Revisiting the Standard Organization of Multi-stakeholder Initiatives (MSIs)

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Revisiting the Standard Organization of Multi-stakeholder Initiatives (MSIs)

The Case of a Meta-MSI in Southeast Asia Murphy, Luisa

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Murphy, L. (2020). Revisiting the Standard Organization of Multi-stakeholder Initiatives (MSIs): The Case of a Meta-MSI in Southeast Asia. Copenhagen Business School [Phd]. PhD Series No. 15.2020

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THE CASE OF A META-MSI IN SOUTHEAST ASIA

REVISITING THE STANDARD ORGANIZATION OF MULTI-

STAKEHOLDER INITIATIVES (MSIS)

Luisa Murphy

CBS PhD School PhD Series 15.2020

PhD Series 15.2020REVISITING THE STANDARD ORGANIZATION OF MULTI-STAKEHOLDER INITIATIVES (MSIS): THE CASE OF A META-MSI IN SOUTHEAST ASIA

COPENHAGEN BUSINESS SCHOOL SOLBJERG PLADS 3

DK-2000 FREDERIKSBERG DANMARK

WWW.CBS.DK

ISSN 0906-6934

Print ISBN: 978-87-93956-40-7 Online ISBN: 978-87-93956-41-4

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Revisiting the standard organization of multi-stakeholder initiatives (MSIs):

The case of a meta-MSI in Southeast Asia

Luisa Murphy

Supervisors:

Professor Jeremy Moon

Professor, Chair of Sustainability Governance Copenhagen Business School

Professor Andreas Rasche Professor of Business in Society

Copenhagen Business School

March 2020

Doctoral School of Organization and Management Studies Copenhagen Business School

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Luisa Murphy

Revisiting the standard organization of multi-stakeholder initiatives (MSIs):

The case of a meta-MSI in Southeast Asia

1st edition 2020 PhD Series 15.2020

ISSN 0906-6934

Print ISBN: 978-87-93956-40-7 Online ISBN: 978-87-93956-41-4

The CBS PhD School is an active and international research environment at Copenhagen Business School for PhD students working on theoretical and

empirical research projects, including interdisciplinary ones, related to economics and the organisation and management of private businesses, as well as public and voluntary institutions, at business, industry and country level.

No parts of this book may be reproduced or transmitted in any form or by any means,electronic or mechanical, including photocopying, recording, or by any informationstorage or retrieval system, without permission in writing from the publisher.

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Foreword

Almost three years ago to the day, I found myself on a plane to Singapore to embark on my first field trip as part of this PhD. Countless stories, radiant smiles, lantern festivals, moon cakes, computer breakdowns and laughs have been shared since. This PhD tries to capture some of the magic I experienced in the Southeast Asian and ASEAN region, whilst

recognizing that there is much more to say and indeed, do.

Needless to say, I am immensely grateful for the opportunity to have conducted this PhD. It was part of the larger VELUX Endowed Chair in Corporate Sustainability, which was funded by the VELUX Foundation, led by Jeremy Moon. If I am to start anywhere with “thank you,”

it is to Jeremy. From Day 1, Jeremy supported and believed in me, my project, my hopes and sometimes crazy dreams. Your brilliance, creativity and commitment to developing junior scholar careers and lives are qualities I will always admire. You have guided me, encouraged me to dream big and have been there through thick and thin notwithstanding a move to Budapest. Thank you for always making the time to read drafts, talk through issues and for treating my research as a high priority despite your own deadlines and work.

The second part of the dynamic duo, who brought life and excellence to the project was Andreas Rasche. Andreas, you also supported me and followed me when I was lost and helped me find my way back. Your excellence and Nike “just do it” slogan of efficiency (I would like a masterclass by the way) is inspiring. I will sincerely miss engaging, sparring and meeting with you both to talk about organizing for CSR and meta-MSIs. Thank you both again for letting me muddle through at times, being patient and providing guidance and mentorship. I count my lucky stars that I was able to collaborate with you both.

This project was also in large part supported by the trust and engagement provided by

ASEAN CSR Network and its CEO, Sir Thomas Thomas who welcomed me to the “family.”

Thomas, thank you sincerely for your willingness to include me and let me participate as a researcher. I am most grateful for the introductions, razor-sharp insights and resources that you provided me with during the last three years. Thank you also to the members of the ASEAN CSR network who took the time and resources to share rich and honest insights into

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Additionally, I am most grateful for the international partners including NGOs and intergovernmental organizations who also provided valuable inputs to this thesis.

Copenhagen Business School has been my professional home for nearly six years as I began my journey as a Project Manager and Research Assistant here prior to this position. I can honestly say that the Department of Management, Society and Communication (MSC) is one of the most vibrant, interesting and supportive environments I have ever experienced. It has served as an anchor. I am grateful to MSC’s Head of Department, Dorte Salskov-Iversen for welcoming me to the department and also to Dennis Schoenborn, the PhD Coordinator. I would like to thank the MSC support staff for all your encouragement and support over the years. Thank you as well to the staff at the Doctoral School of Organization and Management Studies (OMS) for your assistance and for bearing with me when I had technical difficulties.

My journey at CBS began with Mette Morsing, who has been a tremendous mentor to me since I stepped foot at MSC. Mette brought me into CBS and I am forever grateful. Mette, you are unique in your belief in others and truly shine as a person and academic. Thank you for your support, encouragement and the many fun times we have shared over the last six years. I continue to be inspired by your scholarship and way of being. I must also thank other MALT members, Anne and Thilde who have followed me on my journey and brought lots of joy, guidance and Ghanaian music and stories back into my life. Other colleagues at MSC have also been part of nurturing this project. I would like to thank Hans for sharing his expertise on corruption and anti-corruption issues and for your feedback on my project and literature review in its initial phases. I am also most grateful for the support from other MSCers who have provided in-depth feedback on my project including Erin, Kristian, Maha and Martin. Thank you also to Susan Ryan for providing helpful editing services.

