Regulation & Governance

Published by Wiley
Online ISSN: 1748-5991
Print ISSN: 1748-5983
By examining developments in England and Wales this article considers police reform in the context of the tension between operational independence and citizen oversight. The article assesses the nexus between regulation and accountability in order to shed light on how a bifurcated accountability paradigm has protected police autonomy. Particular significance is attached to the cold-blooded police shooting of an innocent man as a critical moment in the recent history of police governance. The lesson-learning strategy of the Independent Police Complaints Commission, created under the Police Reform Act 2002, is singled out as an important driver of police reform. Although police governance reform in England and Wales is context specific, it is held that appreciation of the regulation accountability nexus and complaints as lesson-learning opportunities are of significance in other jurisdictions and sectors.
This study explores the implications of different approaches to performance management for inspection work and regulatory outcomes. It assesses to what extent variations in methods for controlling discretion explain why in some cases regulatory inspectors limit themselves to the narrow boundaries of their formal mandate, while in other cases they work collaboratively with inspected firms and other organizations to develop innovative strategies that solve complex regulatory and business problems. After reviewing alternative approaches to the management of discretion, I present a natural experiment that offered an opportunity for controlled comparisons of two current attempts to reconcile bureaucratic performance with accountability: New Public Management and Experimentalist Governance. Case comparisons in the area of labor inspection in Brazil – involving severance payments, fraudulent cooperatives, and safety in construction – suggest that these two approaches to the management of regulatory bureaucracies produce considerably different inspection strategies and regulatory outcomes. The different accountability mechanisms and investigation strategies inspired by each of these approaches create different sets of incentives with direct effects on inspectors' motivation and their ability to resolve compliance problems.
This research considers accountability issues for new forms of regulation that shift the emphasis from prescribing actions to regulating systems or regulating for results. Shortfalls at various levels of accountability are identified from experiences with these regimes in the regulation of building and fire safety, food safety and nuclear power plant safety. These experiences illustrate how accountability shortfalls can undermine regulatory performance and introduce a potential for subtle forms of regulatory capture. These concerns underscore the importance of finding the right fit between regulatory circumstances and the design of regulatory regimes.
The legitimacy and accountability of polycentric regulatory regimes, particularly at the transnational level, has been severely criticized, and the search is on to find ways in which they can be enhanced. This paper argues that before developing even more proposals, we need to pay far greater attention to the dynamics of accountability and legitimacy relationships, and to how those in regulatory regimes respond to them. The article thus first seeks to develop a closer analysis of three key elements of legitimacy and accountability relationships which it suggests are central to these dynamics: The role of the institutional environment in the construction of legitimacy, the dialectical nature of accountability relationships, and the communicative structures through which accountability occurs and legitimacy is constructed. Second, the article explores how organizations in regulatory regimes respond, or are likely to respond, to multiple legitimacy and accountability claims, and how they themselves seek to build legitimacy in complex and dynamic situations. The arguments developed here are not normative: There is no “grand solution” proposed to the normative questions of when regulators should be considered legitimate or how to make them so. Rather, the article seeks to analyse the dynamics of legitimacy and accountability relationships as they occur in an attempt to build a more realistic foundation on which grander “how to” proposals can be built. For until we understand these dynamics, the grander, normative arguments risk being simply pipe dreams – diverting, but in the end making little difference.
The literature pertinent to regulation presents disparate views of the role of human agency in regulatory compliance. Some authors assume regulators' and regulatees' capacity for agency to be self-evident; others show that human agency may be constrained and as a consequence tends toward sustaining the legitimacy of their respective organizations rather than achieving the risk reduction goals prescribed by the regulatory regime. Drawing on Margaret Archer's work (among others'), this article explores how the agency of regulatory actors is critical to the regulatory project yet contingent. This contingency is explored through a comparative analysis of the regulatory responses to an industrial disaster and to counterterrorism efforts at seaports and airports in the wake of the 11 September 2001 (“9/11”) terrorist attacks. This analysis found that problem solving in the pursuit of regulatory goals was most effective when there was political support for the authority of the regulators and respect for their expertise and when the risk of concern could be narrowly defined. These conditions could also reap benefits at the worksite level. However, the capacity of regulators to mobilize resources, exert authority, and transform constraints into opportunities in order to reduce risk could be limited. Tight political control, limited knowledge of the environment to be regulated, and a potentially limitless exposure to risk meant that while agency could still be expressed, it was aimed at goals that included shoring up political legitimacy, enhancing personal authority, and allaying public concern.
