A trust approach to regulating responsible businesses?

An eternal debate in regulation research is whether regulators should adopt repressive strategies towards businesses or cooperative strategies. Ayres and Braithwaite (1992) proposed their Responsive Regulation Theory to... [ view full abstract ]

An eternal debate in regulation research is whether regulators should adopt repressive strategies towards businesses or cooperative strategies. Ayres and Braithwaite (1992) proposed their Responsive Regulation Theory to overcome this dichotomy and refer to cooperative strategies as trusting. Empirical studies show that trust between regulator and business has positive effects on compliance and helps safeguard public interests. Decisions about which company to inspect, with which frequency and with attention to which aspects were not addressed in Responsive Regulation Theory. Traditionally most attention went to distinguishing the notoriously bad compliers and consistent violators from the rest. More recently complaints from businesses that regulation created too high an administrative burden fell in fertile grounds and new regulatory approaches were developed that make clearer distinctions between trustworthy businesses, which were rewarded with less frequent inspections, and the rest, which received traditional regulatory approaches. We examine these new regulatory approaches for trustworthy businesses. What do trust approaches to regulating responsible business look like? The study is exploratory with cases where regulators have sought to distinguish the trustworthy businesses from the less trustworthy ones; and are treating those trustworthy businesses differently from others, with less intrusive regulatory approaches. We also study cases where the whole sector is “trusted” to self-regulate more. Data analysis is inductive, seeking to explain the different regulatory approaches using concepts from the trust literature.