D2 Phase I: Fostering Regulation? Corporate Social Responsibility in Countries With Weak Regulatory Capacity (2006-2009)

Multinational corporations are commonly seen as forces driving the deregulation of social and environmental standards in globalised markets. On the contrary, our sub-project asks under which conditions multinational corporations (MNCs) can contribute to regulatory capacity building in developing countries.
International agreements explicitly require MNCs to apply and disseminate standards of good environmental and health practices in the countries where they produce. This is particularly true for countries where state regulatory capacity is weak. To what extent and under what conditions can a spillover effect from voluntary corporate self-regulation to government regulation be observed? When applying international standards, do MNCs contribute to improving the level of environmental and health regulation and its practical implementation in these countries? To what extent do "new" forms of governance emerge?

Our project formulated working hypotheses on these questions, the explanatory factors of which vary greatly according to policy fields and sectors. Therefore, in the first SFB phase, we started with a country study, within which we examined multinational enterprises in different economic sectors and two policy fields to be regulated. The analysis focused on South Africa, an emerging economy that nevertheless has poorly developed health and environmental regulation and low political and administrative regulatory capacity. We examined MNCs in the mining, automotive, food and textile industries, which differ in the strength of their associational structures, export orientation, dependence on the domestic market, existence of mobilising NGOs and multi-stakeholder networks. In the area of health, we have selected HIV/AIDS as a comparatively conflict-prone regulatory field in South Africa, and in the area of environment, air pollution control, which is less controversial domestically.

SFB700 - D2 Phase II: Business and Governance in Africa (2010-2013)

The second phase of the project systematically investigates if and how companies engage in local governance in areas of limited statehood. We were particularly interested in the quality of non-state governance. While some argue that business in governance may complement or substitute for weak state capacities, governance literature paradoxically emphasizes the importance of a credible shadow of hierarchy to make firms’ ‘good governance’ behavior work. We examined if and how companies’ governance behavior depends on the capacity and the commitment of the state to cast a credible shadow of hierarchy. More importantly, are there functional equivalents that hold companies accountable in these environments, encouraging them to provide collective goods, to do so in a more inclusive way, and to organize production to minimize negative externalities? We investigated these questions empirically by studying the diverse security and environmental practices of extractive industries in four mining areas in Sub-Saharan Africa, which vary with regard to the capacities and the commitment of the state.