Creating Private Institutions for "Good" Global Governance

Private actors supply a growing proportion of global business regulation. Desirable from a common interest perspective are inclusive institutions. But real-world arrangements vary greatly in this key dimension of institutional design, due to trade-offs with efficiency and control. What explains these differences? Building on the theory of institutional entrepreneurship, this article develops a process model of private governance creation. The proposed model offers an endogenous actor-centred explanation, but also brings contextual factors into the analysis. It identifies the vision of the institutional entrepreneur, the composition of dominant coalitions, and the distribution of bargaining power as the main process variables. With regard to context, the level of political contestation surrounding an institution building project is important. The model’s usefulness is demonstrated in three comparative case studies examining the creation of the Roundtable on Sustainable Biofuels, the Roundtable on Responsible Soy, and the Better Sugarcane Initiative. By unpacking the process of creation, the article fills the micro institutional gap between studies looking at the broader question of private governance emergence on the one hand and studies examining the interaction of existing arrangements on the other.