Private Governance as an Institutional Response to Wicked Problems

The wicked problems of our time, e.g. environmental destruction or human rights violations, can endanger the legitimacy of firms, given that their global supply chain activities often cause these problems. While wicked problems transcend national borders and thus limit the capacity of legislative powers to enact change, corporate sustainability practices on an individual level often fail as well. Hence, the role of private governance on a collective level has become key as a response. This work discusses how private governance emerges and why firms are willing to engage in it by drawing on the case of the German Partnership for Sustainable Textiles. The findings of this work generate in-depth insights into the formation and functionality of private governance institutions.