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How do different actors in the international business arena coordinate their understandings, expectations and actions? In other words, how do the “rules” for international business regulation come to be?

The term “rules” is a shorthand for the range of different ways for coordinating expectations and actions. However, social scientists generally use the term “norms” to indicate coordinated expectations and action. Some scholars suggest detailed and useful taxonomies of norms for business regulation.

The Rules of the Game

Coordinating actions requires common understandings and expectations of what should happen. But, the norms that express what actors expect to happen vary in a number of ways. Norms may be stated in ways that:

• Are more or less precise
• Carry different levels of obligation
• Draw on more or less formal ways of settling disputes when actors do not agree
• Are more or less universal
• Are more or less flexible.

The point is that norms allow for common expectations and coordinated actions. In short, norms regulate global business.

Coordinating Action

Scholars are about finding common patterns in the messy give-and-take of real life. This is particularly challenging when trying to make sense of global business regulation. Different actors use different methods and tools to accomplish different aims within different markets. Add to this complexity the fact that the situation or context of business is always changing (new events, new technologies, changing relationships, new understandings, new problems, etc.) and it is no wonder that scholars, as well as business and state leaders, face a daunting challenge.

So, can anything systematic (and useful) be said about global business regulation? Yes, but perhaps less than we'd like.

What are general ways that actors try to coordinate their action? Scholars identify some general ways actors coordinate their behavior.

• Modeling. I like the way you do something. It seems to work. So, I seek to model my behaviors and understandings (know-how) on yours.
• Reciprocal adjustment. You have a goal. I share that same goal. Let's figure out how to achieve that goal together.
• Non-reciprocal coordination: You have a goal. I have a different goal. However, there is some benefit for both of us if we work together. Perhaps we'll both achieve our separate goals.

Power and Influence

Sometimes actors cannot or do not want to work together. In cases like this, differences in power and influence become critical. Is there some way I can force you or induce you to play by my rules? Or, in other cases, we may all agree on basic approaches to a problem, but we've got to bring “outsiders” into our game. There are different ways of motivating cooperation and coordination.

• Coercion. I (or we) will hurt you in some way if you don't do what we want. For example, play by the rules (laws, customs, contracts, treaties) or we'll use military force (rarely), apply economic penalties, ban you from certain markets or a whole host of other options. Bottom line: Play by our rules or it's going to hurt.
• Rewards. If you play by our rules you'll be rewarded. Perhaps we'll let you enter certain markets. Perhaps we'll give you a loan. Perhaps we'll do business with you.
• Capacity-building. Sometimes actors simply do not have whatever resources, institutions, cultural heritage, etc. it takes to be able to play by the rules. Capacity-building is aimed at putting in place or developing the foundations for cooperation and coordination.
• Settling disputes. Sometimes it makes sense to enlist the help of a third party to help us solve our differences. So, we delegate the ability to decide the dispute to someone who is qualified to help. The power to settle the dispute rests in some separate person or institution.

Power is anything but a simple idea. There are multiple ways of exerting influence and even actors that appear to be less “powerful” have ways of changing the behavior of more powerful actors. Some methods work better than others and methods change greatly, depending on the situation. For instance, even though the U.S. government and businesses exert the most influence in global business regulation (in other words, get their way most often), their influence is far from complete.

Indeed, nominally weak actors have several ways to resist, modify or even threaten the influence of otherwise powerful actors.