The ultimate formulation of the Federal Communications Commission's “nondiscrimination on the Internet” principle could have a significant impact on economic welfare and on innovation. In this article, we explain the economics of discrimination as it applies to the Internet, and we offer a new approach for identifying anticompetitive discrimination. Our proposal would require a complaining content provider to prove (i) the broadband service provider has discriminated in favor of some affiliated content provider that is “similarly situated” to the independent content provider; (ii) such disparate treatment is based on affiliation and not on some other consideration; (iii) the independent content provider has been unreasonably restrained in its ability to compete; and (iv) the harm it suffers as a result of the discrimination would likely redound to the harm of broadband users.
This paper considers the level of, and changes in, optimal noncompliance penalties under the following conditions: (i) where the regulator responsible for setting policy parameters, such as a penalty, is different from (and thus may have a different objective from) the regulator responsible for enforcing existing regulations; and (ii) where enforcement behavior changes from one in which enforcers are unresponsive to overtures on the part of firms to increase compliance to one in which enforcers are responsive to such overtures. The model developed shows that when enforcers “switch” from unresponsive to responsive enforcement, the optimal penalties for noncompliance need to be reduced. The analysis also gives insights as to what variables dictate the degree of penalty reduction.
The average number of serious and “other than serious” violations per inspection in manufacturing in federal OSHA states.
The average number of violations cited by inspection sequence for establishments with different numbers of inspections
Total and serious violations cited by inspection sequence and other variables
The determinants of the number of violations cited with period interactions included
The relation of inspection sequence to hours on-site (only inspections with zero violations)
We examined the Occupational Safety and Health Administration's (OSHA) inspections in the US to identify the effects of repeated inspections and the time between inspections on non-compliance. Our sample included 549,398 inspections conducted from 1972 through 2006 in manufacturing plants in the 29 states where federal OSHA enforces the law. We controlled for inspection type, industry, establishment size, and year. The number of total violations cited fell by 28%–48% from the first to the second inspection; after that, the numbers declined much more slowly. These effects were found in every one of the four sub-periods examined. The number of violations cited increased with each additional year since the prior inspection after controlling for other variables; however, the increases were small, totaling approximately 15% over five years. OSHA should probably give higher priority to first time inspections than to repeated inspections. The current requirement that at least two years elapse between planned inspections should probably be lengthened.
Recent reforms of corporate governance law and related litigation rules in the US and in Germany indicate that reports of the spread of adversarial legalism are greatly exaggerated. Politics and legislation in the US since the mid-1990s have turned quite decisively against shareholder litigation even as corporate governance and securities law reforms have expanded the role and scope of the regulatory state. Germany's extraordinary expansion of financial and corporate governance regulation since the early 1990s exemplifies juridification. Although these reforms included some liberalization of shareholder litigation rules, the changes reflected skepticism towards private litigation and imposed new constraints on the most prevalent forms of shareholder suits. Marketization of economic relations and the era of finance capitalism have produced far more legalism than adversarialism, more regulation than judicialization, and more ex ante transparency rules than ex post litigation remedies.
Contests over the scope and strength of regulation and governance are commonplace – and commonly repeated. The same players vie for the same government prize year after year: for example, environmental standards, government contracts, research grants, and public good provision. The open question is whether more rents are dissipated in repeated regulatory contests than onetime competitions. This question matters for regulation and governance because societies should design policies to waste the fewest scarce resources. According to some, the answer is “no”, but others say “yes”– more resources are wasted when people compete repeatedly for the same government prize. Herein, we use two game theoretic equilibrium concepts to help untangle the answer. Our results suggest non-myopic contestants are more likely to behave as partners than rivals – provided the context is relatively sterile. Several common complications help break up the tacit partnership, including a disparity in relative ability, a shrinking prize, and additional players.
In this research, we assess whether the number of public comments filed in response to proposed agency rules has dramatically increased as a result of the automation of the submission process. Specifically, we compare the volume of comment activity across two large sets of rules issued by the Department of Transportation, one that occurred before the launch of an agency-wide electronic docket system and another that occurred after this launch in 1998. Our analysis shows that, contrary to expectations held by many researchers and practitioners, the overall levels and patterns of stakeholder behavior showed a remarkable degree of similarity across the two periods. This finding implies that public involvement in rulemaking is not likely to become vastly more prevalent in the information age, confounding both hopes of democratization of the process and fears of costly and harmful mass participation.
