This presentation offers deconstruction on Short and Toffel's publication on 'Making Self-Regulation More Than Merely Symbolic'.

1. Riyad Anwar, Candidate of Research Master in Law, Tilburg University
Self-Regulation and Responsive
Regulation
A Look into Short and Toffel “Making Self Regulation More Than
Symbolic Law”

2. • Excerpt on Short and Toffel “Making Self Regulation More
Than Symbolic Law
• Excerpt on Mascini and Wijk “Responsive Regulation at Dutch
Food Consumer Product Safety Authority
• Lesson Learned
• Unresolved Questions
Overview

3. • Law, Organization, and Self-Regulation
• Call for alternative: Formal law unable to prevent harmful corporate behavior
• Self-regulation: Law as embedded value in corporate behavior - law generate
normative commitment in corporate internal control
• Goal: facilitate compliance in legal environment (But is it significant?)
• Mobilizing Internal Compliance Structure
• Primary function: Self-regulation expected to boast corporate voluntarisms in
exchange of lesser penalty
• Secondary function(s): Render formal investigation obsolete (EPA); Increase
commitment to prevent recurrence of violation
• Voluntary disclosures = commitment to self-regulate
Self Regulation - Introduction

4. • Research Object: Corporate Audit Policy from 1993 (prior audit policy
introduction) to 2003
• Connection between symbolic adoption of self-regulatory structures and regulatory
outcomes
• Large datasets
• From perspective inspection-based regime, Audit Policy allow distinction between
self-regulating and non self-regulating organization
• Sample: Industrial facilities subject to US Clean Air Act
• Coverage: Industry and activity that emit air pollutant beyond regulatory threshold set
by the US Environmental Protection Agency (EPA)
Self Regulation – Empirical Testing

5. • Background
• Regulator may include minimum instruction to guide organization’s self-policing
• In process, regulator may incorporate regulatory threat
• Prospect of punishment => external motivators to self-regulate
• Direct regulatory threat => can be also demotivate self-regulation
• H1: Among facilities that are not facing a direct regulatory threat,
those that commit to adopt internal compliance auditing will improve
regulatory compliance
• Result: US industry facilities which are not facing direct regulatory threat
from EPA – tends to be committed to self-regulate themselves
• H1 is statistically significant
Self-Regulation - Effect of Regulatory Threats

6. • Background - Surveillance
• Surveillance is a tool for social control
• CBA: legal compliance only extent to level where comply to law result in less cost than
non-compliance (Would there be additional cost from surveillance?)
• While threat could reduce motivation, surveillance allegedly can bolster compliance
• H2: Among heavily monitored facilities, those that commit to adopting
internal compliance auditing will improve regulatory compliance outcomes
• Background – Industrial Surveillance
• Variety in organizational response (enforcement directed to whole industry vs. individual
organization)
• H3: Within heavily monitored industries, facilities committed to adopt internal
compliance auditing will improve regulatory compliance outcomes
• Result: H2 and H3 are statistically significant (Positive)
Self-Regulation - Effect of Regulatory Surveillance

7. • Background
• Experience in navigating legal environment (experience and knowledge from the
past) determine the approach to the commitment of self-regulate.
• Internal compliance auditing = compliance routines
• New routine adaptability largely depends on its status as, complementary or
competing, standard on the older routine (manager’s dilemma?)
• H4: Among facilities with superior compliance experience, those that
commit to adopting internal compliance auditing will be more likely to
preserve superior regulatory compliance outcomes.
• Result: Although to certain degree positively demonstrated. Compliance
experiences in US Industry does not significantly led to compliance to
internal monitoring as accorded by EPA. This does not fully support H4
Self-Regulation - Effect of Experience

8. • Regulatory threat as motivators – State should not all absent from its
role as regulatory enforcer
• Law is not only dominant factor to self-regulate – Network of
relationship between regulators and regulated entities matters!
• Surveillance can be a non-counterproductive tool to detect harmful
behavior and enhance self-regulatory performance
• Hollow nature of self-regulation – self-regulation treated by weak
complier as “window dressing to deflect attention or culpability resulting
from illegal actions”
• Effective self-regulation is product not only from organization structural
conditions and legal environment, but also from regulators action (tools
of leverage)
Self Regulation – Theoretical Implication

9. • Abstract Definition: Responsive Regulation? Specific developmental
phase of law that follows the stages of 'repressive' and autonomous' law
(Nonet and Selznick 1978).
• consideration on foreseeable, practical outcomes of the application of regulation
(Ayres and Braitwathe)
• Practical Definition: Responsive regulation is the heuristic instrument to
overcome stalemate between adherents of governmental regulation and
those of self-regulation (Ayres and Braitwaithe)
Rationale behind Responsive Regulation
• Regulation inherently should be adjusted to specific context -> no single
form of regulation can be effective under all circumstances!
Responsive Regulation – Introduction

