of the chain are able to coordinate and control production and distribution without direct ownership, unlike in producer-driven chains where vertical integration dominates. The global commodity chain framework was later broadened by Gereffi and others to reflect other forms of coordination in value chains and varying levels of drivenness, “the degree of power of lead actors in setting modalities and thresholds of inclusion and exclusion” (Ponte, 2002, p. 1115). Gereffi et al.’s (2005) typology of global value chain governance is based on three variables, the complexity of transactions, the ability to codify transactions, and the capabilities of suppliers. Global value chain analysis can be utilized by companies to better position themselves in the value chain and by policymakers to support industrial upgrading and economic development in specific value chains (Gereffi et al., 2005; Kaplinsky, 2000).  The globalization of production and trade has contributed to the vertical breakup of transnational companies, many of whom have outsourced production and services, giving rise to complex global production and distribution chains. These complex value chains are coordinated and controlled without direct ownership of the companies involved. Theories have been developed to examine industrial organization, including the structure and dynamics of global value chains and their effects on chain actors and national economies.   Global value chain research has included the role of actors outside the chain, such as the governments or NGOs, (for example, Kaplinsky, 2000), but the literature on private regulation has expanded this aspect of global value chain analysis. Riisgaard and Hammer (2011) apply global value chain analysis to the strategies employed by labor initiatives to shape value chains and advance regulation. The position of the lead companies within the value chain (whether they are producers, buyers or both) shape the strategies of labor movements and environmental NGOs (Doh & Guay, 2004; Riisgaard & Hammer, 2011). Many case studies found that environmental and social regulation is more likely in highly driven value chains because environmental and social initiatives find it easier in these types of value chains to target the lead companies (for example, Raynolds, 2009; Taylor, 2005b), although compliance with standards often remains an issue (Nadvi, 2008). Conversely, in chains with market-based relationships no company has the power to control conditions in the rest of the value chain and developing and implementing private regulation tends to be much more difficult. Riisgard and Hammer (2011) note that private standards may be better suited for creating a link between consumption and production in buyer-driven chains, while international framework agreements may be more appropriate for linking different production locations in producer-driven chains, at least in the case of labor initiatives where established unions exist at the production sites.  The global value chain framework has been used to link chain governance and institutions with where in the chain value-adding and industrial upgrading take place (Humphrey & Schmitz, 2000, pp. 3–4; S Ponte, 2002). Most studies on private regulation that use this approach studied value chains originating in developing countries and focused on coffee and other horticultural products (for example, Muradian & Pelupessy, 2005; Perez-Aleman & Sandilands, 2008).  5.7 Governance: Transaction cost economics The third concept used on the level of institutions of governance is transaction cost economics. Allen (1991) provides two definitions of transaction cost in his historic overview; the first is from the property rights literature and it defines transaction cost as the cost of establishing and maintaining property rights. The second definition is from a neoclassical economics perspective and it describes transaction cost as the cost resulting from the transfer of property rights. In both perspectives, the causes of transaction costs are linked to lack of information (Allen, 1991), which leads to transaction costs such as search and information costs, bargaining and decision costs, and policing and enforcement costs (Dahlman, 1979).  Transaction cost economics looks at what type of institutions of governance minimize transaction costs, a concept developed by Williamson (1985) and other new institutional economics scholars. Demands for environmental and social sustainability increase the complexity of transactions in the value chain, but as for other demands, such as increased product differentiation or just-in-time supply, transaction complexity is reduced through the development of standards (Gereffi et al., 2005). Information asymmetry and transaction costs can be reduced all the way to second and third-tier companies in the value chain through a standard such as Social Accountability 8000, thus improving chain coordination (Ciliberti, De Groot, De Haan, & Pontrandolfo, 2009).  Rosen et al. (2002) applied the transaction cost approach to evaluate private standards in the semiconductor equipment industry. The authors conclude that private environmental standards were established because of a void in state regulation or generally accepted customs. The standards helped lower transaction costs in improving environmental performance and created norms with regards to sustainability at the corporate management level. Rosen et al. point out the danger that standards can create rigidity in industries and prevent innovation, but this is not a problem if standards are flexible and frequently reviewed and revised.  5.8 Governance: Social network analysis Social network analysis applies network theory to social entities, such as people or organizations, and researchers analyze networks by locating causation in the relations between nodes, and not in their individual attributes (Marin & Wellman, 2011, p. 11). As in most other institutional approaches, context is important and relations are examined in the context of other relations.  