Whereas both the literature on globalization and the literature on regulatory diffusion stress the pressures that led to policy convergence, this article shows how the ideology of incumbents produced different regulatory outcomes, even in the face of strong financial and technological pressures that constrained policy agency. By looking at the regulatory frameworks adopted at the time of electricity privatization in Latin America, this article shows that right-wing governments adopted regulations that eliminated barriers to entry and investment and limited the discretion of regulators (market-conforming regulations), and that former statists who had pragmatically converted to the market creed instead chose regulations that tended to impose higher barriers to entry and investment and gave regulators wide discretion in conflict resolution and price setting (market-controlling regulations). These findings suggest the need to look at the ideology (and ideological legacies) of government coalitions for a more nuanced understanding of the process of regulatory diffusion that took place across many sectors in most regions of the world.
In the face of “permanent welfare austerity,” the European Union (EU) is increasingly involved in the governance of health care through various “new governance” tools. This development coincides with a growing interest in modernization of welfare, including health care. One of the fundamental critiques of new governance in the EU context concerns the (perceived) inability of new governance to protect the “social” against the “market” in Europe’s constitutional settlement. Using multi-level governance and constructivist approaches, this article considers whether the EU’s governance of health care via the “Open Method of Coordination” advances a neo-liberal agenda of health care modernization.
The international harmonization of technology-related regulations seeks certain norms across diverse contexts. Harmonization efforts are based primarily on the promulgation of state-centered command and control forms of regulation, though they may also be accompanied by the diffusion of more plural approaches that are decentered from the state. We contrast the ways in which the “proper” use of transgenic cotton seed technologies is understood in harmonizing regulations with the way this technology is used in practice in regions of Argentina and China. We find divergence that poses challenges for both state-centered and decentered approaches to harmonization. While state-centered approaches are blind to some critical processes on the ground, decentered strategies are found wanting in situations where norms remain deeply contested amongst actors situated in very uneven power relations. In both cases, we find that establishing and securing norms that are socially just and environmentally sustainable means attending much more explicitly to the political economies in which technological practices actually take root.
While both India and Brazil are seriously affected by the HIV/AIDS epidemic, each country has chosen a different approach to providing affordable pharmaceutical treatment. Whereas the Indian government has paved the way for market-driven solutions, Brazilian public authorities are strongly involved in the research and production of HIV/AIDS medication. Brazilian regulations permit comprehensive and free provision of HIV/AIDS drugs, whereas the majority of the affected population in India does not receive adequate pharmaceutical treatment. To explain the different policy outputs, we draw on the developmental state literature. Efficient decisionmaking structures, a devoted bureaucracy, and effective policy instruments enable public authorities to provide public goods even in the context of relative scarcity. We show that the assumptions of developmental state theory have to be complemented by the assessment of civil society actors' potential to trigger governmental interventions in the market.
This paper asks whether the migration decisions of unauthorized Mexican immigrants to the USA have been influenced by stronger US border enforcement efforts since 1993 that have sharply increased the physical risk and financial cost of illegal immigration. These measures were supposed to have decreased the probability of successful entry, thereby lowering the expected benefits of migration. We carried out a logistic regression analysis of data from a recent survey of 603 returned migrants and potential first-time migrants in rural Mexico. Our findings indicate that tougher border controls have had remarkably little influence on the propensity to migrate illegally to the USA. Political restrictions on immigration are far outweighed by economic and family-related incentives to migrate. An alternative, labor-market approach to immigration control with higher probability of effectiveness is outlined.
Intensified global economic competition, economic liberalization, and the rise of EU governance have led some observers to argue that there has been a trend toward the “Americanization” of the European “way of law.” This article addresses that contention, focusing on legal change in European member states. It first describes ways in which the American legal tradition has differed most sharply from the national legal systems of Western Europe (including Great Britain) and the political and economic factors that account for this “American legal distinctiveness.” Similar political and economic factors currently are at work in Europe, the article acknowledges, creating incentives for legal convergence. But it also argues that European legal culture and the political organization of European national states generate path-dependent forces that impede European movement toward American ways of law, and it discusses six important differences between European and American law that remain entrenched and are unlikely to disappear.
