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Does California need Delaware? Explaining Indonesian, Chinese, and United States support for legality compliance of internationally traded products

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  • Benjamin Cashore
  • Michael W. Stone

Abstract

The purpose of this paper is to shed light on the emergence and institutionalization of a unique form of transnational business governance (TBG): legality verification (LV) systems, which track products along global supply chains. Instead of imposing wide ranging global standards commonly applied through “gold standard” certification systems, LV helps domestic governments enforce their own laws. Three processes help explain why Indonesia (as a producer), China (as a manufacturer) and the United States (as a consumer) moved, in the 2000s, from lukewarm interest or opposition to formalized support: how triggers enabled by economic interdependence are pulled; how ceding of instrument/process state sovereignty may reinforce substantive sovereignty; and historical institutional processes that shift organizational interests and problem definitions. Looking backward, the empirical results are consistent with a “Delaware effect” in which economic globalization is asserted to lead to a “ratcheting down” of environmental and social standards. Looking forward, we theorize about, and identify the conditions through which, widespread coalitions in support of the institution of LV, may pave the way for a “ratcheting up” process that is consistent with, but nuances, Vogel's “California effect.”

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  • Benjamin Cashore & Michael W. Stone, 2014. "Does California need Delaware? Explaining Indonesian, Chinese, and United States support for legality compliance of internationally traded products," Regulation & Governance, John Wiley & Sons, vol. 8(1), pages 49-73, March.
    • Handle: RePEc:wly:reggov:v:8:y:2014:i:1:p:49-73
    DOI: 10.1111/rego.12053
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    Cited by:

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    2. Berning, Laila & Sotirov, Metodi, 2024. "The coalitional politics of the European Union Regulation on deforestation-free products," Forest Policy and Economics, Elsevier, vol. 158(C).
    3. Zhang, Yan & Chen, Chen & Ma, Baojie & Jin, Shaosheng, 2024. "Trade effects of transnational timber legality assurance regimes: Evidence from the lacey act amendment on China’s forest product exports," Forest Policy and Economics, Elsevier, vol. 158(C).
    4. Timo Busch & Michael L. Barnett & Roger Leonard Burritt & Benjamin W. Cashore & R. Edward Freeman & Irene Henriques & Bryan W. Husted & Rajat Panwar & Jonatan Pinkse & Stefan Schaltegger & Jeff York, 2024. "Moving beyond “the” business case: How to make corporate sustainability work," Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 776-787, February.
    5. Jonathan Zeitlin & Christine Overdevest, 2021. "Experimentalist interactions: Joining up the transnational timber legality regime," Regulation & Governance, John Wiley & Sons, vol. 15(3), pages 686-708, July.
    6. Lucia Quaglia & Aneta Spendzharova, 2022. "Regime complexity and managing financial data streams: The orchestration of trade reporting for derivatives," Regulation & Governance, John Wiley & Sons, vol. 16(2), pages 588-602, April.
    7. Partzsch, Lena & Müller, Lukas Maximilian & Sacherer, Anne-Kathrin, 2023. "Can supply chain laws prevent deforestation in the Democratic Republic of the Congo and Indonesia?," Forest Policy and Economics, Elsevier, vol. 148(C).

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