How Do Firms Feel About Participation by Their Peers in the Regulatory Design Process? An Online Survey Experiment Testing the Substantive Change and Spillover Mechanisms

This paper examines two concerns with calls for increased participation by firms in the government design of regulations in emerging markets. First, given the profit maximization goals of firms, can the benefits of business participation be realized without weakening the social protections that regulations are meant to offer? Second, can resource-constrained states realistically use consultation programs to influence the behavior of enough relevant firms to achieve a reasonable breadth of social protection? We explore these understudied questions through an online survey experiment involving 121 firm managers in Ho Chi Minh City, Vietnam. We find that firms prompted to think about worker safety favored regulatory changes that arose from suggestions by other firms over those resulting from suggestions by chemical safety experts even when unaware of the involvement of either source in the design process. By contrast, firms prompted to focus on business success did not express significant support for revisions suggested by either firms or experts. Learning about the participation of fellow firms positively influenced views about the legitimacy of the state’s regulatory authority but not of the focal regulation itself.