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What's the difference?

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Title:
What's the difference? public, nonprofit, and private administration of U.S. organic food regulations
Added title page title:
Public, nonprofit, and private administration of U.S. organic food regulations
Creator:
Carter, David P. ( author )
Place of Publication:
Denver, Colo.
Publisher:
University of Colorado Denver
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English
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1 electronic file (232 pages). : ;

Thesis/Dissertation Information

Degree:
Doctorate ( Doctor of Philosophy)
Degree Grantor:
University of Colorado Denver
Degree Divisions:
School of Public Affairs, CU Denver
Degree Disciplines:
Public Affairs
Committee Chair:
Heikkila, Tanya
Committee Members:
Weible, Christopher
Sowa, Jessica
May, Peter J.

Subjects

Subjects / Keywords:
Natural foods industry ( lcsh )
Food law and legislation ( lcsh )
Administrative agencies -- United States ( lcsh )
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bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )

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Abstract:
This dissertation examines the implications of a dramatic innovation in regulatory program design: competitive third-party administration. Under competitive third-party programs, the administration of regulatory standards is delegated to multiple independent organizations in competition for regulatee clients, giving rise to concerns regarding how such program designs might threaten regulatory program fidelity. For example, scholars question whether third-party organizations, particularly those from outside of the government sector, possess the requisite expertise to adequately monitor regulated activities and ensure regulatees’ compliance. Others indicate that competition among diverse third-party administrators may threaten regulatory stringency if third-party administrators alter their regulatory behaviors to attract and retain regulatee clients. ( ,,,, )
Abstract:
The dissertation engages such concerns in the context of competitive third-party administration of U.S. organic food regulations, guided by the research question: How does organizational form (public, nonprofit, private) affect third-party organizations’ administration of a regulatory program? The relationship between third-party administrator organizational form and three facets of regulatory administration are studied: third-party administrators’ expertise, services, and regulatory approaches. The project follows a mixed-method research design, with empirical analyses drawing heavily from a national survey of certified organic producers (the regulatees in the organic food regulation context). Multivariate regression procedures are used to account for how perceptions of regulatory administration are influenced by both third-party administrator and survey respondent attributes. Survey data are complemented in the study of third-party administrator services through website coding. Supplementary data are extracted from a database of certified organic operations and nonprofit administrator IRS tax filings.
Abstract:
Dissertation findings indicate that organic food regulation third-party administrator organizational form is associated with two facets of regulatory administration – third-party administrators’ expertise and the services third-party administrators perform. Few differences are found in public, nonprofit, and private third-party administrators’ execution of regulatory functions. Taken collectively, these results offer an intriguing proposition for future research – that the conflicting incentives introduced by a competitive third-party design characterized by third-party organizational form diversity may be effectively resolved through adequate accreditation oversight. The primary contribution of the dissertation is thus a better understanding of how regulatory design innovations might hinder or promote regulatory program objectives. This research also offers insights for multiple disciplines within the field of public affairs, and a demonstration of the promise of using multiple theoretical perspectives in the study of contemporary public administration issues.
Thesis:
Thesis (Ph.D.)--University of Colorado Denver.
Bibliography:
Includes bibliographic references
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System requirements: Adobe Reader.
General Note:
School of Public Affairs
Statement of Responsibility:
by David P. Carter..

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University of Colorado Denver
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Auraria Library
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952495672 ( OCLC )
ocn952495672

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Full Text
WHATS THE DIFFERENCE?
PUBLIC, NONPROFIT, AND PRIVATE ADMINISTRATION
OF U.S. ORGANIC FOOD REGULATIONS
by
DAVID P. CARTER
B.A. and B.S., Colorado State University, 2006
M.P.A., University of Colorado Denver, 2010
A thesis submitted to the
Faculty of the Graduate School of the
University of Colorado in partial fulfillment
of the requirements for the degree of
Doctor of Philosophy
Public Affairs
2016


2016
DAVID P. CARTER
ALL RIGHTS RESERVED
11


This thesis for the Doctor of Philosophy degree by
David P. Carter
has been approved for the
Public Affairs Program
by
Tanya Heikkila, Chair
Christopher M. Weible, Advisor
Jessica Sowa
Peter J. May
Date: April 5, 2016


Carter, David P. (Ph.D., Public Affairs)
Whats the Difference? Public, Nonprofit, and Private Administration of U.S. Organic
Food Regulations
Thesis directed by Associate Professor Christopher M. Weible
ABSTRACT
This dissertation examines the implications of a dramatic innovation in
regulatory program design: competitive third-party administration. Under competitive
third-party programs, the administration of regulatory standards is delegated to
multiple independent organizations in competition for regulatee clients, giving rise to
concerns regarding how such program designs might threaten regulatory program
fidelity. For example, scholars question whether third-party organizations, particularly
those from outside of the government sector, possess the requisite expertise to
adequately monitor regulated activities and ensure regulatees compliance. Others
indicate that competition among diverse third-party administrators may threaten
regulatory stringency if third-party administrators alter their regulatory behaviors to
attract and retain regulatee clients.
The dissertation engages such concerns in the context of competitive third-party
administration of U.S. organic food regulations, guided by the research question: How
does organizational form (public, nonprofit, private) affect third-party organizations'
administration of a regulatory program? The relationship between third-party
administrator organizational form and three facets of regulatory administration are
studied: third-party administrators expertise, services, and regulatory approaches.
The project follows a mixed-method research design, with empirical analyses drawing
heavily from a national survey of certified organic producers (the regulatees in the
IV


organic food regulation context). Multivariate regression procedures are used to
account for how perceptions of regulatory administration are influenced by both third-
party administrator and survey respondent attributes. Survey data are complemented
in the study of third-party administrator services through website coding.
Supplementary data are extracted from a database of certified organic operations and
nonprofit administrator IRS tax filings.
Dissertation findings indicate that organic food regulation third-party
administrator organizational form is associated with two facets of regulatory
administration third-party administrators expertise and the services third-party
administrators perform. Few differences are found in public, nonprofit, and private
third-party administrators execution of regulatory functions. Taken collectively, these
results offer an intriguing proposition for future research that the conflicting
incentives introduced by a competitive third-party design characterized by third-party
organizational form diversity may be effectively resolved through adequate
accreditation oversight. The primary contribution of the dissertation is thus a better
understanding of how regulatory design innovations might hinder or promote
regulatory program objectives. This research also offers insights for multiple
disciplines within the field of public affairs, and a demonstration of the promise of using
multiple theoretical perspectives in the study of contemporary public administration
issues.
The form and content of this abstract are approved. I recommend its publication.
Approved: Christopher M. Weible
v


DEDICATION
This dissertation is dedicated to the people who make up the bedrock of my
strength and motivation. First and foremost, this dissertation is dedicated to my
partner in all things important, Sarah E. E. Shepherd, who everyday provides
inspiration and support.
Second, this dissertation is dedicated to my family: my mom (Kathy Carter-
Dulin) and stepdad (Larry Dulin), my sisters (Shell Tucker and Sandra Carter), my
nephew (Lucas Tucker), and all the additional family members Ive been privileged to
pick up over the years (Philip Tucker, Camille Shepherd and Keith Fessenden, Conner
and Cindy Shepherd, Owen Shepherd, John and Cindy Thomas, and so many more...).
Finally, this dissertation is dedicated to my dad Stephen Alonzo Carter who
exhibited an intellectual and spiritual curiosity unrivaled by most. We undoubtedly
would have spent many hours discussing the ideas that are presented in these pages. I
hope that the shadows of those unfulfilled conversations somehow made their way into
the words that follow.
vi


ACKNOWLEDGEMENTS
I have been unbelievably fortunate to learn from and work with folks that are
not only outstanding scholars, but also first-class human beings. I am indebted to
Christopher M. Weible, Saba Siddiki, and Xavier Basurto for originating the research
project (funded by the National Science Foundation; grant no. 1124541) that made this
dissertation possible. I am further indebted to research collaborators John Brett, Sara
Miller-Chonaiew, Alison Kent, and Ainsley Smith.
I would like to express my gratitude to Christopher M. Weible and Tanya
Heikkila as co-directors of the Workshop on Policy Process Research (WOPPR), and my
WOPPR colleagues, including: Johnathan Pierce, Saba Siddiki, Mark Davis, Sam Gallaher,
Kristin Olofsson, Juniper Katz, Daniel Costie, and Jarkko Levanen. The WOPPR provided
an unparalleled mentorship and research environment, abundant in challenges,
opportunities, and support. In addition to those affiliated with the WOPPR, a long list of
individuals has provided me with support and mentorship for which I am grateful. This
list includes (but is not limited to): Jessica Sowa, Peter J. May, Edella Schlager, my Ph.D.
cohort peers, and School of Public Affairs faculty and staff.
A final deep and heartfelt appreciation is extended to my advisor Christopher M.
Weible, who provided me as many opportunities as I could handle and the guidance to
realize their potential. My training was rich with the best experiences that research and
paper writing, the Policy Studies Journal, many conferences and workshops across the
U.S. (and the U.K.), and institutional coding could possibly offer. Thank you, Chris.
vn


TABLE OF CONTENTS
CHAPTER
I. INTRODUCTION..............................................................1
Literature Review: Organizational Form and Third-Party Regulatory Administration 8
Empirical Context: Competitive Third-Party Regulatory Administration of U.S.
Organic Food Regulations..................................................24
Research Design...........................................................32
Dissertation Overview.....................................................42
II. WHO KNOWS BEST? PUBLIC, NONPROFIT, AND PRIVATE EXPERTISE IN THE
ADMINISTRATION OF U.S. ORGANIC REGULATIONS..................................47
Abstract..................................................................47
Introduction..............................................................48
Expertise, Organizational Form, and Knowledge Management..................51
Third-Party Monitoring of U.S. Organic Food Regulations...................59
Study Design..............................................................60
Findings..................................................................66
Discussion................................................................71
Conclusion................................................................75
III. SERVICE DIVERSIFICATION AND SERVICE QUALITY DIFFERENCES AMONG PUBLIC,
NONPROFIT, AND PRIVATE THIRD-PARTY ADMINISTRATORS OF U.S. ORGANIC
REGULATIONS.................................................................78
Abstract..................................................................78
Introduction..............................................................79
Organization Form and Services in Third-Party Regulatory Administration...82
Third-Party Regulatory Administration under the National Organic Program..89
Study Design..............................................................91
Findings.................................................................100
viii


Discussion
107
Conclusion.................................................................Ill
IV. PUBLIC, NONPROFIT, AND PRIVATE REGULATORY APPROACHES IN THIRD-PARTY
REGULATORY ADMINISTRATION.....................................................115
Abstract...................................................................115
Introduction...............................................................116
Variation in Regulatory Approach...........................................118
Program Context, Regulatory Organization Characteristics, and Regulatory Approach
.......................................................................121
The NOP Regulatory Arrangement.........................................128
Study Design...........................................................130
Findings................................................................137
Discussion..............................................................146
Conclusion..............................................................150
V. CONCLUSION.............................................................154
Key Findings...........................................................156
Research Limitations...................................................160
Contributions to the Literature........................................164
Conclusion..............................................................170
REFERENCES................................................................172
APPENDIX
A. Organic Industry and Regulation Expert Interview Questionnaire.............184
B. Certified Organic Producer Survey Questionnaire............................186
C. Organic Producer Sample Check Procedures...................................204
D. Chapter 2 Descriptive Statistics............................................208
E. Chapter 3 Descriptive Statistics............................................210
IX


F. Chapter 3 Third-Party Administrator Website Coding Indicators................212
G. Chapter 3 Third-Party Administrator Website Coding Findings..................213
H. Chapter 3 Descriptive Statistics............................................214
I. Chapter 3 Service Quality Descriptive Findings..............................216
J. Chapter 4 Descriptive Statistics............................................217
x


LIST OF TABLES
TABLE
1.1. Generalized differences between public, nonprofit, and private organizations
according to organizational factors that theoretically link organizational form to facets
of program administration.........................................................10
1.2. Generalized differences between public, nonprofit, and private organizational forms
and the theorized relationship between organizational form and third-party
administrator expertise...........................................................15
1.3. Generalized differences between public, nonprofit, and private organizational
forms and the theorized relationship between organizational form and third-party
administrator services............................................................18
1.4. Certified organic producer survey respondent commodity types, both certified
organic and conventional..........................................................38
1.5. Dependent variable constructs, conceptual definitions, data sources, and
measurement by dissertation chapter...............................................41
1.6. Study independent variables and conceptual definitions.......................42
2.1. Generalized differences between public, nonprofit, and private organizational
forms and the theorized relationship between organizational form and third-party
administrator expertise...........................................................57
2.2. Regulatory and substantive expertise construct measures......................64
2.3. Regulatory and substantive expertise construct descriptive statistics by third-party
administrator organizational form.................................................67
2.4. Farmer perceptions of third-party administrator and inspector expertise as
explained by administrator and farmer attributes..................................69
3.1. NOP third-party administrator service categories and associated website coding
and survey variables..............................................................94
3.2. Regulatee-client perceptions of third-party administrator service quality as
explained by third-party administrator organizational form and survey respondent
attributes.......................................................................105
4.1. Regulatory approach construct measures......................................133
4.2. Regulatory approach construct variable descriptive statistics by third-party
administrator organizational form................................................138
xi


4.3. Multilevel analysis of the relationship between third-party administrator and
respondent-level characteristics and the regulatory approach constructs...........141
4.4. Multilevel analysis of nonprofit third-party administrator dimensional publicness
measure and respondent-level characteristic relationship with regulatory approach
constructs........................................................................145
5.1. Dissertation findings relative to the studys theoretical expectations.......158
C.l. Survey wave analysis results.................................................204
C.2. Online study sample and follow-up phone sample response comparison...........205
C.3. Reported size of survey respondent operations................................206
C.4. Survey respondents by region.................................................206
C.5. Survey respondent organic certification types................................206
C.6. Survey respondent commodity types............................................207
C. 7. Survey respondents by first year of USDA organic certification..............207
D. l. Chapter 2 descriptive statistics...........................................208
E. l. Chapter 3 descriptive statistics...........................................210
F. l. Third-party regulatory administrator website codes, definitions, and example
indicators........................................................................212
G. l. Services identified on third-party administrator websites..................213
H. l. Chapter 3 descriptive statistics...........................................214
1.1. Chapter 3 service quality survey descriptive findings by organizational form.216
J.l. Chapter 4 descriptive statistics.............................................217
xii


LIST OF FIGURES
FIGURE
1.1. Theorized relationship between exposure to competitive pressure and regulatory
approach.........................................................................22
1.2. Third-party administration under the National Organic Program...............30
3.1. Services diversification identified on NOP third-party administrator websites
according to organization form..................................................100
4.1. Regulatory approach spectrum...............................................119
4.2. Theorized relationship between exposure to competitive pressure and regulatory
approach........................................................................121
xiii


CHAPTER I
INTRODUCTION
Scholars have noted a transformation in the administration of government
functions over recent decades. Spurred in part by skepticism towards the efficiency
and effectiveness of government organizations, public programs are increasingly
characterized by administrative decentralization, devolution of authority, and service
provision arrangements that view citizens as public service customers. Among the
more dramatic of these changes is a reliance on third-parties to deliver what were
traditionally considered public services. Under such programs, central government
agencies are replaced by one or more independent organizations from the nonprofit
and private (for-profit) sectors, as well as other levels of government, to administer
publicly authorized services.
Reflecting these changes, regulatory program designs have been transformed
through a number of innovations that blur the line between public and private
processes and objectives. Traditional regulatory programs rely on government control
over regulated activities through agency rule-making and subsequent monitoring for
behavioral compliance with required rules (May, 2002; Selznick, 1985). Deviations
from this design include voluntary programs that incentivize desired behavioral
changes in exchange for beneficial access to club goods (Morgenstern & Pizer, 2007;
Potoski & Prakash, 2009), the overlapping of economic and social regulation to apply
what were previously considered economic controls to advance social goals (Levi-Faur,
2011), and the delegation of regulatory authority to third-party organizations from
both inside and outside of the governmental sector (Black, 2002, 2008; May, 2002).
1


Although such design transformations are well documented in the literature
(e.g.: Levi-Faur, 2011; Potoski & Prakash, 2009; van der Heijden, 2008), to date
empirical examination of the implications resulting from regulatory program design
innovations is notably limited (May, 2007). The primary aim of this dissertation is
therefore to further our understanding of design innovation implications through a
study of certification as a mode of regulation. The certification program in question is
best characterized as a "competitive third-party design. It is a third-party design
because responsibility for program administration is delegated to organizations
independent of the government agency responsible for establishing regulatory
standards (Levi-Faur, 2011). It is competitive because third-party administrators
service areas overlap, and regulated entities pay for certification services, creating an
environment wherein third-party administrators compete for regulatee clients.
Following arguments associated with New Public Management, competitive
third-party arrangements are held to encourage client-relevant services and higher
service quality through an emphasis on efficiency, customer satisfaction, and
performance (Barzelay, 1992; NPR, 1993; Osborne & Gaebler, 1993). Based on these
premises, competitive third-party designs have been increasingly applied across a
variety of service areas, including education (Heinrich, 2010), healthcare (Benish &
Levi-Faur, 2012), and social services (Van Slyke, 2003).
In the context of regulatory administration, however, competitive third-party
arrangements raise a number of concerns for program fidelity. Scholars have
questioned whether third-party organizations, particularly nongovernmental
organizations, poses the requisite expertise to adequately monitor regulated activities
2


and hold regulatees accountable for regulatory compliance (van der Heijden, 2008,
2010). Competition among diverse third-party administrators may incentivize
administrators to provide a variety of services at the cost of obscuring regulatory
program objectives (Black, 2002; van der Heijden, 2010a, 2010b). Furthermore, in the
case of a multidimensional construct such as organizational performance (Boyne, et al.,
2005; Sowa, Selden & Sandfort, 2004), organizations may emphasize the performance
of certain services while discounting others (Amirkhanyan, Kim & Lamb right, 2008).
Perhaps most concerning, competition among diverse third-party administrators may
threaten regulatory stringency and consistency, which are central concerns for a
regulatory program charged with the application of uniform standards (May, 2007;
Potoski & Prakash, 2009), as "third-party certifiers probably face incentives to satisfy
their clients through at least marginally more lax enforcement (Conglianese & Lazer,
2003, pg. 718).
This dissertation engages these concerns in the context of the United States
Department of Agricultures (USDA) National Organic Program (NOP). The NOP
determines national standards for the production practices of foods marketed and sold
as "organic in the U.S. Under the NOP, organic regulation administration is delegated
to accredited third-party regulatory administrators from the public, nonprofit, and
private sectors. Accredited third-party administrators are responsible for certifying
operations (such as farms) as "organic and monitoring them for regulatory compliance.
Overlapping administrator service areas, combined with the fact that operations choose
their regulatory administrator, result in a competitive third-party regulatory design in
3


which third-party organic regulation administrators compete for organic certification
clients.1
The primary contribution of studying competitive third-party regulatory
administration is a better understanding of how program design innovations might
hinder or promote regulatory objectives. The effort also offers valuable insights for
several public affairs disciplines. The NOPs reliance on public, nonprofit, and private
administrators speaks directly to a sub-literature in public administration and
management regarding the differences between public, private, and nonprofit
organizational forms (see Boyne, 2002; Bozeman, 1987; Wamsley & Zald, 1973). For
organization theorists, the NOP provides a new context for examining how
organizational characteristics affect service responses to competitive pressure (Boyne
& Walker, 2004; Walker & Jeans, 2001). Finally, reliance on competing third-party
regulatory administrators poses important insights into regulatory administrators
preferred and applied regulatory approaches key concerns for public policy and
regulatory scholars particularly as they relate to regulatee compliance (see May, 2002,
2005; Potoski & Prakash, 2011).
This dissertation focuses on the relationship between a key third-party
administrator characteristic organizational form as public, nonprofit, and private -
and differences in third party administrators application of regulatory standards. The
research is guided by the question: How does organizational form (public, nonprofit,
private) affect third-party organizations' administration of a regulatory program? The
1 In practice, third-party regulatory administrators under the NOP are often referred to
as "accredited certifying agents, "ACAs, and "organic certifiers. For consistency, the
term "third-party administrators is used here.
4


attention to organizational form is driven in part by regulatory scholarship which posits
that differences between governmental and nongovernmental administrators may be a
focal source of disparity in contemporary regulatory administration (van der Heijden,
2010a, 2010b). It is also motivated by the centrality of public, nonprofit, and private
organization differences in the public administration and management literatures, and
the observation that related scholarship has yet to extend to the regulatory context
(Bozeman, 2013).
A third motivation driving this projects research question is to take seriously a
lesson long noted by public administration and management scholars but often
overlooked in regulatory studies that organizations and the administrators that run
them can have profound impacts on how public programs are implemented (Bozeman,
2013; Robichau & Lynn, 2009). As stated by Eisner, Worsham, and Rinquist (2000, pg.
ix):
If public policy is, in essence, a pattern of goal-driven actions, the way in
which it is implemented by regulatory agencies must be of central
concern...[y]et much of the existing work in regulation adopts simplifying
assumptions that remove organizations from the picture.
This dissertation examines the relationship between third-party administrator
organizational form and three facets of regulatory program administration.
Organizational expertise is often cited as a necessary component of effective regulatory
administration, as information asymmetry exists between the organizations charged
with regulatory responsibilities and the firms that they are tasked with monitoring
(Macher, Mayo & Nickerson, 2011). The first facet of regulatory program
5


administration examined, therefore, is differences in public, nonprofit, and private
third-party administrators expertise.
Second, organization theory suggests that when third-party administrators
compete for certification clients, they will do so (in part) through the mix of service
amenities they offer alongside certification services. The second facet of regulatory
administration examined, therefore, is differences in public, nonprofit, and private
third-party administrators services. Finally, taking up the concern that relying on
competing third-party organizations for regulatory administration may result in
inconsistent or lax enforcement (Conglianese & Lazer, 2003) and variation stemming
from different organizational forms (van der Heijden, 2008, 2010a), the third facet of
regulatory administration examined is differences in public, nonprofit, and private
third-party administrators regulatory approaches.
This research engages several bodies of literature to understand how different
organizational forms may lead to variation in regulatory program administration.
Public administration and management literature regarding differences between public,
nonprofit, and private organizations (e.g.: Boyne, 2002; Bozeman, 1987, 2007; Dahl &
Lindblom, 1953; Rainey, 1983,1989; Wamsley & Zald, 1973) informs theorizing on how
organizational form translates to differences in organizational attributes and processes.
Knowledge management literature regarding organizational knowledge acquisition and
transfer (e.g.: Hislop, 2013) is applied to understand differences in third-party
regulatory administrator expertise. Organization theory literature regarding service
responses to competitive pressures (e.g.: Andrews, Boyne, & Walker, 2006; Walker &
Jeans, 2001; Walker, Jeans & Rowlands, 2002) is applied to understand differences in
6


third-party administrator services. Regulatory literature on variations in regulatory
behavior (e.g.: Gormley, 1998; May & Burby, 1998; May & Winter, 2000; May & Wood,
2003) is applied to understand differences in third-party administrator regulatory
approaches.
The project follows a two-stage mixed method research design (Leech &
Onwuegbuzie, 2006; Teddlie & Tashakkori, 2009). The first stage consisted of in-depth
interviews with purposively sampled organic regulation experts [n=6). Interview data
informed subsequent research, including question development and measure
operationalization. Interview transcripts were reviewed to help explain the findings of
quantitative data analysis findings (see Creswell, 1994, pg. 203). The second stage
consisted of the primary data collection through a nation-wide survey of NOP certified
organic producers (farmers; n=l,055). Survey data were complemented in the study of
third-party administrator services through content analysis (coding) of administrator
websites. Additional supplementary data were extracted from the NOP-maintained
database of certified organic operations.
The dissertation is structured in five chapters. This introductory chapter
proceeds in four sections. First, a literature review synthesizes lessons drawn from
literature pertaining to public, nonprofit, and private organizational forms, knowledge
management, organizational service responses, and regulatory behavior. Theoretical
propositions are developed and presented according to the studys three aspects of
program administration: expertise, services, and regulatory approaches. Second, the
studys empirical context, the NOP regulatory arrangement, is descibed. Third, a
research design section details data collection methods. The introduction closes with
7


an overview of the second, third, and fourth dissertation chapters: stand-alone
empirical papers addressing the identified facets of third-party regulatory
administration. A concluding chapter summarizes the dissertation findings and
discusses the dissertations contribution to the regulatory design literature, in
particular, as well as broader public affairs scholarship.
Literature Review: Organizational Form and Third-Party Regulatory
Administration
This dissertation examines how organizational form (public, nonprofit, private)
affects three facets of third-party regulatory administration: organizational expertise,
services, and regulatory approaches. As organizational form is the primary
independent variable of interest, lessons drawn from public administration and
management literatures on public, nonprofit, and private organization differences are a
consistent thread throughout the project. Decades of research have resulted in mixed
results in regards to the impact of organizational form on organizational processes and
outputs (Andrews, Boyne, & Walker, 2011; Boyne, 2002; Bozeman & Bretschneider,
1994). Two consistent findings from this research inform this study: the effects of
organizational form appear highly contingent on the program context in question, and
organizational form does not directly impact organizational outputs, but rather
operates through organizational characteristics that vary as a result of organizational
form (Andrews, Boyne, & Walker, 2011; Boyne, 2002; Bozeman, 2013).2
2 A body of public administration scholarship seeks to conceptualize and assess the
impact of organizational form variation (e.g.: Bozeman, 1987, 2007; Dahl & Lindblom,
1953; Rainey, 1983,1989; Wamsley & Zald, 1973). This literature offers multiple
approaches for understanding organizational form, including legal ownership (public,
nonprofit, private), relative positioning on a public-to-private continuum (Dahl &
8


