Trust Problems in Interdependent Regulatory Chains
Within these chains quality controls are often in whole or partly delegated to a variety of intermediate and supporting organizations, such as certifiers, accreditation bodies, auditors and accountancy firms, laboratories, experts, advertisers, and networks of all these organizations, which differ e.g. in specialization, expertise and interests. These often commercial intermediaries have become especially important in global value chains, where public regulators are limited, confined as they are to their territorial jurisdiction. The variety of intermediaries could perhaps be classified using, or even extending, the categories of ‘judgment devices’ in markets, that the French economic sociologist Karpik has distinguished: networks, appellations, cicerones, rankings, and confluences.
The parties in these regulation-chains will have to trust each other to some extent. Just as every transaction in the value chain involves potential uncertainty, risk, and trust problems, so do the inter-organizational relations in the parallel ‘regulation chain’. That may exactly be the motive to engage specialized experts in the process. The paper will, after distinguishing the types of organizations and of their mutual relations, delve further into these trust relations and on the variety of sources on which parties can base their trust, such as personal acquaintance, repeated interaction, interdependence, expertise, credentials, visibility (brand names), info exchange and social status in networks, the reputation effect, yet other third party authorities, even cultures of honor or rumors. Thus the paper will connect various literatures, on regulation and governance, policy styles, trust, and from modern economic sociology. Theoretical typologies will be developed while making references to examples in various value and regulatory chains, including scandals and crises, notably in the food sector.