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This paper explores to what extent the quality of governance by MNC in areas of limited statehood depends on the limitation, and, more importantly, on the restraint of statehood. The control over the monopoly of force and a minimum of state capacity to set and enforce rules are only one condition among others facilitating inclusive governance contributions. Largely overlooked so far is that state actors (or other local authorities) need to be checked and held accountable in order to ensure a certain quality of business contributions to governance. To develop this argument, we introduce the concept of quality of business contributions to governance and discuss to what extent limited and restrained statehood accounts for the substantial variation in quality observed empirically. Based on a discussion of the ambivalent role of statehood for governance by non-state actors, we conceptualize restraints on statehood as a scope condition for the quality of business contributions to local governance. In addition to institutional restraints drawn from liberal state and democratic theory, such as the rule of law and elections, we consider societal mechanisms of restraint at the local level, such as embeddedness in societal institutions and community pressure. Empirically, we explore our argument and the power of these various mechanisms of restraint in case studies of mining companies in Sub- Saharan Africa and explore gold mining companies in Tanzania in more detail.

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