Globalisation brings a new set of transnational challenges as well as new modes of governance. Many question to what extent MSI can resolve the negative externality of globalisation and promote sustainable social, economic, and environmental development. Multi-stakeholder initiatives (MSI) are one of the new modes of governance tools; an alternative to classic hierarchical governance pushed by powerful actors such as firms and non-governmental organisations. Nonetheless, transnational challenges do not seem to miraculously go away with this new tool. This article aims to concisely define MSIs, explain why they appeared, and explain how assessing their legitimacy can be crucial to determining their effectiveness.

What are multi-stakeholder initiatives?

Mena and Palazzo define MSIs as ‘attempts to fill global regulatory gaps’ and portray the initiatives as ‘non-binding and voluntary private rules’ (2012, p. 2). Private actors’ increasing autonomy stems from the increasing power they hold. Transnational corporations (TNCs) hold the three faces of power (Fuchs & Lederer, 2007; Lukes, 2005). Therefore, they can directly, or in a hidden way (Hathaway, 2015), influence national and transnational governance. Similarly, NGOs and civil societies have also been granted more power in decision-making (Dür et al., 2015) since the 1960s’ new social movements (Vaillancourt, 1991). MSIs are bringing together new powerful actors and governments to find better solutions to transnational challenges (Mena & Palazzo, 2012). MSIs indicate personal commitments under ‘learning platforms’, ‘behavioural standards’ such as ‘codes of conduct’ and guidance, auditing mechanisms, and certifications (ibid., pp. 12–13).

The following section explains why MSIs are an attractive mode of governance nowadays.

The globalisation effect

Globalisation pushed for the emergence of new modes of governance. In this article, we refer to global negative externalities as transnational challenges, which themselves symbolise the seventeen sustainable development goals identified by the United Nations (United Nations, 2022).

Globalisation’s impacts are transnational and, thus, tough to resolve by classic nation-state hierarchical modes of governance since a nation’s power usually stops at its borders (Börzel et al., 2005). It pushed the emergence of new modes of governance under a ‘Multiplex world order’ (Acharya, 2017, p. 271; Hale, 2008), which involves an array of new influential actors such as international institutions, firms, and nongovernmental organisations (NGOs) (ibid., p. 276). The global order’s complexity incites conflicts of interest. Therefore, Börzel et al. (2005) established that non-hierarchical modes of governance may be the most effective tool to resolve transnational challenges. This tool brings together new actors under public-private partnerships or ‘self-regulatory activities’ (Mena & Palazzo, 2012, p. 2), such as MSIs. MSIs have a soft-law approach compared to classic hard-law hierarchical governance (Abbott & Snidal, 2000). Soft laws are less costly than hard laws.

Hard laws are distinguished by their binding legality, leading to high negotiation costs, sovereignty costs, violation costs, and additional costs linked to uncertainty (Abbott & Snidal, 2000). Soft laws are cheaper to put in place and easier to implement for a wide array of stakeholders (ibid.). They are implemented voluntarily and require strong post-agreement monitoring. Consequently, they are ideal for tackling transnational challenges characterised by uncertainty and many stakeholders (ibid.). In other words, MSIs may be the answer to transnational challenges.

Nonetheless, can soft laws and non-hierarchical modes of governance be as efficient as hard laws? Hereafter, I present Mena and Palazzo’s legitimacy framework as a tool to assess MSIs’ efficiency.

MSIs’ legitimacy

It is essential to analyse MSIs’ legitimacy to understand if an initiative positively impacts transnational challenges. This article is based on Mena and Palazzo’s framework (2012). MSIs’ legitimacy is analysed through input legitimacy and output legitimacy. Input legitimacy is ‘to what extent regulations are perceived as justified or credible’ (ibid., p. 3) internally, which means the actors directly governed by it, and externally, which means any other concerned non-certified stakeholders. In other words, is the MSI setting itself up for success, or is it giving more benefits to one group stakeholder? The input legitimacy’s criteria set is: ‘(a) stakeholder inclusion; (b) procedural fairness of deliberations; (c) promotion of a consensual orientation; and (d) transparency’ (ibid. p14). MSIs’ output legitimacy is ‘to what extent they effectively solve the issues that they target’ (ibid.). The output legitimacy’s criteria set is coverage, efficacy, and enforcement (ibid., p. 14). We establish that the more an MSI successfully fulfils these criteria, the more efficiently and fairly it should tackle a particular issue.

This set of criteria ought to be used to analyse different MSIs in order to determine their efficiency. The aim is to highlight weaknesses, which may explain instances of compliance failure or the potential risk of non-compliance. Improving our understanding of MSIs’ policy and organisation shortcomings can improve this governance tool and strengthen the fight against transnational challenges. The legitimacy framework can be applied to any MSI to assess the chances of success.

References

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