Governance of sustainable development: Towards synergies between corporate and political governance strategies

The paper explores a framework for analysing governance towards sustainabledevelopment. Departing from the thesis about a possible positive role forcorporate action, it refers to recent theorizing about both market and governmentfailures. Discussing externalities, public goods, information and adaptationdeficits, as well as bureaucracies' self-interest, corruption and capture of theregulator, the paper stresses the importance of governance aiming at synergiesbetween corporate and political governance. Concerning framework conditions, itoutlines principles of regulated self-regulation. Following the thesis about apositive role, the paper adds recent insights about theories of the knowledge-basedfirm, which help to analyse market evolution. In this context, it outlines theconcept of responsible corporate governance. Because governance involvesactors in their daily operations and certainly goes beyond setting a frame, thepaper finally discusses innovation-inducing regulation, serving complementaryfunctions to a framework and business operations. The conclusion is drawn thatgovernments' main function is to facilitate learning processes, thus departing fromstates' function as known from welfare economics. Thus, governance will have tobe explored as collective learning, involving business, governments, and civilsocieties' actors.