Safety regulation – in the form of pre-market approval, licensure, screening, and product entry limitations – governs numerous market realms, including consumer finance. In this article, we ask whether the effects of safety regulation go beyond safety and affect consumers' beliefs about the distribution of products they can use. We model “approval regulation,” where a government regulator must approve the market entry of a product based upon observable, unbiased, and non-anticipable experiments. We show that even if regulator and firm disagree about only quality standards, the disagreement induces the firm to provide more information about its product than it would in the absence of regulation. Put differently, purely first-order disagreements in regulation generate second-order consequences (more certainty about product quality). These second-order consequences of regulation are sufficient to generate first-order effects among end-users (more consumption of superior products), even when users are risk-neutral. In other words, even if approval regulation produces little or no improvement in safety or quality, it still aggregates information useful to “downstream” product users; these users will exhibit higher consumption and will more readily switch to superior products. In contrast with libertarian analyses of entry regulation and licensure, the model predicts that entry restrictions may be associated with greater product or service utilization (consumption) as well as with greater price sensitivity among consumers. Because contemporary cost–benefit analyses ignore these second-order effects, they are unlikely to capture the possible confidence effects of approval regulation.
The figure illustrates the continuum of international legalization covering formal norms from hard law to soft law, based on the criteria of Abbott and Snidal (2000): precision, obligation, and delegation. The continuum contains a diversity of norms that is filling the space of global governance.
The international norms that are developed as tools of global governance can be placed on a continuum from traditional “hard law” treaties to the vaguest and voluntary “soft law.” In this article we develop an analytical framework for comparing norms on different positions along the continuum, thus for comparing international hard and soft law. We root the framework in both the rationalist and the constructivist paradigms of international relations by focusing on two overarching evaluative criteria: effectiveness and legitimacy. These broad concepts are divided into smaller building blocks encompassing mechanisms through which norms can exert influence; for example, by changing material incentives, identities, and building capacity, and by contributing to building source-based, procedural, and substantive legitimacy. We illustrate the applicability of the framework with three norm processes of varying degrees of “softness” in global climate governance.
This article uses the case of anti-money laundering regulation to investigate international club organisations’ efforts to secure compliance with their rules. As these rules can hardly claim much legitimacy, one would expect that they are complied with only if the club organisation uses side-payments or coercion. Indeed, the Financial Action Task Force against Money-Laundering (FATF), the international standard setter in that field, has used blacklisting to force non-members into compliance. But although it had greatly improved compliance, the blacklist was suspended again after a short period of time. Why? This article argues that this was due to allegations of the blacklist being illegitimate. The FATF reacted by withdrawing the blacklist and also by engaging in various legitimatory practices, because even club organisations need legitimacy if they want to achieve results. Only if the rules are considered legitimate, will there be actual, and not just formal compliance. Hence this article denies the existence of a dilemma between legitimacy and effectiveness (the conventional view), suggesting that only legitimate rules can be effective.
Overview of instrumental and normative sources of (non-)compliance in anti-corruption
The Central Eastern European member states of the European Union have introduced a host of anti-corruption measures in the past two decades, yet corruption is still prevalent. Rather than asking what is wrong with the letter of the law, which has traditionally been the focus of analysis, this article identifies some of the reasons why those whose behavior the law seeks to change fail to act as expected. Drawing on theoretical insights from implementation studies and using Hungary as an illustrative example, the article finds that both incentives and normative judgments are skewed towards non-compliance with anti-bribery laws. The main policy implications are that anti-corruption interventions should pay more attention to raising awareness among target groups, take existing social norms into account, and rely on positive incentives as well as, or rather than, increasing penalties.
Transnational governance initiatives increasingly face the problem of regime complexity in which a proliferation of regulatory schemes operate in the same policy domain, supported by varying combinations of public and private actors. The literature suggests that such regime complexity can lead to forum shopping and other self-interested strategies, which undermine the effectiveness of transnational regulation. Based on the design principles of experimentalist governance, this paper identifies a variety of pathways and mechanisms, which promote productive interactions in regime complexes. We use the case of the EU's Forest Law Enforcement Governance and Trade (FLEGT) initiative, interacting with private certification schemes and public legal timber regulations, including those of third countries such as the US and China, to demonstrate how an increasingly comprehensive transnational regime can be assembled by linking together distinct components of a regime complex. We argue that it is the experimentalist features of this initiative and its regulatory interactions, which accommodate local diversity and foster recursive learning from decentralized implementation experience, that make it possible to build up a flexible and adaptive transnational governance regime from an assemblage of interconnected pieces, even in situations where interests diverge and no hegemon can impose its own will.
