Beyond the fear of discretion: Flexibility, performance, and accountability in the management of regulatory bureaucracies

Abstract

This study explores the implications of different approaches to performance management for inspection work and regulatory outcomes. It assesses to what extent variations in methods for controlling discretion explain why in some cases regulatory inspectors limit themselves to the narrow boundaries of their formal mandate, while in other cases they work collaboratively with inspected firms and other organizations to develop innovative strategies that solve complex regulatory and business problems. After reviewing alternative approaches to the management of discretion, I present a natural experiment that offered an opportunity for controlled comparisons of two current attempts to reconcile bureaucratic performance with accountability: New Public Management and Experimentalist Governance. Case comparisons in the area of labor inspection in Brazil - involving severance payments, fraudulent cooperatives, and safety in construction - suggest that these two approaches to the management of regulatory bureaucracies produce considerably different inspection strategies and regulatory outcomes. The different accountability mechanisms and investigation strategies inspired by each of these approaches create different sets of incentives with direct effects on inspectors' motivation and their ability to resolve compliance problems. © 2010 Blackwell Publishing Asia Pty Ltd.