Vurro et al. (2009) extended social network analysis to supply chain management by describing supply chains in terms of the interconnectedness or density of network nodes (companies) and the centrality of the focal companies. Four sustainable supply chain governance models, based on supply chain density and centrality, can be used to explain differences in the adoption and patterns of sustainability initiatives across different industries and chains as well as their varying degrees of success.  6 Discussion 6.1 Trends in quantity of publications Private regulation in value chains is a growing research area, judging by the higher number of articles published in the last three years. A search of articles published in early 2012 suggests that the amount of literature published continues to increase beyond 2011, which indicates that private regulation in global value chains remains a developing field of research.  The 188 articles that examined private regulation in a value chain context is still a relatively small number when comparing it with the extensive CSR literature and supply chain management literature. This confirms what Halldorsson et al. (2009) found in the supply chain management literature, where most of the literature looked at sustainability from the viewpoint of a single company and not from a chain perspective. In the CSR literature, less than half of the studies in mainstream international management and business journals covered more than one country, according to a review by Egri and Ralston (2008). This backs up our finding that CSR has not been studied extensively in a global value chain context.  Researcher reference mostly management and CSR literature but relatively few articles from journals of other disciplines, according to Lockett et al.’s (2006) CSR literature review. This suggests that most of the CSR knowledge is in the management literature, but it may reduce communications with researchers from other disciplines. Our review found that business, economics and management journals were indeed important in publishing research, but the journals of other disciplines combined, specifically environment, political science and law, published more articles on private regulation in value chains.   Research on specific industry sectors, such as agriculture and forestry, is mostly published in business and economics or general science journals and much less in agriculture and forestry journals. Do researchers in agriculture and forestry not pay enough attention to questions around sustainability and regulation in their respective sectors? Or do authors prefer to publish in journals outside their specific industry sector because they may have a wider readership or possibly a higher journal impact factor? Many researchers may also not have a background in agriculture or forestry and are therefore perhaps more likely to publish in journals of their own discipline. As a result, researchers in agriculture and forestry may miss key developments and findings because relatively little is published in journals of their field. One way of keeping applied science researchers and professionals informed about research on sustainability regulation would be for agriculture and forestry journals to run special issues on the topic. For example, the Journal of Rural Studies published a special issue on certified products and governance in 2005, which greatly increased the number of articles included in our review for that year.  Research focuses on a few sectors that are well-known for their labor-intensive production methods and environmental impacts. The environmental effects of management and production methods in natural resource industries, such as agriculture, fisheries and forestry, are usually significant and immediate. It is therefore not surprising that the majority of published articles are in industry sectors directly related to natural resources, such as agriculture, fisheries and forestry. Farming can also be very labor-intensive, which is perhaps one reason why the majority of articles look at agricultural products. Some standards and certification systems in farming, for example Fairtrade, focus on improving working and economic conditions in producer countries, while others, such as organic certification or shade-grown coffee, focus on reducing negative environmental effects of farming.  Relatively few articles examine private regulation in manufacturing other than apparel, despite the prevalence of global manufacturing and outsourcing. For example, electronics manufacturing is often labor-intensive and can be environmentally harmful, but our literature search did not find any articles about the electronics industry, possibly because fewer private regulation initiatives exist in complex value chains in manufacturing industries. Scherer and Palazzo (2010) point to the difficulties of manufacturers of high-tech products when they are asked to control working conditions, water consumption or wildlife habitat destruction in operations far removed from their own company. Most private regulation for internationally traded products is targeted at conditions in developing countries. At least until recently, much of the world’s manufacturing, except of apparel, textiles and similar products, took place in developed countries with democracies and strong legal frameworks and private regulation was perhaps not regarded as necessary by NGOs and other stakeholder groups. Forest certification is an interesting case because it first developed to encourage sustainable forest management in tropical countries, but most certified forests are now in Europe and North America. It remains to be seen whether research on private regulation for sustainability will catch up with the remarkable growth in manufacturing of electronics and other consumer products in China, India and elsewhere in Asia and in Africa, or whether research and NGO interests in regulation remain largely limited to relatively simple global value chains in natural resource extraction, farming and apparel manufacturing.  