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The Firm as an Inspector: Private Ordering and Political Rules

Author

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  • Heritier, Adrienne
  • Mueller-Debus, Anna K.
  • Thauer, Christian R.

Abstract

With increasing fragmentation of worldwide production chains and the corresponding contracting relations between companies, the “firm as an inspector” has become a frequent phenomenon. Buyer firms deploy supervising activities over their suppliers' products and production processes in order to ensure their compliance with regulatory standards, thereby taking on tasks commonly performed by public authorities. Why would a firm engage in such activities? In this article we will analyze the conditions under which firms play the role of an inspector vis-à-vis their sub-contractor firms to guarantee compliance with quality and environmental regulations. We develop a theoretical argument based on transaction cost economics and institutionalism to offer hypothetical answers to this question and provide an empirical assessment of our hypotheses.

Suggested Citation

  • Heritier, Adrienne & Mueller-Debus, Anna K. & Thauer, Christian R., 2009. "The Firm as an Inspector: Private Ordering and Political Rules," Business and Politics, Cambridge University Press, vol. 11(4), pages 1-32, December.
    • Handle: RePEc:cup:buspol:v:11:y:2009:i:04:p:1-32_00
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    Citations

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    Cited by:

    1. Tanja A. Börzel & Thomas Risse, 2010. "Governance without a state: Can it work?," Regulation & Governance, John Wiley & Sons, vol. 4(2), pages 113-134, June.
    2. Janina Grabs, 2023. "A theory of credible cross‐temporal corporate commitments as goal‐based private sustainability governance," Business Strategy and the Environment, Wiley Blackwell, vol. 32(8), pages 5146-5160, December.
    3. Börzel Tanja A. & Hönke Jana & Thauer Christian R., 2012. "Does it really take the state?," Business and Politics, De Gruyter, vol. 14(3), pages 1-34, October.
    4. Büthe Tim, 2010. "Private Regulation in the Global Economy: A (P)Review," Business and Politics, De Gruyter, vol. 12(3), pages 1-40, October.
    5. Tzavara Dionisia & Heritier Adrienne, 2012. "Quality and Environmental Regulation: Verifying Compliance along the Supply Chain," Business and Politics, De Gruyter, vol. 14(2), pages 1-24, August.
    6. Dionisia Tzavara & Adrienne Héritier, 2011. "Quality and Environmental Regulation: Verifying Compliance along the Supply Chain," RSCAS Working Papers 2011/16, European University Institute.
    7. Dionisia Tzavara and Adrienne Héritier, 2011. "Quality and Environmental Regulation: Verifying Compliance along the Supply Chain," EUI-RSCAS Working Papers 16, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    8. Doh, Jonathan P. & Dahan, Nicolas M. & Casario, Michelle, 2022. "MNEs and the practice of international business diplomacy," International Business Review, Elsevier, vol. 31(1).

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