Lords of the Harvest: Third-party Influence and Regulatory Approval of Genetically Modified Organisms

Abstract

Little is known about the factors that influence regulatory-agency decision making. We posit that regulatory agencies are influenced by the firms they regulate, but not exclusively via dyadic exchanges as is traditionally argued in the regulatory capture and business-government literatures. Instead, regulatory decisions are indirectly shaped via third-party actors who shield agencies from legitimacy threats. Focusing empirically on the U.S. Department of Agriculture's approval of genetically modified organisms (GMOs), we find that product assessments by powerful stakeholders and peer agencies influence product approval and that their effects vary under different threats. We also discuss the implications of these findings for business-government relations, nonmarket strategy, and organization theory.