6.2 Theories The majority of the research is practice-oriented and contributes less to theory development. Although there is no clear distinction in the literature between articles on theory and applied research articles - most theoretical articles are also concerned with the practice of private codes and standards, while the hands-on case studies often draw from and inform theories - overall a relatively small number of articles looks at private regulation on a more theoretical level. The majority of research areas identified in this review (development, adoption and implementation, and effect) deal mainly with the hands-on issues and outcomes when planning, adopting, implementing, managing and monitoring private regulation. The theoretical articles were mostly in the research area of private regulation as an institution. The prevalence of practice-oriented research is to be expected in a field that is not only driven by academic advances, but by the agendas of business, NGOs and governments.  The predominance of practice-oriented research concurs with the literature review findings by Carter and Easton (2011), who noted that more than half of the articles about sustainable supply chain management did not use a theoretical lens, although the use of theory was higher in more recently published articles (2001 to 2010) than in earlier studies. Egri and Ralston (2008) found that only twenty-five percent of the corporate responsibility articles reviewed were theoretical studies. Seuring and Müller (2008) suggested in their review that empirical research in sustainable supply chain management needs to have a stronger theoretical basis.  The theoretical concepts used come from a range of disciplines, including economics, management, political science and law. Because of this interdisciplinary nature, research on private standards is fragmented in terms of theoretical approaches used, although most approaches can be grouped under the institutional theory perspective. Williamson’s (1998) levels in the economics of institutions were useful to organize the research concepts on private regulation in global value chains and relate them to the main academic disciplines.  Two other recent literature reviews in the area of sustainability and value chains identified theories in the literature. Table 6 lists the theories found in the two other reviews of the supply chain management literature and compares them to our findings. Relevant reviews of the CSR literature were limited to categorizing theories (for example into normative and non-normative) and they did not identify the theories.  Sarkis et al. (2011) identified several of the same theoretical concepts in their review of the green supply chain management literature, specifically stakeholder theory, transaction cost economics, social network theory and institutional theory. They also identified additional organizational theories not identified in this review and they include: complexity theory, ecological modernization, resource-based view, and resource-dependency theory. Sarkis et al.’s review missed concepts from political science and sociology, such as the advocacy coalition framework and collective action, perhaps because Sarkis et al. used a narrower definition of institutional theory in their review (how external drivers influence organizational actions).  Carter and Easton (2011) distinguished just four main theories used in the sustainable supply chain management literature, namely stakeholder theory, resource-based view, Table 6 transaction cost economics, and organizational learning. Their review found that transaction cost economics is little used in the literature, which corresponds with our findings that despite the apparent relevance to value chain coordination and governance, only one article (Rosen et al., 2002) applied transaction cost economics to private regulation in a global value chain. It is conceivable that the additional theories found in the private regulation literature can be applied to supply chain management research and CSR, and vice versa. As research in all three areas continues to grow the use of existing theories and theory development will expand.  6.3 Research topics Most of the articles reviewed are on adoption and implementation of private regulation, its effect, and private regulation as an institution, while a fourth research area, development of codes and standards, accounts for just ten percent of all articles. We found a notable difference in the number of studies about the effect of private regulation on what is commonly called the three pillars of sustainability. The effects of regulation on economic conditions were studied most often, followed by labor and social conditions and lastly the environment. Very few of the articles we reviewed looked at the interrelation and integration of the economic, social and environmental aspects of sustainability.   The research topic classification into four research areas differs from other literature reviews in this field because of differences in the scope and type of literature reviewed, but a comparison it is still possible where aspects of private regulation and global value chains are part of the reviewed literature. A lack of integration of economic, social and environmental sustainability was also observed by Seuring and Müller (2008), as was the prevalence of research on economic effects in  Egri and Ralston’s (2008) review of CSR literature in international management journals. However, environmental aspects were much more often studied than social concerns in the supply chain management literature (Seuring & Müller, 2008) and in the CSR literature in American management journals (Lockett et al., 2006). The emphasis on environmental issues in the supply chain management literature is not surprising, but the difference to the CSR literature review by Lockett et al. appears related to the selected journals of publication. Other reviews of supply chain management literature, such as by Kleindorfer et al. (2005) or Srivastava (2007) are often more concerned with technical aspects such as green design and operations, which often do not entail standards or other forms of regulation and therefore have little overlap with this review.  