The Politics of Detection in Business Regulation

Abstract

Detecting non-compliant behaviors is an important step in the enforcement of regulations. The literature on the subject is vast yet also narrow in its approach, in the sense that it has built on the assumption that regulators would always want to maximize information quantity and quality, while acting under two fundamental constraints: the regulator's resources, and the information asymmetry between regulator and regulatee. This article argues that regulatory agencies might not always want to maximize information: rather, other bureaucratic goals and concerns might shape detection preferences and toolsof detection in what might seem to be unexpected and irrational ways. To support this argument, the article presents a case study of the regulation of industrial risks in France, which focuses on the detection of incidents -small losses of control -taking place in high hazard sites. The study presents a rich set of observations. It finds regulators sharing with regulatees a restrictive interpretation of incident reporting obligations. It identifies also a range of third party informants -employees -who have been 2 neither solicited by regulators to contribute to detecting incidents, nor have been particularly well received by them when they have done so. The motives of regulators that can account for these detection preferences are mixed, but an overarching one appears to be their concerns for reputational risk. Seen through such a lens, certain types of incidents and certain tools of detecting them appeared either unimportant, or on the contrary as deserving attention and effort. On the basis of the case study and other empirical illustrations found in the literature, the article then offers a more general argument about how bureaucratic reputation may shape detection practices in business regulation.

Reputation and Accountability Relationships: Managing Accountability Expectations through Reputation

“…Ogul (, 15), for instance, notes how visibility (“to groups that are important to them”) serves as a stimulus for congressional oversight. In his study of water pollution control, Hawkins (, 97) notes how “[a]gency vulnerability to public criticism leads them to be more responsive to complaints raised by those in a position of power.” In fact, control mandates were redefined on this basis: “for many fieldmen, the working definition of a ‘serious’ pollution is ‘basically anything that's going to cause a great amount of public reaction’” (see also Etienne ). Public visibility, in its various guises, shapes the oversight behavior of account‐holders in fundamental ways.…”

The Reputational Basis of Public Accountability

“…Reputation‐based accounts have been used to explain varieties in enforcement practices (Hawkins ), organizational responses to external audiences and reputational threats (Gilad, Maor, and Ben‐Nun Bloom ; Maor , ; Maor, Gilad, and Ben‐Nun Bloom ; Maor and Sulitzeanu‐Kenan ), organizational task prioritization (Gilad ) and decision‐making time (Maor and Sulitzeanu‐Kenan ), jurisdictional claim making (Maor ), or how reputation and blame avoidance might deteriorate network performance (Moynihan ). In addition, reputation‐based accounts have been used to explore regulatory interactions ranging from enforcement (Etienne ; Gilad and Yogev ) to divergences in cooperation practices among turf‐conscious bureaucratic actors (Busuioc ).…”

“…Given that being seen as “demanding accountability” is what matters, we expect a prioritization regarding salient and visible instances of misbehavior. Etienne (), for example, describes how inspectors tasked with incident detection effectively narrowed their inspection mandate by focusing on incidents noticeable to the outside world as opposed to those that occurred on the perimeter of the facility. Thus, inspectors' monitoring and policing were not guided by an interest in incident detection or risk prevention, but by an interest in maintaining an appearance of “being in control” in order to minimize their own reputational risk of being associated with visible instances of nondetection.…”

Friend or Foe? Inter‐agency Cooperation, Organizational Reputation, and Turf

“…While initially relied upon to explain aspects of bureaucratic behaviour pertaining to autonomy and autonomy forging (Carpenter ), reputation‐based accounts are increasingly being used to explain a whole array of regulatory behaviour (Carpenter ; Carpenter and Krause ) of regulators and regulatees alike, as well as their interactions, such as: regulatory enforcement practices (Gilad ; Maor and Sulitzeanu‐Kenan ; Etienne ), regulators' prioritization of tasks (Carpenter ), jurisdiction claiming (Maor ), or the strategic use of communication (Gilad et al ; Maor et al ). Given that cooperation is just another (specific) instance of bureaucratic behaviour – in the form of two or more organizational entities working together towards implementing a joint public policy goal – research on the issue from a reputational perspective could prove particularly insightful.…”