Regulatory agencies, reputational threats, and communicative responses

Abstract

A key claim in bureaucratic reputation literature is that reputation has several dimensions. This presents agencies with a difficult choice concerning which dimension(s) they should emphasize in the management of their reputation. This paper analyzes how regulatory agencies manage their reputation through communicative responses to public judgments, based on a single‐case study of the German financial regulator BaFin. Our theoretical argument underscores the importance of different reputational dimensions for regulatory agencies that simultaneously considers their distinct reputation reserves. Our main finding was that BaFin prioritizes responses to public judgments targeting reputational dimensions that are central to its mission and for which the agency has a weak reputation, as opposed to judgments targeting dimensions that are central to its mission and for which it has a strong reputation, or judgments targeting peripheral dimensions. The paper demonstrates the importance of agency missions for reputation management and suggests directions for further research.

Regulating emerging technology in times of crisis: Digital contact tracing in Norway during the COVID‐19 pandemic

“…This intervention is based on social values and focuses on shaming and praising regulatees. Shaming and praising come about when regulators convey information about expected conduct, establishing what constitutes “good” or “bad” behavior and thereby influencing regulatees' reputations (Bach et al, 2021) and perceived legitimacy (Rorie et al, 2018). Studies of regulators working through appeals to moral duty, appropriateness, and reasonableness have reported increased compliance, for instance in the context of environmental regulation (Winter & May, 2001) and tax regulation (Schwartz & Orleans, 1967).…”

The Accountability of Expertise

“…Maor et al (2013) address this type of behaviour most explicitly and show how a financial regulator is more likely to react to public judgments targeting functional areas for which it enjoys a comparatively weak reputation, whereas it tends to remain silent on functional areas where it enjoys a strong reputation. In a study of a financial regulator, Bach et al (2020) demonstrate that regulatory agencies display differential responses to public judgments depending on the reputational dimension that is targeted. Gilad, Maor, and Bloom (2015) study the substance of communicative responses to public judgments, showing how a regulator responds differently to judgments on overregulation as opposed to lenient regulation.…”

“…They find that financial regulators are primarily exposed to performative threats and show different response patterns to such threats across countries. This chapter follows the approach by Maor et al (2013), Bach et al (2020) by distinguishing between communicative responses and non-responses to reputational threats. Hence, whether a regulatory agency responds to a reputational threat (understood as a negative public judgment) or not will be used as an indicator of reputation seeking behaviour.…”

“…More specifically, it builds on the idea that regulatory agencies use accountability relationships to cultivate distinct reputations among multiple actors holding those agencies to account (Busuioc & Lodge, 2017). In line with a growing body of research, we use regulatory agencies' communicative behaviour to study reputation management Bach, Jugl, Köhler, & Wegrich, 2020;Busuioc & Rimkutė, 2019;Carpenter, 2010a;Maor, Gilad, & Bloom, 2013;Moschella & Pinto, 2019). In empirical terms, the chapter assesses whether independent regulatory agencies respond through communicative action to negative public judgments ('threats') which are reported in the news media.…”

Understanding Police Agencies’ Explanations for Racial and Ethnic Disproportionality in Vehicle Stops

“…Quantitative investigations of the Missouri profiling data have answered essential questions regarding the existence and prevalence of disproportionality in the state (Fallik & Novak, 2012; Gaston, 2019; Gaston & Brunson, 2020; Hernández-Murillo & Knowles, 2004; Rosenfeld et al, 2017). Still, societal institutions and the organizations that embody them are neither passive servants to external demands (Bach et al, 2021; Colvard, 1961) nor is their provision of information an entirely neutral and objective act (Choo, 2013; Heimstädt, 2017). Management and organizational theorists emphasize that institutionalized practices are designed for propagation not for change (Meyer & Rowan, 1977), that organizations protect and defend their reputations (Weigelt & Camerer, 1988), and that communication, including of information, is often deployed to manage external impressions (Sutton & Callahan, 1987).…”