Public Authority and Private Rules: How Domestic Regulatory Institutions Shape the Adoption of Global Private Regimes

How might domestic regulatory institutions influence the adoption of global private regimes? We focus on the ISO 9001 and 14001 certification standards, which obligate firms to establish quality and environmental management systems. Previous research highlights the roles of international commercial audiences and national regulatory pressures as unconditional drivers of adoption. However, we argue that domestic regulatory institutions condition their effects—in opposite directions. Where regulatory institutions function well, firms facing high levels of regulatory pressure are more likely to seek ISO certification, but firms facing pressures from international audiences are less likely to do so. In contrast, weak regulatory institutions make export-oriented and foreign-owned firms more likely to seek ISO certification, but render firms facing high levels of regulatory pressure less likely to do so. We find support for our claims using firm-level data from 10,000 firms in 30 countries in Eastern Europe and Central Asia.