To the MSC superstars, what a community of fellow PhDs you have built. I am most grateful to current and former PhDs as well as other junior scholars including but certainly not limited to Amanda, Anestis, Anna, Daniel, Henrik, Lara, Robin, Sara, Sarah N, Sarah C, Sarosh, Sofie, Tali and the list goes on! Thank you for the openness and support you have provided over the last few years. It means a lot to have a group where you can share the highs and the lows of the PhD experience without judgement. I am rooting for you all and look forward to

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This work also received excellent feedback from renowned scholars at CBS and at international institutions during my Work-in-Progress seminars and engagement at workshops and conferences. Thank you to Michael Mol for broadening my horizons and helping me improve my work at my first Work-in-Progress Seminar. I was also fortunate to receive feedback from my two discussants at my second Work-in-Progress seminar, Patrick Haack and Frank de Bakker. Thank you both for excellent guidance on how to how to craft my thesis for submission. There are countless others to thank who have provided constructive feedback and inspiring thoughts along the way. Dirk Matten also provided early feedback which was helpful for the development of this project.

To my incredible family and friends, you have been there by my side over the last three years. Daniel, you are my treasure. Thank you for letting me give myself to this journey. You are the most generous, loving, intelligent husband one could dream of. To my parents,

Victoria and Patrick, your thirst for knowledge, exploration of different countries and drive has been a guiding inspiration. Thank you also for listening to the trials and tribulations of this experience and for always being curious about my work and asking questions and providing feedback. Thank you to my extended parents’ in-law, Peter for your jokes and support and Mette, who we lost too soon, and I hope to make proud in spirit. Thank you for welcoming me to the family and supporting me as well Jessica and Patricia. Gregory, Jason, and your beautiful families, thank you for the joy, love and energy that you bring to my life.

To my Texas and Irish families, thank you for enriching my life and for your encouragement over the last three years. Finally, to my friends in Copenhagen, the US, in Europe, Africa, Asia and Latin America (the list goes on), thank you for always believing in me and providing me with countless laughs along the way.

Copenhagen, 1 March 2020 Luisa Murphy

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English Abstract

This thesis examines how the organization of multi-stakeholder initiatives (MSIs) as meta- organizations (MOs) influences their governance processes and impacts. Overall, the thesis contributes to the literature on MSIs by proposing the concept of a “meta-MSI” by

contrasting the organization of this type of MSI with the standard organization of MSIs in the private governance (PG) literature. Furthermore, this concept contributes to our

understanding of how and why some MSIs may provide different governance processes and impacts. I do so, by drawing on the concept of meta-organization (organizations of

organizations) and extending it to the context of MSIs (rule-setting organizations).

Specifically, I explore three themes of “meta-ness,” including context, membership and regulatory role. The thesis primarily focuses on the corporate social responsibility (CSR) issue of anti-corruption.

The thesis draws on the empirical case of an MSI that focuses on anti-corruption, the ASEAN CSR Network (2011) and its Working Group on Business Integrity (2014). It is

headquartered in Singapore and is comprised of one regional– and seven national CSR member organizations. These organizations (business associations, multi-stakeholder initiatives and corporate and non-profit foundations) are designated representatives of the individual member countries of the Association of Southeast Asian Nations (ASEAN) or regional ASEAN representatives. International civil society and intergovernmental partners support the organization. The data underpinning the papers and overall thesis is comprised of desk research, qualitative semi-structured interviews and observations which were conducted in the field during research stays in Singapore and Thailand.

Based on the case of the ASEAN CSR Network, the thesis shows through the themes of context, membership and regulatory role how meta-MSIs may depart from the standard model of MSI organization. Moreover, it suggests that context shapes the regional and national input into the meta-MSI’s governance processes, resulting in a changing organizational character and national governance impacts resulting from member organization interactions at the meta-MSI level.

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This thesis calls for further research on meta-MSIs and the influence of context, membership and regulatory role in order to advance and advocate a more encompassing understanding of how the organization of MSIs affects their governance processes and impacts.

Three papers constitute this thesis and provide findings which underlie the original

contribution of the concept of a meta-MSI and its governance processes and impacts. Paper 1 examines how national business systems (NBS) influence meta-MSIs and their approach to CSR issues, specifically, anti-corruption. It finds that regional meta-MSIs reinforce national practices represented by orders of worth (OOW) which emanate from members’ different NBS. These different NBS are reflected in the meta-MSI’s organization, thus providing an integrated and contextualized approach to anti-corruption. The paper contributes by showing that input into MSIs may be based on regional and national business systems.

Paper 2 investigates the significance of membership for the type of legitimacy that meta- MSIs create over time. It finds that membership-based meta-MSIs create high levels of cognitive legitimacy which limits their ability to create other types of legitimacy, specifically, pragmatic and moral legitimacy over time. The paper contributes to the PG literature by linking the interaction among different organizing elements with different types of

legitimacy. It contributes to the MSI debate on institutionalization by showing that MSIs do not necessarily become stable institutions but rather that their organizational character changes over time.

Finally, Paper 3 examines how the underlying organizational structure of multi-level meta- MSIs effects the interactions within them. It finds that meta-MSIs are characterized by both the “push” of international rules and the “pull” of national practices. These characteristics result in different interactions (cooperation, coordination, conflict and orchestration) for anti- corruption and necessitate a regulatory role of brokerage over time. The paper contributes by showing the relevance of cross-member MSI interactions for national level impacts.

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Dansk Resumé

Denne Ph.d.-afhandling undersøger, hvordan organiseringen af multi-stakeholder initiativer (MSIer) som meta-organisationer (MOer) påvirker deres governance processer og resultater.

Overordnet set bidrager afhandlingen til den eksisterende litteratur om MSIer ved at introducere konceptet “meta-MSI”. Dette koncept udvikles ved at sammenligne

organiseringen af denne type MSI med den typiske organisering af MSIer som beskrevet i private governance (PG) litteraturen (Dingwerth & Pattberg, 2009). Konceptet bidrager ydermere til vores forståelse af, hvordan og hvorfor nogle MSIer kan have anderledes governance processer og resultater. Jeg viser dette ved at tage udgangspunkt i konceptet meta-organisation (organisationer af organisationer) og anvende det i kontekst af MSIer (regelsættende organisationer). Mere specifikt undersøger jeg tre temaer relateret til “meta- ness,” herunder kontekst, medlemskab og den regulatoriske rolle. Studiet fokuserer på anti- korruption, som er et centralt emne inden for Corporate Social Responsibility (CSR).

