Escalation of Governance: Effects of Voluntary Standardization on Organizations, Markets and Standards in Swiss Fair Trade

Abstract

Voluntary standards are a ubiquitous phenomenon in modern society that has recently started to attract sociologists’ profound interest. This paper concentrates on formal standardization over the long term and seeks to understand its effects on the coordination of an organizational field. Using an institutional approach we see standards as a form of governance that can be analytically distinguished from other modes of coordination, such as markets and hierarchical organizations. To empirically ground our understanding of formal standards’ consequences on field-level governance, we conducted a case study of the historical development of the Swiss fair trade field since the 1970s. Evidence used in this case study is drawn from 28 expert interviews, documentation and fair trade standard documents. While a formal set of voluntary standards was absent in its early development, in 1992 fair trade organizations started to use written standards as a means of achieving their objectives. Paradoxically, the introduction of a rational standardization system has led to escalating governance structures in the field. In the long run the launch of formal standards has caused more organizations, more markets, and even more standards. The use of standards as a means of creating differentiation instead of generating uniformity is thereby seen as the main reason for increased coordination demands. As a consequence, this article highlights standards’ potential to boost additional governance efforts and directs attention to the mutual enforcement of distinct modes of coordination.