Stakeholders wanted! Why and How European Union agencies involve non-state stakeholders

TLDR: In this paper, the authors examine why and how European Union agencies involve non-state stakeholders via three access mechanisms: public consultations, stakeholder bodies, and representation in management boards, concluding that stakeholder involvement is a double-edged sword, contributing to agency accountability and control, but with an inevitable risk of dependence on the regul...

Abstract: This article examines why and how European Union agencies involve non-state stakeholders – such as non-governmental organizations (NGOs), business associations or trade unions – via three access instruments: public consultations; stakeholder bodies; and representation in management boards. We assess how the use of these instruments varies across agencies, and how they are linked to different motivations driving the demand for stakeholder participation. We present two alternative sets of hypotheses, first focusing on agencies’ need for information, organizational capacity and reputation, and second, considering stakeholder involvement as an instrument of legislative control. We draw on a new dataset of stakeholder involvement practices of the full population of EU agencies, compiled via document analysis and interviews. Our findings indicate that stakeholder involvement is a double-edged sword, contributing to agency accountability and control, but with an inevitable risk of dependence on the regul...

Figures

Table 1. Number of agencies using the three access instruments (N = 31).

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Journal of European Public Policy
ISSN: 1350-1763 (Print) 1466-4429 (Online) Journal homepage: https://www.tandfonline.com/loi/rjpp20
Stakeholders wanted! Why and how European
Union agencies involve non-state stakeholders
Sarah Arras & Caelesta Braun
To cite this article: Sarah Arras & Caelesta Braun (2018) Stakeholders wanted! Why and how
European Union agencies involve non-state stakeholders, Journal of European Public Policy, 25:9,
1257-1275, DOI: 10.1080/13501763.2017.1307438
To link to this article: https://doi.org/10.1080/13501763.2017.1307438
Published online: 05 Apr 2017.
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Stakeholders wanted! Why and how European Union
agencies involve non-state stakeholders
Sarah Arras
a
and Caelesta Braun
b
a
Department of Political Science, University of Antwerp, Antwerp, Belgium;
b
Institute of Public
Administration, Leiden University, The Hague, The Netherlands
ABSTRACT
This article examines why and how European Union agencies involve non-state
stakeholders – such as non-governmental organizations (NGOs), business
associations or trade unions – via three access instruments: public
consultations; stakeholder bodies; and representation in management boards.
We assess how the use of these instruments varies across agencies, and how
they are linked to different motivations driving the demand for stakeholder
participation. We present two alternative sets of hypotheses, first focusing on
agencies’ need for information, organizational capacity and reputation, and
second, considering stakeholder involvement as an instrument of legislative
control. We draw on a new dataset of stakeholder involvement practices of
the full population of EU agencies, compiled via document analysis and
interviews. Our findings indicate that stakeholder involvement is a double-
edged sword, contributing to agency accountability and control, but with an
inevitable risk of dependence on the regulated industry.
KEYWORDS Access; agencies; European Union; interest groups; stakeholders
Introduction
Independent agencies have become an important part of the European
Union’s (EU) institutional architecture over the last two decades, rapidly
rising both in sheer numbers and expansion of their powers (Busuioc 2009;
Curtin and Dehousse 2012; Kelemen and Tarrant 2011; Levi-Faur 2011; Rittber-
ger and Wonka 2011; Wonka and Rittberger 2010). While some have limited
informational or executive tasks, others have far-reaching regulatory
powers, such as the European Medicines Agency (EMA) authorizing medicinal
products or the European Banking Authority (EBA) setting rules for financial
institutions throughout the EU (Busuioc et al. 2012). As part of a general
trend towards private actor involvement in regulatory processes, stakeholder
engagement has become an important aspect of EU agencies’ governance
structures (Ayres and Braithwaite 1992; Grabosky 2013). Indeed, 78 per cent
© 2017 Informa UK Limited, trading as Taylor & Francis Group
CONTACT Sarah Arras sarah.arras@uantwerpen.be
JOURNAL OF EUROPEAN PUBLIC POLICY
2018, VOL. 25, NO. 9, 1257–1275
https://doi.org/10.1080/13501763.2017.1307438