Factor and reliability analysis of the punitiveness of the enforcement style-as-intended by the inspector (N = 234) † Factor loadings
Factor and reliability analysis of the punitiveness of the enforcement style-as-perceived by the regulatee (N = 100) Factor loadings According to you, how did the inspector behave during the last inspection? Unreasonable 0.74
Responsive regulation usually boils down to the assumption that enforcers should not shift to coercing before it has become clear that persuading does not work. This presupposes that it is possible to determine what the correct enforcement style is, that enforcers can apply the most suitable style, and that enforcers control the negative unintended consequences of their conduct. We have studied the applicability of these presuppositions at the Dutch Food and Consumer Product Safety Authority by way of observations, interviews, and a survey. The applicability of all three presuppositions has proven problematic; enforcement agents apply different styles in comparable cases; they are impeded in applying the most appropriate style; and they do not control the perverse consequences of their conduct because regulatees tend to perceive it as more coercive than intended by inspectors. Our findings are not unique to this inspectorate and hence raise questions about the applicability of the theory of responsive regulation.
Regulatory bodies: mission and interviewees
Regulatory Impact Assessments (RIAs) are being diffused progressively throughout the world following the recommendations of international organizations. Research has shown that the diffusion of RIA has not produced convergence in actual practices, particularly in developing countries, due to political forces at work in domestic contexts or the available organizational capacities. The Organisation for Economic Co-operation and Development (OECD) has recently recommended that the Brazilian federal government adopt RIA. This article evaluates how contextual variables, specifically political and organizational ones, influence RIA adoption in Brazil. It is based on field research consisting of semi-structured interviews with the main stakeholders of the Brazilian regulatory framework. The research explored RIA concept familiarity among stakeholders, the bureaucratic context, the policy process, pivotal stakeholders' standpoints in adopting RIA, and available organizational capacities. Contrary to previous studies in developing countries, the research reveals that strong organizational capacities are not a sufficient factor for successful diffusion of RIA, because political variables can influence divergence among agencies in future RIA practices.
Governments throughout the world are requiring greater use of economic analysis as a way of informing policy decisions. This paper provides a comprehensive analysis of the use of impact assessment in the European Union, using US assessments as a benchmark. We find that recent EU impact assessments include more economic information than they did in the past, although important items are still missing. We also provide evidence that the quality of EU impact assessment increases with the expected cost of a proposal. Furthermore, we find that the quality of EU assessments that report high total costs is similar to that of US assessments.
Non-state market regulation has become a central focus and continues to receive scholarly attention. The present paper provides an assessment of the conditions under which multinational firms join a multi-stakeholder certification initiative. The cases of the Fair labor Association and 17 international sport footwear companies have been selected for this purpose. A Qualitative Comparative Analysis of the 17 cases is performed. The paper argues that the combination of sustained NGO pressure and public ownership of a firm is a necessary precondition for firms joining a multi-stakeholder certification initiative. The theoretical and policy implications of this result are discussed.
If the core problem for decision making is the limited capacity of people and organizations to collect and process information, it is their limited capacity to pay attention that poses the challenge for regulation. Much regulatory activity is thus focused on devising methods for ensuring that organizations and their staff pay attention to the “right” things. Yet outsiders’ claims on attention often are trivialized by insiders because outsiders make those claims without understanding what will be displaced. Drawing on a study of how rules are used in five HIV clinics, this article analyzes forms, training and meetings, and delegation to new occupations as devices for conserving attention. In asking how much thought is required, what should be thought about, and who should do the thinking, people argue about the moral priority of treatment, research, and administration. Allocation of attention is not just about using a scarce resource efficiently, but is also about the right to decide for oneself what is important.
The processes of globalization have led to a proliferation of spheres of authority and significant challenges for global governance. In this paper is discussed the concept of spheres of authority, the factors that encourage their proliferation, and the prospects for global governance in a world of disaggregated authority. The proliferation of spheres of authority does not mean that global governance is impossible, but that it will not result from a global government. Instead, governance will emerge from the interaction of overlapping spheres of authority; regulation will be achieved not through centralized authority but through the spread of norms, informal rules, and regimes.
This is a review essay concerning the book Regulation by Litigation. Utilizing public choice theory as the basis of its analysis, the book presents three case studies designed to demonstrate that regulation by litigation does not serve the public interest. This review essay attempts to show that public choice theory does not explain the decision to use litigation in these cases, that the alleged failure of litigation in these cases might not be failures at all, and that regulation by litigation is not the unmitigated evil the authors of the book suggest.
The more a government is effective and fair, the more legitimacy that government is likely to attain, and the more it will possess the potential to elicit compliance without excessive monitoring or punitive action. We explore this proposition using contemporary survey data from sub-Saharan Africa. In particular, we are interested in the conditions that promote popular legitimating beliefs that provide support for governments that are attempting to serve their entire populations competently and in a manner that is relatively impartial and equitable. This article provides empirical support for a long hypothesized link between the extent of government effectiveness, procedural justice, and citizens' willingness to defer to governmental tax authority. The sample, drawn from a continuum of developing societies in Africa, allows us to analyze the impact of variations in government effectiveness and citizen perceptions of fairness on the sense of obligation to comply with the tax authorities, our indicator for legitimating beliefs.
