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The Internal Challenges of Associational Governance

  • Sarah Dadush (a1)

This essay describes the normative dynamics within industry associations that affect their contributions to private transnational legal ordering. It asserts that even the most powerful associations possess characteristics that undermine their autonomy to rulemake for their industries, and so, their ability to govern. Examining the relationships between associations and their members helps us identify the forces that impede the effectiveness of associational governance, an important source of transnational private regulation.

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1 The Challenge of Transnational Private Regulation: Conceptual and Constitutional Debates 3 (Colin Scott et al. eds., 2011) (“Transnational private regulation capture[s] the idea of governance regimes which take the form of ‘coalitions of non-state actors which codify, monitor, and in some cases certify firms’ compliance with labor, environmental, human rights, or other standards of accountability.”).

2 Terence C. Halliday & Gregory Shaffer, Transnational Legal Orders, Transnational Legal Orders 3, 48–49 (Terence C. Halliday & Gregory Shaffer eds., 2015).

3 The focus here is on associations from the United States because it is home to many of the world's largest companies and, by extension, the biggest, most resourced, and globally influential associations. U.S. associations are nonprofit, voluntary organizations that aggregate, represent, and promote the interests of their member firms—domestic and transnational corporations. Be it in the area of pharmaceuticals, toys, derivatives, organic cotton, beverages, telecommunications, or chocolate, most industries are governed by at least one association, and most businesses belong to at least one association. Michael L. Barnett, One Voice, But Whose Voice? Exploring What Drives Trade Association Activity, 52 BUS. & SOC'Y 213, 213–214 (2013).

4 Matthew Potoski & Aseem Prakash, A Club Theory Approach to Voluntary Programs, in Voluntary Programs: A Club Theory Perspective 15–40, 23 (Matthew Potoski & Aseem Prakash eds., 2009).

5 See About ISDA,

6 Association professionals highlighted this at a conference on Industry Associations and Transnational Governance organized by the Rutgers Law School Center for Corporate Law and Governance and ASIL's International Organizations Interest Group on June 10, 2016.

7 Halliday & Shaffer, supra note 2, at 36. The authors note that settled norms nonetheless evolve over time, as a function of contexts, including the relative legitimacy of the actors involved. Id. at 24–31, 46.

9 Virginia Haufler, Globalization and Industry Self-Regulation, in Governance in a Global Economy: Political Authority in Transition 226, 232 (Miles Kahler & David A. Lake eds., 2003)

10 See About BIO, Biotechnology Innovation Organization.

11 John Carroll, BIO boots Martin Shrkeli's Turing out after pricing controversz erupts, Fierce Biotech (Sept. 23, 2015, 6:05 PM).

13 Kenneth Abbott & Duncan Snidal, Strengthening International Regulation Through Transnational New Governance: Overcoming the Orchestration Deficit, 42 Vand. J. Int'L L. 501, 512–519, 529–533 (2009).

14 Kenneth Abbott & Duncan Snidal, Hard and Soft Law in International Governance, 54 Int'l Org. 421, 548 (2000) (“Firms also prefer self-regulation for its business-friendly standards, low compliance costs, and limited intrusion by outsiders”); Tim Büthe & Walter Mattli, The New Global Rulers: The Privatization of Regulation in the World Economy 11 (2011) (“Firms and other private actors also often push for private governance, which they see as leading to more cost-effective rules more efficiently than government regulation.”).

15 Id.; Kishanthi Parella, Treaty Penumbras, 38 U. Pa. J. Int'l L. 275 (2017); Roya Ghafele & Angus Mercer, Not Starting in Sixth Gear: An Assessment of the U.N. Global Compact's Use of Soft Law as a Global Governance Structure for Corporate Social Responsibility, 17 U.C. Davis J. Int'l L. & Pol'y 41, 50 (2010) (explaining that “companies, like states, prefer their activities not to be subject to the decisions of an external force” and that soft norms should be hardened only gradually to avoid push-back).

16 Abbott & Snidal, supra note 14, at 3 (differentiating hard from soft law along three dimensions: whether the rule can be described as a binding “obligation,” whether it is “precise,” and the degree to which its interpretation, monitoring, and enforcement is “delegated” to an external body). Andrew Guzman & Timothy Meyer, International Soft Law, 2 J. Legal Analysis 171, 204 (2010) (analyzing delegation of rulemaking to a supranational entities—e.g. tribunals—by nation states).

17 Abbott & Snidal, supra note 14, at 436–444 (explaining the “sovereignty costs” attached to delegating authority to a supranational body).

18 Barnett, supra note 3, at 213-214.

19 Guzman & Meyer, supra note 16, at 182–183.

20 Rachel Brewster, Unpacking the State's Reputation, Harv. J. Int'l L.J. 231, 231–232 (2009).

21 Spillman, supra note 8, at 11–12; Bernstein, supra note 12, at 138–140 (discussing the importance of social bonds for individual, repeat playing diamond dealers); Lisa Bernstein, Private Commercial Law in the Cotton Industry: Creating Cooperation Through Rules, Norms, and Institutions, 99 Mich. L. Rev. 1724, 1750–52 (2001).

22 Spillman, supra note 8, at 168–180.

23 Several association professionals who participated in the Industry Associations and Transnational Governance conference favored having member firms designate specific individuals to represent them at events, rather than sending someone different each time.

24 Spillman, supra note 8, at 163–168, 352–354, and 360–370; Bernstein, supra note 21, at 1782.

25 Bernstein, supra note 21, at 1726–1728 and 1745.

26 Spillman, supra note 8, at 5–8, 12.

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