of all EU agencies actively involve non-state stakeholders – such as firms,
industry associa tions, NGOs or trade unions – via formal arrangements like
advisory committees or public consultations.
1
Following a diverse set of theor-
etical frameworks, including responsive regulation, regulatory capitalism, hori-
zontal accountability and agency governance, stakeholder involvement is
supposed to serve responsive, effective and legitimate regulation (Abbott
and Snidal 2013; Ayres and Braithwaite 1992; Bernauer and Gampfer 2013;
Coglianese et al. 2004; Gornitzka and Sverdrup 2015; Martinez et al. 2013;
Ottow 2015; Verbruggen 2013). This should be especially acute for EU level
agencies, given the combination of a horizontal (delegation of competencies
to non-majoritarian institutions) and upward shift of responsibilities (del-
egation of competencies to supranational governance levels). According to
agency capture theory, stakeholder involvement threatens agencies’ respon-
siveness, effectiveness and legitimacy. The expectation is that stakeholder
involvement will be biased towards well-endowed business groups, leading
to regulation serving private rather than public interests (Carpenter and
Moss 2014; Stigler 1971).
To our knowledge, there are currently no systematic analyses of how EU
agencies interact with non-state stakeholders and the motivations driving
these interactions (but see Borrás et al. 2007; Thiel 2014). With this article,
we contribute to the literature on stakeholder involvement in regulatory gov-
ernance, in particular vis-à-vis EU independent agencies, by answering the fol-
lowing research question: why and how do EU agencies involve non-state
stakeholders? We examine whether organizational arrangements to involve
stakeholders, which we term access instruments, are associated with the
most important motivations for stakeholder involvement. Following the
logic of delegation processes, we first expect stakeholder involvement to
serve agency needs. More in particular, we expect individual access instru-
ments to fulfil different agency needs best. Public consultations are linked
to informational needs, participation in stakeholder bodies to the need for
organizational capacity and, finally, participation in management boards
most likely serves reputational concerns. As an alternative explanation, we
expect stakeholder involvement to be primarily an instrument of legislative
control. To examine our expectations, we draw on a novel dataset of access
instruments used by the full population of 31 EU independent agencies, con-
structed via document analysis, and 27 semi-structured interviews with EU
agency officials.
Two important findings stand out. First, although the main instruments for
stakeholder involvem ent indeed serve informational needs (public consul-
tations), organizational capacity (stakeholder bodies), as well as agencies’
reputation (participation in management boards), our findings also reveal
the impact of legislative control, not only in terms of legal requirements but
also in a more indirect way, for instance in the need to balance different
1258 S. ARRAS AND C. BRAUN

interests. Second, we find that EU agencies with regulatory competences
more extensively involve stakeholders. This implies that rather than being
independent and insulated from external pressures, as the idea of delegation
to experts suggests, EU regulatory agencies are strongly embedded in a
network of stakeholders. In sum, our findings indicate that stakeholder invol-
vement at EU agencies can be considered a double-edged sword. On the one
hand, as an instrument of legislative control, the participation of – especially
non-business – stakeholders can contribute to agencies’ accountability and
oversight. On the other hand, however, as stakeholder participation also
seems to fulfil certain agency needs, especially a need for expertise, it
brings along an inevitable risk of dependence on the regulated industry.
Stakeholder involvement and EU agencies
A functional explanation of delegating tasks to independent agencies follows
from the well-known principle of credible commitment. Governments put
regulatory or executive competences in the hands of independent agencies
because expert-based regulation and implementation is considered to have
more credibility (Maggetti and Verhoest [2014]; Rittberger and Wonka
[2011]; see Gilardi [2005] and McNamara [2002] for sociological institutionalist
explanations). In the case of EU agency creation, the limited resource capacity
of the European Commission (EC) to effectively ensure and oversee
implementation of EU legislation, strengthened this rationale of credible com-
mitment (Dehousse 1997; Wonka and Rittberger 2010). Delegation theory
thereby suggests two important, yet alternative sets of hypotheses concern-
ing the motivations for stakeholder involvement, namely either addressing
agency needs or serving legislative control. We discuss each in turn.
Agency demand for stakeholder involvement
Two important assets for independent agencies are a strong expert base and
sufficient operational capacity to be capable of formulating effective rules, as
well as monitoring and ensuring compliance (cf. Hood et al. 2001; Rittberger
and Wonka 2011). From these core assets follow three main motivations for
involving stakeholders. First, one of the most important motivations is that
agencies need expertise. As Coglianese et al. (2004: 277) put it: ‘information
is the lifeblood of regulatory policy’. Agencies need expertise to formulate
regulatory proposals that effectively meet industry innovations and trends,
and take into account the potential impact on the regulated sector. Incorpor-
ating industry expertise in the regulatory process is one of the most important
characteristics of many co-regulation arrangements, by involving both private
and public actors to varying degrees (Ayres and Braithwaite 1992; Coglianese
et al. 2004).
JOURNAL OF EUROPEAN PUBLIC POLICY 1259

