The Compelling Need for Academic Research on Industry Self-Regulation
Industry self-regulation, a form of “soft law,” has long been a key element in the governance of the U.S. economy, offering businesses a vehicle to establish and enforce standards that enhance consumer trust and promote fair competition in the marketplace.
Over the decades and across more than a dozen presidential administrations, these self-regulatory mechanisms, developed by industries, have played a pivotal role in shaping not only business practices but also in influencing public policy, law and regulations.
Nevertheless, industry self-regulation remains largely misunderstood. That is why last year, when I wrote "The Case For Teaching Industry Self-Regulation In Law, Business And Public Policy Schools," I advocated for incorporating industry self-regulation into higher education curricula, educating future generations on industry self-regulation while pushing for exploration of the conditions that allow self-regulation to flourish, identifying successful—and unsuccessful—instances and examining new models for teaching this concept. I am very pleased that one professor of law I know is piloting soft law and industry self-regulation curricula this semester at the Sandra Day O’Connor College of Law at Arizona State University for his second and third-year law students.
But for more law, business and public policy school professors to effectively teach on the topic of industry self-regulation, there is also a need for them to go beyond its current practical applications. That is why I believe there is a compelling case for robust and additional academic research into the conditions that would expand industry self-regulation’s impact. While a body of research has already been developed and is being further enhanced by our Center for Industry Self-Regulation via its research center, there remains an untapped opportunity for scholars to further investigate and refine this multi-disciplinary area of academic study.
Industry self-regulation refers to the voluntary standards, codes of conduct, dispute resolution and other accountability mechanisms that industries or cross-industries create to govern their own behavior, without direct intervention from the government. While this approach is sometimes associated with specific industries like finance through FINRA, chemical industry safety through the American Chemistry Council and advertising through our organization’s National Advertising Division, it has the potential to span many more sectors.
The most obvious benefit of self-regulation is that it allows industries to set standards that are tailored to their unique needs rather than relying on external governmental regulatory bodies that may not have a nuanced understanding of the sector. Self-regulation can promote efficiency, improve compliance and even reduce the need for more intrusive government oversight.
However, self-regulation is not without its challenges. Concerns around enforcement, accountability and the potential for “race-to-the-bottom” behavior, where companies might set minimal standards to cut costs, can undermine the effectiveness of self-regulatory frameworks. This is where academic research comes into play.
Historically, academic research into industry self-regulation has been somewhat limited, with a growing list of scholars and practitioners contributing to the field on topics as diverse as how Japan and Singapore are influencing global AI policy to self-regulation ideas for the autonomous vehicle industry and other innovative sectors.
While some notable academic studies have advanced understanding of the effectiveness and limitations of industry self-regulation, much of the field remains underexplored. For instance, many industries are grappling with the need to develop new standards that address emerging technologies, yet there is limited academic research on how self-regulation can adapt to these changes.
Research Opportunities For Scholars
Questions abound. For example, how should innovation be balanced with risk mitigation in fields like AI? How can self-regulation ensure that emerging technologies are deployed ethically and do not exacerbate inequality or harm?
These questions and others present formidable research opportunities for scholars across multiple disciplines, opening avenues for academic inquiry that could lead to breakthroughs in the way we understand and approach industry self-regulation. These include:
Evaluating The Effectiveness Of Self-Regulation Programs
While there is enthusiasm around self-regulation, limited empirical research on its effectiveness means that the long-term impacts of some programs are not fully understood. Research could focus on assessing the success of self-regulatory initiatives across different industries, looking at factors such as compliance rates, consumer outcomes and regulatory costs. Comparative studies could also provide valuable insights into which models of self-regulation work best in different scenarios.
Self-Regulation And Public Policy: A Dynamic Relationship
A key question in self-regulation is how it intersects with government regulation. Recent trends suggest that many governments outside the U.S. are shifting toward “co-regulation,” where self-regulatory bodies work alongside regulatory agencies to establish and enforce standards. Scholars could examine what factors determine success in these hybrid systems.
The Role Of Industry Associations And Third-Party Accountability Agents
Industry associations, third-party auditors and accountability agents and neutral dispute resolution organizations often play a key role in self-regulation, but their roles are not always well understood. Research into how these entities help or hinder the effectiveness of self-regulation could help clarify their importance and potential for improving compliance.
Questions like how independent and objective third-party auditors are, or how associations can incentivize members to adhere to self-regulatory standards, remain underexplored but are critical to the functioning of industry self-regulation.
Global Perspectives On Self-Regulation
Self-regulation is increasingly global in scope, but research that explores how it functions across the globe is limited. By examining self-regulatory systems in diverse geographic contexts, scholars can identify best practices that might be adaptable to other regions or industries. A comparative global approach would offer a clearer understanding of how industry self-regulation can become a more universally accepted model for governance.
Industry self-regulation remains a vital mechanism for ensuring responsible business conduct. Through additional focused and interdisciplinary academic research, scholars can help improve the effectiveness of self-regulation across industries. And with opportunities for research in fields as diverse as technology, behavioral economics, consumer psychology, public policy and comparative law, the academic community is well-positioned to play a pivotal role in shaping the future of industry self-regulation.