Transnational governance spirals: the transformation of rule-making authority in Internet regulation and corporate financial reporting

Abstract

Transnational regulation involves profound changes in the ways rules are set today. Based on two case studies on Internet governance and the regulation of corporate financial reporting, we show that transnational governance is best understood as a dynamic, non-linear process. In both fields, regulatory institutions are constantly renegotiated between public and private actors, a process which gives rise to new, hybrid, forms of authority. The hybridization of authority challenges the common distinction between public and private authority in transnational regulation. We propose to characterize the ongoing dynamics as transnational governance spirals. Our comparative analysis follows a research strategy of causal reconstruction. To that end, we identify three mechanisms serving as analytical tools to explain transnational institution building and the observed governance spirals: integration, authorization and formalization.

Keywords:

• transnational regulation
• governance
• authority
• mechanisms
• institution building

Acknowledgements

We would like to thank our colleagues from the cross-sectional research group on New Modes of Governance at the WZB, primarily Holger Strassheim. We also thank Dieter Plehwe, the editors of CPS, and two anonymous reviewers for helpful comments and suggestions.

Notes

1. There is currently a variety of definitions of rules, norms, and standards (see e.g. Braithwaite and Drahos 2000, pp. 18–20). Because the exact distinction between norms, standards, and rules is not central to the argument of our argument, we use these terms synonymously. To us, the important aspects are that standards and norms can be of both a technical and social nature and that they are, contrary to what is frequently stated, not necessarily voluntary (see also Brunsson and Jacobsson 2000).

2. Distrust demands regulatory measures through instruments such as monitoring, auditing, but also deliberative modes of participation which supposedly increase trust but may ultimately entail new distrust. Responsibility drives regulation because jurisdictions are blurred in transnational environments. Soft and self-regulation shift responsibility to the rule takers, which in turn may create the need for additional rules. The search for control over the development of regulation triggers regulatory growth to the extent that regulatees or rule takers seek to influence the regulatory framework by defining competing schemes.

3. The US Department of Commerce declared jurisdiction only over the regulatory functions of the Internet's name and address spaces. The IETF has been able to retain its autonomy in setting technical standards.

4. All agreements between the US government and ICANN can be found here: http://www.icann.org/en/general/agreements.htm [Accessed 15 March 2010].

5. Details of the IASB's development have been covered elsewhere, see Tamm Hallström (2004), Martinez-Diaz (2005), Perry and Nölke (2005), Botzem and Quack (2006), Camfferman and Zeff (2007), Botzem (2008), and Botzem and Quack (2009).