To isolate the factors through which organizational form might be associated
with regulatory administration, the following literatures were assessed for theoretical
overlap with scholarship regarding public, nonprofit, and private organization
differences: knowledge management literature pertaining to knowledge acquisition
and transfer, organization theory literature pertaining to organizational service
responses to competitive pressures, and regulatory literature. The pertinent
organizational factors gleaned from these literatures are identified in Table 1.1.
Lindblom, 1953; Wamsley & Zald, 1973), and multi-dimensional manners of
considering an organizations "publicness (Bozeman, 1987). Additionally, more recent
scholarship in organization and policy studies has drawn attention to the blurring of
organizational forms through organizational "hybridity (e.g.: Billings, 2010). Despite
this variety in organizational form conceptualizations, this project is primarily
concerned with organizational form understood through an organizations legal
ownership as public, nonprofit, or private for several reasons. First, empirical
research applying different organizational publicness models suggests that alternative
publicness conceptualizations may offer explanatory potential, however, legal
ownership is consistently found to be a distinguishing factor in predicting
organizational differences and remains the most commonly applied organizational form
approach (Boyne, 2002; Bozeman & Bretschneider, 1994). Second, this study concerns
differences resulting from organizational form in the context of regulatory program
administration, and existing regulatory literature highlights differences between
governmental and nongovernmental regulatory administrators (as defined by legal
ownership) as a source of regulatory administration disparity (van der Heijden, 2010a,
2010b). Finally, regulatory administration is a context in which organizational form has
received scant investigation, and legal ownership represents a logical first step in
examining the relationship between organizational form and regulatory program
administration.
9


Table 1.1. Generalized differences between public, nonprofit, and private organizations
according to organizational factors that theoretically link organizational form to facets
of program administration____________________________________________________________
Public organizations Nonprofit organizations Private organizations
Goals b Accountability, transparency, etc. Mission Profit
Organizational Political and Board of Private and
governance b bureaucratic Directors investors
Organization internal Formal Less formal Variable
structures a centralized decentralized
Exposure to competitive pressure bc Low Moderate High
External network Closed Open Closed
characteristics a collaborative collaborative competitive
NOTE: a = factor theorized to influence organizational expertise; b = factor theorized
to influence organizational services; c = factor theorized to influence regulatory
approaches
First, the goals that motivate third-party administrators likely influence the
manners in which they administer regulatory functions, as well as the services that they
perform (Bozeman, 2013; van der Heijden, 2010a, 2010b). A consistent observation of
the public administration literature is that public, nonprofit, and private organizations
are motivated by distinct organizational goals (Dahl & Lindblom, 1953; Rainey, 1983,
1989; Wamsley & Zald, 1973). Public organizations, while not immune to special
interest influences and regulatory capture, are generally assumed to operate with goals,
such as accountability and transparency that emphasize the public as the primary
recipient of services over investor interests or clients paying for services (Bozeman,
2007; Nutt & Backoff, 1993; Ranson & Stewart, 1994). Nonprofit service delivery is
assumed to be aimed at furthering a social or principled cause, the subject of which is
generally mission-oriented (Froelich, 1999; Moore, 2000). As for-profit entities, private
sector organizations primary objective is assumed to be revenue generation.
10


The goals that motivate public, nonprofit, and private organizations are
associated with different organizational governing arrangements, which in turn are
thought to influence organizational structures. Public organizations are subject to
considerable political and bureaucratic oversight (Bozeman, 1987; Dahl & Lindblom,
1953), resulting in highly centralized internal environments "littered with formal
authority and oversight (Nutt, 2000, pg. 81), rigid operating rules, and accountability
procedures (Boyne, 2002; Nutt & Backoff, 1993; Perry & Porter, 1982; Rainey, Backoff
& Levine, 1976). Nonprofit organizations are directed in their pursuit of mission
fulfillment by Boards of Directors, and are typically characterized by more
decentralized and less formal organization structures than public organizations (Euske,
2003; Nutt & Backoff, 1993), although Boards of Directors governance and related
constraints on executive authority may result in more formal internal structures than
found in the private sector. Private organizations, while typically experiencing
relatively little external control, may be subject to the oversight of private investors
seeking a return on investment. Empirical research has found private organizations
internal structures to vary considerably, reflecting the greater flexibility that private
organizations have in terms of structural centralization and formalization (Nutt &
Backoff, 1993; Wamsley & Zald, 1973).
It is long recognized in the public administration literature that a key distinction
between the public, nonprofit, and private sectors is the extent to which the
organizations within them operate in competitive environments (Boyne, 2002;
Bozeman, 1987, 2007; Dahl & Lindblom, 1953; Rainey, 1983,1989; Wamsley & Zald,
1973). Organizational goals that emphasize the public interest and a lower reliance on
11


client fees for service, combined with revenue streams from budget appropriations,
"buffer public organizations from competitive pressures (Boyne, 1992, 2002; Meier &
OToole, 2002, 2011). In pursuit of organizational missions, nonprofit organizations
may draw on an array of revenue sources, from private contributions and endowment
funds to membership fees to client service fees (Chang & Tuckman, 1994; Fischer,
Wilsker, & Young, 2011; Moore, 2000). While not completely sheltering nonprofits
from a competitive environment, the ability to draw from diverse revenue sources
suggests that nonprofits face lower levels of competitive pressures than profit driven
private organizations that relying entirely on client fees. At the same time, some
reliance on fees-for-service means that they are likely to face more competitive
pressures than their public peers.
Finally, knowledge management literature suggests that the type of network a
third-party regulatory administrator is connected to influences the external expertise
the organization can access and internalize. Public administration scholarship
indicates that public organizations often play central managerial and coordination roles
in the governance networks to which they belong, resulting in networks that are
collaborative in nature but restricted in terms of network membership referred to as
"closed collaborative networks in the knowledge management literature (Herranz,
2007; Weber & Khademian, 2008). Nonprofit organizations develop a variety of
organizational and individual relationships in pursuit of financial and human resources,
for example through external funding, private contributions, or membership fees
(Chang & Tuckman, 1994; Fischer, Wilsker, & Young, 2011; Moore, 2000), and
organizational partnerships and volunteers (Frumkin, 2002; Herranz, 2008; Leete,
12


2006). The number and diversity of individual and organizational ties a nonprofit
third-party regulatory administrator might foster suggest their networks might be best
characterized as "open collaborative networks. Private sector organizations
concerned with gaining and maintaining competitive advantage are most likely to
engage in networks that are competitive in nature (Herranz, 2008), where network ties
are limited to strategic alliances in which organizations seek win-win scenarios that
provide allied organizations simultaneous advantages (Easterby-Smith, Lyles & Tsang,
2008; Hamel, 1991). Such networks most closely approximate what knowledge
management scholars refer to as "closed competitive networks.
These generalized differences between public, nonprofit, and private
organizations are applied in this project within theoretical frameworks specific to the
three facets of regulatory administration examined in this study: organizational
expertise, services, and regulatory approaches. The remainder of this section
introduces each of these frameworks and details the theoretical relationships linking
public, nonprofit, and private organizational forms to program administration through
the identified organizational factors. Propositions are developed regarding the
expected associations between organizational forms and each facet of regulatory
administration. These propositions are empirically tested Chapters 2-4 of this
dissertation.
Third-Party Regulatory Administrator Expertise
The first facet of regulatory administration investigated in this study is
differences in public, nonprofit, and private third-party regulatory administrators
expertise (Chapter 2 of this dissertation). Expertise is held to be reflective of
13


specialized knowledge within a defined subject area that individuals acquire through
education, training, and experience (Page, 2010; Van der Wal, Graff, Lasthuizen, 2008).
According to this definition, expertise is analogous to knowledge, but as it relates to a
specific topic.
Two types of expertise are particularly relevant in the context of regulatory
administration (Scholz, 1994), and are thus accounted for in this study. The first is
expertise in mandated regulatory tasks, referred to here as "regulatory expertise.
Regulatory expertise is observable in the knowledge and skills that officials exhibit
regarding the regulatory directives that they are charged with enforcing and associated
monitoring and enforcement procedures. The second is expertise in the substantive
operations that regulatory administrators are responsible for monitoring, referred to
here as "substantive expertise. Substantive expertise is observable in the knowledge
and skills that officials exhibit regarding the operative and commercial practices
associated with the industry being regulated.
Knowledge management studies indicate a number of organizational factors that
may affect an organizations ability to access and apply expertise. Two of these share
notable intersections with public administration literature on differences between
public, nonprofit, and private organizational forms. The first is an organizations
associations with external networks, which influence the level of expertise that an
organization can access, receive, and internalize (Easterby-Smith, Lyles & Tsang, 2008).
The second is an organizations internal structure, which influences an organizations
ability to encourage intra-organizational knowledge sharing and dissemination (Willem
& Buelens, 2007).
14


Guided by this theoretical overlap in knowledge management and public
management literatures, this research assumes that understanding how regulatory and
substantive expertise might differ between public, nonprofit, and private third-party
administrators requires taking into account how external network connections affect
the expertise that third-party administrators are able to access, and how their internal
structures facilitate or impede the intra-organizational transfer of expertise. The
manner in which these factors are assumed to vary across organizational forms and the
resulting theoretical expectations are summarized in Table 1.2. Two hypotheses are
developed out of these expectations, and are empirically tested in Chapter 2 of this
dissertation.
Table 1.2. Generalized differences between public, nonprofit, and private
organizational forms and the theorized relationship between organizational form and
third-party monitor expertise_______________________________________________________
Organizational form External network characteristics Organization internal structure Expected relative level of organizational expertise
Public Closed Formal Regulatory: Low
collaborative centralized Substantive: Low
Nonprofit Open Less formal Regulatory: High
collaborative decentralized Substantive: High
Private Closed competitive Variable Regulatory: Moderate Substantive: Moderate
Nonprofit organizations, with connections to open collaborative networks and
"communities of practice, are expected to have the highest access to external
knowledge. Furthermore, compared to public organizations, nonprofits are less likely
to be hampered by formal, centralized internal structures in the intra-organizational
dissemination of knowledge (Carlsson, 2003; Claver-Cortes, Zaragoza-Saez & Pertusa-
Ortega, 2007; Willem & Buelens, 2007). With the greatest access to knowledge and
15


modest barriers to intra-organizational knowledge sharing nonprofit third-party
administrators are likely to exhibit the highest levels of expertise. The resulting
theoretical expectation is worded to recognize the data employed in this study -
regulatee perceptions of third-party administrator expertise:
HI: Nonprofit third-party regulatory administrators will be perceived as
exhibiting the highest levels of regulatory and substantive expertise,
compared to their public and private counterparts.
A tendency towards closed collaborative networks and more formal, centralized
internal structures suggests that public organizations will experience the greatest
barriers in knowledge acquisition and intra-organizational knowledge dissemination
(Carlsson, 2003; Willem & Buelens, 2007). Consequently, public sector third-party
administrators are expected to display the lowest levels of expertise. Private
organizations, while restricted in their acquisition of knowledge by closed competitive
networks, benefit in the intra-organizational transfer of knowledge from relatively
flexible internal structures (Easterby-Smith, Lyles & Tsang, 2008; Hamel, 1991).
Combined with the potential to leverage limited consumer connections, this flexibility
in internal structures suggests that private third-party administrators may be able to
access knowledge not readily available to their public sector counterparts, and will
more easily disseminate acquired knowledge between organization personnel
(Carlsson, 2003). The resulting theoretical expectation is:
H2: Private third-party regulatory administrators will be perceived as
exhibiting higher levels of regulatory and substantive expertise than their
public counterparts.
16


Third-Party Regulatory Administrator Services
The second facet of regulatory administration investigated in this study is
differences between public, nonprofit, and private third-party regulatory
administrators services (Chapter 3 of this dissertation). Drawing on organization
theory, it is assumed that competition among multiple third-party administrators
draws attention to the service-provision aspect of regulatory administration, as third-
party administrators respond to competitive pressures by emphasizing services attract
and retain regulatee clients (Coglianese & Lazer, 2003; van der Heijden, 2010a).
Organizational responses to competitive pressure include crafting "service portfolios
that may include core services (an organizations primary function, such as organic
certification) and peripheral services (services that extend beyond the primary
function) in order to establish market niches through distinctive service bundles
(Agarwal & Chatterjee, 2002; Andrews, Boyne & Walker, 2006; Carman & Langeard,
1980), and focusing on service-recipient perceptions of service quality. This study
therefore examines differences in the diversity and quality of third-party
administrators services.
Public, nonprofit, and private third-party regulatory administrators services are
theorized to be influenced by several organizational factors. First, the greater exposure
a third-party administrator is exposed to, the more it is expected to emphasize its
services to attract and retain regulatee clients (Marshall & Standifird, 2005). Second,
the ability of a third-party administrator to alter its services in response to competitive
pressures is expected to be impacted by constraints imposed by organizational goals
and corresponding governing arrangements (Nutt & Backoff, 1993; Rainey, 1983,
17


1989). How these factors are assumed to vary across organizational forms and the
resulting theoretical expectations are summarized in Table 1.3. Three hypotheses are
developed out of these expectations, and are empirically tested in Chapter 3 of this
dissertation.
Table 1.3. Generalized differences between public, nonprofit, and private
organizational forms and the theorized relationship between organizational form and
third-party administrator services__________________________________________________
Exposure to
Organizational competitive Organizational Expected
form pressures governance Goals services
Public Low Political and bureaucratic Accountability, transparency, etc. Limited
Nonprofit Moderate Board of Directors Mission Mission- oriented
Private High Private and investors Profit Replication of core services
Relatively low exposure to competitive pressures suggests that public third-
party administrators will experience fewer incentives to emphasize service provision in
the administration of regulatory standards, when compared with their nonprofit and
private peers (Andrews, Boyne & Walker, 2006). Furthermore, the ability of public
third-party administrators to adapt services in response to the limited competitive
pressures they experience is likely to be limited by their political and bureaucratic
constraints (Andrews, Boyne & Walker, 2006; Walker & Jeans, 2001). These factors,
combined with organizational goals that conflict with an emphasis on regulatee client-
centered services, suggest that public sector administrators least likely to emphasize
services in the administration of regulatory standards:
18


H3: Public third-party regulatory administrators will exhibit fewer, and
lower quality, services than their nonprofit and private counterparts.
Mission-oriented service delivery and diverse revenue sources, while not
completely sheltering nonprofit third-party regulatory administrators from a
competitive environment, suggest that they will face lower levels of competitive
pressures than primarily profit driven private administrators that rely entirely on client
fees. At the same time, some reliance on fees-for-service means that they are likely to
face more competitive pressures than their public sector peers. Organizational
missions and the goals established by nonprofit organizations governing boards are
likely to lead nonprofit organizations to emphasize services that align with
organizational missions, even at the cost of decreased revenue (Brown & Slivinski,
2006; James, 1983).
A principal function of many nonprofits is to represent the political and policy
interests of select groups (Andrews & Edwards, 2004; Jenkins, 2006). Along these lines,
social and political movement perspectives on nonprofit management suggest that
nonprofit organizations founded in support of a social or political cause will devote
organizational services to the realization of that cause (Smith & Gronbjerg, 2006).
Thus, nonprofit third-party regulatory administrators established to encourage the
organic food movement are expected to diversify their services by emphasizing services
intended to further the movements policy objectives (Hasenfeld & Gidron, 2005; Smith
& Gronbjerg, 2006):
19


H4: Nonprofit third-party regulatory administrators are more likely to
exhibit service diversification, and higher quality of services, in services that
align with social and advocacy goals.
For private sector organizations, altering services for competitive advantage
often involves expanding existing services into new markets or replicating existing
services to appeal to new consumer bases. The replication of existing services with
similar service offerings thus can attract new clients while requiring minimal input
costs, for it involves "...a mere duplication of a well-conceived system... as opposed to
"...a minor or major redesign of the system with a fair chance of unwelcomed negative
consequences that is required when services are diversified through the addition of
entirely new service offerings (Carmen & Langeard, 1980, pg. 8). With high levels of
exposure to competitive pressures, organizational goals that align with a service-
provision emphasis, and a tendency to respond to competitive pressures by expanding
service offerings through the replication of existing services, private sector third-party
administrators are expected to emphasize the replication of core services:
H5: Private third-party regulatory administrators will exhibit service
diversification, and higher quality of services, in the replication of core
services.
Third-Party Regulatory Administrator Regulatory Approaches
The third facet of regulatory administration that is investigated in this study is
differences between public, nonprofit, and private third-party regulatory
administrators regulatory approaches (Chapter 4 of this dissertation). As
conceptualized in this study, an organizations regulatory approach most closely
20


approximates what May and Buby (1998) refer to as an agencys enforcement strategy,
and includes the combination of the tools or tactics used by an agency to bring about
regulatee compliance, such as "cariying out inspections, issuing warnings, providing
technical advice, and imposing sanctions (pg. 161). This study follows a number of
studies that suggest regulatory approaches can be characterized as falling along a
continuum from an emphasis on enforcement and sanctioning, often referred to as a
deterrence approach, to a more flexible or accommodative approach (Bardach & Kagan,
1982; Braithwaite, 1985; Potoski & Prakash, 2011; Kagan, 1989,1994).
The amount of competitive pressure that a regulatory organization is exposed to
can shape the incentives that the organization faces when considering its regulatory
approach (van der Heijden, 2010a, 2010b). A regulatory organization with higher
levels of exposure to competitive pressure may respond by adapting its regulatory
behavior to attract and retain clients (Marshal & Standifird, 2005). Rather than adopt a
legalistic and punitive approach to its regulatory duties, such an organization will be
inclined to "work with regulatee clients to bring them into regulatory compliance (van
der Heijden, 2008). Exposure to competitive pressures can therefore be linked
theoretically to the deterrence-accommodation regulatory approach spectrum: the
greater the competitive pressures a regulatory organization is exposed to, the more
likely the organization is to exhibit behaviors characteristic of an accommodative
regulatory approach. Figure 1.1 displays this theorized relationship.
21


Deterrence
Regulatory approach
Accommodation
Low *------- Exposure to competitive pressure -------- High
Figure 1.1. Theorized relationship between exposure to competitive pressure and
regulatory approach
Public, nonprofit, and private third-party regulatory administrators regulatory
approaches can thus be anticipated based on the relative exposure to competitive
pressure third-party administrators' are exposed to, which is influenced by the
organizational form in question. Drawing on assumptions regarding how exposure to
competitive pressure varies by organizational form, three hypotheses are developed,
and are empirically tested in Chapter 4 of this dissertation.
Public third-party regulatory administrators, as indicated in Table 1.1, are
assumed to face lower levels of competitive pressure than nonprofit or private third-
party administrators. Within the theoretical relationship displayed in Figure 1.1, a
lower level of exposure to competitive pressures is expected to be associated with a
regulatory approach that falls closer to the deterrence end of the regulatory approach
spectrum. As this study measures third-party administrators behavior indirectly
through the perceptions of regulatees, the expectation is:
H6: Public third-party regulatory administrators are more likely to be
perceived by regulatees as exhibiting a deterrent regulatory approach
when compared with their nonprofit and private counterparts.
22


As indicated earlier, mission-oriented service delivery and more diverse revenue
sources, while not completely sheltering nonprofits from a competitive environment,
suggest that they will face lower levels of competitive pressures than primarily profit
driven private organizations that rely entirely on client fees. At the same time, some
reliance on fees-for-service means that they are likely to face more competitive
pressures than their public peers. Exposure to competitive pressure that is lower than
that of private third-party regulatory administrators and higher than that of public
third-party administrators is expected to position nonprofits regulatory approach,
relative to their private and public counterparts, towards the middle of the deterrence-
accommodation spectrum:
H7: Nonprofit third-party regulatory administrators are more likely to be
perceived by regulatees as exhibiting a more accommodative regulatory
approach than their private counterparts, and a more deterrent regulatory
approach than their public counterparts.
In contrast with their public and nonprofit peers, private third-party
administrators are assumed to face high levels of competitive pressures, and the
greater exposure to competitive pressures is expected to situate private sector third-
party regulators closer to the accommodation end of the regulatory approach spectrum:
H8: Private third-party regulatory administrators are more likely to be
perceived by regulatees as exhibiting an accommodative regulatory
approach when compared to their public and nonprofit counterparts.
23


Empirical Context:
Competitive Third-Party Administration of U.S. Organic Food Regulations3
The empirical context for this study of public, nonprofit, and private third-party
regulatory administrators is U.S. organic food regulation. This section depicts this
empirical context in three parts. It first provides an overview of how the competitive
third-party regulatory design emerged and became institutionalized through
legislation. It then provides a description of the regulated industry: organic food
operations. It closes with an overview of the subjects of this research: third-party
administrators of organic food regulations.
A Brief History of the U.S. Organic Food Industry and Regulation
The foundation of the contemporary U.S. organic industry is generally credited
to the early efforts of Jerome I. Rodale, founder of the Rodale Press and publisher of the
magazine Organic Gardening and Farming (Nowacek & Nowacek, 2008). Rodale found
inspiration in the writings of Sir Albert Howard, an English agriculture researcher and
proponent of the theory that disease in plants and animals came from unhealthy soil, a
problem that could be addressed by recycling organic waste materials back into farm
soil (the "law of return; Heckman, 2005). Rodale and the organic farming movement
built on this principle by favoring "organic materials in agricultural production over
synthetic alternatives, thus establishing organic agricultural methods in contrast to
"conventional practices.
3 This section borrows heavily on a book chapter prepared for Alka Sapats (Ed.)
Routledge Handbook on Environmental Governance, co-authored with Saba N. Siddiki.
As the chapters first author, the majority of material in this section was written by
David P. Carter.
24


The 1960s and early 1970s mark the period that organically produced food
gained recognition among the American public, when, influenced by publications such
as Rachel Carsons (1962) Silent Spring, a growing suspicion of detrimental impacts of
conventional farming practices motivated consumer interest (Baker 2005; Vos 2000).
During this time, organic farmers identified a threat to the future of organic farming
market consumer difficulty in identifying truly organic produce (Rodale, 1971). With
the intention of encouraging a market for organically grown, chemical-free food, Rodale
gathered a group of California farmers to discuss the possibility of a certification
process for organically farmed produce.
In 1972 the Rodale Press certification program was established, providing labels
for products of qualifying farms that read "Organic Farmer: Certified by Organic
Gardening and Farming Magazine. The certification indicated that food bearing the
seal was produced without pesticides or artificial fertilizers, grown in soil fertilized
with organic matter and natural mineral fertilizers, and was not treated with
preservatives, hormones, or antibiotics (Nowacek & Nowacek, 2008). Rodale Press
certification set a blueprint for other organic certification programs that followed,
including the first government-sponsored organic certification in the state of Oregon in
1973.4
As the popularity of organic food rose, an increasing number of governmental,
nonprofit, and for-profit certification bodies emerged to provide organic food venders
verification of organic claims through certification labels. In the absence of federal
action providing national standards, states passed a variety of bills that in some way
4 In 1974 Rodale Press certification program became California Certified Organic
Farmers (CCOF), one of the larger accredited organic certifiers today.
25


regulated organic certification, ranging from legal definition of the term "organic to
implementing state-derived certification standards and processes. By 1990, twenty-
two states had passed a type of organic food statute. Eventually, a proliferation of
inconsistent state-defined standards and non-governmental certification organizations
led to concerns over "a patchwork of inconsistent or nonexistent laws...threatening the
meaning and value of the organic food label (Baker, 2005, p. 1). More problematic for
early proponents of organic farming, for-profit organic farming certification companies
were accused of "[making] misleading or false claims about the organic nature of their
products (Amaditz, 1999).
Concern over organic certification fragmentation heightened in the 1980s as
media accounts drew attention to pesticides and other chemical processes in
agricultural practices, and consumers increasingly turned to organic foods as an
alternative to conventionally produced foods. The event credited with galvanizing
public and governmental support for national organic standards came in 1989, with a
"60 Minutes special on Alar, a cosmetic additive that was used to give apples a brighter,
more uniform color (Baker, 2005, p. 1). Among other matters, the special highlighted a
report by the National Resources Defense Council raising concerns that Alar had the
potential to cause cancer.
The Organic Foods Production Act (OFPA) was passed shortly thereafter as part
of the 1990 Farm Bill with the goal of encouraging an organic foods market through
federal organic standards and an official organic labeling system under a National
Organic Program (NOP). The Act had three explicit goals: (i) to establish national
standards governing the marketing of organically produced foods; (ii) to assure
26


consumers that organically produced foods meet a consistent standard; and (iii) to
facilitate interstate commerce in organic foods (OFPA, 1990).
Tensions over divergent values vying for institutionalization in national organic
standards were evident throughout the initial implementation of the OFPA. In
December of 1997, the USDA released the NOP Proposed Rule, and immediately began
receiving protests over its contents. Among the most contentious elements were the
allowance of the "big three irradiation of produce, municipal biosolids (sewage
sludge) as fertilizer, and genetically modified organisms under national organic
standards. In total, the USDA received 275,603 citizen comments on the Proposed Rule,
a majority of which argued against the inclusion of one or more of the big three in
organic practices. As one comment stated:
A compromised standard, one that yields to pressures from commercial
interests and waters down the meaning of organic so as to include
precisely the elements the organic consumer is trying to avoid, renders
certification meaningless and vacates trust in the USDA as a guardian of
the peoples wellbeing (as cited in Shulman, 2003, p. 258).
The USDA reacted to such criticisms by emphasizing that the organic label was
never intended to be a food safety or public health claim, but rather was to be
implemented for marketing purposes (Shulman, 2003). Support for this claim is found
in the fact that the Rule was to be promulgated under the Agriculture Marketing Service
(AMS). Nonetheless, in response to the volume of citizen input, USDA Agricultural
Secretary Dan Glickman extended the public comment time period an additional 45
days, stating "our goal is to develop a final rule that the organic community and all the
public can embrace (as cited in "Protests Prompt Delay, 1998, p. 18A).
27


