Legitimizing the Regulatory State: How Institutional Intermediaries Facilitate Inclusive and Effective Co-creation in Emerging Economies

Le résumé fourni par la source

Theory indicates that inclusive regulatory co-creation between firms and their governments activates a procedural justice mechanism that improves firms’ views of state legitimacy and leads to rules that better fit the full spectrum of real-world operating conditions. Emerging economies, however, face what we argue is a legitimacy–co-creation paradox: Widely held baseline views of government as corrupt and captured by elite interests lead many firms to balk at engaging with the state, thereby impeding opportunities for mutually beneficial co-creation. To address this challenge, we pilot and test the impact of a third-party intervention that we name the RegRoom, wherein an expert helps firms refine their comments on draft regulation before submitting them and, in so doing, increases the firms’ understanding of the regulation’s public purpose. We hypothesize and find evidence through a field experiment in Thailand that this institutional intermediation improves firms’ perceptions of state legitimacy and observable engagement in regulatory co-creation. Further exploration of our data leads us to theorize a sequence by which institutional intermediaries overcome the legitimacy–co-creation paradox; specifically, legitimacy deficits need to be addressed before capability enhancement can occur. Our study shows how institutional intermediaries can contribute to the expansion of fairer and more-sustainable markets.

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