Afhandlingen bygger på et empirisk casestudie af en MSI som fokuserer på anti-korruption, ASEAN CSR Netværket (2011) og dets Arbejdsgruppe om Virksomhedsintegritet (2014).

Organisationen har hovedkvarter i Singapore og består af en regional CSR organisation -og syv nationale organisationer. Disse organisationer (erhvervsorganisationer, multi-stakeholder initiativer samt private og non-profit fonde) er udpegede repræsentanter for enten de

individuelle medlemslande i Sammenslutningen af Sydøstasiatiske Nationer (ASEAN) eller regionale ASEAN repræsentanter. Internationale civilsamfundsorganisationer og

mellemstatslige partnere støtter organisationens arbejde. Afhandlingen og de individuelle artikler baserer sig på data fra desk research, kvalitative semi-strukturerede interviews og observationer fra feltarbejde i Singapore og Thailand.

Gennem en analyse af ASEAN CSR Netværket og temaerne kontekst, medlemskab og den regulatoriske rolle viser afhandlingen, hvordan meta-MSIer kan bevæge sig væk fra standardmodellen for organisering af MSIer. Ydermere argumenterer jeg for, at kontekst former inputtet (regionalt og nationalt) til meta-MSIers governance processer, hvilket fører til en skiftende organisatorisk karakter og governance effekter på det nationale niveau, som er resultatet af interaktioner mellem medlemmer.

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Afhandlingen opfordrer til yderligere forskning om meta-MSIer og indflydelsen af kontekst, medlemsskabskarakter og den regulatoriske rolle med henblik på at fremme en mere

dybdegående forståelse af, hvordan organiseringen af MSIer påvirker governance processer og resultater.

Afhandlingen består af tre artikler, som tilsammen underbygger det originale bidrag i form af konceptet meta-MSI og dets governance processer og resultater. Artikel 1 undersøger,

hvordan national business systems (NBS) påvirker meta-MSIer og deres tilgang til CSR spørgsmål, herunder specifikt anti-korruption. Artiklen konkluderer, at regionale meta-MSIer forstærker nationale praksisser forstået som orders of worth (OOW) der udspringer fra medlemmernes forskellige NBS. Disse forskellige NBS reflekteres i meta-MSIers

organisering og skaber en integreret og kontekst-specifik tilgang til anti-korruption. Artiklen bidrager ved at vise, at input til MSIer kan være baseret på regionale og nationale business systems.

Artikel 2 undersøger betydningen af medlemskab for den type af legitimitet, som meta-MSIer skaber over tid. Artiklen konkluderer, at medlemsskabsbaserede meta-MSIer skaber et højt niveau af kognitiv legitimitet, som begrænser deres evne til at skabe andre former for legitimitet, herunder specifikt pragmatisk- og moralsk legitimitet. Artiklen bidrager til PG litteraturen ved at forbinde interaktionen mellem forskellige organiserende elementer med forskellige typer af legitimitet. Artiklen bidrager til MSI diskussionen om institutionalisering ved at vise, at MSIer ikke nødvendigvis udvikler sig til stabile institutioner, men at deres organisatoriske karakter i stedet forandrer sig over tid.

Endelig undersøger Artikel 3, hvordan multi-level meta-MSIers underliggende

organisatoriske struktur har indflydelse på de interne interaktioner. Artiklen konkluderer, at meta-MSIer er karakteriseret ved både “push” fra internationale regler og “pull” fra nationale praksisser. Dette resulterer i forskellige interaktioner (samarbejde, koordination, konflikt og orkestrering) i forhold til anti-korruption og nødvendiggør en regulatorisk mæglingsrolle over tid. Artiklen bidrager ved at vise betydningen af interaktioner på tværs af medlemmer for resultater på det nationale plan.

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ABBREVIATIONS

ACN ASEAN CSR Network

AWGOBI ASEAN Working Group on Business Integrity CSR Corporate Social Responsibility

EITI Extractive Industries Transparency Initiative FSC Forest Stewardship Council

INGO International Non-Governmental Organization MNC Multi-National Corporation

MO Meta-Organization

MSI Multi-Stakeholder Initiative NBS National Business Systems

NGO Non-Governmental Organization OOW Orders of Worth

PG Private Governance

TBG Transnational Business Governance

TBGI Transnational Business Governance Interactions UNGC United Nations Global Compact

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The commonalities of transnational rule-making organizations on sustainability issues frequently go beyond their defining characteristics. In fact, there is something akin to a standard model around which the design, rhetoric and processes of transnational rule-making organizations converge (Dingwerth & Pattberg, 2009, p. 713).

There has been a tendency to understand multi-stakeholder initiatives (MSIs) as “global rule- setting” (Fransen & Kolk, 2007) organizations which are remarkably similar in their

organization (Dingwerth & Pattberg, 2009) in the private governance (PG) literature. This is because MSIs are conceptualized as “institutional infrastructure” (Waddock, 2008) which emerged to shape the corporate social responsibility (CSR) policies and practices of

companies (Brammer et al., 2012) in the 1990s as part of a larger transnational rule-making organizational field of similar organizations.¹ While, the PG literature has advanced our understanding of MSIs as organizations which are part of a larger phenomenon relating to the role of private actors in closing “governance gaps” (Ruggie, 2004) due to globalization (Scherer & Palazzo, 2007; 2011), our understanding of the nuances of MSI organization has also been limited by these assumptions.

This thesis takes its point of departure in the conventional understanding of how MSIs are organized, by revisiting assumptions about the context in which they are embedded, their membership² and corresponding, regulatory role.³ Three observations related to the

international context in which MSIs are presumed to be embedded (Gilbert et al., 2011), their

“standard” organization (Dingwerth & Pattberg, 2009) and global rule-setting regulatory role (Fransen & Kolk, 2007) spurred this thesis. In the following, I discuss the need for research which departs from the conventional understanding of how MSIs are organized in the context of these three themes to understand their potential implications for MSI governance processes and impacts.