Involvement of non-stake stakeholders to obtain their expertise resonates
in the interest group literature as part of a resource exchange perspective; the
most important mechanism explaining interest group access to public
decision-making. Within this perspective, interactions between policy-
makers and stakeholders are conceptualized as an exchange relation
(Bouwen 2002; Braun 2012; Coen and Katsaitis 2013). Interest groups, or sta-
keholders more generally, offer relevant policy goods required by policy-
makers in return for access and the possibility of having influence. Information
is one of the most important goods interest groups have to offer to policy-
makers, and ranges from technical expertise, legal and administrative infor-
mation (see De Bruycker [2016] for a discussion) to so-called ‘political intelli-
gence’ (Hall and Deardorff 2006), which helps public authorities to more
effectively design and implement legislation.
Besides expertise, independent agencies can also benefit from stake-
holders’ organizational capacity to facilitate and monitor compliance. Invol-
ving stakeholders early on in the regulatory process and providing
opportunities for their input is argued to ensure higher levels of ownership
and compliance among regulatees, adding to cost-reduction and effective
implementation (Martinez et al. 2013 ; Ottow 2015). In addition, interest associ-
ations can function as an intermediary between public officials and private
firms. This intermediary function is important, given the limited resource
capacity of regulatory authorities to engage with all relevant stakeholders
individually. This more inclusive interpretation of policy goods beyond mere
informational needs, as is dominant in the interest group literature (Bouwen
2002), is reflected in the concept of regulatory enrolment (cf. Black 2003).
‘Enrolment occurs when a regulator chooses to engage with actors that
possess resources relevant for regulation and enforcement, such as infor-
mation, expertise, financial means, authority, or organizational capacity that
the regulator itself might lack’ (Verbruggen 2013: 524).
A complementary motivation for stakeholder involvement refers to an
overall capacity of agencies to achieve so-called de facto autonomy (Maggetti
2007) and, hence, their capability to regulate and enforce compliance. This
idea of political capacity refers to how well agencies are embedded within
networks of both state and non-state actors, and their capability to forge
such networks over time in such a way that it benefits their authority to
draft and enforce regulation. Such strategic embeddedness speaks to reputa-
tional strategies (Carpenter 2001, 2010; cf. Maggetti and Verh oest 2014). Care-
fully managing stakeholder involvement by balancing and strategically
exploiting certain interests may serve an agency’s reputation of fairly and
strictly monitoring regulatory norms (Carpenter 2010; Wilson 1974). It also
fits within a reputational-based approach to accountability, which ‘is about
sustaining one’s own reputation vis-à-vis different audiences’, including
societal stakeholders (Busuioc and Lodge 2016: 248). In this regard, engaging
1260 S. ARRAS AND C. BRAUN

Frequently asked questions

Q1. What are the contributions in "Stakeholders wanted! why and how european union agencies involve non-state stakeholders" ?

This article examines why and how European Union agencies involve non-state stakeholders – such as non-governmental organizations ( NGOs ), business associations or trade unions – via three access instruments: public consultations ; stakeholder bodies ; and representation in management boards. The authors present two alternative sets of hypotheses, first focusing on agencies ’ need for information, organizational capacity and reputation, and second, considering stakeholder involvement as an instrument of legislative control. 

Q2. What have the authors stated for future works in "Stakeholders wanted! why and how european union agencies involve non-state stakeholders" ?

They are, however, interesting hypotheses for further research on independent agencies elsewhere. Their findings also suggest a complex interplay between mechanisms of legislative control and agency needs for stakeholder involvement, speaking to the overall question of responsiveness and legitimacy running throughmultiple theoretical frameworks. First, the observation that informational needs appear to be an important motivation and are, albeit to varying degrees, associated with all three access instruments, may be interpreted as a signal that agencies are likely tobedependent on the regulatees. Second, the finding that reputational concerns resonate in multiple access instruments in conjunction with the observation that several agencies engage in voluntary stakeholder involvement, exceeding legal requirements, suggests the relevance of stakeholder involvement when considering agency autonomy and delegation processes. 