In May of 1998, the USDA capitulated to protests over the proposed standards,
announcing that it would not allow the big three under a Final Rule. Secretary Glickman
announced the changes with a written comment which stated: "If organic farmers and
consumers reject our national standards, we have failed. Thousands of commenters
requested that USDA issue revised proposed standards, and we intend to do so" (as
cited in Puzzanghera, 1998, p. A6). A revised rule was issued in March of 2000, and as
Secretary Glickman had pledged, the big three were excluded from the revised
standards. Overall, the changes were welcomed. Dr. Margaret Mellon, of the Union of
Concerned Scientists, noted: "this could turn out to be the most important rule USDA
has issued in 20 years...the agency has never before been responsive to consumers" (as
cited in Burros, 2000, p. 22). The revised rule was released as a Final Rule in December
of 2000, allowing time for organic farmers to comply with the standards. In October of
2002 the OFPA was officially implemented.
The Regulated Industry: U.S. Organic Food Production
As required by the OFPA, operations that market food products as "organic in
the U.S. must hold organic certification and adhere to national organic standards. An
exemption from this requirement is made for small-scale producers, as operations that
earn less than $5,000 a year from organic sales are not required to hold certification. In
2015, the United States Department of Agriculture (USDA) reported 19,474 domestic
certified organic operations, with over 8,000 additional international certified
operations (AMS, 2015). Operations certified under the NOP can hold one or more of
four organic certification types (referred to as scopes): crops, wild crops, livestock and
handling.
28


Data regarding organic producers as a population is limited, consisting of
sporadic USDA-initiated surveys. According to the USDA, the average size of a certified
organic farm (280 acres) is markedly smaller than the average U.S. farm, generally (418
acres; Greene, Slattery, & McBride, 2010). Reflecting the diversity of U.S. agriculture,
broadly, certified organic operations produce a wide variety of products, although the
composition of the organic industry varies from that of conventional agriculture
(Greene, Slattery, & McBride, 2010; Dimitri & Oberholtzer, 2009). Fruit and vegetable
production is more predominant in organic food sales than in the conventional
agricultural industry, and the same is true for organic dairy production. In contrast,
meat, fish, and poultry make up a very small portion of organic sales (2-3%; Greene,
Slattery, & McBride, 2010).
The Third-Party Regulatory Administrators: Accredited Certification Agents
The OFPA and NOP regulation institutionalized the third-party certification
system that existed prior to 1990, modeled loosely after International Organization for
Standardization (ISO) principles for third-party accreditation and certification systems.
This arrangement is depicted in Figure 1.2. The NOP is responsible for accrediting
independent organizations to serve as certification administrators, referred to as
accredited certification agents, or ACAs.5 ACAs in turn certify operations according to
national organic regulations, and then inspect certified operations for regulatory
compliance.
5 In this dissertation, these organizations are referred to as "third-party regulatory
administrators. As this section details the empirical context, in this section these
organizations are referred to by the label generally used in practice: "accredited
certification agents, or "ACAs.
29


To attain organic certification, operations must first submit an organic systems
plan to an ACA. Once an organic systems plan has been reviewed and approved, the
operation is then inspected for congruence with the organic systems plan. According to
NOP regulations, certification must be renewed once a year, which entails submission of
any changes to the organic systems plan and a yearly on-site inspection. Unannounced
inspections and product chemical residue testing are allowed, but not required, by NOP
regulations.6
Figure 1.2. Third-party administration under the National Organic Program
ACA responses to regulatee noncompliance follow one of two forms. The first is
a written notice of noncompliance, which is simultaneously sent to an operation and
filed with the NOP. A notice of noncompliance outlines an operations regulatory
violation and the date by which a noncompliance must be corrected. The second
6 Shortly after this study was conducted, the NOP established guidelines that third-
party administrators test at least five percent of the products they certify for the
presence of substances prohibited by NOP regulations.
30


response that an ACA may take in response to operation noncompliances is a
suspension or revocation of the operations organic certificate. Although ACAs may
administer notices of noncompliances and suspend or revoke an operations
certification without external review, operations may appeal enforcement decisions
through the USDA. Following the NOP regulations, the USDA may choose to pursue
legal action against willful regulatory violations, such as fraudulent organic
certifications, through financial penalties of up to $11,000 per violation.
The NOP accredited 48 US-based ACAs as of 2013.7 These organizations vary
widely in the number of operations that they certify, ranging from just over a dozen
(Monterey County Organic) to 2,800 (California Certified Organic Farmers [CCOF]).
Seventeen are private, for-profit organizations, eleven are nonprofits, and 20 are from
the public sector. Public ACAs can be further broken down into three different forms:
17 fall under state government programs, such as the Colorado Department of
Agriculture Organic Program, two fall under California county governments, and one
operates out of Clemson Universitys Department of Plant Industry.
The "market for organic certification varies by geographic area within the U.S.
The manner in which the competitive certification environment is accounted for in this
dissertation is through a Herfindahl-Hirschman Index (HHI) concentration measure by
state, which indicates the extent to which a small number of ACAs account for a large
proportion of certifying services in a state (Hannan, 1997). Market concentration thus
serves as an indicator of competition the more concentrated a market, the less
competitive it is assumed to be (Hannan, 1997). For comparison, the Department of
7 Another 47 third-party administrators are based internationally.
31


Justice defines HHI scores between 0-1,500 as "not concentrated, 1,500-2,500 as
"moderately concentrated, and 2,500-10,000 as "highly concentrated (USDOJ, n.d.J.
Using data pulled from the 2012 NOP database of certified operations, the average state
organic certification HHI was calculated to be 4,379. The lowest calculated state
organic certification HHI was 1,318 and the highest was 9,022. The construction of
these HHI measures, along with the other data used in this dissertation, is discussed in
the following Research Design section.
Research Design
To study the relationship between third-party administrator organizational form
and regulatory program administration this project followed a two-stage mixed method
research design (Leech & Onwuegbuzie, 2006; Teddlie & Tashakkori, 2009). The first
research stage consisted of in-depth interviews with purposively sampled organic
regulation experts [n=6). The second research stage comprised collection of the
principal data used in this study, through a nation-wide survey of NOP certified organic
producers (farmers; n=l,055). Survey data were complemented in the study of third-
party regulatory administrator services through content analysis (coding) of third-
party administrator websites. Additional data were gathered from the NOP database of
certified organic operations.8
The projects research design is presented here in three parts. It begins with an
overview of the first research stage comprised of interviews with organic regulation
experts. It then turns to the second research stage comprised of the certified organic
8 A final supplementary data source was nonprofit third-party administrator IRS tax
filings. As the use of these data is limited to an exploratory analysis in Chapter 4, the
associated collection procedures are omitted from this section and can be found in the
Chapter 4 Study Design section.
32


producer survey, including sample considerations, and collection of supplementary
data. The section closes with an overview of the variables included in empirical
analyses, related constructs, and conceptual definitions. Readers are directed to the
empirical chapters in this dissertation (Chapters 2-4) for further details regarding data
collection and analysis.
Stage 1: Organic Regulation Expert Interviews
The first data collection stage involved semi-structured interviews with six
individuals identified as experts in the U.S. organic industry and organic food
regulation. The sample frame was purposeful: individuals were chosen based on the
official positions that they held within the organic industry combined with extended
(five years or longer) involvement with organic food production and regulation.
Participants with the following affiliations were interviewed: the National Organic
Program, the Accredited Certifiers Association, the Northeast Organic Dairy Producers
Association, an organic certification consultant, and two third-party administrator
organizations.
Questions asked in the interviews covered descriptions of the organic
certification process and differences and similarities between third-party organic
regulation administrators. The exact interview questions are provided in the interview
questionnaire found in Appendix A. Interview data were used in two manners. First,
interviews informed later data collection efforts. For example, interview transcripts
were reviewed to identify and confirm the services that NOP third-party regulatory
administrators offered in addition to those that are regulatory in nature. Second,
interview transcripts were reviewed for themes related to third-party regulatory
33


administrators administrative behaviors. These themes were used in a supplementary
manner, to help explain and provide descriptive detail to the other data collection
findings.
Stage 2: Certified Organic Producer Survey and Complementary Data Collection
The second stage of data collection involved the primary data collection for this
research a survey of certified organic producers and two complementary data
collection methods: (i) third-party administrator website coding, and (ii) measure
construction from data pulled from the NOP-maintained certified organic operation
database. This second stage of data collection as it pertains to study dependent
variables is presented in Table 1.5, below, alongside dependent variable constructs,
conceptual definitions, and measurement methods. An overview of data collection
considerations follows, beginning with the organic producer survey sample. Further
details are provided in the three empirical dissertation chapters (Chapters 2-4).
Certified Organic Producer Survey
The certified organic producer survey was administered online in the winter of
2013-2014. Data collected through the survey include dependent variable data
pertaining to the three facets of regulatory administration examined in this research:
organic producers perceptions of third-party regulatory administrators expertise,
services (service quality), and regulatory approaches (see Table 1.5). A range of
independent variable data were also gathered from the certified organic producer
survey, as displayed in Table 1.6.
All domestic certified operations holding any combination of crops, wild crops,
and livestock certifications for which the USDA listed a valid email address were sent
34


survey requests, representing approximately half of all certified organic producers.
Processing operations that held only handling organic certification were excluded. In
total, 6,273 domestic certified organic producers were sent a survey request.
Responses were received from 1,055 producers for a response rate of 17 percent.
Three considerations regarding the sample are worth noting, as they threaten
the generalizability of study findings. First, the USDA list of certified organic producer
emails is made up of operations certified by 41 of the 48 domestic ACAs. The study
results, therefore, cannot be generalized to the seven ACAs missing from the sample.
Second, operations for which the USDA does not report a valid email address were
excluded from the sample. A third factor to note is the surveys response rate of 17
percent. Farmers are a notoriously difficult population to survey, and a response rate of
17 percent is consistent with other farmer survey research (Pennings, Irwin & Good,
2002), however, the relatively low response rate suggests the study findings are
particularly susceptible to nonresponse bias.
Three steps were taken to gauge the impact of nonresponse bias in the study, the
details of which are provided in Appendix C. First, a wave analysis was conducted
based on the assumption that the answers of survey late responders are more likely to
approximate the answers of non-respondents than those of individuals that readily
respond to survey requests (e.g.: Kauppi & van Raaij, 2014; Rainey, Pandey & Bozeman,
1995). The analysis compared the responses of early survey respondents to those that
responded after follow-up survey requests (later "waves). No statistically significant
differences between the regulatory approach dependent variable measure responses of
different survey waves were found (p<0.05).
35


Second, 20 non-respondents were contacted by phone and verbally
administered five survey questions. Nonparametric tests (due to the extreme
difference in group size) comparing these responses with those of the online sample
revealed no statistically significant differences (p<0.05). Although these do not
eliminate the possibility of nonresponse bias impacting the findings of the study, the
results suggest that the threat of nonresponse bias may be small.
Finally, a comparison of respondents demographic characteristics with available
USDA data indicates a fair, but not perfect, representation of the U.S. certified organic
producer population. When survey respondents were asked to report their operations
size relative to the size of other operations producing similar products, 51 percent
reported "smallest or "small, consistent with USDA reports that a majority of organic
farmers are characterized by relatively small operations (Greene, Slattery, & McBride,
2010). Notably, 17 percent of respondents classified their operations as "large or
"largest, indicating that the perspectives of larger organic farmers were appropriately
incorporated in study findings.
The reported locations of survey respondents suggest a fairly representative
geographic distribution of certified organic operations, with the exception of
underrepresentation among Midwest organic farmers, at 16 percent of respondents.
The highest percentage of survey respondents were from the West (29 percent),
followed by the Northwest (22 percent) and Northeast (18%). Collectively, the
Southwest and Southeast made up 15 percent of the survey respondents.
Of the four USDA organic certification types, the vast majority held organic crop
certification, 17 percent held organic livestock certification, and less than four percent
36


held organic certification for wild crops. The most frequently reported commodity
types produced by survey respondents were vegetable, grain, fruit, and herb crops, as
shown in Table 1.4. A much smaller percentage of respondents reported eggs, dairy,
poultry, or livestock commodities. The breakdown of survey respondents by
certification and commodity types roughly mirrors production trends in U.S. organic
food production writ large (see Table 1.4; Dimitri & Oberholtzer, 2009; Greene, Slattery,
& McBride, 2010).
37


Table 1.4. Certified organic producer survey respondent commodity types, both
certified organic and conventional_________________________________________
Certified organic Conventional
Vegetable crops 39% 5%
Grains, alfalfa, mixed hay, other field crops 31% 5%
Tree or vine fruit, nut crops 30% 5%
Herb crops 27% 3%
Brambles, berries 20% 3%
Nursery, floriculture, greenhouse crops 15% 4%
Beef 8% 8%
Eggs 7% 8%
Dairy products 6% 2%
Poultry 5% 6%
Apiculture 3% 4%
Lamb 2% 4%
Pork 1% 6%
Other 9% 3%
NOTE: N= 1,055; Respondents were directed to select all appropriate commodity
types.
Third-Party Regulatory Administrator Website Coding
The second facet of regulatory administration that is investigated in this study is
differences between public, nonprofit, and private third-party regulatory
administrators services. In the study of services, service quality data collected through
the certified organic producer survey were complemented with website coding: each
third-party administrator website was coded for the services explicitly advertised or
mentioned. Service categories were identified first through the aforementioned expert
interviews, and indicators were developed inductively as coding was conducted.
In addition to organic certification, service categories that were coded included
certification services offered in addition to organic (e.g.: "gluten-free and "fair trade),
education services (e.g.: workshops and training programs), and advocacy services
related to organic policy. When an indicator for one of the service category codes was
identified, a snapshot of the specific webpage was imported into QSRs NVivo (QSR
38


International Pty Ltd, 2008) qualitative software program. NVivo was then used to call
up indicators and codes from across websites, allowing for a coding comparison and
facilitating a qualitative interpretation of service claims. Third-party regulatory
administrator website coding methods are detailed in Chapter 3.
NOP Certified Organic Operation Database Data
Supplementary data were gathered from the NOP-maintained list of USDA
certified organic operations. These data were used in two ways. First, the database was
used to determine the number of operations that each NOP accredited third-party
regulatory administrator certifies as organic. This measure was used as a proxy for
third-party administrator characteristics other than organizational form, such as third-
party administrator size.
Second, the database was used to construct a Herfindahl-Hirschman Index (HHI)
concentration measure by state, which served as a proxy for the competitiveness of the
certification environment in each state. The HHI roughly represents the relative
proportion of third-party administrators to the number of certified operations within a
state. Following previous constructions of HHI measures (e.g.: Hannan, 1997), a market
share value for each third-party administrator operating in a given state was calculated
by dividing the number of clients for each third-party administrator in the state by the
total number of certified operations in the state. Each third-party administrator market
share value was then squared, and the results summed for all third-party
39


administrators in a given state, producing a state HHI with potential to range from 0
(not concentrated) to 10,000 (highly concentrated).9
Variables, Constructs, and Conceptual Definitions
This project examines how organizational form (public, nonprofit, private)
affects three facets of third-party organizations regulatory administration:
organizational expertise, services, and regulatory approaches. These three facets of
regulatory administration represent the broadly-conceptualized dependent variables of
interest in the study. In the empirical investigation of these regulatory administration
facets, the variables were examined according to the constructs and definitions
presented in Table 1.5. Table 1.5 also indicates the data sources and construct
measurement overviews for each dependent variable. Further details regarding
dependent variable operationalization and measurement are provided in the empirical
chapters of this dissertation (Ch. 2-4).
9 An alternative manner of constructing the market concentration measure is to
calculate the proportion of clients a third-party administrator certifies relative to all of
the certified operations across the same geographical area. The chosen method was
preferred due to the difficulty in determining the boundaries of third-party
administrator "markets as defined by their service areas. For example, assuming the
states that a third-party administrator offers services in constitute the third-party
administrators market is contradicted by the fact that many certifiers services are
concentrated in a limited number of states, while extending to only a few operations
immediately across the geographical boundaries of those states.
40


Table 1.5. Dependent variable constructs, conceptual definitions, data sources, and measurement by dissertation chapter
Dependent variable Construct Definition Data source Construct measurement
Organizational Regulatory The knowledge and skills that regulatory Producer Producer perceptions of
expertise (Chapter 2) expertise officials exhibit regarding the regulatory directives that they are charged with enforcing and associated monitoring and enforcement procedures. survey regulatory expertise exhibited by: (1) third-party administrator organizations, and f21 third-partv administrator inspectors.
Substantive The knowledge and skills that regulatory Producer Producer perceptions of
expertise officials exhibit in the substantive operations that regulatory monitors are responsible for enforcing survey substantive expertise exhibited by: (1) third-party administrator organizations, and f21 third-partv administrator inspectors.
Services Service The variety of service categories advertised or Third-party The presence or absence on third-
(Chapter 3) diversity promoted by a service-provider. administrator website coding party regulatory administrator websites of activities pertaining to three service categories: (1) educational services, (2) advocacy services, and (3) additional labeling/certification services.
Service A combination of the performance of a Producer Producer perceptions of their
quality service-provider and the expectations of service recipients (Cronin & Taylor, 1992; Mwita, 2000). survey third-party administrators service quality in three service categories: (1) educational services, (2) advocacy services, and (3) additional labeling/certification services.
Regulatory Regulatory The combination of the tools or tactics used by Producer Producer perceptions of their
approaches (Chapter 4) approach an agency to bring about regulatee compliance, such as "carrying out inspections, issuing warnings, providing technical advice, and imposing sanctions (May & Burby, 1998, pg. 161). survey third-party administrators behavior, pertaining to four measures: (1) strictness of regulatory interpretation, (2) administration of sanctions, (3) flexibility, and (4) willingness to provide technical assistance.


The primary independent variable of interest in this study is third-party
administrator organizational form. Organizational form was operationalized as a third-
party administrators legal designation as a public, nonprofit, or private (for-profit)
entity. A range of control variables were included in empirical analyses, as presented in
Table 1.6., to account for additional third-party administrator characteristics that might
have an impact on regulatory administration, or to account for organic producer
survey-respondent characteristics that might influence producers perceptions of their
third-party regulatory administrators. Further details regarding independent variable
operationalization and measurement are provided in the empirical chapters of this
dissertation (Ch. 2-4).
Table 1.6. Study independent variables and conceptual definitions
Variable
Chapter3 Definition
Independent variable of interest
Third-party administrator 2,3,4
organizational form
A third-party administrator's legal
designation as public, nonprofit, or
private (for-profit)
Third-party administrator control variables
Clients
ACA member
Certification fees as a
proportion of nonprofit
administrator revenue
2,3,4 Number of operations a third-party
administrator certifies as organic
2 Third-party administrator identified as a
member of the Accredited Certifiers
Association
4 Revenue listed under "certification
revenue on IRS Form 990s, divided by
total organizational revenue
Organic producer survey respondent control variables
State HHI 3,4 State market concentration: The extent
to which a small number of third-party
administrators account for a large
proportion of certifying services in a
state
42


Table 1.6 contd
Variable Chapter3 Definition
Importance of perceived expertise 2 The extent to which a producers perception of their third-party administrators expertise was an important factor in selecting that administrator
Importance of perceived services 3 The extent to which a producers perception of their third-party administrators services was an important factor in selecting that administrator
Perceived third-party administrator strictness 2,3 The extent to which a producer perceives their third-party administrator as strictly interpreting the NOP regulations
Profit motive 4 The extent to which a producer reports increased profits as being important in their decision to pursue organic certification
Organic movement motive 2,3,4 The extent to which a producer reports supporting the organic movement as being important in their decision to pursue organic certification
Regulatory assessment 3,4 Producer's perceptions of NOP regulations as organic standards
Regulatory experience 2,4 Producers reported difficulty in complying with NOP regulations
Predisposition towards laws 4 Producers predisposition towards the role of laws in ordering society
Operation size 2,3,4 Relative size of producers operation
Pre-NOP certification 4 Whether an operation held organic certification prior to NOP enactment in 2002
Certification scope 2,3,4 The organic certification types held by the producer (crops, livestock, handling, and/or wild crops')
NOTE: a = Variable included in dissertation chapters analysis. Chapter 2 = third-party
administrator expertise; Chapter 3 = services; Chapter 4 = regulatory approaches
43


Dissertation Overview
This dissertation focuses on the relationship between a key characteristic of
organic food regulation third-party administrators organizational form as public,
nonprofit, and private and differences in regulatory administration. The research is
guided by the question: How does organizational form (public, nonprofit, private) affect
third-party organizations' administration of a regulatory program? Three facets of
regulatory administration are investigated: third-party administrator expertise,
services, and regulatory approaches. Each of these facets of regulatory administration
is examined in a stand-alone chapter. Collectively, the three studies offer an answer to
the dissertations research question, which is provided in the dissertations concluding
chapter, alongside research limitations, contributions, and future research directions.
Chapter II. Who Knows Best? Public, Nonprofit, and Private Expertise in the
Administration of U.S. Organic Regulations
This chapter investigates the relationship between third-party administrator
organizational forms and third-party administrator expertise. Applying lessons from
knowledge management studies indicating how organizational factors influence
knowledge acquisition and transfer, the study takes up the question: To what extent is
organization form (public, nonprofit, private) associated with third-party
administrators expertise in the administration of regulatory standards?
Drawing on regulatee perceptions of third-party administrator expertise, the
findings indicate that nonprofit third-party organic food regulation administrators
exhibit higher levels of both regulatory and substantive expertise when compared to
their public and private counterparts. No systematic differences in expertise are found
44


between public and private third-party administrators. The findings shed light on how
third-party administrator organizational forms and other organizational characteristics
may affect regulatory administration in cases of delegated regulatory authority. The
study also highlights the relevance of knowledge management literature for regulatory
and public administration studies.
Chapter III. Service Diversification and Service Quality Differences among Public,
Nonprofit, and Private Third-Party Administrators of U.S. Organic Regulations
This chapter investigates the relationship between third-party administrator
organizational forms and third-party administrator services. The chapter makes the
case that "competitive third-party regulatory arrangements programs in which the
administration of regulatory standards is deferred to multiple independent
organizations in competition for regulatee clients draw attention to the service
provision aspect of regulatory administration. Recognizing that organizational
responses to competitive pressure often differ according to organization form (public,
nonprofit, or private), the study asks: To what extent do third-party regulatory
administrator services differ according to administrator organizational form in the
context of a competitive service provision arrangement?
Third-party services are assessed in two manners. Service diversification is
studied through the services that are evident on third-party administrator websites.
Regulatee-client perceptions of service quality are studied through a survey of certified
organic producers. The findings indicate systematic differences in service
diversification and quality according to third-party administrator organizational form.
The study findings offer insights into the implications of competitive third-party
45


regulatory arrangements, and show the promise of taking a service provision
perspective on the administration of regulatory standards.
Chapter IV. Public, Nonprofit, and Private Regulatory Approaches in Third-Party
Regulatory Administration
This chapter investigates the relationship between third-party administrator
organizational forms and third-party administrator regulatory approaches. Based on
the notion that third-party arrangements draw attention to administrator
organizational characteristics, the paper asks: To what extent does organizational form
(public, nonprofit, private) affect third-party administrators regulatory approaches in
the administration of uniform regulatory standards? A secondary analysis explores an
economic facet of dimensional publicness among nonprofit third-party administrators.
The study draws on regulatee survey data and uses multilevel analysis to account for
how regulatory approaches vary across third-party administrator characteristics, as
well as according to respondent-level attributes.
The findings indicate that little systematic variation in regulatory approaches
can be attributed to administrator organizational form. The facet of regulatory
approach in which organizational form appears to play a role is found in public third-
party regulatory organizations lower provision of technical assistance, when compared
to their private counterparts. The paper discusses explanations for the limited
relationship between third-party organizational form and regulatory approaches, and
suggests future research for better understanding the linkage between regulatory
program design, administrator organizational characteristics, and program outputs.
46


