Examining a key aspect of agency-to-business relationships

the effects of regulatory control on the satisfaction of regulated firms

David I. Gilliland, K. Douglas Hoffman

Research output: Contribution to journalArticle

Abstract

This paper studies an overlooked, but highly important relationship, the relationship that exists between regulatory agencies (e.g., the EPA, OSHA, and the FDA) and the for-profit businesses they attempt to govern. Drawing on business-to-business control and satisfaction research, a framework is developed to understand how regulatory control influences the satisfaction levels of customer firms. Regulatory control is disaggregated into four distinct facets: the controlling agency, the rules and regulations of control, the processes used by the agency to apply the regulations, and sanctions. Each facet is hypothesized to have an effect on satisfaction. A regulator's administration of state food safety regulations provides the empirical context for testing the hypotheses. Results from a survey of 173 restaurants provide empirical support for the conceptual model. Most importantly, the study finds that the informal control process increases customer satisfaction, while the formal control process decreases customer satisfaction. We discuss how these and other findings may contribute to more effective agency-to-business relationships and ongoing research.
Original languageEnglish
Pages (from-to)75-102
Number of pages28
JournalJournal of Business-to-Business Marketing
Volume11
Issue number4
DOIs
Publication statusPublished - Oct 2004

Fingerprint

Industry
Customer satisfaction
Food safety
Business relationships
Profitability
Testing
Food and Drug Administration
Conceptual model
Formal control
Business to business
Restaurants
Safety regulations
Sanctions

Keywords

  • regulatory policy
  • control
  • governance
  • satisfaction

Cite this

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title = "Examining a key aspect of agency-to-business relationships: the effects of regulatory control on the satisfaction of regulated firms",
abstract = "This paper studies an overlooked, but highly important relationship, the relationship that exists between regulatory agencies (e.g., the EPA, OSHA, and the FDA) and the for-profit businesses they attempt to govern. Drawing on business-to-business control and satisfaction research, a framework is developed to understand how regulatory control influences the satisfaction levels of customer firms. Regulatory control is disaggregated into four distinct facets: the controlling agency, the rules and regulations of control, the processes used by the agency to apply the regulations, and sanctions. Each facet is hypothesized to have an effect on satisfaction. A regulator's administration of state food safety regulations provides the empirical context for testing the hypotheses. Results from a survey of 173 restaurants provide empirical support for the conceptual model. Most importantly, the study finds that the informal control process increases customer satisfaction, while the formal control process decreases customer satisfaction. We discuss how these and other findings may contribute to more effective agency-to-business relationships and ongoing research.",
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