Q3. What is the main motivation for involving stakeholders in the regulatory process?

Involving stakeholders early on in the regulatory process and providing opportunities for their input is argued to ensure higher levels of ownership and compliance among regulatees, adding to cost-reduction and effective implementation (Martinez et al. 2013; Ottow 2015). 

Q4. What is the role of the public consultation instrument in the agency’s work?

As the work of agencies with regulatory competences has a larger and more direct impact on stakeholders, levels of mobilization will be higher, making the need to canalize interactions with stakeholders via formal access instruments more acute. 

Q5. What percentage of the non-regulatory agencies use the public consultation instrument?

While 63 per cent of the regulatory agencies have representatives of nonstate stakeholders in their management board, only 13 per cent of the non-regulatory agencies employ this access instrument. 

Q6. What is the role of the EU’s stakeholders in the regulatory process?

As part of a general trend towards private actor involvement in regulatory processes, stakeholder engagement has become an important aspect of EU agencies’ governance structures (Ayres and Braithwaite 1992; Grabosky 2013). 

Q7. What is the main reason why the authors expect public consultations to serve different agency needs best?

Public consultations are linked to informational needs, participation in stakeholder bodies to the need for organizational capacity and, finally, participation in management boards most likely serves reputational concerns. 

Q8. What is the important motivation for involving stakeholders?

Involvement of non-stake stakeholders to obtain their expertise resonates in the interest group literature as part of a resource exchange perspective; the most important mechanism explaining interest group access to public decision-making. 

Q9. What is the common way to tie stakeholders to an agency?

Agencies in need for stakeholders that can offer organizational capacity, i.e., that can either serve as intermediate or help facilitate the implementation process, are likely to employ access instruments that will tie such organizations to them over a longer period of time. 

Q10. What is the definition of fire-alarm oversight?

Fire-alarm oversight refers to a system of rules, procedures and informal practices allowing citizens and interest groups to examine agency activities and demand remedies from agencies, courts or parliament itself, should agency activities violate legislative goals. 

Q11. What is the main reason why the authors expect stakeholder involvement to be primarily an instrument of legislative?

On the one hand, as an instrument of legislative control, the participation of – especially non-business – stakeholders can contribute to agencies’ accountability and oversight. 

Q12. Why do the authors expect the EU to put its regulatory or executive competences in the hands of independent?

Governments put regulatory or executive competences in the hands of independent agencies because expert-based regulation and implementation is considered to have more credibility (Maggetti and Verhoest [2014]; Rittberger and Wonka [2011]; see Gilardi [2005] and McNamara [2002] for sociological institutionalist explanations). 

Q13. What is the likely explanation for the use of access instruments?

the authors expect that:H1: EU agencies with regulatory competences are more likely to employ access instruments to involve non-state stakeholders than EU agencies without regulatory competences. 

Q14. What is the main motivation for the agency to interact with stakeholders?

Illustrative is the following quote on why the agency interacts with stakeholders in general: ‘One objective would be to gather support, not for specific work, but to increase the credibility of the organization [i.e., the agency]’ (Interview 06052015). 

Q15. What is the effect of interestgroup access on the agency?

studies of interestgroup access demonstrate that higher levels of government activity and wider competences are positively correlated with interest group mobilization and hence with more frequent interactions with a larger set of groups (Leech et al. 2005). 

Q16. What is the main motivation for the agencies to interact with stakeholders?

This is especially the case for regulatory agencies, since 81 per cent of them mentioned reputational concerns as a main motivation to interact with stakeholders, while only 27 per cent of the non-regulatory agencies did. 

Q17. What is the main reason for the risk of dependence on the regulated industry?

On the other hand, however, as stakeholder participation also seems to fulfil certain agency needs, especially a need for expertise, it brings along an inevitable risk of dependence on the regulated industry. 

Q18. What is the main reason for the EU’s involvement of stakeholders?

It is therefore likely that stakeholder involvement arrangements are primarily the result of legal requirements set by the EU institutions when designing independent agencies. 

Q19. How many EU agencies actively involve non-state stakeholders?

78 per cent© 2017 Informa UK Limited, trading as Taylor & Francis GroupCONTACT Sarah Arras sarah.arras@uantwerpen.beof all EU agencies actively involve non-state stakeholders – such as firms, industry associations, NGOs or trade unions – via formal arrangements like advisory committees or public consultations.