CHAPTER II
WHO KNOWS BEST? PUBLIC, NONPROFIT, AND PRIVATE EXPERTISE IN THE
ADMINISTRATION OF U.S. ORGANIC REGULATIONS
Abstract
A presumption underlying the delegation of regulatory authority to
organizations outside of regulatory agencies is that third-party organizations possess
the requisite expertise to monitor regulated firms behavior and hold them accountable
for regulatory compliance. This study examines how third-party expertise varies in the
administration of US organic food regulations. Applying lessons from knowledge
management studies, the study asks: To what extent is organizational form (public,
nonprofit, private) associated with third-party administrators expertise in the
application of regulatory standards? Drawing on regulatee perceptions of third-party
administrator expertise, the findings indicate that nonprofit administrators exhibit
higher levels of both regulatory and substantive expertise when compared to their
public and private counterparts. No systematic differences in expertise are found
between public and private administrator expertise. The findings shed light on how
third-party administrator characteristics may affect the application of regulatory
standards through delegated regulatory authority, and highlight the relevance of
knowledge management literature for public administration studies.
47


Introduction
In the study of regulatory administration, scholars are paying increasing
attention to the delegation of regulatory authority to organizations outside of central
government agencies. This scholarship documents a shift in some regulatory programs
from hierarchical government regulation to "decentered regulatory administration
through multiple levels of government and third-party organizations (Black, 2002,
2008; May, 2002, 2007). Under such non-traditional regulatory arrangements,
regulatory agencies establish regulations through agency rule-making but rely on
independent outside organizations the third-parties for the monitoring and
enforcement of those regulations.
A primary presumption underlying this delegation of regulatory authority is that
third-party administrators possess the requisite expertise, both in terms of their
regulatory tasks and the substantive operations they oversee, to effectively monitor
regulated firms behavior and hold them accountable for regulatory compliance. Third-
party administrators are increasingly characterized by variety of organizational forms,
however, including organizations from across the public, nonprofit, and private sectors
(van der Heijden, 2010; Levi-Faur, 2011). As a consequence, third-party administrators
can vary widely in regards to organizational factors that may affect administrators
acquisition and use of organizational expertise.
Expertise is centrally linked to many aspects of organizational capacity within
public administration literature (Page, 2010; Wiig, 2002). The ability to access and
apply knowledge pertinent to programmatic operations is held as important not only to
organizational effectiveness, but also to the realization of policy goals (Weber &
48


Khademian, 2008). Expertise is particularly relevant in a regulatory context, in which
an information asymmetry often exists between the organizations that are charged with
regulatory administration and the firms that they are responsible for monitoring
(Macher, Mayo & Nickerson, 2011). Addressing this asymmetry requires a regulatory
administrator to poses proficiency in the inspection and enforcement practices of a
particular regulatory program, combined with a familiarity with regulatee practices and
behaviors, to identify and appropriately sanction for instances of noncompliance (May,
2007; Scholz, 1994). Furthermore, regulatees perceptions of competence on the part of
regulatory administrators can have an impact on regulatee compliance (May, 2005;
Winter & May, 2001), indicating that administrators that are perceived as having higher
levels of expertise may be more effective in furthering regulatory program objectives.
Given the variety of organizational forms that characterize third-party
administrators, combined with the importance of expertise for effective regulatory
administration, this study is concerned with how regulatory administrator expertise
varies as a function of organizational form. Although it is recognized in the public
administration literature that central functions of public sector organizations are
developing and supplying expertise (Luen & Al-Hawamdeh, 2001; Wiig, 2002), with a
few exceptions (Bate & Roberts, 2002; Kim & Lee, 2006; Syed-Ikhsan & Rowland, 2004;
Willem & Buelens, 2007) management of expertise in the public sector has received
little scholarly attention, and no systematic comparisons of how expertise differs across
organizational forms were identified at the time of this study. A body of literature in
organization and management studies, however, examines how knowledge is acquired,
managed, and transferred within and among organizations (e.g.: Hislop, 2013),
49


shedding light on how differences in organizational characteristics associated with
organizational form might influence the relative expertise third-party administrators
leverage in the execution of their regulatory duties.
The study draws on knowledge management literature to examine how
expertise differs between third-party regulatory administrators through an
investigation of the entities charged with administering the United States Department
of Agricultures (USDA) National Organic Program (NOP). The NOP determines national
standards for the practices that are allowed and prohibited in the production of food
products marketed as "organic in the USA. The NOP relies on accredited third-party
administrators from across the public, nonprofit, and private sectors to certify
operations as "organic and administer organic food regulations. The question guiding
the study is: To what extent is organization form (public, nonprofit, private) associated
with third-party administrators expertise in the application of regulatory standards?
The study draws on regulatee perceptions of third-party administrator expertise, while
taking into account third-party administrator and regulatee characteristics that might
influence how a regulatee perceives the expertise of their regulatory administrator.
The study is outlined in six sections. The first section integrates lessons from the
public administration literature and knowledge management studies to theoretically
link organizational form and relative levels of organizational expertise. The second
section provides background on the study context the NOPs third-party regulatory
arrangement. The third section presents the study design, data collection methods, and
measures. The fourth section presents study findings. A discussion of the findings is
provided in the fifth section, followed by future research opportunities for better
50


understanding the links between third-party regulatory administrator organizational
form, expertise, and program outputs, in the papers conclusion.
Expertise, Organizational Form, and Knowledge Management
Expertise is held to be reflective of specialized knowledge within a defined
subject area that individuals acquire through education, training, and experience (Page,
2010; Van der Wal, Graff, Lasthuizen, 2008). According to this definition, expertise is
analogous to knowledge, but as it relates to a specific topic.10 Two types of expertise
are particularly relevant in the context of regulatory administration (Scholz, 1994), and
are thus accounted for in this study. The first is expertise in mandated regulatory tasks,
referred to here as "regulatory expertise. Regulatory expertise is observable in the
knowledge and skills that regulatory officials exhibit regarding the regulatory directives
that they are charged with enforcing and associated monitoring and enforcement
procedures. The second is expertise in the substantive operations that regulatory
administrators are responsible for monitoring, referred to here as "substantive
expertise. Substantive expertise is observable in the knowledge and skills that officials
exhibit regarding the operative and commercial practices associated with the industry
being regulated.
This study examines the extent to which expertise both regulatory and
substantive differs as a function of third-party administrator organizational form.
Knowledge management studies indicate a number of organizational factors that may
10 The conceptualization of expertise used in this study follows the approach of Nicolini,
Gherardi, and Yanow (2003) that considers knowledge not as a process, but rather as
an object that can be possessed, managed, and shared. Knowledge and expertise,
therefore, are valuable organizational assets that can reside within, and be shared
among, organization members as a form of intellectual capital (Bates & Robert, 2002;
Weber & Khademian, 2008).
51


affect an organizations ability to access and apply expertise. Two of these share
notable intersections with public administration literature on differences between
public, nonprofit, and private organizational forms. First, an organizations associations
with external knowledge sources influence the level of external expertise that an
organization can access, receive, and internalize (Easterby-Smith, Lyles & Tsang, 2008).
Second, an organizations internal structure influences an organizations ability to
encourage intra-organizational knowledge sharing and dissemination (Willem &
Buelens, 2007). By taking into account how these factors typically differ across
organizational forms, expectations can be drawn regarding the relative levels of
expertise that public, nonprofit, and private sector administrators leverage in the
execution of their regulatory duties.
External Sources of Expertise
A third-party administrators associations with external knowledge sources can
influence the level of regulatory and substantive expertise available to the organization
(Easterby-Smith, Lyles & Tsang, 2008). In the knowledge management literature, such
associations are characterized as more formally organized networks of competitor
and/or collaborator organizations, or less formal relationships with individuals and
organizations as part of "open networks and "communities of practice (Grover &
Davenport, 2001; Powell, Koput& Smith-Doerr, 1996; Wenger, McDermott & Snyder,
2002). The manners in which these associations vary by organizational form provide
an indication of the expertise that a third-party administrator can access, internalize,
and apply in the execution of their regulatory duties.
52


Public sector organizations often play central managerial and coordination roles
in the governance networks to which they belong, resulting in networks that are
collaborative in nature but restricted in terms of network membership. These
networks resemble what are referred to as "closed collaborative networks in the
knowledge management literature (Herranz, 2007; Weber & Khademian, 2008).11
Because they are often established with an express interest in promoting information
sharing and learning, collaborative networks are generally more conducive to inter-
organizational knowledge transfer when compared with networks established among
competing organizations. Networks in which membership is restricted and actively
managed by a central firm or government organization, however, tend to display lower
levels of knowledge transfer when compared to more "open collaborative networks
such as those to which nonprofit organizations are likely connected (Carlsson, 2003;
Easterby-Smith, Lyles & Tsang, 2008).
Nonprofit organizations develop a variety of organizational and individual
relationships in pursuit of financial and human resources, for example through external
funding, private contributions, or membership fees (Chang & Tuckman, 1994; Fischer,
Wilsker, & Young, 2011; Moore, 2000), and organizational partnerships and volunteers
(Frumkin, 2002; Leete, 2006). These relationships are reflected in open collaborative
networks including membership and volunteer bodies, resembling what knowledge
management scholars refer to as "communities of practice (Herranz, 2008). Such
networks are held to be the effective at supplying knowledge because they expose an
11 Collaborative networks established to promote information sharing and learning are
well documented in the public administration literature (Agranoff, 2008; OToole,
1997),
53


organization to the greatest number and variety of knowledge sources, are often
characterized by greater flexibility to allow for communication across boundaries, and
are associated with more intense communication related to cooperative challenges and
tasks (Cross & Parker, 2004; Grover & Davenport, 2001; Willem & Buelens, 2007).12
Open networks consisting of individuals organized around a shared interest -
communities of practice appear to be the most effective network form for transferring
what is referred to as "tacit knowledge, that is less likely to take to form of written
instructions or codified data (Wenger, McDermott & Snyder, 2002).
Private sector organizations concerned with gaining and maintaining
competitive advantage are most likely to engage in networks that are competitive in
nature (Herranz, 2008). In competitive networks, inter-organizational knowledge
sharing is generally limited to strategic alliances in which organizations, through
mutual knowledge sharing, seek win-win scenarios that provide allied organizations
simultaneous advantages (Easterby-Smith, Lyles & Tsang, 2008; Hamel, 1991).13 As a
result, knowledge acquisition in competitive networks is low, something private sector
organizations may attempt to address by establishing limited relationships with
individuals and communities of practice, particularly through relationships with
customers (Carlsson, 2003).
12 The extent to which knowledge transfer is effective in networks is contingent on
several considerations, in addition to the extent to which a network is "open or
"closed. For example, research indicates that higher levels of knowledge transfer are
generally associated with less ambiguous knowledge content, organizational objectives
that align, and a high degree of individual member social ties that span network
organization borders (Carlsson, 2003; Easterby-Smith, Lyles & Tsang, 2008).
13 Such win-win situations have been shown to be vulnerable to selective knowledge-
sharing that leads to a more formidable alliance member receiving a disproportionate
amount of alliance benefits (Becerra, Lunnan & Huemer, 2008; Hamel, 1991).
54


Expertise Transfer and Organization Structure
The internal structure of a third-party regulatory administrator may influence
the extent to which expertise is shared among organization members by impacting the
types and extent of communication and coordination that occurs within the
organization (Carlsson, 2003; Willem & Buelens, 2007). Organizational structure may
vary in the extent to which it is centralized the degree to which authority is
concentrated. Organizational structure can also vary in the extent to which it is
formalized the degree to which organization practices and functions are codified in
policies and prescribed procedures (Kim & Lee, 2005; Mintzberg, 1979; Rainey, 2003).
Public administration scholars have long documented differences in organization
internal structure resulting from organizational form (Meier & OToole, 2011; Rainey,
1983,1989; Rainey, Backoff & Levine, 1976), and these differences suggest manners in
which intra-organizational knowledge sharing and dissemination may differ across
public, nonprofit, and private sector third-party regulatory administrators.
Public sector organizations are generally characterized by an emphasis on
accountability and equitable treatment, and associated political oversight, resulting in
highly centralized internal environments "littered with formal authority and oversight
(Nutt, 2000, pg. 81), rigid operating rules, and regulatory and accountability procedures
(Boyne, 2002; Nutt & Backoff, 1993; Perry & Porter, 1982; Rainey, Backoff & Levine,
1976). Higher levels of centralization and formalization limit the number of
authoritative information sources from which knowledge is disseminated, and the
pathways by which knowledge can be spread. As a result, formal and centralized
organization internal structures are thought to impede intra-organizational knowledge
55


sharing and dissemination (Carlsson, 2003; Claver-Cortes, Zaragoza-Saez & Pertusa-
Ortega, 2007; Willem & Buelens, 2007).
Nonprofit organizations, while exhibiting considerable intra-sectoral variation,
are typically characterized by more decentralized and less formal organization
structures than public sector organizations (Euske, 2003; Nutt & Backoff, 1993). At the
same time, Boards of Directors governance and related constraints may result in more
formal internal structures than found in the private sector. Empirical research has
found private sector organization internal structure to vary considerably, reflecting the
greater flexibility that private sector organizations have in terms of structural
centralization and formalization in comparison with public and nonprofit organizations
(Nutt & Backoff, 1993; Wamsley & Zald, 1973). In the knowledge management
literature, decentralization and informal internal structures are generally associated
with higher levels of intra-organizational knowledge transfer, suggesting that nonprofit
and private sector organization internal structures may be more effective at intra-
organizational knowledge sharing when compared with their public sector
counterparts.
Decentralization is associated with a greater number of communication channels
"as it increases units' dependence on mutual adjustment to coordinate activities...and
consequently improves the quality and quantity of ideas and information that may be
shared (Wijk, Jansen & Lyles, 2008, pg. 833; see also Sheremata, 2000). This kind of
lateral coordination is associated with greater flexibility in transferring relevant
knowledge across departmental units, a wider intra-organizational diffusion of
knowledge, and stronger inter-personal relationship characteristics that are associated
56


with knowledge transfer such as personal connectivity and trust (Claver-Cortes,
Zaragoza-Saez & Pertusa-Ortega, 2007; Cross & Parker, 2004; Willem & Buelens, 2007].
Informal internal structures allow for voluntary, spontaneous coordination that
encourages a greater level of personal connectivity and social ties that are conducing to
knowledge transfer (Bate & Robert, 2002; Willem & Buelens, 2007]. Informal
structures have also been shown to be more effective in the transfer of tacit knowledge,
that is often best transferred via personal contact and experience (Claver-Cortes,
Zaragoza-Saez & Pertusa-Ortega, 2007; Hansen, 1999].
Theoretical Expectations linking Organizational Form & Expertise
The preceding discussion of how organizational factors are expected to differ as
a function of organizational form, and the impact these organizational factors have on
organizational knowledge acquisition and intra-organizational transfer, provide an
indication of how regulatory and substantive expertise might differ between public,
nonprofit, and private sector third-party administrators. These differences and the
resulting theoretical expectations are summarized in Table 2.1.
Table 2.1. Generalized differences between public, nonprofit, and private
organizational forms and the theorized relationship between organizational form and
third-party administrator expertise_________________________________________________
Organizational form External network characteristics Organization internal structure Expected relative level of organizational expertise
Public Closed Formal Regulatory: Low
collaborative centralized Substantive: Low
Nonprofit Open Less formal Regulatory: High
collaborative decentralized Substantive: High
Private Closed competitive Variable Regulatory: Moderate Substantive: Moderate
57


Nonprofit organizations, with connections to open collaborative networks and
"communities of practice, are expected to have the highest access to external
knowledge. Furthermore, nonprofits are less likely to be hampered by formal
centralized internal structures in the intra-organizational dissemination of knowledge,
compared to their public sector peers. With the greatest access to knowledge and
modest barriers to intra-organizational knowledge sharing nonprofit third-party
administrators are likely to exhibit the highest levels of expertise. The resulting
theoretical expectation is worded to recognize the data employed in this study -
regulatee perceptions of third-party administrator expertise:
HI: Nonprofit third-party administrators will be perceived as exhibiting
the highest levels of regulatory and substantive expertise, compared to their
public and private sector counterparts.
A tendency towards closed collaborative networks and more formal, centralized
internal organizational structures suggests that public sector organizations will
experience the greatest barriers in knowledge acquisition and intra-organizational
knowledge dissemination. Consequently, public sector third-party administrators are
likely to display the lowest levels of expertise. Private sector organizations, while
benefiting from flexible internal structures, are restricted in their acquisition of
knowledge by closed competitive networks. The potential to leverage limited consumer
connections, however, suggests that private sector organizations may be able to access
knowledge not readily available to their public sector peers. The resulting theoretical
expectation is:
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H2: Private third-party administrators will be perceived as exhibiting
higher levels of regulatory and substantive expertise than their public
sector counterparts.
These hypothesized differences in expertise between public, nonprofit, and
private sector third-party administrators are examined here in the context of third-
party administration of NOP regulations. The extent to which such expectations
generalize to other third-party regulatory arrangements, or apply in other regulatory
program design contexts, is returned to in the conclusion. Regulatory and substantive
expertise measures and data are discussed along with the studys research design
following a description of the NOP third-party regulatory arrangement in the next
section.
Third-Party Monitoring of U.S. Organic Food Regulations
As required by the 1990 Organic Foods Production Act (OFPA), operations that
market or label food products as "organic in the USA must hold NOP organic
certification and adhere to national organic standards.14 In 2012, this included 12,220
US based certified organic producers. Reflecting the diversity of US agriculture,
generally, certified organic operations produce a wide variety of products, and are
categorized according to four organic certification types: crops, wild crops, livestock
and handling.
The NOP program is based on International Organization for Standardization
principles for third-party accreditation and certification systems (see Figure 1.2). As
such, the NOP is responsible for accrediting third-party organizations, to serve as
14 Operations that earn less than $5,000 a year from organic product sales are exempt
from this requirement.
59


regulatory administrators. These third-party administrators in turn certify operations
according to national organic regulations, and then inspect certified operations for
regulatory compliance. The NOP accredited 48 US-based accredited third-party
administrators as of 2013. These organizations vary widely in the number of
operations that they certify, ranging from just over a dozen (Monterey County Organic)
to 2,800 (California Certified Organic Farmers [CCOF]). Seventeen are private, for-
profit organizations, eleven are nonprofits, and 20 are from the public sector. Public
sector administrators can be further broken down into three different types: 17 fall
under state government programs, such as the Colorado Department of Agriculture
Organic Program, two fall under California county governments, and one operates out
of Clemson Universitys Department of Plant Industry.
Organic food production has exhibited double-digit year-over-year growth since
the 1990s, accounting for a $59 billion market (Sahota, 2012). This sustained growth
highlights the practical importance of the NOP and understanding the implications of its
third-party regulatory arrangement. This paper seeks to provide a better
understanding of the NOP, and the factors that influence the organizational capacity of
third-party regulatory organizations generally, through an investigation of difference in
public, nonprofit, and private sector regulatory administrators expertise.
Study Design
For this study, data on NOP third-party administrators regulatory and
substantive expertise are drawn from a survey of regulated operations (certified
organic producers), in which regulatees were asked several questions regarding the
expertise of their third-party regulatory administrators. This section first discusses the
60


regulatee sample. Next, study variables and measures are presented.
Operationalizations for all measures are provided in Appendix D.
Regulatee Sample
Organic third-party administrator expertise data were collected through an
online survey of NOP certified organic producers in the winter of 2013-2014. All
domestic certified operations holding any combination of crops, wild crops, and
livestock certifications for which the USDA listed a valid email address were included,
representing approximately half of all certified organic producers. 6,273 domestic
certified organic producers were sent a survey request. Responses were received from
1,055 producers for a response rate of 17 percent.
Three important considerations regarding the sample require attention, as they
limit the generalizability of analysis results considerably. First, the USDA list of
certified organic producer emails is made up of operations certified by 41 of the 48
domestic accredited third-party administrators. The study results, therefore, cannot be
generalized to the seven administrators missing from the sample. Second, operations
for which the USDA does not report a valid email address were excluded from the
sample. A third, and perhaps most important factor, is the surveys response rate of 17
percent. Farmers are a notoriously difficult population to survey, and a response rate of
17 percent is consistent with other farmer survey research (Pennings, Irwin & Good,
2002), however, the relatively low response rate suggests the study findings are
particularly susceptible to nonresponse bias.
Three steps were taken to gauge the impact of nonresponse bias in the study.
First, a wave analysis was conducted based on the assumption that the answers of
61


survey late responders are more likely to approximate the answers of non-respondents
than those of individuals that readily respond to survey requests (e.g.: Kauppi & van
Raaij, 2014; Rainey, Pandey & Bozeman, 1995). The analysis compared the responses
of early survey respondents to those that responded after follow-up survey requests
(later "waves). No statistically significant differences between the dependent variable
measure responses of different survey waves were found (p<0.05). Second, 20 non-
respondents were contacted by phone and verbally administered five survey questions.
Nonparametric tests (due to the extreme difference in group size) comparing these
responses with those of the online sample revealed no statistically significant
differences (p<0.05). Although these do not eliminate the possibility of nonresponse
bias impacting the findings of the study, the results suggest that the threat of
nonresponse bias may be small.
Finally, a comparison of respondents demographic characteristics with available
USDA data indicates a fair, but not perfect, representation of the U.S. certified organic
producer population. When survey respondents were asked to report their operations
size relative to the size of other operations producing similar products, 51 percent
reported "smallest or "small, consistent with USDA reports that a majority of organic
farmers are characterized by relatively small operations (Greene, Slattery, & McBride,
2010). Notably, 17 percent of respondents classified their operations as "large or
"largest, indicating that the perspectives of larger organic farmers were appropriately
incorporated in study findings. The reported locations of survey respondents suggest a
fairly representative geographic distribution of certified organic operations, with the
exception of underrepresentation among Midwest organic farmers, at 16 percent of
62


respondents. The highest percentage of survey respondents were from the West (29
percent), followed by the Northwest (22 percent) and Northeast (18%). Collectively,
the Southwest and Southeast made up 15 percent of the survey respondents.
Of the four USDA organic certification types, the vast majority held organic crop
certification, 17 percent held organic livestock certification, and less than four percent
held organic certification for wild crops. The most frequently reported commodity
types produced by survey respondents were vegetable, grain, fruit, and herb crops. A
much smaller percentage of respondents reported eggs, dairy, poultry, or livestock
commodities. The breakdown of survey respondents by certification and commodity
types roughly mirrors production trends in U.S. organic food production writ large
(Dimitri & Oberholtzer, 2009; Greene, Slattery, & McBride, 2010).
Study Variables and Survey Measures
Third-party administrator expertise was measured by asking regulatee survey
respondents to indicate their level of agreement with statements regarding their third-
party administrators regulatory and substantive expertise according to a five-point
scale ("strongly disagree, "disagree, "neither agree nor disagree, "agree, or "strongly
agree). Expertise constructs and their associated survey measures are presented in
Table 2.2. Because the attributes and behaviors of inspectors the regulatory actors
that regulatees are most frequently in contact with generally reflect but may
sometimes diverge from the attributes and behaviors of the regulatory organizations
they represent (May & Burby, 1998; Scholz, 1994), separate questions queried survey
respondents about the expertise of their third-party administrator organizations
generally, and their inspectors, specifically.
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Table 2.2. Regulatory and substantive expertise construct measures_____________
Construct Query
My certifier is highly competent regarding the National Organic
Regulatory Program regulations.
expertise My inspectors are highly competent regarding the National
Organic Program regulations.
Substantive My certifier understands the intricacies of my organic business.
expertise_____________Mv inspectors understand the intricacies of my organic business.
NOTE: Respondents were asked to indicate their level of agreement with each
statement on a five-point scale: "strongly disagree, "disagree," "neither agree nor
disagree, "agree, or "strongly agree.
The primary independent variable of interest third-party administrator
organization form was operationalized as a third-party administrators legal
designation as public, nonprofit, or private. Accredited third-party administrators were
also identified as members (or not members) of the Accredited Certifiers Association
(ACA) the principle organic certification trade organization with the purposes of
"...developing uniform criteria for implementation of the USDA National Organic
Program, third-party monitor training, support and networking opportunities and
being a forum for discussion of issues impacting organic certification (ACA, 2014).15 In
an attempt to account for organizational attributes other than organization form
(public, nonprofit, private) that might impact third-party administrator expertise, such
as third-party administrator size, data regarding the number of operations that each
accredited third-party administrator certifies were gathered from the NOP database.
Because this study relies on regulatee survey perceptions to measure third-party
administrator expertise, data on survey respondent characteristics were also included
in the analysis. First, the more a producer values expertise in selecting from among
15 A publicly available list of all ACA members is available at the ACA website
fhttp://www.accreditedcertifiers.org/T
64


organic regulation administrator choices, the more likely the producer is to report high
perceptions of third-party administrator expertise. To account for this, survey
respondents were asked to indicate the extent to which expertise was important in
their selection of organic administrator. Second, a respondents motivations for
pursuing organic certification may impact their perceptions relative to the
administration of regulations. A survey measure regarding a respondents "organic
movement motive was included to account for the extent to which supporting the
organic movement motivates a respondent to pursue organic certification. Third, the
challenges respondents encounter in complying with regulations may impact their
perception of regulatory administration, therefore a survey measure asked respondents
to indicate the level of difficulty they experience in maintaining compliance with NOP
regulations was included.
Similarly, the stringency with which third-party administrators enforce
regulations may affect a respondents perceptions of the administrators expertise. A
survey question measured a respondents perception of the strictness with which their
third-party administrator interprets NOP regulations. Fifth, as a proxy for operation
characteristics such as regulatee professionalization and operational sophistication, an
operation size question was included, measured on a five-point scale from "smallest to
"largest. Finally, data on the type of organic certification (livestock, crops, handling)
each respondent held were gathered, to account for differences in expertise perceptions
across certification types.
65


