Regulation under Uncertainty: The Coevolution of Industry and Regulation

Charles Sabel, Gary Herrigel, Peer Hull Kristensen

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

As production and design disintegrate and become more collaborative, involving dynamic relations between customers and firms supplying complex subsystems and service, products and production methods become more innovative but also more hazardous. The inadvertent co-production of latent hazards by independent firms is forcing firms and regulators to address the problem of uncertainty – the inability to anticipate, much less assign a probability to future states of the world – more directly than before. Under uncertainty, neither the regulator nor the regulated firms know what needs to be done. The regulator must induce firms to systematically canvas their practices and identify potential hazards. But recognizing the fallibility of all such efforts, the regulator must further foster the institutionalization of incident or event reporting procedures: systems to register failures in products or production processes that could be precursors to catastrophe; to trace out and correct their root causes; to alert others in similar situations to the potential hazard; and to make certain that countermeasures to ensure the safety of current operations are taken and the design requirements for the next generation of the implicated components or installations are updated accordingly. In this essay we develop these arguments and look closely at changes in the Norwegian offshore oil and gas industry and its regulator, the Petroleum Safety Authority to better understand the coevolution of vertically disintegrated industry and new forms of regulation.
Original languageEnglish
JournalRegulation & Governance
Volume12
Issue number3
Pages (from-to)371-394
Number of pages24
ISSN1748-5983
DOIs
Publication statusPublished - Sep 2018

Bibliographical note

Published online: 7. June 2017

Keywords

  • Incident reporting
  • Meta-regulation
  • Norway
  • Oil and gas industry
  • Uncertainty

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