From Hierarchy to Network: Globalisation and emerging governance networks between MNEs, NGOs and governments

Globalisation is transforming the relationships between economics, business and politics around the world. More than this, it is changing the way in which governments, firms (especially multinationals) and other policy actors (which include NGOs, broadly defined, and international organisations, IOs) interact with each other. It thus follows that changing governance processes and structures are creating new policy opportunities for nonstate actors. It is the purpose of this project to explore these new opportunities in depth.

The formal stages of public policy-making remain largely within national borders; founded on a particular view of the sovereignty of the nation-state. However sovereignty, understood as the capacity to act within state borders (Krasner, 1999), is diminished by the rescaling of political economic relationships: policy-makers’ formal spheres of political authority (Rosenau, 2007) no longer coincide territorially with the economic geography of contemporary international business.

Multinational enterprises (MNEs) are the key to these changing relationships, for they possess control over economic resources across multiple jurisdictions that are beyond the control of nationally bounded states. If sovereignty is now a question of interdependence between a range of public and private actors, then MNEs are doing much of the actual, on-the-ground governing in the international economy, both intra-firm and through supply chain management. However, the corollary of diminished state sovereignty is not an equivalent increase in private autonomy, but rather a blurring of the boundary between the public and private, as public and private actors become increasingly interdependent. Whilst shifting patterns of business-government interdependencies are not a new development (Katsikas, 2010), the technological underpinnings of the current wave of globalisation make its subsequent reversal highly unlikely (Kobrin, 1991).

These developments are giving rise to new challenges, notably in the governance of the resulting economic structures. As a consequence, this renders problematic the analytical separation of market from non-market strategy. MNEs cannot execute their market strategies exclusively in the private domain; they have public roles required of them, via policy rather than the market, by emerging trans-boundary networks of actors, including states but also NGOs and IOs. Firms depend on these for knowledge, capability and legitimacy in order to implement both their market and non-market strategies.

One consequence of globalisation has been a weakening in the ability of national governments to control transnational economic actors, such as MNEs. This project draws on international business, institutional economics and public policy literatures to analyse this change and its implications for the actors involved in policy design and implementation. This shift implies that there are some functions that markets cannot perform, whilst globalisation is weakening traditional structures of hierarchy. The challenge is to identify ways in which networks can emerge and be governed in the absence of authority derived from hierarchy. Further, what does this shift mean for MNEs? How is it changing their market and non-market strategies as the divide between the public and the private weakens.

This project is conceived as being multi-disciplinary. It is anticipated that the research will involve extensive use of fieldwork interviews with policy-makers, MNEs, lobbyists and other actors involved in policy governance.