Findings
The hypotheses outlined in this paper suggests that when comparing the
expertise of public, nonprofit, and private sector third-party administrators in the
administration of uniform regulatory standards nonprofit third-party administrators
are likely to exhibit the highest levels of regulatory and substantive expertise (HI),
followed by private third-party administrators (H2), with public third-party
administrators exhibiting the lowest levels of expertise.
Table 2.3 presents descriptive findings for the regulatory and substantive
expertise measures according to organizational form.16 According to these descriptive
findings, public sector third-party administrators and inspectors exhibit the lowest
relative level of regulatory and substantive expertise, private sector administrators
exhibit the highest, and nonprofit sector administrators level of expertise is situated
between that of their public and private sector counterparts across all measures.
Practically, the differences in expertise between the sectors are minor, on the order of a
fraction of a standard deviation. Differences between the mean expertise values were
found to be statistically significant (p<0.05) for one measure third-party
administrator regulatory expertise.
16 Relatively high correlations (r = 0.58-0.78) between the four dependent variables
indicate strong inter-measure relationships. A principal components factor analysis
identified two factors underlying the four measures based on the underlying factors,
the administrator and inspector measures of each type of expertise could be justifiably
combined resulting in a single measure for regulatory expertise and a single measure
for substantive expertise. Because of the clear conceptual distinction between the
attributes and actions of regulatory organizations (level of analysis = organization) and
the inspectors that represent them (level of analysis = individual inspector; May &
Burby, 1998; Scholz, 1994), the results of individual measures as distinct variables are
reported and analyzed here.
66


Table 2.3. Regulatory and substantive expertise construct descriptive statistics by
third-party administrator organizational form_____________________________________
Mean Public Mean Nonprofit Mean Private Overall Mean SD Min Max
Third-party
administrator regulatory expertise* 1.16 1.31 1.32 1.26 0.76 -2 2
Inspector regulatory expertise Third-party 1.11 1.17 1.25 1.17 0.81 -2 2
administrator substantive expertise 0.76 0.84 0.95 0.84 0.96 -2 2
Inspector substantive expertise 0.80 0.90 1.00 0.90 0.97 -2 2
NOTE: Values reflect mean respondent agreement with construct measure queries (see
Table 2.2); Higher values correspond with higher reported levels of expertise; > =
statistically significant differences at p<0.05
Multiple regression analyses were next conducted to account for the influence
that third-party administrator characteristics other than organizational form, as well as
survey respondent attributes, might have on regulatees perceptions of third-party
administrator expertise. Robust standard errors with clustering by third-party
administrator were used because collecting administrator expertise data from multiple
clients per third-party administrator violates the independence of observation
assumption underlying basic linear regression (Wooldridge, 2012).17 Dummy
variables for nonprofit and private third-party administrators represent third-party
administrator organizational form, with public sector administrator serving as the
reference group. An "ACA member dummy variable indicates membership to the ACA,
17 Fixed effects analyses were not used due to the constant relationship between
individual third-party administrator and organization form. Multilevel and ordered
logit analyses with clustering by third-party administrator were also conducted, with
no substantial differences from the reported results. OLS results are reported for ease
of interpretation.
67


with non-members constituting the reference group. The number of operations that a
third-party administrator certifies as organic is log transformed due to the wide range
of operations by third-party administrator, and to facilitate interpretation of the results.
Analysis results are reported in Table 2.4. The overall variance explained in
each model ranges from 29 percent in the case of inspector substantive expertise, to 43
percent in the case of third-party administrator regulatory expertise. The results
indicate that taking into account the influence of third-party administrator and survey
respondent characteristics, nonprofit third-party administrators exhibit higher levels of
both regulatory and substantive expertise than their public sector counterparts. The
difference is statistically significant at the p<0.05 level for three expertise measures
(administrator regulatory expertise, administrator substantive expertise, and inspector
substantive expertise), and statistically significant at the p<0.10 level in the case of
inspector regulatory expertise. In contrast, the difference between public and private
third-party administrator regulatory expertise is not statistically insignificant for any of
the expertise measures.
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Table 2.4. Farmer perceptions of third-party administrator and inspector expertise as
explained by administrator and farmer attributes__________________________________
Administrator regulatory expertise Inspector regulatory expertise Administrator substantive expertise Inspector substantive expertise
Nonprofit 0.15 ** 0.11 * .018 ** 0.21 **
administrator (0.06) (0.06) (0.09) (0.09)
(Reference = Public)
Private administrator 0.08 0.08 0.10 0.13
(Reference = Public) (0.06) (0.06) (0.07) (0.10)
ACA member -0.08 -0.09 * -0.24 ** -0.27 **
(0.05) (0.05) (0.10) (0.10)
Number of clients -0.02 -0.06 ** _o *** -0.10 ***
(Log transformed) (0.03) (0.02) (0.03) (0.03)
Importance of 0.12 *** Q *** 0.18 *** Q ^7 ***
expertise (0.02) (0.02) (0.03) (0.03)
Organic movement 0.05 ** 0.06 ** Q *** Q ***
motive (0.02) (0.02) (0.02) (0.02)
Difficulty maintaining -0.03 -0.05 ** -0 09 *** -0.07 **
compliance (0.02) (0.03) (0.03) (0.03)
Perceived strictness 0.54 *** 0.50 *** 0.45 *** 0.45 ***
(0.04) (0.04) (0.04) (0.05)
Operation size 0.02 -0.01 0.01 -0.02
(0.02) (0.03) (0.03) (0.04)
Handling scope -0.05 -0.07 -0.05 -0.07
(0.04) (0.06) (0.08) (0.08)
Constant 0.12 0.38 * 0.05 0.24
(0.22) (0.23) (0.31) (0.28)
F 128*** 155*** 124*** gy***
R2 0.43 0.33 0.31 0.29
n 817 815 812 812
NOTE: *significant at p<0.10, ** significant at p<0.05, ***significant at p<0.01; Robust
standard errors in parentheses, clustered by administrator (n= 41)
Third-party administrator ACA membership shares a statistically significant
relationship with producer perceptions of both third-party administrator and inspector
substantive expertise, indicating that ACA membership is associated with lower levels
of expertise concerning organic practices. The number of certification clients a third-
party administrator has is negatively associated with all third-party administrator
69


expertise measures, suggesting that the more operations a third-party administrator
certifies, the less likely they are to be perceived as exhibiting regulatory and
substantive expertise.
A number of the producer respondent characteristic variables displayed
statistically significant relationships with perceptions of third-party administrator
expertise. Predictably, the more a producer reported valuing expertise in the selection
of their administrator, the more likely they were to perceive higher third-party
administrator regulatory and substantive expertise. Higher levels of motivation to
support the organic movement through certification are also positively associated with
both types of expertise, as is respondent perception that their administrator strictly
interprets the NOP regulations. The relative difficulty a respondent experiences in
maintaining compliance with the NOP regulations is negatively associated with
expertise, indicating that the more difficulty a respondent experiences the lower they
are likely to rate their third-party administrators expertise. Neither operation size nor
handling certification type have statistically significant relationships with respondent
perceptions of third-party administrator expertise.
To summarize the analysis findings, partial support for the expected
relationships between third-party administrator organizational form and expertise
were indicated. The findings clearly indicate that nonprofit third-party administrators
exhibit higher levels of regulatory and substantive expertise than their public and
private counterparts. Countering study expectations, no apparent differences were
found between producers perceptions of public and private third-party administrator
expertise. These findings are discussed in the following section.
70


Discussion
This study investigated the extent to which organizational form (public,
nonprofit, or private) affects third-party administrators expertise in the application of
regulatory standards. The empirical setting for the investigation was organic food
regulation in the U.S., drawing on regulatee perceptions of third-party administrator
substantive (i.e.: pertaining to organic practices) and regulatory expertise. The study
applied knowledge management literature to develop expectations regarding the
relative levels of expertise that might be exhibited by public, nonprofit, and private
sector third-party administrators. Based on the assumptions that nonprofit third-party
administrators can more easily access external expertise sources through open
collaborative networks, and more easily transfer expertise through less formal and
decentralized organizational structures, it was suggested that nonprofit administrators
are most likely to exhibit high levels of expertise. The findings of the study support this
expectation.
It was also theorized that private sector third-party administrators flexibility in
organizational structure would facilitate intra-organizational knowledge transfer,
resulting in higher levels of expertise than their public sector counterparts. This
expectation was not supported by study results, as no differences were found between
private and public sector third-party administrators substantive or regulatory
expertise. One explanation for these results is that regardless of the effectiveness of
intra-organizational knowledge transfer in private third-party administrator
organizations, it may not be sufficient to adequately make up for the lack of access to
external expertise resulting from competitive network connections. Another possible
71


explanation is that public third-party administrators are less hampered in intra-
organizational knowledge transfer by formal, centralized internal structures than
assumed in this study. Such explanations offer future research opportunities for
examining how organizational expertise may be influenced by organizational
characteristics. Examining such explanations would be aided by the incorporation of
network characteristic and organizational structure data, which is addressed further in
the limitations section below.
To account for how third-party administrator expertise might vary as a result of
organizational characteristics other than organizational form, such as organization size,
the number of operations that an administrator certifies as organic was included in the
analysis. The results indicate a negative relationship between third-party
administrator size (as measured by number of certified operations) and expertise.
These findings counter some studies from the knowledge management literature that
find larger organizations exhibit higher knowledge management capacity (Wijk, Jansen,
& Lyles, 2008). The findings are consistent with the theoretical logic of this paper,
however, if larger organizational size is associated with more rigid, bureaucratic
structures that can impede intra-organizational knowledge transfer (Frost, Birkinshaw,
& Ensign, 2002).
An interesting finding from analysis results is that third-party administrator
membership in the ACA, an organic certifier professional organization, is negatively
associated with both regulatory and substantive expertise. This is somewhat
surprising, given that an express goal of the ACA is to facilitate the sharing of
information related to organic food practices and regulation (ACA, 2014). One
72


explanation for the find is that it is indicative of an endogenous relationship that
third-party administrators with lower levels of expertise self-select into the ACA
precisely because they seek to increase relatively low levels of organizational
knowledge. Alternatively, the finding could reflect a lesson drawn from the knowledge
management literature earlier that formal closed networks are less effective at
knowledge transfer than less formal, open networks, particularly when network ties are
between competitors (Easterby-Smith, Lyles & Tsang, 2008).
While a central premise in this paper is that organizational factors play an
important role in explaining differences in third-party administrators expertise, survey
respondent attributes were included in the analysis to account for variations in
regulatee perceptual data as a function of respondent characteristics. This studys
findings suggest that a regulatees perception of an administrators expertise is
associated with the regulatees motivation for participating in a quasi-voluntary
regulatory program. Furthermore, a regulatees difficulty in maintaining compliance
with regulations appears to have a negative impact on perceptions of third-party
administrators expertise. Combined with the lesson from the regulatory literature that
regulatees perceptions of competence on the part of regulatory administrators can
have a measurable impact on regulatee compliance (May, 2005; Winter & May, 2001),
this finding supports the recommendation that both regulatory stringency and
regulatee motivation be taken into account in the examination of regulatory compliance
(Potoski & Prakash, 2011).
73


Limitations and Directions for Future Research
There are several limitations of this study that deserve mention and represent
opportunities for future third-party administrator expertise research. First, it is
important to note that this studys theoretical mechanisms for knowledge acquisition
and transfer- external network characteristics and organizational structures were not
measured in this study. Rather, assumptions were developed from the public
administration literature regarding how these characteristics vary by organizational
form. Measuring and accounting for how these mechanisms vary in the empirical
organization sample under study would provide a better understanding of not just how
expertise varies as a function of organizational form, but could help provide indications
of why. Incorporating such data in future analyses offers a promising next step in
leveraging the intersection of knowledge management and public administration
theory.
Second, data were collected from a considerably limited sample of certified
organic producers. The sample was made up of certified operations for which the USDA
lists a valid email address approximately half of all USDA organic operations. The
impact of this limitation is minimized by the national scope of the sample, however, the
results are nonetheless constrained to half of the USDA certified organic producer
population. More importantly, the findings are based on a survey with a response rate
of 17 percent. As noted earlier, a response rate of 17 percent is consistent with other
farmer survey research, as farmers are a notoriously difficult population to survey
(Pennings, Irwin & Good, 2002), and a comparison of sample characteristics with
74


available USDA population data suggests a fairly representative sample. The restricted
sample and response rate, nonetheless, preclude broad generalization of study findings.
Finally, the data used in this study regulatee perceptions of third-party
administrator expertise represent both a limitation and strength of the study.
Regulatee perceptual date diverges somewhat from past studies of regulatory
administration. Cross-sectional survey data does not provide, for example, the rich
descriptive data captured by in depth case studies (e.g.: Hawkins, 1984; Hutter, 1997).
Additionally, surveying regulatees limits the collected data to third-party
characteristics that are observed, remembered, and reported by regulated entities. A
strength of the approach over past studies that have relied on self-reported regulator
data (e.g.: Gormley, 1998; May & Burby, 1998; May & Winter, 2000), however, is that
regulatees may face fewer pressures to report higher levels of expertise in manners that
could bias study findings. Future research can compare expertise measurement
approaches to gauge the empirical validity of different data types.
Conclusion
This study examined the extent to which organizational form (public, nonprofit,
private) is association with third-part regulatory administrators expertise in the
application of regulatory standards. Organizational form and expertise were linked
theoretically through differences in organizational factors identified by the knowledge
management literature as being important to knowledge acquisition and transfer.
Comparing regulatee perceptions regarding the expertise of U.S. organic food regulation
third-party administrators, study findings indicate that nonprofit third-party
administrators exhibited the highest levels of both substantive and regulatory
75


expertise, while no significant differences were found between the expertise of public
and private administrators.
The primary contribution of this study is to our understanding of third-party
regulation. The delegation of regulatory authority to third-party administrators is
increasingly common in a variety of regulatory areas, including forestry (Meidinger,
2006; Pattberg, 2005), health care (Reiman, 1991), and food safety (Havinga, 2006). An
assumption made under such delegation is that the entities charged with regulatory
administration hold the requisite expertise to examine the regulated processes in
question and effectively apply regulatory standards. With the increased presence of
varied organizational forms assuming regulatory functions, concerns have been raised
over the levels and types of expertise that different organizational forms may possess,
or more importantly, lack (May, 2007). In particular, van der Heijden (2008, 2010)
suggests that public sector administrators reflect higher levels of what this study refers
to as regulatory expertise, while private sector administrators may have higher levels of
substantive expertise. The findings of this study suggest that, in the case of U.S. organic
food regulation, such concerns may not be warranted.
This studys empirical context is likely a key factor in explaining the results of
this study. For example, organic food production as an industry has historically been
characterized by tightly networked producer communities (referenced in this study as
"communities of practice; Sage, 2003) and organic food advocacy through social action
(Hassanein, 2003). As a consequence, nonprofit third-party administrators have played
a central role in the development of the organic food industry and organic food
regulation (Bostrom & Klintman, 2006). The extent to which the relatively high levels
76


of expertise found to be exhibited by nonprofit administrators of organic food
regulation hold through changes in the organic food industry over time, or for other
industries in which nonprofit organizations have not played such an integral role, offer
questions for advancing knowledge in the delegation of regulatory authority across
contexts.
A second contribution made by this study is the incorporation of knowledge
management literature to explain how expertise may differ according to organizational
form. Public administration literature recognizes that public sector organizations are
often principally established to develop, provide and apply knowledge (Luen & Al-
Hawamdeh, 2001; Wiig, 2002), however, limited attention has been paid in this
literature to knowledge management in the public sector, or how the public sectors
knowledge management compares to that of other organizational forms. This study
joins a few prior studies (Bate & Roberts, 2002; Kim & Lee, 2006; Syed-Ikhsan &
Rowland, 2004; Willem & Buelens, 2007) in demonstrating that the lessons drawn from
knowledge management studies can be effectively leveraged in the examination of
public administration questions. Further integration of knowledge management and
public administration theory thus offers the potential not only of improved
understandings of regulatory delegation, but of knowledge and expertise as pivotal
elements of public program delivery.
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CHAPTER III
SERVICE DIVERSIFICATION AND SERVICE QUALITY DIFFERENCES AMONG PUBLIC,
NONPROFIT, AND PRIVATE THIRD-PARTY ADMINISTRATORS OF U.S. ORGANIC
REGULATIONS
Abstract
The study of regulatory administration has long focused on the stringency of
regulatory standards and the enforcement practices of regulators. This paper makes
the case that "competitive third-party regulatory arrangements programs in which
the administration of regulatory standards is deferred to multiple independent
organizations in competition for regulatee clients draw attention to the service
provision aspect of regulatory administration. Recognizing that organizational
responses to competitive pressure often differ according to organization form
(organizational ownership as public, nonprofit, or private), the study asks: To what
extent do third-party regulatory administrator services differ according to
administrator organizational form in the context of a competitive service provision
arrangement? The question is examined in the context of third-party administration of
U.S. organic food regulations. Third-party services are assessed in two manners.
Service diversification is studied through the services that are evident on third-party
regulatory administrator websites. Regulatee-client perceptions of service quality are
studied through a survey of certified organic producers. The findings indicate
systematic differences in service diversification and quality according to third-party
administrator form. The study findings offer insights into the implications of
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competitive third-party regulatory arrangements, and show the promise of taking a
service provision perspective on the administration of regulatory standards.
Introduction
The study of regulatory administration has long focused on the stringency of
regulatory standards and the enforcement practices of regulators. Contemporary
regulatory arrangements, however, call for the consideration of regulatory
administration from alternative perspectives. This paper makes the case that
"competitive third-party regulatory arrangements programs in which the
administration of regulatory standards is deferred to multiple organizations
independent of a central government agency in competition for regulatee clients draw
attention to the service provision aspect of regulatory administration. As third-party
administrators emphasize organizational services to attract and retain regulatee clients,
differing third-party administrator organizational characteristics may result in a
diversity of services being offered in the administration of regulatory standards and
systematic variances in service quality.
Traditional regulatory programs rely on government agency control over a
regulated industry through rule-making and hierarchical enforcement of required rules
(May, 2002; Selznick, 1985). Competitive third-party regulatory arrangements are
among the more dramatic innovations on this design observed in the regulatory
literature (Black, 2002, 2008; Havinga, van Waarden & Casey, 2015; May, 2002).
Following arguments associated with New Public Management (NPM), competitive
third-party arrangements are held to encourage client-relevant services and higher
service quality through an emphasis on efficiency, customer satisfaction, and
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performance (Barzelay, 1992; NPR, 1993; Osborne & Gaebler, 1993). However,
organizational responses to competitive pressures often vary based on the
characteristics of the organizations in question (Henderson & Mitchell, 1997),
indicating that program administration through competing organizations can lead to
unintended variation in program services. In the context of regulatory administration
such arrangements may also introduce incentives to provide a diversity of services at
the cost of obscuring regulatory program objectives (Black, 2002; van der Heijden,
2010a, 2010b). Furthermore, in the case of a multidimensional construct such as
organizational performance (Boyne, et al., 2005; Sowa, Selden & Sandfort, 2004),
organizations responses to competition may emphasize the performance of certain
services while discounting others (Amirkhanyan, Kim & Lamb right, 2008).
A notable manner in which third-party organizations can differ is organizational
form organizational ownership as public, nonprofit, or private (Salamon, 2002; van
der Heijden, 2010a). It is long recognized that a key distinction between the public,
nonprofit, and private organizations is their relative exposure to competitive pressures
(Boyne, 2002; Bozeman, 1987, 2007; Dahl & Lindblom, 1953; Rainey, 1983; Wamsley &
Zald, 1973), suggesting that organizational form may be a source of divergent responses
to a competitive service provision arrangement. Additional differences associated with
organizational form, including missions and organizational governing structures, are
thought to result in services and service quality which vary depending on whether an
organization is public, nonprofit, or private (Allison, 1979; Boyne, 2002).
This paper argues that in the context of a competitive third-party regulatory
arrangement the services of third-party administrators are likely to differ as a function
80


of organizational form. As a result, the inclusion of third-party administrators from the
nonprofit and private sectors may lead to service diversification through peripheral
services that are "bundled with regulatory activities, as well as systematic differences
in service quality. These assertions are investigated through a study of third-party
administration of the United States Department of Agricultures (USDA) National
Organic Program (NOP). The NOP determines national standards for the practices that
are allowed and prohibited in the production of food products marketed as "organic in
the USA. To enforce these standards, the NOP relies on third-party administrators from
across the public, nonprofit, and private sectors to certify operations as "organic and
administer organic food regulations. Third-party administrator service areas that
overlap geographically, combined with the fact that operations choose their
administrator, creates a competitive service provision environment in which third-
party administrators compete for regulatee clients.
The question guiding the study is: To what extent do the diversification and
quality of services offered by third-party regulatory administrators differ according to
administrator organizational form (public, nonprofit, private), in the context of a
competitive service provision arrangement? Drawing on multiple data sources, the
services of NOP regulation third-party administrators are studied from two angles.
Service diversification is examined through the services that are evident on third-party
administrator websites. Regulatee-client perceptions of service quality are examined
through a survey of certified organic producers.
The study is outlined in six sections. The first section describes the theoretical
relationship between organization form and third-party regulatory administrator
81


service provision. The second section provides background information on the studys
empirical context: third-party administration of U.S. organic food regulations. The third
section details the multi-method study design, and the fourth section relays study
findings. The implications of the findings for our understanding of third-party
regulatory administration are discussed in the fifth section, with the studys
contributions highlighted in the conclusion.
Organization Form and Services in Third-Party Regulatory Administration
Regulatory administration is a function that is traditionally assumed to be a
function carried out by government organizations for the purpose of protecting citizens
from specified risks or harm (Levi-Faur, 2011; May, 2002). As a result, scholars have
had little cause to examine regulatory administration through the lens of service
provision, and instead have focused on the monitoring and enforcement of regulatory
standards. Regulatory scholars, for example, have devoted considerable effort to
categorizing and assessing the enforcement styles of agencies charged with regulatory
administration (Braithwaite, Walker & Grabosky, 1987; Gormley, 1998; May & Burby,
1998; Scholz, 1991) and the inspection practices of regulatory inspectors (May &
Winter, 2000; May & Wood, 2003). This focus extends to voluntary programs in which
regulatee firms opt into regulatory oversight, the study of which emphasizes the
stringency of voluntary regulations while discounting voluntary programs as services
regulatee firms pursue (e.g.: Potoski & Prakash, 2011).
This study recognizes that competition among multiple third-party regulatory
administrators draws attention to the service-provision aspect of regulatory
administration, as third-party administrators respond to competitive pressures by
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emphasizing the provision of services to attract and retain regulatee clients (Coglianese
& Lazer, 2003; van der Heijden, 2010a). Organization theory indicates that a central
organizational response to competitive pressures is to alter services to better meet
consumer desires or appeal to new consumer groups (Gronroos, 1994; Schnieder,
1994). It is this logic that underpins the NPM argument that competition encourages
client-relevant services and higher service quality as organizations pay greater
attention to customer desires and perceptions of service quality in order to attract and
retain clients (Barzelay, 1992; NPR, 1993; Osborne & Gaebler, 1993).
Organizational responses to competitive pressure include an expansion of
service areas into new geographic locations in search of a wider client base (Carman &
Langeard, 1980). Organizations may also offer peripheral services beyond their core
functions in order to enhance service portfolios and establish market niches through
distinctive service bundles (Agarwal & Chatterjee, 2002; Andrews, Boyne & Walker,
2006; Carman & Langeard, 1980). Understanding how the services of public, nonprofit,
and private sector third-party regulatory administrators vary requires taking into
account how differences in organization form affect the relative levels of competitive
pressure an organization faces. Thus, the greater exposure a third-party administrator
is faces, the more likely it is to diversify the services it offers beyond its core regulatory
function and the greater attention the organization will pay to regulatee perceptions of
service quality.
The ability of a third-party regulatory administrator to alter its services in the
described manners is impacted by organizational mission and goals, as well as the
constraints placed on a third-party administrator by its governing structure -
83