Lending methodologies and geographic focus by company
typology of loan officers (LOs)
Bonus performance by loan officer type (2003-2007)
Loan officer activities, professionalism, and compensation
This article explores how loan officers enact and adapt organizational policies within microfinance institutions. Some loan officers frequently bend or choose not to enforce written rules in an effort to better address client needs, while others enforce the rules strictly. These differences in enforcement styles are analyzed to explore the structural characteristics that generate and sustain rule-bending behavior. In microfinance, the pressures to standardize and automate lending decisions challenge loan officers' ability to manage clients because context uncertainty cannot be fully captured by centralized policies. The article shows that officers exercise discretion productively, as measured by the organization's own criteria to (i) better serve client needs when policies can lead to bad outcomes; (ii) purposefully improve the rules themselves; and (iii) defend loan officer status within the organization. The article unveils two inherent tensions in microfinance. First, increased efforts to centralize and enforce policies in fact only increase the motivation for loan officers to work outside the organization's regulations. Second and ironically, the value of the productive rule bending displayed by some loan officers is best captured when other officers are strict enforcers.
New Foundations of Cost–Benefit Analysis, by Matthew Adler and Eric Posner, represents the most ambitious and credible effort to date to build a solid theoretical defense of the use of cost–benefit analysis (CBA) in evaluating government regulation. In this review, three cost–benefit “skeptics” offer their reactions to this ambitious and important book. We note its virtues – its humility, its scrupulousness, its open-mindedness. We also explore its vices. If preferences are to be “laundered,” is it intellectually defensible to remove the bad but not consider adding the good? Does Adler's and Posner's welfarism really play the limited role they suppose, or does it risk “crowding out” other important deontological and distributional values? If CBA is merely a decision procedure that provides an imperfect proxy of welfare – the moral criterion we really care about – how do we know that the proxy it provides in practice will actually be accurate enough to be useful? Isn't this at bottom an empirical question that cannot be answered by this thoroughly theoretical book? If CBA is no more than an imperfect proxy for welfare, then alternative imperfect decision procedures may perform better in the real world.
This article responds to the criticisms of New Foundations of Cost–Benefit Analysis that appeared in a review by Amy Sinden, Douglas A. Kysar, and David M. Driesen. We argue that their criticisms are either based on misunderstandings of our approach or are too demanding, in the sense that no reasonable decision procedure would satisfy them. We illustrate this second argument by demonstrating that their preferred approach – feasibility analysis – has little to recommend it.
This article extends the concept of street-level bureaucracy to address the problem of the inflexibility and rigidity of governmental rules and regulations, a problem at the heart of the standard economic argument against an active government role in the management of the economy. In so doing, it seeks to create a conceptual bridge over which a range of social science disciplines can be drawn into the debate about public sector management and thereby expand the repertoire of policy tools. The article draws primarily on research on one class of street-level bureaucratic organizations, labor inspection organizations in Latin America and southern Europe, and secondarily on a project focusing on DARPA, the research arm of the US Department of Defense. In both organizations, line officers have wide discretion in program development and management and in effect adjust to changing economic and social conditions in a way not unlike the market. These adjustments are grounded in tacit rules that evolve through discussion among the line agents coping day-to-day with novel cases. Management can influence that evolution by entering into the ongoing discussion and giving it direction. Various ways in which it might do so are examined.
Recent developments in regulation and tax administration in Australia inspired this article on tax compliance and responsive regulation. This article analyzes the economics of crime and compliance as the dominant approach to tax enforcement of the past three and a half decades. It evaluates the key advantages and disadvantages of the economic approach as well as its application to tax. The article then explores responsive regulation as an alternative method that draws on the economic paradigm but also supplements this approach with other theories, particularly those involving identity, conflict escalation, and procedural justice. Building on this analysis and a case study of Australian investors in mass marketed tax schemes, the article suggests that the broader, more balanced, and closely tailored method of regulating responsively may enable regulators to draw on the advantages of the economic model while alleviating some of its drawbacks. Responsive regulation may therefore constitute a superior method for regulating compliance.
