The role of trust in the regulation of complex and high-risk industries: the case of the U.S. Federal Aviation Administration’s voluntary disclosure programs

Russell W. Mills and Dorit Rubinstein Reiss

Chapter 2 in Trust in Regulatory Regimes, 2017, pp 37-59 from Edward Elgar Publishing

Abstract: As part of the shift from command and control to process oriented regulatory regimes (Gilad 2010), building trust between regulators and the regulated firms has grown in importance. Collaborative mechanisms often rely on a free-flow of information and communication, which requires the building and maintenance of trust. This exchange of information and trust building is even more vital in complex and high-risk industries where potential information asymmetries and prevailing motivations could lend themselves to the hiding of information (Gormley 1986; May 2005). In this paper, we examine the evolution of the role of trust in the U.S. Federal Aviation Administration’s Voluntary Disclosure Programs by developing case studies of three voluntary disclosure programs: the Aviation Safety Reporting System (ASRS), the Aviation Safety Action Program (ASAP) and the Voluntary Disclosure Reporting Program (VDRP). Using extensive interview and observational data, we demonstrate how trust is essential to the operation of the problems. We show how the FAA used institutional mechanisms to create trust at the national level, but at the local level, personal relationships had to be built to foster trust. The need for relationship-based trust building meant that the level of trust between the FAA and air carriers varied across regions and was often contingent upon the enforcement style of the regulator. While trust is necessary for the programs we describe and can provide substantial benefits to the public, it can also lead regulators to ignore warning signs and miss problems. We explore this darker side of trust using the Southwest Airlines incident.

Keywords: Business and Management; Economics and Finance; Politics and Public Policy (search for similar items in EconPapers)
Date: 2017
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