characteristics that are frequently cited to differ according to organization form (Nutt &
Backoff, 1993; Rainey, 1983,1989). For example, a nonprofit organization motivated in
part by a desire to influence policy may be more likely to diversify its services by
emphasizing advocacy activities (Frumkin & Andre-Clark, 2000). In another example, a
public sector organization constrained by political and bureaucratic oversight faces
imposed limits on its ability to expand the number of services it offers in responses to
competitive pressures (Andrews, Boyne & Walker, 2006). The remainder of this section
discusses how differences in relative exposure to competitive pressure, mission and
goals, and governing structures typically differ across public, nonprofit, and private
sector organizations, and the expected influence these differences are likely to have on
third-party regulatory administrator services and service quality.
Public Sector Third-Party Regulatory Administrator Services
Public administration studies suggest a number of reasons that public third-
party regulatory administrators are likely to experience lower levels of competitive
pressure, and by extension fewer incentives to emphasize service provision in pursuit
of competitive advantage, when compared with their nonprofit and private sector
counterparts. Public sector organizations, while not immune to special interest
influences and regulatory capture, face greater levels of political and bureaucratic
oversight that generally emphasize the "public as the primary recipient of regulatory
amenities over clients paying for regulatory services (Bozeman, 2007; Nutt & Backoff,
1993; Ranson & Stewart, 1994). Political and bureaucratic jurisdictions may limit the
number and variety of competitors with which a public organizations service area
overlaps (Andrews, Boyne & Walker, 2006). Revenue streams that include inter-
84


departmental transfers and budget appropriations further "buffer public sector
organizations from competitive pressures (Boyne, 1992, 2002; Meier & OToole, 2002,
2011).
In addition to having lower levels of exposure to competitive pressure, public
sector third-party administrators are likely to face greater constraints on their ability to
alter their services in response to competitive pressures. Beyond confining the
geographic area in which a public sector organization operates, for example, legislation
and associated statutes often limit the range of services that a public sector
organization is able to offer (Andrews, Boyne & Walker, 2006). As a result, with a few
exceptions (Walker & Jeans, 2001; Walker, Jeans & Rowlands, 2002), public sector
organizations tend to refrain from diversifying their services beyond mandated core
functions. Finally, public third-party regulatory administrators are likely to experience
a number of goals such as transparency, accountability, and equity, which may conflict
with service quality objectives and reduce a public sector organizations focus on
regulatory administration as service provision (Bozeman, 1987; Nutt& Backoff, 1993;
Wamsley & Zald, 1973).
Relatively low exposure to competitive pressures suggests that public sector
third-party administrators are likely to experience fewer incentives to emphasize
service provision in the administration of regulatory standards, when compared with
their nonprofit and private sector peers. Furthermore, the ability of public sector third-
party administrators to adapt services in response to the limited competitive pressures
they experience is likely to be constrained by their political and bureaucratic
constraints. These factors, combined with organizational goals that conflict with an
85


emphasis on regulatee client-centered services, suggest that public sector
administrators are less likely to either engage in service diversification or focus on
client perceptions of service quality in the administration of regulatory standards:
HI: Public sector third-party regulatory administrators will exhibit fewer,
and lower quality, services than their nonprofit and private sector
counterparts.
Nonprofit Sector Third-Party Regulatory Administrator Services
Nonprofit service delivery is frequently assumed to be aimed at furthering a
social or principled cause, the subject of which is generally mission oriented (Moore,
2000; Powell & Steinberg, 2006). Nonprofit organizations often draw on an array of
revenue sources, from private contributions and endowment funds to membership and
client service fees (Chang & Tuckman, 1994; Fischer, Wilsker, & Young, 2011; Moore,
2000). Mission-oriented service delivery and diverse revenue sources, while not
completely sheltering nonprofit third-party regulatory administrators from a
competitive environment, suggest that they will face lower levels of competitive
pressures than primarily profit driven private sector administrators that rely entirely
on client fees. At the same time, some reliance on fees-for-service means that they are
likely to face more competitive pressures than their public sector peers.
Due to their reliance on a mix of revenue sources, and Boards of Directors
governance structures, nonprofit organizations face a number of pressures and
constraints beyond competitive pressures (Mendel, 2010; Rose-Ackerman, 1990). For
example, resource dependence theories indicate that external funding sources such as
private donations can have an impact on the manners in which nonprofit organizations
86


fulfill their organizational goals, and the services that they offer (Barman, 2008;
Schervish, 2005). Perhaps more importantly, organizational missions and the goals
established by nonprofit organizations governing boards are likely to lead nonprofit
organizations to emphasize services that align with organizational missions, even at the
cost of decreased revenue (Brown & Slivinski, 2006; James, 1983). A principal function
of many nonprofit interests is to represent the political and policy interests of select
underrepresented groups (Andrews & Edwards, 2004; Jenkins, 2006). Along these
lines, social and political movement perspectives on nonprofit management suggest
that nonprofit organizations founded in support of a social or political cause will devote
organizational services to the realization of that cause (Smith & Gronbjerg, 2006).
Thus, nonprofit third-party regulators established to encourage the organic food
movement are expected to diversify their services by emphasizing services intended to
further the movements policy objectives (Hasenfeld & Gidron, 2005; Smith &
Gronbjerg, 2006):
H2: Nonprofit sector third-party regulatory administrators are more likely
to exhibit service diversification, and higher quality of services, in services
that align with social and advocacy goals.
Private Sector Third-Party Regulatory Administrator Services
When compared with public and nonprofit organizations, private sector
regulatory organizations primary objective is assumed to be revenue generation, and
the central revenue source for private service provision organizations is fees for
services (Nutt & Backoff, 1993). Private sector service areas are not typically bound
geographically by political jurisdictions, opening private regulatory organizations to a
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Full Text

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E? PUBLIC, NONPROFIT, AND PRIVATE ADMINISTRATION OF U.S. ORGANIC FOOD REGULATIONS by DAVID P. CARTER B.A. and B.S., Colorado State University, 2006 M.P.A. University of Colorado Denver 2010 A thesis submitted to the Faculty of the Graduate School of the University of Colorado in partial fulfillment of the requirements for the d egree of Doctor of Philosophy Public Affairs 2016

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ii 2016 DAVID P. CARTER ALL RIGHTS RESERVED

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iii This thesis for the Doctor of Philosophy degree by David P. Carter has been approved for the Public Affairs Program by Tanya Heikkila, Chair Christopher M. Weible, Advisor Jessica Sowa Peter J. May Date: April 5, 2016

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iv Carter, David P. (P h .D., Public Affairs) Public, Nonprofit, and Private Administration of U.S. Organic Food Regulations Thesis directed by Associate Professor Christopher M. Weible ABSTRACT T his dissertation examines the implications of a dramatic innovation in regulatory program design : competitive third party administration Under competitive third party programs, the administration of regulatory standards is delegated to multiple independent organizations in competition for regulatee clients giving rise to concerns regarding how such program designs might threat en regulatory program fidelity For example, s cholars question whether third party organizations, particularly those from outside of the government sector, poss e ss the requisite expertise to adequately monitor regulated activities and ensure regulatees c ompliance Others indicate that c ompetition am ong diverse third party administrators may threat en regulatory stringency if third party administrators alter their regulatory behaviors to attract and retain regulatee clients. The dissertation engages such concerns in the context of competitive third par ty administration of U.S. organic food regulations guided by the research question: How does organizational form (public, nonprofit, private) affect third administration of a regulatory program? T he relationship between third party administrator organizational form and three facets of regulatory administration are studied: third party administrator expertise, service s and regulatory approaches. The project follows a mixed method research desi gn, with empirical analyses draw ing heavily from a national survey of certified organic producers ( the regulatees in the

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v organic food regulation context ) Multivariate regression procedures are used to account for how perceptions of regulatory administrat ion are influenced by both third party administrator and survey respondent attributes. Survey data are comple mented in the study of third party administrator se rvices through website coding S upplementary data are extracted from a database of certified organic operations and nonprofit administrator IRS tax filings Dissertation f indings indicate that organic food regulation third party administrator organizational form is associated with two facets of regulatory administration third party administrator party administrators perform. Few differences are found in public, nonprofit, and private third Taken collectively, the se results offer an intriguing proposition for future research that the conflicting incentives introduced by a competitive third party design characterized by third party organizational form diversity may be effectively resolved through adequate accreditation oversight. The primary contribution of the dissertation is thus a better understanding of how regulatory design innovations might hinder or promote regulatory program objectives. This research also offers insights for multiple disciplines within the field of public affairs and a demonstration of the promise of using multiple theoretical perspectives in the study of contemporary public administration issues The form and content of this abstract are approv ed I recommend its publication. Approved: Christopher M. Weible

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vi DEDICATION This d issertation is dedicated to the people who make up the bedrock of my strength and motivation. First and foremost, this dissertation is dedicated to my partner in all things important, Sarah E. E. Shepherd who everyday provides inspiration and support. Second, this dissertation is dedicated to my family: my mom ( Kathy Carter Dulin) and stepdad ( Larry Dulin) my sisters (Shell Tucker and Sandra Carter), my nephew (Lucas Tucker), and all the additional fam privileged to pick up over the years (Philip Tucker, Camille Shepherd and Keith Fessenden, Conner and Cindy Shepherd, Owen Shepherd, John and Cindy Thomas Finally, this dissertation is dedicated to my dad Step hen Alonzo Carter who exhibited an intellectual and spiritual curiosity unrivaled by most. We undoubtedly would have spent many hours discussing the ideas that are presented in these pages. I hope that the shadows of those unfulfilled conversations som ehow made their way into the words that follow.

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vii ACKNOWLEDGEMENTS I have been unbelievably fortunate to learn from and work with folks that are not only outstanding scholars but also first class human beings I am indebted to Christopher M. Weible, Saba Siddiki and Xavier Basurto for originating the research project (funded by the National Science Foundation; grant no. 1124541) that made this dissertation possible I am further indebted to research collaborators John Brett Sara Miller Chonaiew Al ison Kent and Ainsley Smith I would like to express my gratitude to Christopher M. Weible and Tanya Heikkila as co directors of the Workshop on Policy Process Research (WOPPR) and my WOPPR colleagues including: Johnathan Pierce, Saba Siddiki, Mark Da vis, Sam Gallaher, Kristin Olofsson, Jun i per Katz, Daniel Costie and Jarkko Levnen The WOPPR provided an unparalleled mentorship and research environment abundant in challenges, opportunities and support. In addition to those affiliated with the WOPPR, a long list of individuals has provided me with support and mentorship for which I am grateful. This list includes (but is not limited to): Jessica Sowa, Peter J. May, Edella Schlager, my Ph.D cohort peers, and School of Public Affairs faculty and staff A final deep and heartfelt appreciation is extended to my advisor Christopher M. Weible, who provided me as many opportunities as I could handle and the guidance to realize their potential. M y training was rich with the best experiences that research and paper writing, the Policy Studies Journal, many conferences and workshops across the U.S. (and the U.K.), and institutional coding could possibly offer. T hank you, Chris.

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viii TABLE OF CONTENTS C HAPTER I INTRODUCTION ................................ ................................ ................................ ................................ .......... 1 Literature Review: Organizational Form and Third Party Regulatory Administration 8 Empirical Context: Competitive Third Party Regulatory Administration of U.S. Organic Food Regulations ................................ ................................ ................................ ................... 24 Research Design ................................ ................................ ................................ ................................ ...... 32 Dissertation Overview ................................ ................................ ................................ .......................... 42 II WH O KNOWS BEST? PUBLI C, NONPROFIT, AND PR IVATE EXPERTISE IN T HE ADMINISTRATION OF U. S. ORGANIC REGULATIO NS ................................ ................................ ... 47 Abstract ................................ ................................ ................................ ................................ ...................... 47 Introduction ................................ ................................ ................................ ................................ .............. 48 Expertise, Organizational Form, and Knowledge Management ................................ ........... 51 Third Party Monitoring of U.S. Organic Food Regulations ................................ ..................... 59 Study Design ................................ ................................ ................................ ................................ ............. 60 Findings ................................ ................................ ................................ ................................ ...................... 66 Discussion ................................ ................................ ................................ ................................ .................. 71 Conclusion ................................ ................................ ................................ ................................ ................. 75 III SERVICE DIVERSIFIC ATION AND SERVICE QU ALITY DIFFERENCES AM ONG PUBLIC, NONPROFIT, AND PRIVA TE THIRD PARTY ADMINISTRATORS OF U.S. ORGANIC REGULATIONS ................................ ................................ ................................ ................................ .............. 78 Abstract ................................ ................................ ................................ ................................ ...................... 78 Introduction ................................ ................................ ................................ ................................ .............. 79 Organization For m and Services in Third Party Regulatory Administration ................. 82 Third Party Regulatory Administration under the National Organic Progr am ............. 89 Study Design ................................ ................................ ................................ ................................ ............. 91 Findings ................................ ................................ ................................ ................................ .................... 100

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ix Discussion ................................ ................................ ................................ ................................ ................ 107 Conclusion ................................ ................................ ................................ ................................ ............... 111 IV PUBLIC, NON PROFIT, AND PRIVATE REGULATORY APPROACHE S IN THIRD PARTY REGULATORY ADMINISTR ATION ................................ ................................ ................................ ...... 115 Abstract ................................ ................................ ................................ ................................ .................... 115 Introduction ................................ ................................ ................................ ................................ ............ 116 Variation in Regulatory Approach ................................ ................................ ................................ 118 Program Context, Regulatory Organization Characteristics, and Regulatory Approach ................................ ................................ ................................ ................................ ................................ ..... 121 The NOP Regulatory Arrangement ................................ ................................ ................................ 128 Study Design ................................ ................................ ................................ ................................ ........... 130 Findings ................................ ................................ ................................ ................................ .................... 137 Discussion ................................ ................................ ................................ ................................ ................ 146 Conclusion ................................ ................................ ................................ ................................ ............... 150 V CONCLUSION ................................ ................................ ................................ ................................ ......... 154 Key Findings ................................ ................................ ................................ ................................ ........... 156 Research Limitations ................................ ................................ ................................ .......................... 160 Contributions to the Literature ................................ ................................ ................................ ....... 164 Conclusion ................................ ................................ ................................ ................................ ............... 170 REFERENCES ................................ ................................ ................................ ................................ .............. 172 A PPENDIX A. Organic Industry and Regulation Expert Interview Questionnaire ................................ 184 B. Certified Organic Producer Survey Questionnaire ................................ ................................ 186 C. Organic Producer Sample Check Procedures ................................ ................................ ........... 204 D. Chapter 2 Descriptive Statistics ................................ ................................ ................................ ..... 208 E. Chapter 3 Descriptive Statistics ................................ ................................ ................................ ...... 210

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x F. Chapter 3 Third Party Administrator Website Coding Indicators ................................ ... 212 G. Chapter 3 Third Party Administrator Website Coding Findings ................................ ..... 213 H. Chapter 3 Descriptive Statistics ................................ ................................ ................................ .... 214 I. Chapter 3 Service Quality Descriptive Findings ................................ ................................ ....... 216 J. Chapter 4 Descriptive Statistics ................................ ................................ ................................ ....... 217

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xi LIST OF TABLES TABLE 1.1. Generalized differences between public, nonprofit, and private organizations according to organizational factors that theoretically link organizational form to facets of program administration ................................ ................................ ................................ ...................... 10 1 .2. Generalized differences between public, nonprofit, and private organizational forms and the theorized relationship between organizational form and third party administrator expertise ................................ ................................ ................................ ............................ 15 1.3. Generalized differences between public, nonprofit, and private organizational forms and the theorized relationship between organizational form and third party administrator service s ................................ ................................ ................................ .............................. 18 1.4. Certified organic producer survey respondent commodity types, both certified organic and conventional ................................ ................................ ................................ ........................ 38 1.5. Dependent variable constructs, conceptual definitions, data sources, and measurement by dissertation chapter ................................ ................................ ................................ 41 1.6. Study independent variables and conceptual definitions ................................ ................. 42 2.1. Generalized differences between public, nonprofit, and private organizati onal forms and the theorized relationship between organizational form and third party administrator expertise ................................ ................................ ................................ ............................ 57 2.2. Regulatory and substantive expertise construct measures ................................ .............. 64 2.3. Regulatory and substantive expertise construct descriptive statistics by third party administrator organizational form ................................ ................................ ................................ ...... 67 2.4. Farmer perceptions of third party administrator and inspector expertise as explained by administrator and farmer attributes ................................ ................................ ........ 69 3.1. NOP third party administrator service categories and associated website coding and survey variables ................................ ................................ ................................ ................................ .. 94 3.2. Regulatee client perceptions of third party administrator service quality as explained by third party administrator organizational form and survey respondent attributes ................................ ................................ ................................ ................................ ...................... 105 4.1. Regulatory approach construct measures ................................ ................................ ............. 133 4.2. Regulatory approach construct variable descriptive statistics by third party administrator organizational form ................................ ................................ ................................ .... 138

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xii 4.3. Multilevel analysis of the relationship between third party administrator and respondent level characteristics and the regulatory approach constructs ....................... 141 4.4. Multilevel analysis of nonprofit third party administrator dimensional publicness measure and respondent level characteri stic relationship with regulatory approach constructs ................................ ................................ ................................ ................................ ..................... 145 ....................... 158 C.1. Survey wave analysis results ................................ ................................ ................................ ....... 204 C.2. Online study sample and follow up phone sample r esponse comparison ................. 205 C.3. Reported size of survey respondent operations ................................ ................................ .. 206 C.4. Survey respondents by region ................................ ................................ ................................ ..... 206 C.5. Survey respondent organic certification types ................................ ................................ ..... 206 C.6. Survey respondent commodity types ................................ ................................ ....................... 207 C.7. Survey respondents by first year of USDA organic certification ................................ ... 207 D.1. Chapter 2 descriptive statistics ................................ ................................ ................................ .. 208 E.1. Chapter 3 descriptive statistics ................................ ................................ ................................ ... 210 F.1. Third party regulatory administrator website codes definitions, and example indicators ................................ ................................ ................................ ................................ ..................... 212 G.1. Services identified on third party administrator websites ................................ ............. 213 H.1. Chapter 3 descriptive statistics ................................ ................................ ................................ .. 214 I.1. Chapter 3 service quality survey descriptiv e findings by organizational form ...... 216 J.1. Chapter 4 descriptive statistics ................................ ................................ ................................ .... 217

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xiii LIST OF FIGURES FIGURE 1.1. Theorized relationship between exposure to competitive pressure and regulatory approach ................................ ................................ ................................ ................................ ......................... 22 1.2. Third party administration under the National Organic Program ................................ 30 3.1. Services diversification identified on NOP third party administrator websites according to organization form ................................ ................................ ................................ ........... 100 4.1. Regulatory approach spectrum ................................ ................................ ................................ ... 119 4.2. Theorized relationship between exposure to competitive pressure and regulatory approach ................................ ................................ ................................ ................................ ....................... 121

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1 CHAPTER I INTRODUCTION S cholars have noted a transformation in the administration of government functions over recent decades Spurred in part by skepticism towards the efficiency and effectiveness of government organizations, public programs are increasingly characterized by administrative decentralization, devolution of authority and service provision arrangements that view citizens as public service customers Among the more dramatic of these changes is a reliance on third parties to deliver what were traditionally considered public services. Under such program s central government agencies are replaced by one or more independent organizations from the nonprofit and private (for profit) sectors, as well as other levels of government, to administ er publicly authorized services. Reflecting these changes, regulatory program design s ha ve been transformed through a number of innovations that blur the line between public and private processes and objectives. Traditional regulatory programs rely on government control over regulated activities through agency rule making and subsequent monitoring for behavioral compliance with required rules (May, 2002; Selznick, 1985). Deviations from this design include voluntary programs that incentivize desired behavioral changes in exchange for beneficial access to club goods (Morgenstern & Pizer, 2007; Potoski & Prakash, 2009), the overlapping of economic and social regulation to apply what were previously considered economic controls to advance social goals (Levi Faur, 2011), and the delegation of regulatory authority to third party organizations from both inside and outside of the governmental sector (Black, 2002, 2008; May, 2002 )

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2 Although such design transformations are well documented in the literature (e.g.: Levi Faur, 2011; Potoski & Prakash, 2009; van der Heijden, 2008), to date empirical examination of the implications resul ting from regulatory program design innovations is notably limited (May, 2007). Th e primary aim of this dissertation is therefore to f urther our understanding of design innovation implications through a study of certification as a mode of regulation The certification program in question is party design because responsibility for program administration is delegated to organizations independent of the government agency responsib le for establish ing regulatory standards (Levi Faur, 2011). It is competitive because third party administrator service areas overlap and regulated entities pay for certification services, creating a n environment wherein third party administrators comp ete for regulatee clients. Following arguments associated with New Public Management, competitive third party arrangements are held to encourage client relevant services and higher service quality through an emphasis on efficiency, customer satisfaction, a nd performance (Barzelay, 1992; NPR, 1993; Osborne & Gaebler, 1993). Based on these premises, competitive third party design s have been increasingly app l ied across a variety of service areas, including education (Heinrich, 2010), health care ( Benish & Levi Faur, 2012 ), and social services (Van Slyke, 2003). In the context of regulatory administration, however, competitive third party arrangements raise a number of concerns for program fidelity. Scholars have questioned whether third party organizati ons, particularly nong overnment al organizations poses the requisite expertise to adequately monitor regulated activities

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3 and hold regulatees accountable for regulatory compliance (van der Heijden, 2008, 2010). Competition among diverse third party administrators may in centivize administrators to provide a variety of services at the cost of obscuring regulatory program objectives (Black, 2002; van der Heijden, 2010a, 2010b) Furthermore, in the case of a multidimensional construct such as organizati onal performance (Boyne, et al., 2005; Sowa, Selden & Sandfort, 2004), organizations may emphasize the performance of certain services while discounting others (Amirkhanyan, Kim & Lambright, 2008). Perhaps most concerning competition among diverse third party administrators may threaten regulatory stringency and consistency, which are central concerns for a regulatory program charged with the application of uniform standards (May, 2007; third party certifiers probably face in centives to satisfy 2003, pg. 718). Th is dissertation engages these concerns i n the context of the United States determines national standards for the production practices of food s marketed and sold in the U S. Under the NOP, organic regulation administration is delegated to acc redited third party regulatory administrators from the public, nonprofit, and private sectors Accredited t hird party administrators are responsible for certify ing operations (such as farms ) ing them for regulatory compliance. Ove rlapping a dministrator service areas, combined with the fact that operations choose their regulatory administrator result in a competitive third party regulatory design in

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4 which third party organic regulation administrators compete for organic certification clients. 1 T he primary contribution of studying competitive third party regulatory administration is a better understanding of how program design innovation s might hinder or promote regulatory objectives. The effort also offers valuable insig hts for several public affairs disciplines. T he NOP public, nonprofit, and private administrators speaks directly to a sub literature in public administration and management regarding the differences between public, private, and nonprofit organization al form s (see Boyne, 2002; Bozeman, 1987; Wamsley & Zald, 1973). For organization theorists, t he NOP provid es a new context for examining how organizational characteristics affect service responses to competitive pressure (Boyne & Walker, 2004; Walker & Jeans, 2001). Finally, reliance on competing third party regulatory administrators poses important insights into regulatory preferred and applied regulatory approach es key concern s for public policy and regulatory scholars particularly as they relate to regulatee compliance ( see May, 2002, 2005; Potoski & Prakash, 2011). This dissertation focuses on the relationship between a key third party administrator characteristic organizational form as public, nonprofit, and private and differences in third party administrator application of regulatory standards. The research is guided by the question: How does organizational form (public, nonprofit, private) affect third party administration of a regulatory program? The 1 In practice, t hird party regulatory administrators under the NOP are often referred to