Recent research on regulatory enforcement has been showing that the best way to enforce protective regulations is to thoroughly adapt the remedy to the problem at hand. Unfortunately, this is far from easy, as organizations and work environments all too often encourage street-level bureaucrats to standardize and simplify their practices. In an attempt to bridge this gap, many scholars equate responsiveness to preprogrammed escalation. This article analyzes how the Brazilian Ministério Público (MP) promotes a more ambitious form of responsiveness, here called relational regulation. While most of the formal features of the MP encourage routinization, groups of reformist prosecutors identify important cases, recruit external allies, and jointly devise innovative and context-specific solutions to problems of non-compliance. Crucially, this mode of action is not an anomaly, the result of individual proclivities or specific and formal job assignments. Rather, it is systematically produced by a mostly parallel and covert organization that operates within and expands beyond the MP itself. These two logics – routinized and custom-made responses – compete, cooperate, interpenetrate, and find common ground within the same organizational umbrella, and through their interaction they create an enforcement agency that is more robust, reliable, and responsive than allowed by current theory.
Business–government relations on trade issues are generally characterized as protectionist lobbying or – less often – lobbying for the liberalization of markets. However, with the evolution of the trading system, negotiations today concern not just market opening, but also the regulatory frameworks that structure international trade. This transformation has important consequences for the ways in which private interests can contribute to trade negotiations. Instead of simply trying to exert pressure, businesses and other private actors now form working relationships with governments based on expertise, learning, and information exchange. This article illustrates these new forms of public–private interactions with examples from the USA, the European Union, and Brazil.
The influence of external organizations and pressures on business risk management practices has hitherto been examined through the influence of state regulatory regimes on businesses. This article concentrates on key socio-legal concerns about the influence of the law in social and economic life. We know that the sources of regulation and risk management are diversifying beyond the state. What we do not have is much empirically informed research about the range of sources influencing the business world and in particular the weighting of influence exercised by them. In this paper we explore the understandings regulatory actors have of the different external pressures on business risk management through an empirical study of the understandings of those in the food retail sector about the management of food safety and food hygiene risks. A broader objective is to throw some further light onto the debate about regulation within and beyond the state.
Using private contractors through procurement is common in most public sector areas. Despite the benefits of procurement, officials are sometimes tempted to circumvent procurement regulations. The aim of this article is to examine the strategies used by local governmental decisionmakers to bypass procurement regulations and to analyze the rationality underlying these officials' actions. Interviews, court documents, municipal documents, and newspaper articles describing the actions of Swedish municipal officials concerning special transport service (STS) procurements were collected and analyzed. In a case in which rural municipalities lost regular taxi services after STS procurement, we demonstrate how decisions were driven by pressure from the public and local interest groups, making municipal officials deviate from procurement regulations in striving to secure the existence of regular taxi services. One outcome was that local businesses were given preferential treatment, violating regulations and reducing economic efficiency.
In the summer of 2007, a member of the Rationality Center at the Hebrew University of Jerusalem took it upon himself to install a closed-circuit TV camera in the Center’s kitchen. An email explained that the camera was installed in an effort to solve the problem of cleanness in the kitchen. The camera was removed a week later: within this week, the members of the Center exchanged close to 120 emails among themselves, expressing their opinions for and against the camera, and discussing related issues. Taking off from this exchange, this article explores some of the surprisingly rich set of normative concerns touched upon by the kitchen camera incident. Among them: public surveillance and people’s polarised attitudes to it, the invasive gaze and the argument that “if you have nothing to hide you have nothing to worry about,” the efficacy of disciplining behavior through sanctions along with the problem of shaming sanctions, the notion of privacy and its arguable relevance to the kitchen case, and more. In an epilogue, I offer some reflections in the wake of the incident, connecting it to the incipient literature on regulation through observation. I find that it is precisely the smallness, concreteness, and seeming triviality of this incident that helps bring a large set of interconnected, vexing normative concerns into sharp relief.
The concept of power in political governance has traditionally focused on domination and the preservation of the status quo. In an economic context, institutional and organizational studies have expressed growing interest in the dynamics of agency and institutional change, captured in the concept of “institutional entrepreneurship.” In the context of global free trade, the Fair Trade movement's experience shows that ongoing institutional entrepreneurship is important for entrepreneurs to transcend absorption by corporate hegemony. In this article I examine the capacity for agency in market institutions through the lens of “defiance” to illuminate the imaginative “game players” who evade institutional capture in the evolution of market governance.