10. • Research conducted between February 2007 and July 2008
• Coverage: Three districts in the Netherlands
• Sample: Inspector officers and inspected business owners
• Source of Data: Observations, interview, and a survey.
• Method:
• Researcher accompany inspectors (36 Inspectors; 269 Inspections)
• Interview inspector prior operation (expected interaction with entrepreneur and how
to cope with such interaction)
• Selected inspectors varied on professional background, style of team leadership,
tenure.
• Survey on entrepreneur (115 returned questionnaires from 269 inspections)
Responsive Regulation – Empirical Testing

11. 1. Are inspectors consistent in their approach toward regulatees? No
• Inspectors had different views on regulated entities
• 17 inspectors believe more on bad companies; 8 believe bad and good companies
are equal in quantity; 11 believe more good companies than bad companies
• Inspectors had different focus of attention
• Few focus on environmental standard (temperature measurement); other focus in
taking samples.
• Inspectors differs in enforcement styles
• Penalizing vs. Building Trust
Responsive Regulation – Consistency of Approach

12. 2. Do inspectors encounter impediments in applying the enforcement style
they perceive most suitable? Yes
• Inspector preferred to acted differently, but unable to do so (practical
impediment or lack of discretion)
• Avoiding lawsuit (I): Enforcement style based on precedence by past inspector
• Avoiding lawsuit (II): general health risk vs. specific/ concrete health hazard
• Ambiguity of rules negatively affect inspector performance (e.g. Peking duck
confusion)
• Language barriers – language does not preclude inspector option of
enforcement, but it does reduce its effectiveness
• Study Generalization: Unique factor embedded to inspector could hamper
his/her enforcement style
• Example: Strict order from above (Austrian Tax Officer and Car Dealer); Focus on
formulating sanction (Dutch inspector), lack of self-confidence in taking new approach
(Austrian Tax Office)
Responsive Regulation – Impediment in preferred
enforcement style

13. 3. Do inspectors control the negative unintended consequences of the
enforcement style they apply? No
• Dutch Food and Consumer Product Safety Authority: switching command/
control and compliance assistance to be one of the starting points of their
actual responsive policy
• Inspector more than often failed to deliver his/her intention
• Communicating inspector intention: style-as-perceived vs. style-as-intended
• Entrepreneur action bias: negative relational signal (warning or fine)
detrimental to overall cooperation between inspector and entrepreneur,
regardless its enforcement style
• Study generalization: Inspector could deviate from its daily conduct, but
whether such deviation is effective depends largely on regulatees perception
Responsive Regulation – Unintended Consequences

14. • Regulator action matters!
• Direct regulatory threat = negative relational signal
• Compliance in alternative regulation lies in twilight of CBA and normative
motivation
• Proposition 1: Self-regulation as the only solution for transboundary
problems? No
• Proposition 2: Self-regulation oxymoron? Yes
• Proposition 3: Self-regulation only shift burden? Yes
• Proposition 4: Self-regulation often had ambiguous legal status? Yes to
certain extend
Lesson Learned

15. • Does compliance based on incentive relevant in both studies?
• If so, then how specific form of incentive (representation) interplays in these both
situation?
• There seemingly discord between the benefits of heavy surveillance and
the resource limitation in surveillance
Personal Remarks

16. Brabants Dagblad News: Jumbo Recalls its Cod Bits and Fried
Filled of Haddock Products (18/10/17)

17. • The inspection found an intestinal bactreria called listeria
on Jumbo’s fishproducts.
• Products contaminated with listeria can pose a threat
against public health, especially for pregnant women,
elders and people with a weakened immune system.
• Listeria causes food poisoning. In The Netherlands
yearly 45 to 60 get ill due to this bacteria, of whom
approximately 20 people die.
Facts

18. • Dangerous bacteria
• 12.7% mortality rate
• 1.470 human cases in 2011
• Can be found in soil, plants and water. Animals, including
cattle, fish, vegetables and goats
• Consumption of food is the main route of transmission to
humans and animals
• But may also through contact with infected animals and people
• For processed food - Contamination can occur after the
food is cooked but before being packaged
Source: https://www.efsa.europa.eu/en/topics/topic/listeria
EFSA: Listeriosis (listeria monocytogenes)

19. • It is important to follow good manufacturing practices,
• hygiene practices and effective temperature control throughout the
food production,
• distribution and storage chain including in the home.
• In the home, consumers are advised to keep the temperature of
their refrigerators low in order to limit potential growth of bacteria
such as Listeria should it be present in ready-to-eat foods.
• International organisations such as the World Health Organisation
advise to refrigerate foods at temperatures below 5 °C.
EFSA: Preventing Listeriosis

20. Taking into consideration the ideas presented in this
week’s mandatory readings. Would the following actors
opt for legislation or self-regulation:
1. Health Inspector
2. Business-owner
3. Legislator
4. Judge
DISCUSSION