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5 attention to organizational form is driven in part by regulatory scholarship which posits that differences between governmental and nongovernmental administrators may be a foc al source of disparity in contemporary regulatory administration ( van der Heijden, 2010a, 2010b). It is also motivated by the centrality of public, nonprofit, and private organization differences in the public administration and management literature s and the observation that related scholarship has yet to extend to the regulatory context (Bozeman, 2013) A third motivation driving research question is to take seriously a lesson long noted by public administration and management scholars but often overlooked in regulatory studies that organizations and the administrators that run them can have profound impacts on how public programs are implemented (B ozeman, 2013; Robichau & Lynn, 2009). As stated by Eisner, Worsham, and Rinquist (2000, pg. ix): If public policy is, in essence, a pattern of goal driven actions, the way in which it is implemented by regulatory agencies must be of central much of the existing work in regulation adopts simplifying assumptions that remove organizations from the picture. T h is dissertation examines th e relationship between third party administrator organizational form and t hree facets of regulatory program ad ministration. O rganizational expertise is often cited as a necessary component of effective regulatory administration, as information asymmetry exists between the organizations charged with regulatory responsibilit ies and the firms that they are tasked with monitoring (Macher, Mayo & Nickerson, 2011) The first facet of regulatory program

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6 administration examined, therefore, is d ifferences in public, nonprofit, and private third party administrator Second, o rganization theory suggests that when third party administrator s compete f or certification clients they will do so (in part) through the mix of service amenities they offer alongside certification services The second facet of regulatory administration examined, therefore, is differenc es in public, nonprofit, and private third party administrator services Finally, taking up the concern that relying on competing third party organizations for regulatory administration may result in inconsistent or lax enforcement (Conglianese & Lazer, 2003) and variation stemming from different organizational form s (van der Heijden, 2008, 2010 a ), the third facet of regulatory administration examined is differences in public, nonprofit, and private third party administrator T his research engages several bodies of literature t o understand how different organizational form s may lead to variation in regulatory program administration Public administration and management l iterature regarding differences between public, nonprofit, and private organizations (e.g.: Boyne, 2002; Bozeman, 1987, 2007; Dahl & Lindblom, 1953; Rainey, 1983, 1989; Wamsley & Zald, 1973) informs theori zing on how organizational form translates to differences in organizational attributes and processes Knowle dge management literature regarding organizational knowledge acquisition and transfer (e.g.: Hislop, 2013) is applied to understand differences in third party regulatory administrator expertise. Organization theory literature regarding service responses to competitive pressures (e.g.: Andrews, Boyne, & Walker, 2006 ; Walker & Jeans, 2001; Walker, Jeans & Rowlands, 2002) is applied to understand differences in

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7 third party administrator services. Regulatory literature on variations in reg ulatory behavior (e.g.: Gormley, 1998; May & Burby, 1998; May & Winter, 2000; May & Wood, 2003) is applied to understand differences in third party administrator regulatory approaches The project follows a two stage mixed method research design (Leech & Onwuegbuzie, 2006 ; Teddlie & Tashakkori, 2009 ). The first stage consisted of in depth interviews with purposively sampled organic regulation experts ( n =6). Interview data informed subsequent research, including question development and measure operation alization I nterview transcripts were reviewed to help explain the findings of quantitative data analysis findings (see Creswell, 1994, pg. 203) The second stage consisted of the primary data collection through a nation wide survey of NOP certified organic producers (farmers; n =1,055 ). Survey data were comple mented in the study of third party administrator services through content analysis (coding) of administrator websites. Additional s upple mentary data were extracted from the NOP maintained database of certified organic operations. The dissertation is structured in five chapters This introductory chapter pr oceeds in four section s First, a literature review synthesizes lessons drawn from literature pertaining to public, nonprofit, and private organizational forms, knowledge management, organizational service responses and regulatory behavior Theoretical propositions are d eveloped and presented according to the three aspects of program administration: expertise, services, and regulatory approaches. Second, the study the NOP regulatory arrangement is descibed Third, a research design sec tion details data collection methods. The introduction closes with

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8 an overview of the second, third, and fourth dissertation chapters : stand alone empirical papers addressing the identified facets of third party regulatory administration A concluding chapter summarizes the dissertation findi ngs and discusse s the regulatory design literature, in particular, as well as broader pub lic affairs scholarship Literature Review: Organizational Form and Third Party Regulatory Administration This dissertation examine s how organizational form (public, nonprofit, private) affects three facets of third party regulatory administration : o rganizational expertise, services and regulatory approaches As organizational form is the primary independent variable of interest, lessons drawn from public administration and management literature s on public, nonprofit, and private organization differences are a consistent thread throughout the project. Decades of research have resulted in mixed results in regards to the impact of organizational form on organizational processes and outputs (Andrews, Boyne, & Walker, 2011; Boyne, 2002; Bozeman & Bretschneider, 1994). Two consistent findings from this research inform this study: the effects of organizational form appear highly contingent on the program context in question, and organizational form does not directly impact organizational out puts but rather o perate s throu gh organizational characteristics that vary as a result of organizational form (Andrews, Boyne, & Walker, 2011; Boyne, 2002; Bozeman, 2013). 2 2 A body of public administration scholarship seeks to conceptualize and assess the impact of organizational form variation (e.g.: Bozeman, 1987, 2007; Dahl & Lindblom, 1953; Rainey, 1983, 1989; Wamsley & Zald, 1973) This literature offers multiple approaches for understanding organizational form, including legal ownership (public, nonprofit, private), relative positioning on a public to private continu um ( Dahl &

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9 To isolate the factors through which organizational form might be associated with regulatory administration, the following literatures were assessed for theoretical overlap with scholarship regarding public, nonprofit, and private organization differences : knowledge management literature pertaining to knowledge acquisition and transfer, organization theory literature pertaining to organizational service responses to competitive pressures, and regulatory literature. The pertinent organizational factors glean ed from these literatures are identified in Table 1. 1. Lindblom, 1953; Wamsley & Zald, 1973), and multi dimensional manners of Bozeman, 1987). Additionally, more recent scholarship in organization and policy studies has drawn attention to the blurring of Despite this variety in organizational form conceptualizations, this project is primarily concerned with organizational form understood through ownersh ip as public, no nprofit, or private for several reasons. First, empirical research applying different organizational publicness models suggests that alternative publicness conceptualizations may offer explanatory potential, however, legal ownership is c onsistently found to be a distinguishing factor in predicting organizational differences and remains the most commonly applied organizational form approach (Boyne, 2002; Bozeman & Bretschneider, 1994). Second, this study concerns differences resulting fro m organizational form in the context of regulatory program administration, and existing regulatory literature highlights differences between governmental and nongovernmental regulatory administrators (as defined by legal ownership) as a source of regulator y administration disparity (van der Heijden, 2010a, 2010b). Finally, regulatory administration is a context in which organizational form has received scant investigation, and legal ownership represents a logical first step in examining the relationship be tween organizational form and regulatory program administration.

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10 Table 1 .1 Generalized differences between public, nonprofit, and private organizations according to organizational factors that theoretically link organizational form to facets of program administration Public Nonprofit Private organizations organizations organizations Goals b Accountability, transparency, etc. Mission Profit Organizational governance b Political and bureaucratic Board of Directors Private and investors Organization internal structures a Formal centralized Less formal decentralized Variable Exposure to competitive pressure b,c Low Moderate High External network characteristics a Closed collaborative Open collaborative Closed competitive NOTE: a = factor theorized to influence organizational expertise; b = factor theorized to influence organizational service s ; c = factor theorized to influence regulatory approaches First, the goals that motivate third party administrators likely influen ce the manners in which they administer regulatory functions, as well as the services that they perform (Bozeman, 2013; van der Heijden, 2010a, 2010b ) A consistent observation of the public administration literature is that public, nonprofit, and private organizations are motivated by distinct organizational goals ( Dahl & Lindblom, 1953; Rainey, 1983, 1989; Wamsley & Zald, 1973). Public organizations, while not immune to special interest influences and regulatory capture, are generally assumed to operate with goals such as accountability and transparency recipient of services over investor interests or clients paying for services (Bozeman, 2007; Nutt & Backoff, 1993; Ranson & Stewart, 1994). Nonprofit service delivery is assumed to be aimed at furthering a social or principled cause, the subject of which is generally mission oriented (Froelich, 1999; Moore, 2000). As for profit entities, private generation

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11 The goals that motivate public, nonprofit, and private organizations are associated with different organizational governing arrangements which in turn are thought to influence organizational structures. Public organizations are subject to co nsiderable political and bureaucratic oversight (Bozeman, 1987; Dahl & Lindblom, authority and oversight (Nutt, 2000, pg. 81), rigid operating rules, and accountability pro cedures (Boyne, 2002; Nutt & Backoff, 1993; Perry & Porter, 1982; Rainey, Backoff & Levine, 1976). Nonprofit organizations are directed in their pursuit of mission fulfillment by Boards of Directors, and are typically characterized by more decentralized a nd less formal organization structures than public organizations (Euske, 2003; Nutt & Backoff, 1993), although Boards of Directors governance and related constraints on executive authority may result in more formal internal structures than found in the pri vate sector. Private organizations, while typically experiencing relatively little external control may be subject to the oversight of private investors seeking a return on investment. Empirical research has found private organization internal structu re s to vary considerably, reflecting the greater flexibility that private organizations have in terms of structural centralization and formalization (Nutt & Backoff, 1993; Wamsley & Zald, 1973). It is long recognized in the public administration literatu re that a key distinction between the public, nonprofit, and private sectors is the extent to which the organizations within them operate in competitive environments (Boyne, 2002; Bozeman, 1987, 2007; Dahl & Lindblom, 1953; Rainey, 1983, 1989; Wamsley & Za ld, 1973). Organizational goals that emphasize the public interest and a lower reliance on

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12 client fees for service, combined with revenue streams from budget appropriations, r & I n pursuit of organizational missions, nonprofit organizations may draw on an array of revenue sources, from private contributions and endowment funds to membership fees to client service fees (Chang & Tuckman, 1994; Fischer, Wil sker, & Young, 2011; Moore, 2000). While not completely sheltering nonprofits from a competitive environment, the ability to draw from diverse revenue sources suggests that nonprofits face lower levels of competitive pressures than profit driven private o rganizations that relying entirely on client fees. At the same time, some reliance on fees for service means that they are likely to face more competitive pressures than their public peers. Finally, knowledge management literature suggests that the type of network a third party regulatory administrator is connected to influence s the external expertise the organization can access and internalize Public administration scholarship indicates that public organizations often play central managerial and coordination roles in the governance networks to which they belong, resulting in networks that are collaborative in nature but restricted in t erms of network membership referred to as ture (Herranz, 2007; Weber & Khademian, 2008). Nonprofit organizations develop a variety of organizational and individual relationships in pursuit of financial and human resources, for example through external funding, private contributions, or membership fees (Chang & Tuckman, 1994; Fischer, Wilsker, & Young, 2011; Moore, 2000), and organizational partnerships and volunteers (Frumkin, 2002; Herranz, 2008; Leete,

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13 2006). The number and diversity of individual and organizational ties a nonprofit third party regulatory administrator might foster suggest their networks might be best Private sector organizations concerned with gaining and maintaining competitive advantage are most likely to engage in networks tha t are competitive in nature (Herranz, 2008), where network ties are limited to strategic alliances in which organizations seek win win scenarios that provide allied organizations simultaneous advantages (Easterby Smith, Lyles & Tsang, 2008; Hamel, 1991). Such networks most closely approximate what knowledge These generalized differences between public, nonprofit, and private organizations are applied in this project within theoretical framewor ks specific to the three facets of regulatory administration examined in this study: organizational expertise, service s and regulatory approaches. The remainder of this section introduces each of these frameworks and details the theoretical relationships linking public, nonprofit, and private organizational forms to program administration through the identified organizational factors. Propositions are developed regarding the expected associations between organizational for ms and each facet of regulatory administration. These propositions are empirically tested Chapters 2 4 of this dissertation. Third Party Regulatory Administrator Expertise The first facet of r egulatory administration investigated in this study is differences in public, nonprofit, and private third expertise (Chapter 2 of this dissertation) Expertise is held to be reflective of

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14 specialized knowledge within a defined subject area that individuals acquire through education, traini ng, and experience (Page, 2010; Van der Wal, Graff, Lasthuizen, 2008). According to this definition, expertise is analogous to knowledge, but as it relates to a specific topic. Two types of expertise are particularly relevant in the context of regulator y administration (Scholz, 1994), and are thus accounted for in this study. The first is Regulatory expertise is observable in the knowledge and skills that officials exhi bit regarding the regulatory directives that they are charged with enforcing and associated monitoring and enforcement procedures. The second is expertise in the substantive operations that regulatory administrators are responsible for monitoring referre d to and skills that officials exhibit regarding the operative and commercial practices associated with the industry being regulated. Knowledge management studies indi cate a number of organizational factors that notable intersections with public administration literature on differences between public, nonprofit, and private organizat ional forms. The first is associations with external networks which influence the level of expertise that an organization can access, receive, and internalize (Easterby Smith, Lyles & Tsang, 2008). The second is an organization inte ability to encourage intra organizational knowledge sharing and dissemination (Willem & Buelens, 2007).

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15 Guided by this theoretical overlap in knowledge management and public management literatures, this research assumes that u nderstanding how regulatory and substantive expertise might differ between public, nonprofit, and private third party administrators requires taking into account how external network connections affect the expertise that third party administrators are able to access, and how their internal structures facilitate or impede the intra organizational transfer of expertise. The manner in which these factors are assumed to vary across organizational forms and the resulting theoretical expec tations are summarized in Table 1. 2. Two hypotheses are developed out of these expectations, and are empirically tested in Chapter 2 of this dissertation. Table 1. 2 Generalized differences between public, nonprofit, and private or ganizational forms and the theorized relationship between organizational form and third party monitor expertise Organizationa l form External network characteristics Organization internal structure Expected relative level of organizational expertise Public Closed collaborative Formal centralized Regulatory: Low Substantive: Low Nonprofit Open collaborative Less formal decentralized Regulatory: High Substantive: High Private Closed competitive Variable Regulatory: Moderate Substantive: Moderate Nonprofit organizations, with connections to open collaborative networks and knowledge. Furthermore, compared to public organizations, nonprofits are less likely to be hampered by formal centralized internal structures in the intra organizational dissemination of knowledge (Carlsson, 2003; Claver Cortes, Zaragoza Saez & Pertusa Ortega, 2007; Willem & Buelens, 2007) With the greatest access to knowled ge and

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16 modest barriers to intra organizational knowledge sharing nonprofit third party administrators are likely to exhibit the highest levels of expertise. The resulting theoretical expectation is worded to recognize the data employed in this study reg ulatee perceptions of third party administrator expertise: H1: Nonprofit third party regulatory administrators will be perceived as exhibiting the highest levels of regulatory and substantive expertise, compared to their public and private counterparts. A tendency towards closed collaborative networks and more formal, centralized internal structures suggests that public organizations will experience the greatest barriers in knowledge acquisition and intra organizational knowledge dissemination (Carlsson, 2 003; Willem & Buelens, 2007) Consequently, public sector third party administrators are expected to display the lowest levels of expertise. Private organizations, while restricted in their acquisition of knowledge by closed competitive networks benefit in the intra organizational transfer of knowledge from relatively flexible internal structures (Easterby Smith, Lyles & Tsang, 2008; Hamel, 1991) Combined with t he potential to leverage limited consumer connections, this flexibility in internal structur es suggests that private third party administrators may be able to access knowledge not readily available to their public sector counterparts and will more easily disseminate acquired knowledge between organization personnel (Carlsson, 2003) The resulti ng theoretical expectation is: H2: Private third party regulatory administrators will be perceived as exhibiting higher levels of regulatory and substantive expertise than their public counterparts.

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17 Third Party Regulatory Administrator Service s The second facet of regulatory administration investigated in this study is differences between public, nonprofit, and private third party regulatory (Chapter 3 of this dissertation) Drawing on organization theory, it is assumed that competition among multiple third party administrators draws attention to the service provision aspect of regulatory administration, as third party administrators respond to competitive pressures by emphasizing service s attract and retain regulatee cli ents (Coglianese & Lazer, 2003; van der Heijden, 2010a). certification) and peripher al services (services that extend beyond the primary function) in order to establish market niches through distinctive service bundles (Agarwal & Chatterjee, 2002; Andrews, Boyne & Walker, 2006; Carman & Langeard, 1980), and focusing on service recipient p erceptions of service quality. This study therefore examines differences in the diversity and quality of third party administrators services Public, nonprofit, and private third party reg are theorized to be influenced by several organizational factors. First, the greater exposure a third party administrator is exposed to, the more it is expected to emphasize its services to attract and retain regulatee clients (Marshall & Standifird, 2005) Second, the ability of a th ird party administrator to alter its services in response to competitive pressures is expected to be impacted by constraints imposed by organizational goals and corresponding governing arrangement s (Nutt & Backoff, 1993; Rainey, 1983,

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18 1989). How these fa ctors are assumed to vary across organizational forms and the resulting theoretical expectations are summarized in Table 1. 3. Three hypotheses are developed out of these expectations, and are empirically tested in Chapter 3 of this dissertation. Table 1.3. Generalized differences between public, nonprofit, and private organizational forms and the theorized relationship between organizational form and third party administrator service s Organizational form E xposure to competitive pressures Organizational governance Goals Expected service s Public Low Political and bureaucratic Accountability, transparency, etc. Limited Nonprofit Moderate Board of Directors Mission Mission oriented Private High Private and investors Profit Replication of core services Relatively low exposure to competitive pressures suggests that public third party administrators will experience fewer incentives to emphasize service provision in the administration of regulatory standards, when compared with their nonprofit and private peers (Andrews, Boyne & Walker, 2006) Furthermore, the ability of public third party administrators to adapt services in response to the limited competitive pressures they experience is likely to be limited by their political and bureaucratic constraints (Andrews, Boyne & Walker, 2006; Walker & Jeans, 2001) These factors, combined with organizational g oals that conflict with an emphasis on regulatee client centered services, suggest that public sector administrators least likely to emphasize services in the administration of regulatory standards:

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19 H 3 : Public third party regulatory administrators will e xhibit fewer, and lower quality, services than their nonprofit and private counterparts. Mission oriented service delivery and diverse revenue sources, while not completely sheltering nonprofit third party regulatory administrators from a competitive envir onment, suggest that they will face lower levels of competitive pressures than primarily profit driven private administrators that rely entirely on client fees. At the same time, some reliance on fees for service means that they are likely to face more co mpetitive pressures than their public sector peers. O rganizational likely to lead nonprofit organizations to emphasize services that align with organizational missions, ev en at the cost of decreased revenue (Brown & Slivinski, 2006; James, 1983). A principal function of many nonprofit s is to represent the political and policy interests of select groups (Andrews & Edwards, 2004; Jenkins, 2006). Along these lines, social and political movement perspectives on nonprofit management suggest that nonprofit organizations founded in support of a social or political cause will devote organizational services to the realiza tion of that cause (Smith & Gronbjerg, 2006). Thus, nonprofit third party regulatory administrators established to encourage the organic food movement are expected to diversify their services by emphasizing services cy objectives (Hasenfeld & Gidron, 2005; Smith & Gronbjerg, 2006):

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20 H 4 : Nonprofit third party regulatory administrators are more likely to exhibit service diversification, and higher quality of services, in services that align with social and advocacy goa ls. For private sector organizations, altering services for competitive advantage often involves expanding existing services into new markets or replicating existing services to appeal to new consumer bases. The replication of existing services with simil ar service offerings thus can attract new clients while requiring minimal input conse entirely new service offerings (Carmen & Langeard, 1980, pg. 8). With high levels of exposure to competitive pressures, organizational goals that align with a service provisio n emphasis, and a tendency to respond to competitive pressures by expanding service offerings through the replication of existing services, private sector third party administrators are expected to emphasize the replication of core services: H 5 : Private third party regulatory administrators will exhibit service diversification, and higher quality of services, in the replication of core services. Third Party Regulatory Administrator Regulatory Approaches The third facet of regulatory administr ation that is investigated in this study is differences between public, nonprofit, and private third party regulatory (Chapter 4 of this dissertation) As conceptualized in roach most closely

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21 and includes the combination of the tools or tactics used by an agency to bring about This study follows a number of studies that sug gest regulatory approaches can be characterized as falling along a continuum from an emphasis on enforcement and sanctioning, often referred to as a deterrence approach, to a more flexible or accommodative approach (Bardach & Kagan, 1982; Braithwaite, 1985 ; Potoski & Prakash, 2011; Kagan, 1989, 1994). The amount of competitive pressure that a regulatory organization is exposed to can shape the incentives that the organization faces when considering its regulatory approach (van der Heijden, 2010a, 2010b). A regulatory organization with higher levels of exposure to competitive pressure may respond by adapting its regulatory behavior to attract and retain clients (Marshal & Standifird, 2005). Rather than adopt a legalistic and punitive approach to its regul atory duties, such an organization will be der Heijden, 2008). Exposure to competitive pressures can therefore be linked theoretically to the deterrence accommodation regulatory approach spectrum : the greater the competitive pressures a regulatory organization is exposed to, the more likely the organization is to exhibit behaviors characteristic of an accommodative regulatory approach. Figure 1. 1 displays this theorize d relationship.

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22 Figure 1.1. Theorized relationship between exposure to competitive pressure and regulatory approach Public nonprofit, and private third approaches can thus be anticipated based on the relative exposure to competitive pressure third organizational form in question. Drawing on assumptions regarding how exposure to competitive pressure varies by organizational form, three hypotheses are developed, and are empirically tested in Chapter 4 of this dissertation. Public third party regulatory administrators, as indicated in Table 1. 1, are assumed to face lower level s of competitive pressure than nonprofit or private third party administrators Within the theoretical relationship displayed in Figure 1. 1 a lower level of exposure to competitive pressures is e xpected to be associated with a regulatory approach that falls closer to the deterrence end of the regulatory approach spectrum. As this study measures third through the perceptions of regulatees the expectation is: H 6 : Public third party regulatory administrators are more likely to be perceived by regulatees as exhibiting a deterrent regulatory approach when compared with their nonprofit and private counterparts.

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23 As indicated earlier, mission oriented service delivery and more diverse revenue sources, while not completely sheltering nonprofits from a competitive environment, suggest that they will face lower levels of competitive pressures than primarily profit dri ven private organizations that rely entirely on client fees. At the same time, some reliance on fees for service means that they are likely to face more competitive pressures than their public peers. Exposure to competitive pressure that is lower than th at of private third party regulatory administrators and higher than that of public third relative to their private and public counterparts, towards the middle of the deterrence a ccommodation spectrum: H7: Nonprofit third party regulatory administrators are more likely to be perceived by regulatees as exhibiting a more accommodative regulatory approach than their private counterparts, and a more deterrent regulatory approach than their public counterparts. In contrast with their public and nonprofit peers p rivate third party administrators are assumed to face high level s of competitive pressures, and the greater exposure to competitive pressures is expected to situate private sector third party regulators closer to the accommodation end of the regulatory approach spectrum: H 8 : Private third party regulatory administrators are more likely to be perceived by regulatees as exhibiting an accommodative regulatory approach when compared to their pub lic and nonprofit counterparts.

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24 Empirical Context: Com petitive Third Party A dministration of U.S. Organic Food Regulations 3 The emp irical context for this study of public, nonprofit, and private third party regulatory administrators is U.S. organic food regulation. This section depicts this empirical context in three parts. It first provides an overview of how the competitive third party regulatory design emerged and became institutionalized through legislation. It then provides a description of the regulated industry: organic food operations. It closes with an overview of the subje cts of this research: third party administrators of organic food regulation s A Brief History of the U.S. Organic Food Industry and Regulation The foundation of the contemporary U.S. organic industry is generally credited to the early efforts of Jerome I. Rodale, founder of the Rodale Press and publisher of the magazine Organic Gardening and Farming (Nowacek & Nowacek 2008). Rodale found inspiration in the writings of Sir Albert Howard, an English agriculture researcher and proponent of the theory that disease in plants and animals came from unhealthy soil, a problem that could be addressed by recycling organic waste materials back into farm synthetic alternatives, thus establishing organic agricult ural methods in contrast to practices 3 Routledge Handbook on Environmental Governance co authored with Saba N. Siddiki. thor, the majority of material in this section was written by David P. Carter.

