A comparative capitalism perspective on the privatization of governance: Business power, nonbusiness resistance and state enforcement in Germany, 2000–2010

Abstract

Abstract The privatization of governance including the institution of nonbinding corporate social responsibility (CSR) frameworks to govern the social and economic conduct of large corporations is a controversial global process, which unfolds between and within nations. Studies of transnational private governance suggest that CSR frameworks reflect bargains between business and nonbusiness actors, reached on the background of the unfeasibility of intergovernmental binding regulation. But what explains the rise of such multi-stakeholder initiatives on the national level—and particularly in European coordinated market economies—where public forms of governance are historically well-institutionalized and more feasible? Based on our power resource theory (PRT)-informed study of Germany’s adoption of a national CSR framework, we argue that such settings motivate nonbusiness actors to resist, rather than engage in, business-driven processes of the privatization of governance. The struggle is decided by the state, which in Germany used its public power to enforce multi-stakeholder consensus around privatized forms. Our findings thus extend scholarly recognition of the role played by public authority in the privatization of governance. More generally, we promote a comparative capitalism perspective for the study of the politics of private governance.