Managing in the Regulatory Thicket: Regulation Legitimacy and Expertise

• Author: Kenneth J. Meier,Anna A. Amirkhanyan,Laurence J. O'Toole
• DOI: http://doi.org/10.1111/puar.12591
• Published date: 01 May 2017
• Date: 01 May 2017

Managing in the Regulatory Thicket: Regulation Legitimacy and Expertise 381

Public Administration Review,

Vol. 77, Iss. 3, pp. 381–394. © 2016 by

The American Society for Public Administration.

DOI: 10.1111/puar.12591.

Laurence J. O ’ Toole, Jr., is

the Margaret Hughes and Robert

T. Golembiewski Professor of Public

Administration and Distinguished Research

Professor in the Department of Public

Administration and Policy, School of Public

and International Affairs, The University of

Georgia. He is also professor of comparative

sustainability policy studies in the

Department of Governance and Technology

for Sustainability at the University of Twente

in The Netherlands. His research interests

include questions of public management

and performance.

E-mail: cmsotool@uga.edu

Kenneth J. Meier is the Charles

H. Gregory Chair in Liberal Arts and

Distinguished Professor of Political

Science at Texas A&M University. He is

also professor of public management in

the Cardiff School of Business, Cardiff

University, Wales. His research interests

include public management, representation,

race and politics, and public policy. He

is currently working on testing theories

of public management across different

national contexts and research on race and

public education.

E-mail: kenneth-j-meier@pols.tamu.edu

Anna A. Amirkhanyan has a PhD

in public administration from the Maxwell

School of Citizenship and Public Affairs,

Syracuse University. She is associate

professor in the School of Public Affairs at

American University. Her research focuses

on public management, privatization,

organizational performance, citizen

participation, and social welfare policy. Her

research been published in

Journal of Public

Administration Research and Theory, Public

Administration Review,

and

Journal of Policy

Analysis and Management.

E-mail: amirkhan@american.edu

Abstract : Although the influence of government regulation on organizations is undeniable, empirical research

in this field is scarce. This article investigates how the understanding of and attitudes toward government

regulation among public, nonprofit, and for-profit managers affect organizational performance, using U.S.

nursing homes as the empirical setting. Findings suggest that managers’ perceptions of regulation legitimacy—

views of regulation fairness, inspectors’ effectiveness, and internal utility of the mandates—positively affect

service quality. Subgroup analysis suggests that managers’ views of regulation matter in nonprofit and

for-profit organizations but not in public organizations. In nonprofit homes, performance declines when

managers report higher regulatory expertise—better knowledge of the regulatory standards. In for-profit

facilities, frequent communication with regulators lowers quality. These findings suggest that the regulated

entities’ views of government regulation are central to their success, which necessitates improvements in the

regulatory process.

Practitioner Points

• Organizations experiencing fair and effective government regulation are more likely to deliver high-quality

services. Thus, investing in government inspectors’ training to help ensure a speedy, fair, transparent,

and consistent inspection process can help improve service providers’ perceptions of regulation and their

commitment to reducing regulatory violations. These changes are especially important in the context of

nonprofit and for-profit nursing homes.

• In nursing home care, the providers’ communication with government regulators fails to mitigate and resolve

the regulated entities’ performance problems. Regulatory agencies should recognize that communication

with the regulated entities may be used as a tool to not only identify or investigate performance concerns but

also improve performance.

• Excessive commitment to external expectations may undermine organizational ability to manage staff,

promote innovations, resolve internal problems, and prevent service deficiencies from occurring.

Anna A. Amirkhanyan

American University

Kenneth J. Meier

Texas A&M University

Laurence J. O ’ Toole , Jr.

The University of Georgia

Managing in the Regulatory Thicket:

Regulation Legitimacy and Expertise

G overnment performance is affected by

resources, personnel, structure, stakeholder

support, market conditions, and other

factors (Andersen and Mortensen 2010 ; Boyne

2003 ; Boyne and Meier 2009 ; Brewer and Selden

2000 ; Lynn, Heinrich, and Hill 2000 ). Regulation

is one factor that has emerged as a source of public

sector improvement (Boyne 2003 ). Conceptualized

as external control of public and private actors,

regulation is expected to correct the consequences

of market and government failures (James 2000 ;

Lowery 1998 ). The complexity of relationships

between regulators and the regulated, however, may

result in regulatory failures that attenuate the effect of

regulation on performance (Boyne 2003 ; James 2000 ).

Although regulators clearly affect organizations,

actual empirical research is rare. This article uses

U.S. nursing homes to investigate how the views of

government regulation among public, nonprofit, and

for-profit managers affect performance.

This article operationalizes the constructs of

administrators’ regulatory expertise, perceptions

of regulation legitimacy, and frequency of contact

with regulatory agencies and explores their impact

on nursing home quality. Controlling for past

performance, the analysis suggests that nursing home

quality improves along with the managers’ perceptions

of regulation legitimacy. Meanwhile, no change in

quality is found in organizations whose managers had

higher regulatory expertise. Also, higher frequency

of contact with government regulators is associated

with a decline in quality. Subgroup analysis suggests

that regulation legitimacy matters in nonprofit and

for-profit organizations but not in government

organizations.