Unlike in our review research themes in CSR are typically described from a corporate perspective, such as in Taneja et al.’s (2011) literature review that categorized the topics into five groups: CSR in action; changing meaning, definitions and models of CSR; factors determining CSR initiatives; measurement of corporate social performance; and impact of CSR on stakeholders and financial performance. These five groups mostly correspond with the two research areas ‘development’ and ‘adoption and implementation’ that we identified. The impact on financial performance of companies is a notable exception. None of the articles in our review focused on the financial performance of buyer companies, while the effect on economic conditions in producing countries was an important topic. The growth in research on the effects of private regulation in recent years corresponds to some extent with Taneja’s et al. observation that recent publications look more often at how to measure the outcome of CSR initiatives.  The role and governance of value chains has not been included in research topic classifications in recent CSR literature reviews (Egri & Ralston, 2008; Lockett et al., 2006; Taneja et al., 2011) despite the prominence of global manufacturing and trade. Etzion (2007) included industry-wide private regulation in his analysis of how organizations interrelate with the natural environment, but omitted the role of the companies’ suppliers or value chains. As Scherer and Palazzo (2010) note, traditional CSR research has limits in a world where markets and corporations are global. While this review cannot address Scherer and Palazzo’s call for a new theory of the global firm, it expands the classification of research topics in the literature on private regulation for sustainability to perspectives other than from corporate global buyers and to include research topics on global value chains and governance.  Conclusions This literature review provides an overview of the research on private regulation for sustainability in global value chains. The following conclusions can be drawn from reviewing applicable articles published in peer-reviewed journals:  Private regulation in global value chains appears understudied in the academic literature. The number of articles that examine private regulation explicitly in a value chain context is relatively small at 188 published articles when considering the importance and growth of global value chains in the world’s economy. The CSR literature is extensive but most research is from a single-company perspective. The green supply management literature on the other hand focuses more often on engineering and logistics than on private regulation initiatives.  The most often studied sectors of the economy are agriculture, forestry and apparel manufacturing. The relatively small number of articles in manufacturing other than apparel, for example electronics and other consumer products, is noteworthy. This is despite the globalization of manufacturing value chains and the often problematic environmental and working conditions in which raw materials are sourced and products are assembled.  Research on private regulation in agriculture and forestry is mostly published in business and economics or general science journals and much less in agriculture and forestry journals. Agriculture and forestry researchers and professionals may miss recent developments and findings because relatively little is published in journals of their respective field.   Articles in this review examined almost equally the adoption and implementation of private regulation in global value chains, its effects, and its institutional role. The development of private codes and standards was the least studied area. The effects on economic, social and working conditions in value chains were analyzed more often than environmental impacts. Our classification of research topics in the literature differed in its value chain scope from previous reviews of the CSR and supply chain management literature, which either focused on CSR in single companies or on approaches not related to regulation, such as design and engineering.  The most commonly used theoretical approaches in the literature were global value chain analysis and stakeholder theory. A range of other concepts from economics, sociology and political science were also used. All theoretical approaches could be grouped under the banner of institutional theory as they examined private regulation as an institution at one of the three levels described by Williamson (1998): embeddedness, institutional environment, and governance.  Research on private regulation initiatives in global value chains is a relatively recent and growing field. Based on the analysis of published literature to date, we have three recommendations to help develop this area of research.  Define a common terminology for regulation and value chains among the different research disciplines and economic sectors studied;   Include the global value chain perspective more often in CSR research to reflect the reality of globalization and outsourcing in most industries; and  Carry out more research on sustainability initiatives in complex global value chains that are currently understudied, such as electronics.  Appendix: Bibliography of reviewed articles   References Allen, D. W. (1991). What are transaction costs. Research in Law and Economics, 14(0), 1–18. Bacon, C. M. (2010). Who decides what is fair in fair trade? The agri-environmental governance of standards, access, and price. Journal of Peasant Studies, 37(1), 111–147. doi:10.1080/03066150903498796 Baird, I., & Quastel, N. (2011). 