Lords of the Harvest: Third-Party Influence and Regulatory Approval of Genetically Modified Organisms

Abstract

Little is known about the factors that influence regulatory-agency decision making. We posit that regulatory agencies are influenced by the firms they regulate, but not exclusively via dyadic exchanges as is traditionally argued in the regulatory capture and business-government literatures. Instead, regulatory decisions are indirectly shaped via third-party actors who shield agencies from legitimacy threats. Focusing empirically on the U.S. Department of Agriculture's approval of genetically modified organisms (GMOs), we find that product assessments by powerful stakeholders and peer agencies influence product approval and that their effects vary under different threats. We also discuss the implications of these findings for businessgovernment relations, nonmarket strategy, and organization theory.

Corporate Social Responsibility Reporting in China: Symbol or Substance?

“…First, research has shown that government agencies and bureaucracies are the key government areas responsible for policy implementation. This leads to greater organizational oversight (Bonardi et al 2006, Hiatt andPark 2013). Second, such connections are more ongoing and involve closer connections with the government.…”

Blacklisted Benefactors: The Political Contestation of Non-Market Strategy

“…Ingram, Yue, and Rao (2010) provide complementary evidence that firms interpret public protest as a signal of hostile non-market environments with higher regulatory costs. Most recently, Hiatt and Park (2013) argue that regulatory agents interpret public protests as signals of legitimacy risks. Analyzing a sample of petitions for approval of genetically modified plant products, they found that public protests brought against products significantly decreased the likelihood of regulatory approval.…”

“…After all, despite its ubiquity, corporate political activity is a contentious subject that draws widespread media coverage and public opprobrium, especially given steady declines since the 1970s in public approval of the role of business in American politics (Smith, 2000). As social actors, government officials strive to build and protect their legitimacy in order to wield and exercise power within their own social field (Pfeffer & Salancik, 1978;Skocpol, 1985;Suchman, 1995;King, Felin & Whetten, 2010;Hiatt & Park, 2013;Werner, 2014). Individual regulators are especially sensitive to threats to their legitimacy because of their continuous, substantial reliance on support from external constituencies (Carpenter, 2001), and elected officials, with their focus on reelection, are similarly cautious.…”

Regulator Leniency and Mispricing in Beneficent Nonprofits

“…Stakeholders with the strongest impact on regulators' resources, autonomy, and future success include local, state, and federal governments, who have power over regulators' budgets, nominate directors, and oversee regulatory activities. Other stakeholders include voters, professional associations, nonprofit organizations, and public interest groups, who can influence governments via lobbying activities (Hiatt and Park, 2012;Suchman, 1995). Actions of regulatory agencies that are perceived as desirable can confer legitimacy on those agencies, shaping the perceptions of stakeholders and preserving and promoting regulators' access to resources and power (Deephouse and Suchman, 2008;Delmas and Toffel, 2004;King, Felin, and Whetten, 2010).…”

“…For regulatory agencies, ensuring the supply of these unprofitable services without compromising on their role as enforcers of regulatory standards is important for their own continued legitimacy (Hiatt and Park, 2012). We explore whether this results in a dynamic process whereby regulators signal enforcement leniency towards beneficent nonprofit hospitals, which react with increased mispricing to cross-subsidize the provision of unprofitable services.…”