1 Organizational field refers to “those organizations that in the aggregate, constitute a recognized area of

institutional life” (Di Maggio & Powell, p. 193).

2 Membership refers to a decision regarding who is allowed to join a organization (Ahrne & Brunsson, 2011).

3 In line with other literature on organization and private governance, I understand regulatory role as a

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First, MSIs have traditionally been viewed as emblems of the broader shift of governance regimes from a national to a transnational logic (Koenig-Archibugi, 2004; Scholte, 2005 cited in Mena & Palazzo, 2012). This is because MSIs are theorized to reflect the new role of private actors in the governance of transboundary social and environmental issues in the global governance⁴ context (Waddock, 2008). MSIs are one of the most prevalent

“institutional infrastructures for corporate social responsibility” among other standards, business-led initiatives and code of conducts which evolved for corporate self-regulation through soft-law. These mechanisms evolved in response to “new demands” (Ibid, p.88) created by globalization issues such as sweatshops, child labor and environmental destruction (Ibid). MSIs have hence been a prominent fixture in the CSR literature (e.g. Gilbert, Rasche,

& Waddock, 2011; Waddock, 2008) as well as the political science literature (e.g. Cashore, 2002), streams constituting the PG literature (Fransen et al., 2011).

Recent literature, however, regarding the relationship between governments and business responsibilities (e.g. Knudsen & Moon, 2017; Schrempf-Stirling, 2016) as well as the emergence of “rival” national MSIs which endeavor to enable local stakeholders to reclaim

“local” ownership over the MSIs (Hospes, 2014; Schouten & Bitzer, 2015) suggests that

“national contexts matter” in influencing MSIs and the organizational fields they constitute (Manning, Boons, von Hagen, & Reinecke, 2012, p.197). MSIs may not, as previously theorized (Scherer & Palazzo, 2007; 2011), be removed from the contexts in which they are embedded, but rather “mirror” (Jackson & Apostolakou, 2010) or replicate them in their use of organizational elements such as membership (e.g. Knudsen, 2018; Leitheiser, 2019).

Furthermore, even though many MSIs have evolved and are today embedded in regional contexts, how these contexts influence the organization of MSIs and their organizational character⁵ has been neglected. This is surprising given the literature on the relationship between CSR, regional contexts and public regional governance organizations such as the European Union (EU) (e.g. Knudsen & Moon, 2017).

4 Global governance both relates to a structure for the global governance of CSR issues by transnational actors

but also to a literature (e.g. Rosenau,1995).

5 Organizational character refers to the process by which organizations become institutions (Selznik, 1957). In

line with Selznik, I understand organizational character as a process that implies change based on an

organization’s relationship with its local environment (Ibid). I adopt Selznik’s view of organizational character

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There is also literature on CSR and regional agreements such as the North American Free Trade Agreement (NAFTA) (e.g. Dombois, Hornberger, & Winter, 2003), Trans-Pacific Partnership (TPP) and the Nordic Council’s Strategy for Corporate Social Responsibility, which regulate international business responsibility issues at the regional and national levels.

Yet, how regional and national contexts influence the organization of MSIs has been downplayed even though these contexts may have implications for their organization.

Second, while the PG literature is beginning to acknowledge the role that national institutions play in the evolution and organization of MSIs in home contexts (e.g. Knudsen, 2017), it has neglected to explore the relationship between national members and their role in transmitting national practices into international MSIs. This is surprising given that many MSIs include or are exclusive to national government and national network representatives as members. For instance, MSIs such as the Extractive Industries Transparency Initiative (EITI) includes member countries, Partnerships for the Goals (P4G) includes country partners as members and the United Nations Global Compact (UNGC) has local networks which represent national contexts.

Overall, membership,⁶ or who is allowed to join an MSI has been taken for granted in the literature. While MSIs are distinguished by their open and diverse membership of business and civil society organizations, most of the literature assumes that members are individual organizations (e.g. Fransen & Kolk, 2007, Mena & Palazzo, 2012). This is surprising given that MSIs are also referred to in the literature as “meta-organizations,” which are comprised of “organizations of organizations” as members, rather than individual members such as ISEAL Alliance, a global membership association for sustainability standards, United Nations Global Compact and the Forest Stewardship Council (Ahrne & Brunsson, 2005;

2008; Berkowitz, Bucheli, & Dumez, 2017; Chadhury, Ventresca, Thornton, Helfgott, Sova, Baral, Rasheed, & Litghart, 2016; Valente & Oliver, 2018). Despite the potential significance of this broader conceptualization of membership for other organizing elements which

organizations draw on including rules, hierarchy, monitoring and sanctioning, the implications for MSI governance have not yet been examined.

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Third, the nature of the regulatory role which MSIs play in aligning abstract global rules with national CSR initiatives and practices has been neglected in the literature. This is puzzling given the existence and emergence of MSIs which play bottom-up, experimentalist⁷

(Overdevest & Zeitlin, 2014), intermediary⁸ (Salles-Djelic, Mena, & Brés, 2019) and regional layer roles (Rasche, 2012). As Kourula, Paukku, Peterman and Korla (2019) point out, “we still have a rather limited understanding of the types of organizations that become regulatory intermediaries, the activities that they perform, their dynamic interaction with other

organizations, and what makes them successful” (p.141).

Moreover, Rasche (2012) uncovered nine prominent MSIs with a regional network layer.

These included the Forest Stewardship Council, Global Reporting Initiative and World Business Council for Sustainable Development, among others. As Rasche (2012) explains,

“we need to better understand whether a regional network layer would strengthen

coordination across local networks” since national networks may need to align themselves with international initiatives which might not be possible or attractive otherwise (Rasche, 2012, p.700). The world’s largest MSI, the United Nations Global Compact’s integration of a regional layer to promote coordination across national networks, echoes the need to

understand the prospects and pitfalls of such arrangements. Hence, further insights are needed on the different types of regulatory roles MSIs play and the institutional and organizational change such organizations might offer for standardizing vis-à-vis contextualizing

sustainability practices.