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Journal of Business Ethics, 87(Supplement 1), 233–249. doi:10.1007/s10551-008-9815-z    Table 1 Typologies for global standards1, 2 Field of application Form Coverage Key drivers Certification process Regulatory implication Quality assurance Environmental Health Labour Social Ethical Codes of conduct Label Standard Firm / value-chain specific Sector specific Generic International business International NGOs International trade unions International organizations First party Second party Third party Private sector auditors NGOs Government Legally mandatory Market competition requirement Voluntary 1 From Nadvi and Waeltring (2004, p. 61) 2 Marked in italics are the types of standards included in the literature review  Table 2 Keywords used in literature search  Private regulation Sustainability Ethics Value chain Governance Certification Codes of conduct Codes of practice Industry self-regulation Initiatives Labelling Non-state market driven Soft law Soft regulation Standards Voluntary codes Voluntary regulation Voluntary standards Development Environmental Green Labor law Labor standards Social Corporate accountability Corporate citizenship Corporate ethics Corporate responsibility Ethical trade Social responsibility Triple bottom line Commodity chain  Commodity network Procurement Production chain Production network Supply chain Supplier relationship Traceability Value network Power  Table 3 Literature by journal category Journal category1 Articles Business and economics Business Economics Management Industrial relations & labor Operations research & management science Total  39 31 22 5 1 98 Environment Environmental sciences Geography Environmental studies Forestry Ecology Biodiversity conservation Fisheries Total  19 19 18 8 4 1 1 70 Political Science and Law Planning & development Political science Law Public administration International relations Total  31 13 3 3 2 52 Agriculture and food Agriculture Agricultural economics & policy Food science & technology Nutrition & dietetics Agricultural engineering Total  7 5 5 4 1 22 Engineering Engineering, environmental Engineering, industrial Engineering, manufacturing Materials science, paper & wood Total  7 2 1 1 11 Other categories Ethics Sociology Multidisciplinary Energy & fuels History & philosophy of science Social issues Area studies Biotechnology & applied microbiology Anthropology Philosophy Total  25 11 7 5 5 3 2 2 1 1 62 No Thomson Reuters category 22 1 Categories assigned to journals by Thomson Reuters; journals fall under one or more categories  Table 4 Literature by economic sector examined Economic sector Total 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 Agriculture 75 12 11 8 10 5 3 15 4 4  1 1 1 General 50 5 6 12 4 2 2 7 5 3 3 1   Forestry 29 6 1 2  4 5 4 2 3 1 1   Apparel and sporting goods 24 1 2 4 3 7  5  1  1   Fisheries 12 2 3 1 2 2 2        Manufacturing 8 1 1 1 1 2   1  1    Retail 5   2 1   2       Electronics 3  1 1       1    Construction 2   1 1          Logistics 1 1             Mining 1 1             Total 210 29 25 32 22 22 12 33 12 11 6 4 1 1 Note: Articles may examine more than one sector; total number of articles is 188  Table 5 Literature by research topic Research topic Total 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 Development               Codes and standards review 5 2 1   1      1   Gender 5    1   1 1 2     Role of producers and stakeholders 5  1     2 1 1     Integration of economic, environmental and social performance 2  1          1  Local context 2     2         Total 19 2 3  1 3  3 2 3  1 1  Adoption and implementation               Management 20 2 2 4  1 5 4   2    Motivation 12 4 1 1 1  1  1 2 1    Monitoring 10 1 1 1 1 4  2       Small and medium sized firms 4 1   1 1 1        Stakeholders 4   1 1 1  1       Strategy 3       2   1    Barriers 2 1  1           Total 55 9 4 8 4 7 7 9 1 2 4    Effect               Economic conditions in producing countries 21 4 4 3 4  1 3 1     1 Labor and social conditions 15  2 3 1 1 1 2 3 1 1    Connection between production and consumption 7 2   3   1       Local response 4 1 2 1 1          Product markets 3 1    1      1   Environmental conditions 2 1    1         Legal implications 2   1     1      Total 54 9 8 8 9 3 2 6 5 1 1 1  1 Institution               Value chain 26 4 5 4 4 2  3 1 1  2   Emergence 15 1 2 4  2 1 2 1 1 1    Role of the state 8 1 1 2   1 3       Norms and values 5 1  2 1   1       Context 4  1  1 2         Governance 2   1  1         Total 60 7 9 13 6 7 2 9 2 2 1 2   Grand total 188 27 24 29 20 20 11 27 10 8 6 4 1 1   48 Figure 1 Concepts in research on private regulation in global value chains in relation to the economics of institutions1 and academic discipline  1Economics of institution levels and frequency of change are from Williamson (1998)  Table 6 Theories identified in reviews of literature on sustainability in value chains  Carter & Easton, 2011  Sarkis, Zhu and Lai, 2011 Wahl and Bull, 2013 Area of interest Sustainable supply chain management Green supply chain management and organizational theory  Private regulation in value chains Journals reviewed Logistics and supply chain management journals Operations and supply chain management journals All in Academic Search Complete, Web of Science databases  Theories Knowledge-based view/organizational learning Resource-based view Stakeholder theory Transaction cost economics  Organizational theories: Complexity theory Ecological modernization Information theory Institutional theory Resource-based view Resource dependence theory Social network theory Stakeholder theory Transaction cost economics  Advocacy coalition framework Collective action problem Convention theory Embeddedness Global value chain analysis Politics of scale Social network analysis Stakeholder analysis Transaction cost economics  Convention theory Global value chain analysis Transaction cost economics 1- Embeddedness: Informal institutions, customs, traditions, norms, religion 2- Institutional environment: Formal rules of the game Level Frequency of change (years) Concepts in research on private regulation in global value chains 10² to 10³ 10 to 10² 1 to 10 continuous Imposes constraints Signals feedback Advocacy coalition framework Politics of scale Embeddedness Collective action problem Stakeholder analysis Main academic discipline Sociology Political science Economics Economics 3- Governance: Play of the game Sociology Social network analysis 4- Resource allocation and employment: Prices and quantities, incentive alignment   49    


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