Private voluntary regulation in Business in the Community and Stonewall: The strengths of weak regulation

Understanding how to effectively regulate labour standards is a central issue in the field of industrial relations because it significantly impacts the lives of individual workers, as well as society and the environment at large. In this work, I draw attention to a relatively new and increasingly relevant method of regulating labour standards called ‘private voluntary regulation’. Hitherto, private voluntary regulation has been widely criticised of being weak and ineffective, particularly due to its lack of enforceability, its struggle to disseminate meaningful minimum standards and its potential for shallow implementation within the workplace. However, the existing literature on private voluntary regulation has generally ignored two substantial issues. First, research was predominantly conducted in the context of global supply chains, while national-level private voluntary regulation remains under-studied. Second, the agency of private actors, such as employers themselves or private collective organisations who may actively influence its effectiveness has largely been ignored in favour of structural considerations, such as organisational size, age, sector, and industry. To address these research gaps, I identify and evidence the relevance of three actor-centric independent variables which significantly impact the success of private voluntary regulation in shaping and influencing labour standards. These are: first, the ‘framing’ of private voluntary regulation, comprising of ‘business-case framing’ and ‘ethical framing’; second, the ‘interactions’ between the member firms in collective organisations, including ‘cooperation’ and ‘competition’; and third, the ‘governance’ of private voluntary regulation within firms, including ‘top-down governance’ and ‘bottom-up governance’. I argue that when these three variables work in conjunction with one another than labour standards can be effectively raised through private voluntary regulation. I empirically substantiate this argument through a comprehensive investigation of two British collective organisations that are involved in private voluntary regulation, namely ‘Business in the Community’ and ‘Stonewall’, as well as, ten of their member firms. I draw on multi-method data collection and triangulate three qualitative methods and one quantitative method to obtain more objective and generalisable empirical findings. These include firstly, a relational content analysis of documents, articles and press releases; secondly, 91 semi-structured interviews with experts and representatives of my case study organisations; thirdly, participant observations at 31 separate events; and finally, two small-scale online surveys with the member employers of the collective organisations. Through an iterative process of shuttling back and forth between existing theory and my collected empirical data, I develop and substantiate a theoretical argument which uses private actor agency to explain the fluctuating success of private voluntary regulation in raising labour standards. Firstly, I find that Business in the Community primarily relies on business-case framing to convince many employers to join its cause surrounding responsible business activity. These employers choose to participate in the private voluntary regulation of labour standards principally because it can result in improved financial performance through various pathways. This includes better employee recruitment and retention, the winning of new work contracts, a strengthening of brand image, and improved compliance with the law. While business-case framing results in high levels of firm commitment, its profit-centric ideology leads some businesses to merely make superficial changes to labour standards and even provides some employers with a smokescreen to hide other malpractices. Stonewall, on the other hand, relies more strongly on ethical framing which emphasises the notion that joining their membership is simply ‘the right thing to do’. I show that Stonewall gently challenges member firms on a moral level which is comparatively a less salient financial argument, and yet leads to more profound changes in labour standards. However, both Business in the Community and Stonewall tailor their usage of business-case and ethical framing depending whom they are talking to, and often use a combination of both types of framing. In fact, I show that the most successful changes to labour standards are made in those firms that actively respond to business-case, as well as ethical framing. Second, Stonewall primarily relies on inter-firm competition through its central benchmarking tool, namely the ‘Workplace Equality Index’. It fosters a competitive environment where employers are encouraged to self-monitor their own workplace policies and practices, to submit annual applications with supporting evidence, to receive external feedback, and to actively engage in a ‘race to the top’ of constantly elevating levels of labour standards. Business in the Community also utilises some successful competition, such as through its annual ‘Responsible Business Awards’; yet, I found these tools to be rather celebratory and to result in surface-level changes to labour standards. Instead, the main emphasis of interaction in Business in the Community is on creating cooperation between employers through its prestigious business network. This tactic successfully resulted in the dissemination and sharing of best practice, as well as in some communal projects. However, cooperation through business networks, I found, may at times remain a self-congratulatory façade so that employers feel as part of a ‘responsible business club’, without necessarily raising labour standards effectively. Competition and cooperation are not necessarily mutually exclusive however, and the most successful changes are made in those organisations that are both part of cooperative employer groups and are simultaneously in constant competition with other businesses. Finally, my ten firm level case studies revealed that top-down governance and bottom-up governance each carry distinctive advantages and disadvantages in implementing changes to labour standards through private voluntary regulation. Top down governance is most effective when changes are tactically and incrementally drip-fed into firms’ organisational culture, as well as actively aligned to their mission and values. Conversely, top-down governance can become tokenistic when new policies are not effectively translated into practices and lack dissemination across the organisation. Bottom-up governance is most effective in those firms where individuals or groups of employees actively take ownership of new private voluntary regulation initiatives and passionately use their agency to transform organisational cultures from within. Employee network groups (e.g. ‘LGBT employee networks’) are particularly valuable tools to drive change, especially when they provide workers with a voice and the power to influence management decision making through information feedback loops. However, bottom-up governance can at times lack the direction, strategy, support, and resources to effectively influence labour standards. Once again, my findings suggest a symbiotic and mutually reinforcing relationship between top-down and bottom-up governance leading to the most successful examples of change to labour standards through private voluntary regulation. Paradoxically, I find that those very aspects of private voluntary regulation that induce many critics to condemn it as ‘weak’, can – when collective organisations and their member employers utilise their agency in meaningful ways – turn into the ‘strengths’ of private voluntary regulation. When these private actors manage to successfully shape and influence private voluntary regulation through framing, interaction, and governance then it can in fact become a strong form of regulation. First, business-case and ethical framing can lead to an approachability and trust between collective organisations and private employers. Second, competition and cooperation can lead to an ever-evolving set of best practice standards. Third, top down and bottom-up governed private voluntary regulation can together lead to deep-rooted changes of organisational culture which emphasise worker voice. Thus, analogous to Mark Granovetter’s (1973) ‘strength of weak ties’, the effects of private voluntary regulation – allegedly a weak form of regulation – can through private actor agency, be strong