Patterns and explanations of corporate voluntary norm compliance: results from a structured focused comparison of German G500 in the Global Reporting Initiative.

VerfasserSchwindenhammer, Sandra

1 Introduction

A growing body of voluntary approaches to regulation (VAR) is applied in several countries and transnational contexts, especially in the environmental sector (see for example Toller, 2011; Dingwerth & Pattberg, 2009). (1) VAR are seen as part of a new interplay between the state, business and civil society (Flohr et al., 2010a) with companies taking on voluntary (self-)regulatory functions. There is some empirical evidence of banking, chemical, forestry and insurance companies committing themselves to public-private or private self-regulatory initiatives, e.g. to reduce greenhouse gas emissions, hazardous waste, or rain forest destruction. The emergence of voluntary eco-labeling systems, codes of conduct, certification or reporting schemes reflects the increased use of VAR, even though they highly differ from a cross-national perspective and with regard to the number and types of actors involved, and the steering mechanisms and instruments applied. Their increased use raises questions of both, the input and the output dimension of environmental governance. According to Scharpf (1999), governing processes are generally responsive to the manifest preferences of the governed and the policies adopted have to generally represent effective solutions to common problems of the governed. With regard to the latter dimension, the output of a VAR can be defined as the commitments of actors, the outcome includes changes of behavior based on such commitments, and the impact can be understood as the contribution to problem solving resulting from changes of behavior (Underdal, 2004, p. 34). Given the growing use of new forms of public-private or even private VAR, it is important to understand the extent to which companies comply with non-binding norms, the factors that influence compliance, and the strategies available to increase it.

Thus, the article focusses on the outcome of a transnational multi-stakeholder VAR in the field of sustainability reporting. It asks how transnational business self-regulation is carried out in the Global Reporting Initiative (GRI) and tests factors of influence that create or enhance a company's willingness to comply with norms based on voluntary self-commitments. (2) With a focus on the actor level, I test competing hypotheses on the influence of different national conditions. With a focus on the German domestic context, I present the results from a structured focused comparison of systematically selected Fortune Global 500 companies originating from Germany (German G500). I detect different patterns of voluntary corporate norm acceptance and norm implementation in the GRI and highlight the factors of influence and underlying causal mechanisms by which German G500 are likely to contribute to transnational voluntary environmental self-regulation.

The article proceeds in several steps. Section 2 starts conceptualizing companies as political actors and introduces descriptive categories and indicators which help to identify different patterns of corporate voluntary norm compliance. Three patterns of corporate norm-consumership are distinguished: Companies that comprehensively comply (all-embracing norm-consumers), comply sporadically (incomplete norm-consumers) or do not comply at all (non-consumers). Next, section 3 discusses corporate voluntary norm compliance in the GRI. Section 4 presents the research methodology and systematic selection of five extreme cases. Section 5 introduces a home state-framework for analysis that applies a modified isomorphism approach from sociological neo-institutionalism combined with an actor-level perception argument. It differentiates between coercive, mimetic and normative isomorphic pressures as causal mechanisms. Drawing on data from semi-structured expert interviews with company representatives, section 6 discusses the explanatory value of factors of influence and causal mechanisms in the political, societal and economic dimension of origin and on the transnational level. It comes up with the conclusion that the willingness of German G500 to engage proactively in the GRI is influenced by a causal complex consisting of one necessary and eight significant conditions. The final section 7 summarizes the empirical findings and sketches future steps for research.

2 Defining patterns of voluntary corporate norm compliance

In environmental VAR the functional division of labour between the private and the public sector is blurred. Companies have taken on authoritative roles and regulatory functions (Hall & Biersteker, 2002; Cutler et al., 1999).

"The earlier distinction between governments as being public in form and public in purpose, while actors from civil society were regarded as private in form and public in purpose, and business corporations as being private in form and private in purpose, is no longer valid" (Flohr et al., 2010a, p. 4).

