Abstract and Keywords
This article explores some of the ways that corporations coordinate to set the rules of business competition. Such coordination is often called “industry self-regulation” (ISR). ISR is sometimes created by actors that are not “industrial”. Its enforcement may not be “self” regulated, but rely instead on the sanctions of outsiders. It first describes the difficulties and promises of self-regulation as a mechanism to address environmental problems. Research has demonstrated that the effectiveness of the initiatives is subject to the credible enforcement of their rules and their interactions with other institutions. Stakeholders must infer the credibility of the certification by gauging the interests of the certifier. Informed customers and intermediaries support the functioning of self-regulatory institutions. Self-regulatory programs created by business enterprises take forms that appear to be designed to solve exchange problems. Firms can create misleading programs that substitute good feeling for good action.
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