Transparency systems: do businesses in North Rhine-Westphalia (Germany) regret the cancellation of the Smiley scheme?

Abstract

Our paper explores how participants of voluntary transparency systems react to the cancellation of such programmes. We concern ourselves with participants of the voluntary transparency scheme known as the “North Rhine-Westphalia Smiley”. The Smiley system, which awarded the compliant behavior of businesses that joined it, was established in 2007 but cancelled in 2013 due to lack of participants. In our survey, the vast majority of the respondents express regret at the cancellation of the scheme. The goals of this paper are to (i) econometrically explain how socio-demographic, monetary, and non-monetary determinants influence participants’ willingness to continue with the voluntary transparency system and (ii) find reasons for the inconsistency between the lack of participants and the expression of regret within our survey. We find evidence that the non-monetary variables “revenue” and “award” and the monetary variable “revenue” influence participants’ regret. We speculate that status quo bias and loss aversion are the reasons why businesses favour maintaining the Smiley scheme once they have experienced it.