In the evident fragmentation of political authority companies have wider responsibilities than simply to make money for their shareholders, as classical economics, most notably Milton Friedman, long have argued (Friedman 1970). According to the revised definition of corporate social responsibility (CSR) by the European Commission released in October 2011, CSR is "the responsibility of enterprises for their impacts on society" (European Commission, 2011, p. 6). Companies are discovered as political partners with significant regulatory capacities, e.g. technical expertise or extensive financial resources for solving global environmental problems. Indeed, a growing number of companies is engaged voluntarily in transnational processes of norm setting and norm implementation. But, transnational environmental VAR are not fully enforced in consistent ways. Cross-national or even national variation in corporate voluntary norm-related behavior persists. The mere existence of transnational environmental VAR does not preclude companies from green-washing themselves or contributing to environmental degradation. (3) The deepwater horizon oil spill disaster of BP in the Gulf of Mexico in 2010 is only one example of how companies still notoriously damage air and water quality, produce non-degradable waste or contribute to the change of the world's climate. Arguably, critical scholars thus question the willingness of companies to take voluntary steps to eliminate or minimize adverse impacts of business actions on the natural environment and to act in the general interest (see for example Banerjee, 2007).

Even if we do not share such a general negative appraisal, corporate voluntary norm-related behavior in the context of transnational environmental VAR is, to say it least, multifarious: While many companies still do business as usual and resist complying, others engage sporadically, and only a few companies have currently begun to contribute proactively to processes of voluntary norm acceptance and norm implementation.

Notwithstanding the fact that most transnational VAR in environmental governance struggle with corporate compliance gaps, much of the existing literature has left the level of corporate norm application as something of a black box (Vogel, 2008, p. 276). The outcome dimension of transnational VAR is neglected for several reasons: Scholars predominantly focus on processes of norm setting and ask for the conditions under which new transnational norms emerge, how they develop, how they interact, and in how far they contribute to an emerging transnational governance architecture (Flohr et al., 2010a). In the literature, there is often a sense that VAR are out there and just come about --with an associated feeling of determinism and functionalism (Djelic & Sahlin-Andersson, 2006, p. 2).

In a functionalistic understanding voluntary norm compliance is exclusively induced by the institutional design features of VAR. While rationalist scholars concentrate on positive and negative incentives such as the provision of club goods (Potoski & Prakash, 2009), constructivists conceive of corporate voluntary norm compliance as a process of norm internalization. They postulate that the emergence of global standards of appropriate business behavior affect companies' preferences to act in the general interest:

"If you want to be a socially accepted 'global player' these days, you had better subscribe at least to some international human rights and environmental standards, and you had better report about your efforts at implementing these norms through changes in management and production rules" (Risse, 2007, p. 135).

But, first and foremost, the impact of VAR is neither deterministic nor is corporate norm compliance a self-fulfilling prophecy. The existence of certain VAR does not imply that companies de facto implement the norms they have committed to.

As previously mentioned, corporate voluntary adoption of norms can take on many forms, even the form of window-dressing. Companies can (and do) decouple structure from process and thus create compliance gaps between formally stated norms and given corporate practices. Thus, it is crucial to assess different patterns of corporate voluntary compliance with transnational norms. We first need to pay close attention to the question: How is transnational business self-regulation carried out? The literature on transnational VAR identifies two general behavioral patterns to indicate corporate voluntary norm-related behavior. Companies can contribute to norm setting and norm development processes and thereby engage as norm-entrepreneurs or/and they can accept and implement certain norms and act as norm-consumers (Wolf & Schwindenhammer, 2011; Flohr et al., 2010a, p. 18f.).

Norm-entrepreneurs support the institutionalization of a new norm by adopting unilateral company codes, by lobbying for it among their peers or by engaging in the creation of a collective self-regulatory approach. After a norm has already reached a certain level of institutionalization, a company can still...

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