Where states have been unable or unwilling to authoritatively regulate corporate conduct beyond their borders, a variety of private actors have taken over. In addition to environmental damage, particularly human and labor rights violations have raised concerns about business exploiting weak standards in developing countries. Regulative initiatives by civil society NGOs rely on the tight functional coupling of two governance mechanisms, governance by values and governance by the market. NGOs try to apply market pressure on brand-named transnational corporations to comply with fundamental standards for fear of customer retaliation. As a consequence, since the 1990s, a vast number of certificates have proliferated alongside corporate codes of conduct, signalizing to stakeholders that the participating firms are “good corporate citizens”. Or, in the words of David Vogel, a “market for virtue” has come into existence.
This model of transnational labor regulation has recently come under fire, particularly as it axiomatically fails to address the complexity of global production networks. Unnoticed by the mainstream global governance literature, another type of non-state actor, labor unions and their transnational associations, the global union federations, have created an innovative governance scheme. Global union federations have negotiated and concluded global (framework) agreements that hold transnational corporations accountable for labor rights violations in their value chains. In this paper, drawing on work by Streeck and Schmitter, I argue that global agreements exemplify a transnational governance scheme relying on a distinct mechanism that is neither market- nor value-based but associational. I show that governance in specific constellations of actors and institutions can be based on cross-class cooperation and associational power. Furthermore, I point to the conditions for the effectiveness of associational governance. To this end, I draw on a broad empirical foundation of interview data collected in the course of a research project on global framework agreements.
