A Double-Edged Sword? Stakeholder Involvement and Legitimacy in Hybrid Regulatory Regimes

The involvement of stakeholders in agency decision-making is often promoted as a way to enhance the democratic legitimacy, effectiveness, and acceptance of regulatory outcomes. By incorporating a wider range of perspectives and expertise, stakeholder involvement is assumed to improve both the quality of decisions and their societal support. Nevertheless, the democratic legitimacy of stakeholder involvement remains contested. Stakeholders are not elected representatives and may reflect particularistic interests rather than the broader public good, raising concerns about bias, unequal access, and the potential capture of regulatory processes. This paper examines stakeholder involvement affects legitimacy perceptions, with particular attention to three dimensions: the form of involvement, its timing within the regulatory process, and the diversity of stakeholders involved. In addition, the paper assesses whether the type of regulatory regime conditions these legitimacy perceptions by differentiating between rule-based and goal-based regulatory regimes. Rule-based regulation relies on detailed and prescriptive while goal-based regulation emphasizes outcomes and grants regulatees greater flexibility in how regulatory objectives are achieved. Building on original survey data gathered in Belgium, we investigate how perceptions of regulatory legitimacy vary depending on both the nature of stakeholder involvement and the regulatory regime in which it occurs. We expect goal-based regulation to require more intensive collaboration between policymakers and regulated actors, which may enhance perceived legitimacy among interest groups representing regulatees due to increased influence, mutual learning, and practical feasibility. In contrast, groups representing beneficiaries or diffuse public interests may view such close collaboration with greater suspicion, perceiving it as fostering overly cozy relationships and increasing the risk of regulatory capture. As a result, their trust in regulatory authorities may decline, leading to lower legitimacy perceptions. By identifying these conditional effects, the paper seeks to contribute to debates on participatory governance and regulatory design by showing that stakeholder involvement is not uniformly legitimacy-enhancing, but instead produces differentiated effects across regulatory contexts and stakeholder types. Submission for panel 7: Stakeholder involvement in regulatory governance