Impacts of multi-layered trade governance on regulating corporate governance

In the wake of the emergence of global governance, the traditional division of labour between democratically legitimated state actors and private actors such as business firms has become blurred. This development challenges traditional approaches to regulation and even to democracy. With business firms engaging in regulation and in the provision of public goods, legitimacy problems arise. In particular, this trend renders the assumptions of corporate governance questionable, which build on the functioning of national regulatory frameworks. In a ‘post-Westphalian world’, the relationship of domestic law, international law and existing governance institutions with business firms needs to be re-examined. From the perspective of business firms, this development increases the complexity of their regulatory environments (‘transnational legal pluralism’) and, consequently, requires much more complex corporate governance structures. Instead of an exclusive focus on the protection of corporate shareholders, corporate governance needs to align individual, societal and business interests as closely as possible and tackle democracy and legitimacy deficits resulting from corporate engagement in global governance. Building on and complementing the methodological framework proposed in project 1.3.1., as well as upon earlier research, this project focuses on the impacts of trade on corporate governance.