The empirical context for this paper focuses on anti-corruption as one CSR issue which MSIs address. Anti-corruption is synonymous with the “fight” against corruption, generally

referring to using one’s “authority for private benefit” (Rodriguez, Siegel, Hillman, & Eden, 2006 cited in Barkemeyer et al., 2015, p.349).

7 Experimentalism refers to a “recursive process of goal setting and revision based on learning from comparison

of alternative approaches to advancing these goals in different contexts” (Overdevest & Zeitlin, 2014, p. 25).

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While, corruption was traditionally an issue which states addressed exclusively, the

“corruption eruption” (Naim, 1995) led to a nexus of private and public actors, institutions, tools and discourse which gradually coalesced into a global anti-corruption “norm” and corresponding “industry” in the 1990s (Sampson, 2010). Despite the burgeoning of PG initiatives which focus on corruption (e.g. Extractive Industries Transparency Initiative, the Global Reporting Initiative 205: Anti-Corruption), there has been a lack of research on the topic (e.g. Barkemeyer et al. 2015; Barkemeyer, Preuss, & Ohana., 2018; Haufler, 2010).

Corruption is significant to study as an issue which MSIs address as “anti-corruption” for a few reasons. First, it differs from other CSR issues such as the environment which may relate solely to business externalities and be resolved without state actors. In contrast, corruption is linked directly to commerce, the state and societal institutions because it distorts the market by creating additional costs for firms and individuals and debilitates societal institutions which administer for example, contracts. (Barkemeyer et al., 2015). It thus, often reduces economic development and bears significant monetary and non-monetary costs on society (Ibid).⁹ Moreover, dealing with corruption may also be a precursor to addressing other CSR issues given that corruption can cripple institutions such as courts and reduce public spending for public goods such as healthcare and education (Transparency International, n.d.).

Corruption is also distinct because it is often viewed as more compliance-driven than other CSR issues (Barkemeyer et al., 2018), which arguably implies greater tensions at the local level due to the pressure to standardize practices according to global norms instead of

adaptation of these rules to local practices (Donaldson & Dunfee, 1994). Research into MSIs which may be organized to reflect local realities but also promote international rules provides insights into whether these organizations provide a way to reconcile these tensions since corruption perpetuates itself differently and is thus, a highly contextualized issue (Hellman, 2017; Zyglidopoulos & Fleming, 2008).

9 The global cost of corruption has been estimated at US $2.6 trillion or five percent of the world’s gross

domestic product (GDP), and at more than US $1 trillion paid in bribes by companies and individuals annually

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Examining the case of a meta-organization MSI (meta-MSI) in Southeast Asia, the ASEAN CSR Network, this thesis zooms in on the question: how do context, membership and regulatory role influence the governance processes and impacts of meta-MSIs?

Specifically, this thesis focuses on the implications of the regional and national contexts in which a regional MSI is embedded and its interplay with the global rule-setting

organizational field, how this affects its membership, and its regulatory role. It examines the governance processes and impacts of these themes with reference to the characteristics of the MSI debate (de Bakker et al., 2019). The thesis uses the CSR issue of anti-corruption to examine these questions.

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1.1 Motivation

Personal, empirical and theoretical motivations led to my embarking on this thesis. I elaborate these accordingly in this section.

1.1.1 Personal motivation

Prior experience with hard law and, particularly, the regulation of business in the Antitrust Division of the United States Department of Justice (DOJ) formed part of the rationale to conduct this thesis. My personal interest in the possibility that businesses might not only be deterred and punished through legal processes, but also motivated to engage in anti-

corruption activities through or in concert with soft-law instruments such as MSIs, served as a motivation to examine how MSIs and other PG organizations could contribute the

governance of CSR issues – specifically, anti-corruption.

Moreover, during my employment at the US DOJ, I became interested in how context influences business responsibilities. The issue of corruption was a contentious issue in the context of bid-rigging cases which involved international companies and occurred in contexts where the parties had different conceptions of business relationships and informal norms regarding business practices such as what constituted collusion. While this thesis does not explicitly focus on how or whether corruption is socially constructed, the experience at the DOJ sparked my interest in how CSR and anti-corruption are organized in different cultures and regulatory environments.

One serendipitous day during my employment as a research assistant for the VELUX Endowed Chair in Corporate Sustainability in 2016, I became further inspired to investigate the relationship between context and governance for CSR issues. This occurred when I was asked to prepare a brief on a regional MSI developed in the geographically, linguistically, economically, ethnically, religiously and culturally rich and diverse region of Southeast Asia (Archya, 2012). I was struck by the novelty of a regional MSI situated and developed in Asia, and the empirical opportunity for research on context, MSI organization and governance that this phenomenon provided.

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1.1.2 Empirical phenomenon-driven motivation

Three empirical puzzles drove this thesis. In the following, I elaborate on the phenomenon of a regional MSI embedded in a Southeast Asian context, its confederal membership-driven design and the implied tensions of its international and national organizing elements for its regulatory role. Collectively, these issues raised questions about how MSIs are

conceptualized in the PG literature.

1.1.2.1 Regional MSI embedded in Southeast Asian context

First, ASEAN CSR Network is a regional MSI (2011) that developed in the empirical context of Southeast Asia.¹⁰ Unlike the MSIs conceptualized in the literature, this MSI has a distinct regional purpose “in line with the achievement of the ASEAN Community in 2015” and aimed at promoting corporate social responsibility “as an integral strategy in ensuring sustainable and inclusive socio-economic development in ASEAN” (ASEAN CSR Network, n.d., p.1). This MSI therefore raised questions about the influence of national context given that extant literature with some exceptions (e.g. Manning et al., 2015; Schouten & Bitzer, 2015) has generally downplayed the influence of national and regional institutions on the organization of MSIs given their transnational orientation (Dingwerth & Pattberg, 2009;

Scherer & Palazzo, 2011).