The experience of European Union (EU) health care services policy shows the importance of supporting coalitions in any effort to effect policy change and the extent to which the presence or absence of such coalitions can qualify generalizations about policymaking. EU health care services law is substantively liberalizing and procedurally driven by the courts, with little legislative input. But the European Court of Justice (ECJ) has been much better at establishing an EU competency in law than in causing policy development in the EU or member states. Literature on courts helps to explain why: courts are most effective when they enjoy supporting coalitions and the ECJ does not have a significant supporting coalition for its liberalizing health care services policy. Based on interview data, this article argues that the hard law of health care services deregulation and the newer forms of health care governance, such as the Open Method of Coordination and the networks on rare diseases, depend on supporting coalitions in member states that are willing to litigate, lobby, budget, decide cases, and otherwise implement EU law and policy. Given the resistance that the Court has met in health care sectors, its overarching deregulatory approach might produce smaller effects than expected, and forms of experimentalist governance that are easy to deride might turn out to have supporting coalitions that make them unexpectedly effective.
Under US regulations known as the “Common Rule,” federally-supported human-subject research must be reviewed by an Institutional Review Board (IRB). The Common Rule system from a distance looks like an innovative instantiation of prescriptions for constitutive regulation and soft law, but in practice has grown into a self-referential, unresponsive, and legalistic bureaucracy. This article reviews criticism of the Common Rule. It also discusses why the system fails to regulate in an efficient and effective way, pointing in particular to the poor fit between the IRB and its assigned tasks. Turning to reforms, the article uses the heuristic of “regulatory space” to describe the range of actual and potential regulators with the capacity to set standards, monitor compliance, and discipline violators. Regulatory reform is framed by three conceptual changes: recognizing the limitations of the IRB as an oversight body; narrowing the range of risks the system is tasked to control; and disentangling the conflicting regulatory logics of behavioral standard-setting and virtue promotion. The article concludes with a roster of possible changes that would make the IRB a more responsive regulator, enroll a wider range of actors in the promotion of virtue, focus resources on more serious risks, and address the structural causes of researcher misconduct.
Sustainable forest management is a key challenge for local and global governance. The Forest Stewardship Council has emerged as one of the solutions to global forest deterioration and is generally regarded as the prime example of certification as a global governance tool. This article examines the macro-effectiveness of certification on halting deforestation and examines the relationship between certification and governance institutions. The article finds that the macro-effectiveness of certification on halting deforestation is still limited due to the “stuck at the bottom” problem of developing countries, which are kept out of the certification process, and the market-driven nature of certification initiatives. The article does not find a relationship between certification and governance institutions at the macro level. It does find, however, significant variation in certification uptake between countries, pointing to the potential of this policy tool. The implications of the results are discussed.
Three models of gambling regulation
This paper deals with the liberalization of Dutch gambling markets, in particular the (re)regulation of these markets after 2002. It is argued that during the 1990s a neo-liberal “risk regime” of gambling regulation replaced the traditional moralizing and restrictive gambling policies. However, this risk regime has recently been challenged by the development of Internet gambling, the discussions about the “Services Directive” in the European Parliament and cases brought to the European Court of Justice. These circumstances are redefining the European context for national gambling policies and gambling organizations. Together with a growing risk awareness, this has caused the Dutch government to reconsider its gambling policies. This paper outlines the basic features of the risk regime of gambling regulation, and makes clear that after a decade of great leniency and tremendous market growth, the Dutch gambling markets, including casinos, lotteries and slot machines, were confronted with serious backwashes.
It is currently widely recognized that trade liberalization leads not only to deregulation but also to re-regulation. However, it is less well understood how trade agreements and trade liberalization affect domestic regulatory institutions. This article aims to contribute to such an understanding through a case study of Chile. Since 1990, Chile has pursued a strategy of economic integration through bilateral, regional, and multilateral agreements. The study shows how this strategy has led to the partial implementation of a patchwork of competing regulatory institutions, many of which can trace their roots to the domestically preferred institutions of Chile’s major trading partners.
How has China's food safety administrative system changed since it was founded in 1949? How can we periodize the process of this historical transformation in terms of regulators, regulatees, and regulatory tools? This review article offers an analytical framework that distinguishes three regimes in the history of China's food safety governance: an old regime of command and control (1949–1977), an intermediate regime of mixed instruments (1978–1992), and a new regime of regulatory governance (1993–ongoing). In the article the regimes' features, advantages, disadvantages, and development tracks are discussed, and the groundwork is laid for an analysis of China's emerging regulatory state. Finally, a new notion of “transitional regulatory state” is used to define the current Chinese regulatory state based on its food safety regulation.
Top-cited authors
Julia Black
  • The London School of Economics and Political Science
Benjamin Cashore
  • National University of Singapore
Tanja A. Börzel
  • Freie Universität Berlin
Steven Bernstein
  • University of Toronto
Thomas Risse
  • Freie Universität Berlin