Private Governance as an Institutional Response to Wicked Problems

From casualties in textile factories to child slavery on cocoa farms, firms are repeatedly involved in immoral business practices. Statutory regulation as well as individual efforts to improve these circumstances are, however, limited and widely ineffective. Instead, another idea is becoming increasingly popular: private regulation that enables collective action. In a nutshell, the idea is for firms to collectively and voluntarily impose compulsory regulation on themselves in order to trigger constitutional change. This work discusses the phenomenon and the conditions under which firms are willing to engage in multi-stakeholder initiatives. In this vein, it draws on a single in-depth case study of the German Partnership for Sustainable Textiles, an analysis of which reveals that such private governance institutions can evolve if actors perceive engagement to be possible, and that the frontiers of this perception can shift over time if certain conditions prevail and adjustment mechanisms are applied.