ASEAN CSR Network’s embeddedness in Southeast Asia provided a unique, diverse and understudied context to examine how institutions¹¹ influence the organization of MSIs (Kim

& Moon, 2015; Nesadurai, 2017). The Southeast Asian context is arguably characterized by an exceptional diversity of institutional configurations (Mahbubani, & Sng, 2017; Tipton, 2009). Indeed, “national business systems” (NBS) or a countries historical and political institutional framework (Whitley, 1992; 1999) exhibit a stronger influence vis a vis firm resources or industry structures on firm structure and strategy as well as CSR practices (Ibid;

Chapple & Moon, 2005).

10 Southeast Asia refers to 11 countries. These include Brunei, Cambodia, East Timor, Indonesia, Laos,

Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam (Witt, 2019).

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The different stages of development represented by these NBS (Whitley, 1999) even before the histories of colonization by different Western powers of the Southeast Asian countries has led to vastly different levels of economic development and unique religious, cultural, ethnic and sub-nationalities (Ibid; Witt & Redding, 2014).

For example, Singapore’s GDP is 50 times Myanmar’s, whereas Indonesia’s population is almost 50 times greater than the population of Singapore. Distinct religions are practiced in the region. For example, Indonesia is a primarily Muslim country, while the Philippines is mainly Christian, and the majority of Thailand is Buddhist. Concurrently, with the exception of Thailand, histories of colonization by the British, French, Dutch, Spanish and American have engendered similar institutions, such as a strong role for the state with low capacity to achieve their goals and family ownership of large companies (Tipton, 2009; Witt & Redding, 2019).

Moreover, the ASEAN CSR Network was founded by designated country representatives of diverse CSR organizations representing most of the ASEAN countries, including non-profit and corporate foundations, business associations and multi-stakeholder initiatives. This also raised questions regarding how context influenced MSI members given the relationship between the type of responsible business organization, e.g., corporate foundation versus business or labor association, and context which have been theorized in the CSR literature (Matten & Moon, 2008). For instance, Matten & Moon (2008) have theorized that business associations are more common forms of organization for CSR issues in Europe as there is a history of negotiating, for example on labor issues through these associations and government plays a supportive regulatory role (Ibid; Knudsen, 2018). In contrast, corporate foundations may be a more prevalent form of business organization in North America given that there is a history of corporations providing discretionary funds and developing their own policies on these issues and more of an antagonistic relationship with unions and coercive regulatory role played by the government (Ibid).

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Finally, in juxtaposition to MSIs that have assumed political roles to govern CSR issues previously governed by the state and intergovernmental organizations in the Westphalian order (Scherer & Palazzo, 2007; 2011), the ASEAN CSR network was created under the auspices of the Association of Southeast Asian Nations (ASEAN).¹² The fact that ASEAN operates according to a shared “ASEAN way” that values personal relationships, informality, consensus and non-interference among member states (Jones, 2016), raised questions about the extent to which the ASEAN CSR Network reflected the ASEAN way. How “private”

could the organization be, given its initial funding and relationship to the intergovernmental organization of ASEAN?

1.1.2.2 Confederal membership

Second, the confederal membership design of the ASEAN CSR network contrasted with the nature of membership conceptualized in the PG literature. While the literature suggests that MSIs emerge independently from their members, the ASEAN CSR Network was formed by putting a boundary around its eight, pre-existing and founding members. This raised

questions about the significance of its members, since the ASEAN CSR Network would not exist without them. In addition, all ASEAN CSR Network members were appointed to sit on its board of trustees in a confederal design. This departs from literature on MSIs, which due to open membership usually involves representatives of business and civil society

organizations in governance processes (Dingwerth & Pattberg, 2009). Overall, this raised questions about member autonomy and MSI hierarchy, given the role of members in the MSI’s creation and also its governance processes.

Moreover, while a hallmark feature of MSIs is open membership to individual business and civil society organizations (Dingwerth & Pattberg, 2009), ASEAN CSR Network’s

membership to organizations of organizations or CSR organizations representing ASEAN countries with their own members, purposes and activities raised questions about how this type of membership impacted its members’ adoption of rules.

12 ASEAN is a regional intergovernmental and confederal organization comprised of ten diverse Southeast

Asian member countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore,

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1.1.2.3 Regulatory role

Third, the ASEAN CSR Network comprises different national organizations and collaborates with international partners to promote international rules, which aligns it with the definition of an international MSI. Yet, its confederal membership of national CSR organizations gives it a national flavor. This raised questions about the regulatory role and underlying organizing structure of multi-level MSIs, which are theorized to serve as global rule-setting

organizations (Fransen & Kolk, 2007) that “push” international rules to local networks (Rasche, 2012).

1.1.2.4 Anti-corruption focus

Finally, the diverse context of corruption in Southeast Asia and ASEAN CSR Network’s focus on anti-corruption posed questions about whether it could pursue a standardized approach as conceptualized in the PG literature. Indeed, there are different country contexts, reasons and modes through which actors engage in corruption in Southeast Asia (Hellmann, 2017; Johnson, 2017). For instance, in Thailand and the Philippines, “big men” or

patrimonial networks participate in corruption through fraud and large-scale theft as a means of providing more predictability in business and government, whereas “colluding elites”

engage in corrupt activities in Singapore and Malaysia in order to perpetuate the status quo by politicizing the bureaucracy and kickbacks (Ibid). In Indonesia, politico-bureaucrats and other elites use their power to exploit public and private resources (Ibid).

There are also vastly different levels of corruption among the ASEAN countries themselves.

For example, according to Transparency International’s (TI) Corruption Perceptions Index (CPI) (2019), Singapore is ranked among the least corrupt countries, whereas Thailand, the Philippines, Indonesia and Vietnam consistently rank among the most corrupt countries. See Table 1 below for an overview of perceived corruption rates in the Association of Southeast Asian Nations (ASEAN) adapted from TI’s CPI (2019). ASEAN’s recent focus on corruption and its acknowledgement that it poses the greatest obstacle to conducting business in the region (UNDP, n.d.), thus contributed to the empirical motivation to engage in this study.

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Table 1: Overview of corruption in ASEAN, adapted from Transparency International’s Corruption Perception’s Index (2019) (the author)

Country (organized by ranking) CPI Rank (2019) (0 = high corruption, 100 = clean)

Singapore 85

Brunei Darussalam 60

Malaysia 53

Indonesia 40

Thailand 36

Philippines 34

Vietnam 37

Myanmar 29

Laos 29

Cambodia 20

1.1.3 Theoretical motivation

This thesis is grounded in two theoretical motivations. First, as noted, literature on MSIs has neglected the context and regulatory embeddedness of MSIs (de Bakker et al., 2019). As previously mentioned, this has been due to prevailing assumptions about MSIs as global rule- setters (Fransen & Kolk, 2007) that share a standard model due to the global rule-setting organizational field (Dingwerth & Pattberg, 2009). This assumption is grounded in neo- institutional theory’s concept of the organizational field and the idea that organizations become isomorphic because they are subject to institutional pressures for homogeneity within a given organizational field which is assumed to grant legitimacy to the organizations

(DiMaggio & Powell, 1983). These include normative pressures relating to

professionalization of a field, mimetic pressures resulting in imitation by organizations of successful organizations due to uncertainty and finally, coercive pressures from regulatory sources (Ibid). In the context of MSIs, there has been a tendency to draw on neo-institutional theory as opposed to classic institutional theory in order to conceive of MSIs as expressions of uniformity rather than differentiation due to the fact that MSIs standardize global and universal corporate social responsibility rules (Brammer et al., 2012).

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As Brammer et al. (2012) explain with regard to the transnational rule-making field, “this new ‘public domain’ (Ruggie, 2004) with “global public policy networks” (Detomasi, 2007) is arguably one of the most powerful sources of isomorphic pressure to institutionalize CSR in business” (p. 16).

However, the formation and organization of the ASEAN CSR Network appears to depart from neo-institutional assumptions. As mentioned, the organization’s relationship to ASEAN and to the appointed member organizations of each member country (listed companies’

associations, chambers of commerce and industry, multi-stakeholder initiatives) appears to represent the ways of organizing for business responsibility and the major business

constituencies of each country suggesting that national and regional institutional frameworks might play a role in influencing the organization as well as the member organizations.

Thus, this case provided a motivation to consider the relevance of the comparative CSR and national business systems (NBS) approach (Whitley, 1992; 1999) and corresponding

literatures such as the “varieties of capitalism literature” (VoC) (Hall & Soskice, 2001) which I subsume under the NBS label. As mentioned previously, the NBS approach refers to how business is shaped by the national institutions in which it is situated, including the state, financial system, education and labor as well as the cultural system (Whitley, 1999). With a few exceptions (e.g. Knudsen, 2018 and Leitheiser, 2019), scholars have rarely drawn on the NBS approach for the purpose of theorizing about how PG initiatives are organized, as such organizations are viewed as vehicles of global governance (Brammer et al., 2012). Private governance theory could thus be enriched from applying this approach to the study of MSIs.

Furthermore, the diversity and “multiplicity” of “business systems” which have been theorized to comprise the Asian business systems (Witt & Redding, 2014); for instance, countries are theorized to be distinguished by more than one business system was relevant.

This provided an opportunity to appreciate the role of multiple business systems and their influence on the organization of MSIs beyond the traditional dichotomy of coordinated- market economies (CMEs) and liberal market economies (LMEs) which have been applied previously to conceptualize the organization of MSIs which developed in North America and Europe (e.g. Knudsen, 2017; Leitheiser, 2019) or even, state-led market economies in East

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Indeed, the multiplicity of Southeast Asian business systems offered an opportunity to extend theory by investigating how MSIs might reflect not one, but multiple business systems in their organization. Table 2 summarizes the shared and diverse ‘business system’ elements – categorized by Witt and Redding (2014) into seven dimensions – across the ASEAN

‘business systems’. However, Brunei Darussalam, Cambodia, Laos and Myanmar have been excluded, as data on their ‘business systems’ are limited (Witt, 2019).

Table 2: Overview of business system features of Southeast Asian business systems (adapted from ‘Table 2: High-level summary of institutional differences and similarities,’

Witt, 2019, pp.11-12).

Country

Business system elements

Indonesia, Malaysia, the Philippines, Thailand

Singapore Vietnam

Political system • Strong role for state

• Predatory

• Strong role for

state

• Developmental

and regulatory

• Strong role for

state

• Developmental

and regulatory

Financial system • Bank-led

• Allocation by

relationships and state guidance

• Bank-led

• Allocation by

relationships and state guidance

• Bank-led

• Allocation by

relationships and state guidance Education and

labor systems

• Weak education

• Weak skills

formation

• Employment tenures

short

• Weak unions

• Excellent

education

• Weak skills

formation

• Employment

tenures short

• Weak unions,

incorporated in government

• Weak skills

formation

• Employment

tenures short

• High union

membership but union a branch of Communist Party

Cultural systems • Interpersonal (some

institutionalized in Malaysia)

• Interpersonal and

institutionalized

• Developmental

• Interpersonal

Nature of the firm • Family and state

ownership

• Family and state

ownership

• Family and state

ownership Organization of

market processes

• Conglomerates

• Personal ties

• Government

• Conglomerates

• Personal ties

• Government

• Conglomerates

• Personal ties

• Government

• Communist party

Coordination and control systems

• Top-down decision-

making

• Little delegation

• Top-down

decision-making

• Top-down

decision-making

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Second, as a corollary to the first issue regarding the standard model of MSI organization, MSIs have been assumed to be organized with inclusive membership, rhetoric and processes as a means of garnering legitimacy (moral, cognitive and pragmatic)¹³ from external

audiences (Cashore, 2002; Fransen & Kolk, 2007; Mena & Palazzo, 2012). Yet, the ASEAN CSR Network’s exclusive membership of seven national member organizations and one regional organization suggests that MSIs can be organized with exclusive membership, rhetoric and processes. This raised questions about open and inclusive membership for legitimacy creation in MSIs and the types of legitimacy creation in MSIs with exclusive membership.

The ASEAN CSR Network has an underlying confederal organizational design entailing a regional organization of autonomous national organizations that create and implement their own international rules but also serve as “focal networks” or an organization that is

responsible for local coordination (Rasche, 2012). This provided another motivation for considering the different organizational structures possibly underlying multi-level MSIs and the interactions among the organizations within them.

These differences in the ASEAN CSR Network’s organization further prompted me to consider the relevance of organizational theory and the concept of meta-organization to the PG literature (Ahrne & Brunsson, 2005; 2008). In general, organizational theory has been somewhat marginalized in the literature. As Rasche, de Bakker & Moon (2013) explain,

“CSR scholars have tended to overlook, or take for granted, the respective organizational components of these developments” (Rasche, de Bakker, & Moon, 2013, p. 651). However, scholars are, in fact, beginning to recognize the value of examining the organizing elements such as membership, hierarchy or rules (Ahrne & Brunsson, 2011) – that PG organizations utilize and the implications for governance in relation to the dynamics within and between the organizing elements (Rasche & Seidl, 2019). However, although the concept of meta-

organization (Ahrne & Brunsson, 2005; 2008) is clearly relevant when one describes new forms of organizing for collective action as this is one of its purposes (Berkowitz & Dumez, 2016), its use in these discussions has been rare, albeit with some notable exceptions (e.g.

Berkowitz, Bucheli, & Dumez, 2017).

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Ahrne and Brunsson (2005; 2008) developed the concept of meta-organizations as a means of referring to organizations of organizations. Meta-organizations are primarily distinguished by their formation, which involves creating a boundary around existing organizations, but also by the nature of their membership, which is exclusive and endows members with a high degree of autonomy by virtue of their formation (Ibid). This is relevant because the

organizations which form the meta-organization do not “disappear” into the new organization but rather become its members (Ibid). Moreover, this process involves a local connection often because a boundary is put around organizations in a given context. In Ahrne &

Brunsson’s (2008) words, “meta-organizations can bring about a re-embedding by constituting a new context for interactions between organizations that lack a local connection” (p. 161).

Many MSIs and other PG organizations, such as the ISEAL Alliance (global standard membership organization), have formed in a similar fashion, and many are comprised of organizations of organizations whose membership is exclusive and thus provides and reinforces a certain identity. The Extractive Industries Transparency Initiative (EITI) is one such MSI. Even so, the concept and its theoretical implications for PGs has not been engaged to theorize about MSIs that depart from the standard organization (Dingwerth & Pattberg, 2009). As such, meta-organization theory provided a conceptual impetus and an opportunity to contribute theoretically to PG literature, a contribution made through the lens of ASEAN CSR Network’s exclusive membership of organizations of organizations, its formation by these founding members and the implications of this formation and membership for its multi- level governance processes and impacts.

1.1.4 Meta-organization and MSI characteristics

Given that I analyze the case, the ASEAN CSR Network as both a MSI and meta-

organization, what I refer to as a “meta-multi-stakeholder initiative” (meta-MSI), it is useful to summarize the meta-organization and MSI characteristics. I briefly explore the key similarities and differences along the lines of the context, membership and regulatory role according to the ideals presented in the MSI and meta-organization literature.

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First, in relation to context, MSIs are considered transnational governance mechanisms, whereas meta-organizations imply that the organization is bound to a national or local territory given that its formation involves putting a boundary around organizations in a specific environment. Meta-organizations are sometimes “interwoven” in their connection to an international organization (Ahrne & Brunsson, 2008, p.21).

Second, the purpose of creating meta-organizations is for member interaction (e.g. for best practice sharing, collective action and reinforcing identity). While as mentioned, the purpose of MSIs is to serve as global rule-setting organizations (Fransen & Kolk, 2007).

In contrast to the nature and type of membership in MSIs, meta-organizations are defined by their exclusive membership of similar but heterogenous organizations (e.g. organizations of organizations with different membership and identities) (Ahrne & Brunsson, 2008). This contrasts with the nature of membership in MSIs which is predicated on being diverse in its inclusion of individual firms and civil society organizations (Ibid; Mena & Palazzo, 2012).

In contrast, meta-organizations are dependent on their members for resources due to the nature of membership (Ahrne & Brunsson, 2008), MSIs are presented often as autonomous from their members in their creation and purpose.

Third, while MSIs are often presented as creating their own rules, meta-organizations are not usually considered global rule-making organizations but rather organizations which create member interaction for best practices as opposed to standardization or convergence of rules as doing so, would threaten member authority (Ahrne & Brunsson, 2008). Moreover, meta- organizations do not make rules necessarily for their members as is the case in MSIs but rather have the goal of making rules for the broader environment because they lack the authority to make rules which target their members due to their dependence on them (Ibid).

This contrasts with members being the rule target of MSIs (Mena & Palazzo, 2012).

Fourth, meta-organizations are characterized by making limited use of their hierarchy due to the role of members in their formation and governance processes. This contrasts with MSIs presented in the literature which appoint individual representatives to ensure equal

stakeholder representation in governance processes at the global level (Fransen & Kolk,

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Finally, meta-organizations are rarely able to sanction or monitor their members due to their lack of authority over them (Ahrne & Brunsson, 2008). In contrast, MSIs are set up to monitor their members implementation of the rules through a watchdog function (Fransen &

Kolk, 2007). This can involve sanctioning through expulsion albeit this is often not possible given the voluntary nature of MSIs (Fransen & Kolk, 2007; Rasche & Seidl, 2019). In Table 3, I provide a summary of the meta-organization and MSI characteristics.

Table 3: Summary of MSI and meta-organization characteristics

Characteristics Multi-stakeholder initiative Meta-organization Context • Organizational field of

global ‘rule-setting’

organizations

• Form a boundary around organizations in a context

• National, regional and international boundaries

• Re-embed local organizations Regulatory role • Global rule-setting

organization (rule-driven)

• Created for and by members (membership- driven)

• Interaction for best practices

• Collective action

• Identity building Membership (nature and