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25 The 1960s and early 1970s mark the period that organically produced food gained recognition among the American public, when, influenced by publications such Silent Spring a g rowing suspicion of detrimental impacts of conventional farming practices motivated consumer interest (Baker 2005; Vos 2000). During this time, organic farmers identified a threat to the future of organic farming market consumer difficulty in identifyin g truly organic produce (Rodale, 1971). With the intention of encouraging a market for organically grown, chemical free food, Rodale gathered a group of California farmers to discuss the possibility of a certification process for organically farmed produc e. In 1972 the Rodale Press certification program was established, providing labels seal was produced without pesticides or artificial fertilizers, grown in soil ferti lized with organic matter and natural mineral fertilizers, and was not treated with preservatives, hormones, or antibiotics (Nowacek & Nowacek, 2008). Rodale Press certification set a blueprint for other organic certification programs that followed, inclu ding the first government sponsored organic certification in the state of Oregon in 1973. 4 As the pop ularity of organic food rose, an increasing number of governmental, nonprofit, and for profit certification bodies emerged to provide organic food vende rs verification of organic claims through certification labels. In the absence of federal action providing national standards, states pass ed a variety of bills that in some way 4 Farmers (CCOF), one of the larger accredited organic certifiers today.

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26 implementing state derived certification standards and processes. By 1990, twenty two states had passed a type of organic food statute. Eventually, a proliferation of inconsistent state defined standards and non governmental certification organ izations early proponents of organic farming, for profit organic farming certifica tion companies Concern over organic certification fragmentation heightened in the 1980s as media accounts drew attention to pesticides and o ther chemical processes in agricultural practices, and consumers increasingly turned to organic foods as an alternative to conventionally produced foods The event credited with galvanizing public and governmental support for national organic standards came in 1989, with a more uniform color (Baker, 2005, p. 1). A mong other matters t he special highlighted a report by the National Resources Defense Council raising concerns that Alar had the potential to cause cancer. The Organic Foods Production Act (OFPA) was passed shortly thereafter as part of the 1990 Farm Bi ll with the goal of encouraging an organic foods market through federal organic standards and an official organic labeling system under a National Organic Program (NOP). The Act had three explicit goals: (i) to establish national standards governing the m arketing of organically produced foods; (ii) to assure

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27 consumers that organically produced foods meet a consistent standard; and (iii) to facilitate interstate commerce in organic foods (OFPA, 1990). Tensions over divergent values vying for institutional ization in national organic standards were evident throughout the initial implementation of the OFPA. In December of 1997, the USDA released the NOP Proposed Rule, and immediately began receiving protests over its contents. Among the most contentious ele ments were the irradiation of produce, municipal biosolids (sewage sludge) as fertilizer, and genetically modified organisms under national organic standards. In total, the USDA received 275,603 citizen comments on the Pro posed Rule, a majority of which argued against the inclusion of one or more of the big three in organic practices. As one comment stated: A compromised standard, one that yields to pressures from commercial precisely the elements the organic consumer is trying to avoid, renders certification meaningless and vacates trust in the USDA as a guardian of (as cited in Shulman, 2003, p. 258). The USDA reacted to such critic isms by emphasizing that the organic label was never intended to be a food safety or public health claim, but rather was to be implemented for marketing purposes (Shulman, 2003). Support for this claim is found in the fact that the Rule was to be promulga ted under the Agriculture Marketing Service (AMS). Nonetheless, in response to the volume of citizen input, USDA Agricultural Secretary Dan Glickman extended the public comment time period an additional 45 e that the organic community and all the

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28 In May of 1998, the USDA capitulated to protests over the proposed standards, announcing that it would not allow the big three under a Fina l Rule. Secretary Glickman announced the changes with a written comment which stated: "If organic farmers and consumers reject our national standards, we have failed. Thousands of commenters requested that USDA issue revised proposed standards, and we in tend to do so" (as cited in Puzzanghera, 1998, p. A6). A revised rule was issued in March of 2000, and as Secretary Glickman had pledged, the big three were excluded from the revised standards. Overall, the changes were welcomed. Dr. Margaret Mellon, of the Union of Concerned Scientists, noted: "this could turn out to be the most important rule USDA cited in Burros, 2000, p. 22). The revised rule was released as a Final Rule in December of 2000, allowing time for organic farmers to comply with the standards. In October of 2002 the OFPA was officially implemented. The Regulated Industry: U.S. Organic Food Production As required by the OFPA operations that market food pr the U.S. must hold organic certification and adhere to national organic standards. An exemption from this requirement is made for small scale producers, as operations that earn less than $5,000 a year from organic sales are not requ ired to hold certification. I n 2015, the United States Department of Agriculture (USDA) reported 19,474 domestic certified organic operations, with over 8,000 additional international certified operations (AMS, 2015). Operations certified under the NOP can hold one or more of four organic certification types (referred to as scopes) : crops, wild crops, livestock and handling.

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29 Data regarding organic producers as a population is limited, consisting of sporadic USDA ini tiated surveys. According to the USDA, the average size of a certified organic farm (280 acres) is markedly smaller than the average U.S. farm, generally (418 acres; Greene, Slattery, & McBride, 2010). Reflecting the diversity of U.S. agriculture, broadl y certified organic operations produce a wide variety of products although the composition of the organic industry varies from that of conventional agriculture (Greene, Slattery, & McBride, 2010; Dimitri & Oberholtzer, 2009). Fruit and vegetable product ion is more predominant in organic food sales than in the conventional agricultural industry, and the same is true for organic dairy production. In contrast, meat, fish, and poultry make up a very small portion of organic sales (2 3%; Greene, Slattery, & McBride, 2010). The Third Party Regulatory Administrators: Accredited Certifi cation Agents The OFPA and NOP regulation institutionalized the third party certification system that existed prior to 1990, modeled loosely after International Organization for S tandardization (ISO) principles for third party accreditation and certification systems This arrangement is depicted in Figure 1. 2 T he NOP is responsible for accrediting independent organizations to serve as certification administrators referred to as accredited certification agents, or ACAs 5 ACAs in turn certify operations according to national organic regulations, and then inspect certified operations for regulatory compliance. 5 I n this dissertation party regulatory

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30 To attain organic certification, operations must first submit a n organic systems plan to an ACA. Once an organic systems plan has been reviewed and approved, the operation is then inspected for congruence with the organic systems plan. According to NOP regulations, certification must be renewed once a year, which en tails submission of any changes to the organic systems plan and a yearly on site inspection. Unannounced inspections and product chemical residue testing are allowed, but not required, by NOP regulations. 6 Figure 1.2. Third party administration under the National Organic Program ACA responses to regulatee noncompliance follow one of two forms. The first is a written notice of noncompliance, which is simultaneously sent to an operation and filed with the NOP. A notice of noncompliance outlines violation and the date by which a noncompliance must be corrected. The second 6 Shortly after this study was conducted, the NOP established guidelines that third party administrator s test at least five percent of the products they certify for the presence of substances prohibited by NOP regulations

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31 response that an ACA may take in response to operation noncompliances is a CAs may certification without external review, operations may appeal enforcement decisions through the USDA. Following the NOP regulations, the USDA may choose to pursue legal actio n against willful regulatory violations, such as fraudulent organic certifications, through financial penalties of up to $11,000 per violation. The NOP accredited 48 US based ACAs as of 2013. 7 These organizations vary widely in the number of operations th at they certify, ranging from just over a dozen (Monterey County Organic) to 2,800 (California Certified Organic Farmers [CCOF]). Seventeen are private, for profit organizations, eleven are nonprofits, and 20 are from the public sector. Public ACAs can b e further broken down into three different forms: 17 fall under state government programs, such as the Colorado Department of Agriculture Organic Program, two fall under California county governments, and one of Plant Industry. ies by geographic area within the U.S. The manner in which the competitive certification environment is accounted for in this dissertation is through a Herfindahl Hirschman Index (HHI) concentration measure by state which indicates the extent to which a small number of ACAs account for a large proportion of certifying services in a state (Hannan, 1997). Market concentration thus serves as an indicator of competition the more concentr ated a market, the less competitive it is assumed to be (Hannan, 1997). For comparison, the Department of 7 Another 47 third pa rty administrator s are based inte rnationally.

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32 Justice defines HHI scores between 0 2,500 as (USDOJ, n.d.). Using data pulled from the 2012 NOP database of certified operations, the average state organic certification HHI was calculated to be 4,379. The lowest calculated state organic certification HHI was 1,318 and the highest was 9,022. The construction of these HHI measures, along with the other data used in this dissertation, is discussed in the following Research Design section. Research Design To study the relationship between third party administrator organizational form and regulatory program administration this project followed a two stage mixed method research design (Leech & Onwuegbuzie, 2006; Teddlie & Tashakkori, 2009). The first research stage consisted of in depth interviews with purposively sampled organic regulation experts ( n =6). The second research stage comprised collection of the principal data used in this study, through a nation wide survey of NOP certified organic producers (farmers; n =1,055). Survey data were comple mented in the study of third party regulatory adminis trator services through content analysis (coding) of third p arty administrator websites. Additional data were gathered from the NOP database of certified organic operations 8 three parts. It begins with an overview of the first research stage comprised of interviews with organic regulation experts. It then turns to the second research stage comprised of the certified organic 8 A final supplementary data source was nonprofit third party administrator IRS tax filings. As the use of these data is limited to an exploratory analysis in Chapter 4, the associated collection procedures ar e omitted from this section and can be found in the Chapter 4 Study Design section.

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33 producer survey including sample considerations and collection of supplementary data The section closes with an overview of the variables included in empirical analyses related constructs and conceptual definitions Readers are directed to the empirical chapters in this dissertation (Chapters 2 4) for further detail s regarding data collection and analysis. Stage 1: Organic Regulation Expert Interviews The first data collection stage involved semi structured interviews with six individuals identified as experts in the U.S. organic industry and organic food regulation. The sample frame was purposeful: individuals were chosen based on the official positions that they held within the organic industry combined with extended (five years or longer) involvement with organic food production and regulation Participants with the following affiliations were interviewed: the National Organic Program, the Accredited Certifiers Association, the Northeast Organic Dairy Producers Association, an organic certification consultant and two third party administrator organizations. Que stions asked in the interviews covered descriptions of the organic certification process and differences and similarities between third party organic regulation administrators. The exact interview questions are provided in the interview questionnaire foun d in Appendix A Interview data were used in two manners. First, interviews informed later data collection efforts. For example, interview transcripts were reviewed to identify and confirm the services that NOP third party regulatory administrators offered in addition to those that are regulatory in nature. Second, interview transcripts were reviewed for themes related to third party regulatory

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34 administ These themes were used in a supplementary manner, to help explain and provide descriptive detail to the other data collection findings. Stage 2: Certified Organic Producer Survey and Complementary Data Collection The sec ond stage of data collection involved t he primary data collection for this research a survey of certified organic producers and two complementary data collection methods: ( i ) third party administrator website coding and ( ii) measure construction from data pulled from the NOP maintained certified organic operation database This second stage of data collection as it pertains to study dependent variables is presented in Table 1. 5 below, alongside dependent variable constructs, conceptual definitions, a nd measurement methods. An overview of data collection considerations follows, beginning with the organic producer survey sample. Further details are provided in the three empirical dissertation chapters (Chapters 2 4) Certified Organic Producer Survey The certified organic producer survey was administered online in the winter of 2013 2014. Data collected through the survey include dependent variable data pertaining to the three facets of regulatory administration examined in this research: third services (service quality), and regulatory approaches (see Table 1. 5 ) A range of independent variable data were also gathered from the certified organic producer survey, as displayed in Table 1. 6 All domestic certified operations holding any combination of crops, wild crops, and livestock certifications for which the USDA listed a valid email address were sent

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35 survey requests representing approximately half of all cert ified organic producers. Processing operations that held only handling organic certification were excluded. In total, 6,273 domestic certified organic producers were sent a survey request. Responses were received from 1,055 producers for a response rate of 17 percent. Three considerations regarding the sample are worth noting, as they threaten the generalizability of study findings First, the USDA list of certified organic producer emails is made up of operations certified by 41 of the 48 domestic AC As. The study results, therefore, cannot be generalized to the seven ACAs missing from the sample. Second, operations for which the USDA does not report a valid email address were e rate of 17 percent. Farmers are a notoriously difficult population to survey, and a response rate of 17 percent is consistent with other farmer survey research (Pennings, Irwin & Good, 2002), however, the relatively low response rate suggests the study f indings are particularly susceptible to nonresponse bias. Three steps were taken to gauge the impact of nonresponse bias in the study, the details of which are provided in Appendix C First, a wave analysis was conducted based on the assumption that the answers of survey late responders are more likely to approximate the answers of non respondents than those of individuals that readily respond to survey requests (e.g.: Kauppi & van R aaij, 2014; Rainey, Pandey & Bozeman, 1995). The analysis compared the responses of early survey respondents to those that responded after follow differences between the regulatory approach dependent variable measure responses of different survey waves were found ( p <0.05).

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36 Second, 20 non respondents were contacted by phone and verbally administered five survey questions. Nonparametric tests (due to the extreme difference in group size) co mparing these responses with those of the online sample revealed no statistically significant differences ( p <0.05). Although these do not eliminate the possibility of nonresponse bias impacting the findings of the study, the results suggest that the threa t of nonresponse bias may be small. USDA data indicates a fair, but not perfect, representation of the U.S. certified organic producer population. When survey respondents wer size relative to the size of other operations producing similar products, 51 percent farmers are characterized by relatively small o perations (Greene, Slattery, & McBride, incorporated in study findings. The report ed location s of survey respondents suggest a fairly representative geographic distribution of certified organic operations, with the exception of underrepresentation among Midwest organic farmers, at 16 percent of respondents. The highest percentage of su rvey respondents were from the West (29 percent), followed by the Northwest (22 percent) and Northeast (18%). Collectively, the Southwest and Southeast made up 15 percent of the survey respondents. Of the four USDA organic certification types, the vast ma jority held organic crop certification, 17 percent held organic livestock certification, and less than four percent

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37 held organic certification for wild crops. The most frequently reported commodity types produced by survey respondents were vegetable, grai n, fruit, and herb crops, as shown in Table 1. 4. A much smaller percentage of respondents reported eggs, dairy, poultry, or livestock commodities. The breakdown of survey respondents by certification and commodity types roughly mirrors production trends in U.S. organic food production writ large (see Table 1. 4 ; Dimitri & Oberholtzer, 2009; Greene, Slattery, & McBride, 2010).

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38 Table 1.4. Certified organic producer survey respondent commodity types, both certified organic and conventional Certified organic Conventional Vegetable crops 39% 5% Grains, alfalfa, mixed hay, other field crops 31% 5% Tree or vine fruit, nut crops 30% 5% Herb crops 27% 3% Brambles, berries 20% 3% Nursery, floriculture, greenhouse crops 15% 4% Beef 8% 8% Eggs 7% 8% Dairy products 6% 2% Poultry 5% 6% Apiculture 3% 4% Lamb 2% 4% Pork 1% 6% Other 9% 3% NOTE: N = 1,055; Respondents were directed to select all appropriate commodity types. Third Party Regulatory Administrator Website Coding The second facet of regulatory administration that is investigated in this study is differences between public, nonprofit, and private third party regulatory s In the study of service s service quality data collected through the certified org anic producer survey were comple mented with website coding: each third party administrator website was coded for the services explicitly advertised or mentioned. Service categories were identified first through the aforementioned expert interviews, and in dicators were developed inductively as coding was conducted. In addition to organic certification, service categories that were coded included education service s (e.g.: workshops and training programs), and advocacy services related to organic policy. When an indicator for one of the service category codes was

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39 International Pty Ltd 2008) qualitative software program. NVivo was then used to call up indicators and codes from across websites, allowing for a coding comparison and facilitating a qualitative interpretation of service claims. Third party regulatory administrator website coding methods are detailed in Chapter 3. NOP Certified Organic Operation Database Data Supplementary data were gathered from the NOP maintained list of USDA certified organic operations. These data were used in two ways. First, the database was used to determine the number of operations that each NOP accredited third party regulatory admin istrator certifies as organic. This measure was used as a proxy for third party administrator characteristics other than organizational form, such as third party administrator size. Second, the database was used to construct a Herfindahl Hirschman Index (HHI) concentration measure by state, which served as a proxy for the competitiveness of the certification environment in each state. The HHI roughly represents the relative proportion of third party administrators to the number of certified operations w ithin a state. Following previous constructions of HHI measures (e.g.: Hannan, 1997), a market share value for each third party administrator operating in a given state was calculated by dividing the number of clients for each third party administrator in the state by the total number of certified operations in the state. Each third party administrator market share value was then squared, and the results summed for all third party

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40 administrators in a given state, producing a state HHI with potential to ra nge from 0 (not concentrated) to 10,000 (highly concentrated). 9 Variables, Constructs, and Conceptual Definitions This project examines how organizational form (public, nonprofit, private) affects three facets of third nistration: organizational expertise, service s and regulatory approaches. These three facets of regulatory administration represent the broadly conceptualized dependent variables of interest in the study. In the empirical investigation of these regulato ry administration facets, the variables were examined according to the constructs and definitions presented in Table 1. 5 Table 1. 5 also indicates the data sources and construct measurement overviews for each dependent variable. Further details regarding dependent v ariable operationalization and measurement are provided in the empirical chapters of this dissertation (Ch. 2 4). 9 An alternative manner of constructing the market concentration measure is to calculate the proportion of clients a third party administrator certifies relative to all of the certified operations across the same geographical area. The chosen method was preferred due to the difficulty in determining the boundaries of third party administrator am ple, assuming the states that a third party administrator offers services in constitute the third party concentrated in a limited number of states, while extending to o nly a few operations immediately across the geographical boundaries of those states.

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41 Table 1.5. Dependent variable constructs, conceptual definitions, data sources, and measurement by dissertation chapter Dependent variable Construct Definition Data source Construct measurement Organizational expertise (Chapter 2) Regulatory expertise The knowledge and skills that regulatory officials exhibit regarding the regulatory directives that they are charged with enforcing and associated monitoring and enforcement procedures. Producer survey Producer perceptions of regulatory expertise exhibited by: (1) third party administrator organizations and (2) third party administrator inspectors Substantive expertise The knowledge and skills that regulatory officials exhibit in the substantive operations that regulatory monitors are responsible for enforcing Producer survey Producer perceptions of substantive expertise exhibited by: (1) third party administrator organizations and (2) third party administrator inspectors Services (Chapter 3) Service diversity The variety of service categories advertised or promoted by a service provider. Third party administrator website coding The presence or absence on third party regulatory administrator websites of activities pertaining to three service categories: (1) educational services, (2) advocacy ser vices, and (3) additional labeling/certification services. Service quality A combination of the performance of a service provider and the expectations of service recipients (Cronin & Taylor, 1992; Mwita, 2000). Producer survey Producer perceptions of their third service quality in three service categories: (1) educational services, (2) advocacy services, and (3) additional labeling/certification services. Regulatory approaches (Chapter 4) Regulatory approach The combination of the tools or tactics used by an agency to bring about regulatee issuing warnings, providing technical advice, pg. 161). Producer survey Producer p erceptions of their third behavior, pertaining to four measures: (1) strictness of regulatory interpretation, (2) administration of sanctions, (3) flexibility, and (4) willingness to provide technical assistance.

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42 The primary independent variable of interest in this study is third party administrator organizational form. Organizational form was operationalized as a third a public, nonprofit, or private (for profit) entity A range of control variables were included in empirical analyses, as presented in Table 1. 6 ., to account for additional third party administrator characteristics that might have an impact on regulatory administration or to account for organic producer survey third party regulatory administrators. Further details regarding independent variable operationalization and measurement are provided in the empirical chapters of this dissertation (Ch. 2 4). Table 1.6. Study independent variables and conceptual definitions Variable Chapter a Definition Independent variable of interest Third party administrator o rganizational form 2,3,4 A third designation as public, nonprofit, or private (for profit) T hird party administrator control variables Clients 2,3,4 Number of operations a third party administrator certifies as organic ACA member 2 Third party administrator identified as a member of the Accredited Certifiers Association Certification fees as a proportion of nonprofit administrator revenue 4 total organizational revenue Organic producer survey respondent control variables State HHI 3,4 State market concentration: The extent to which a small number of third party administrators account for a large proportion of certifying services in a state

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43 Variable Chapter a Definition Importance of perceived expertise 2 perception of their third party important factor in selecting that administrator Importance of perceived services 3 perception of their third party important factor in selecting that administrator Perceived third party administrator strictness 2,3 The extent to which a producer perceives their third party administrator as strictly interpreting the NOP regulations Profit motive 4 The extent to which a producer reports increased profits as being important in their decision to pursue organic certification Organic movement motive 2,3,4 The extent to which a producer reports supporting the organic movement as being important in their decision to pursue organic certification Regulatory assessment 3,4 regulations as organic standards Regulatory experience 2,4 complying with NOP regulations Predisposition towards laws 4 role of laws in ordering society Operation size 2,3,4 Pre NOP certification 4 Whether an operation held organic certification prior to NOP enactment in 2002 Certification scope 2,3,4 The organic certification types held by the producer (crops, livestock, handling, and/or wild crops) party administrator expertise; Chapter 3 = services; Chapter 4 = regulatory approaches

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44 Dissertation Overview This dissertation focuses on the relationship between a key characteristic of organic food regulation third party administrators organizational form as public, nonprofit, and private and differences in regulatory administration. The research is guided by the question: How does organizational form (public, nonprofit, private) affect third a regulatory program? Three facets of regulatory administration are investigated: third party administrator expertise, service s and regulatory approaches. Each of these facets of regulatory administration is examined in a stand alone chapter. Collectiv ely, the three studies offer an answer to provided in the chapter, alongside research limitations, contributions, and future research directions. Chapter II Who Knows Best? Public, N onprofit, and Private Expertise in the Administration of U.S. Organic Regulations This chapter investigates the relationship between third party administrator organizational form s and third party administrator expertise. Applying lessons from knowledge management studies indicating how organizational factors influence knowledge acquisition and transfer, the study takes up the question: To what extent is organization form (public, nonprofit, private) associated with third part y expertise in the administration of regulatory standards? Drawing on regulatee perceptions of third party administrator expertise, the findings indicate that nonprofit third party organic fo od regulation administrators exhibit higher levels of both regulatory and substantive expertise when compared to their public and private counterparts. No systematic differences in expertise are found

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45 between public and private third party administrators The findings shed light on how third party administrator organizational forms and other organizational characteristics may affect regulatory administration in cases of delegated regulatory authority. The study also highlights the relevance of knowledge management literature for regulatory and public administration studies. Chapter III Service Diversification and Service Quality Differences among Public, Nonprofit, and Private Third Party Administrators of U.S. Organic Regulations This chapter investigat es the relationship between third party administrator organizational forms and third party administrator service s The chapter makes the programs in which the administration of regulatory stand ards is deferred to multiple independent organizations in competition for regulatee clients draw attention to the service provision aspect of regulatory administration. Recognizing that organizational responses to competitive pressure often differ accor ding to organization form (public, nonprofit, or private), the study asks: To what extent do third party r egulatory administrator services differ according to administrator organizational form in the context of a competitive service provision ar rangement? Third party services are assessed in two manners. Service diversification is studied through the services that are evident on third party administrator websites. Regulatee client perceptions of service quality are studied through a survey of certified organic producers. The findings indicate systematic differences in service diversification and quality according to third party administrator organizational form. The study findings offer insights into the implications of competitive third party

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46 regulat ory arrangements, and show the promise of taking a service provision perspective on the administration of regulatory standards. Chapter IV Public, Nonprofit, and Private Regulatory Approaches in Third Party Regulatory Administration This chapter investiga tes the relationship between third party administrator organizational forms and third party administrator regulatory approaches. Based on the notion that third party arrangements draw attention to administrator organizational characteristics, the paper a sks: To what extent does organizational form (public, nonprofit, private) affect third the administration of uniform regulatory standards? A secondary analysis explores an economic facet of dimensional publi cness among nonprofit third party administrators. The study draws on regulatee survey data and uses multilevel analysis to account for how regulatory approaches vary across third party administrator characteristics, as well as according to respondent leve l attributes. The findings indicate that little systematic variation in regulatory approaches can be attributed to administrator organizational form The facet of regulatory approach in which organizational form appears to play a role is found in public third to their private counterparts. The paper discusses explanations for the limited relationship b etween third party organizational form and regulatory approaches, a nd suggests future research for better understanding the linkage between regulatory program design, administrator organizational characteristics, and program outputs.

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47 CHAPTER II WHO KNOWS BEST? PUB LIC, NONPROFIT, AND PRIVATE EXPERTISE IN THE ADMINISTR ATION OF U.S. ORGANI C REGULATIONS Abstract A presumption underlying the delegation of regulatory authority to organizations outside of regulatory agencies is that third party organizations possess or and hold them accountable for regulatory compliance. This study examines how third party expertise varies in the administration of US organic food regulations. Applying lessons from knowledge management studies, the study asks: To what extent is orga nization al form (public, nonprofit, private) associated with third part y administrators application of regulatory standards? Drawing on regulatee perceptions of third party administrator expertise, the findings indicate that nonprofit administrators exhibit higher levels of both regulatory and substantive expertise when compared to their public and private counterparts. No systematic differences in expertise are found between public and private administrator expertise The findings sh ed light on how third party administrator characteristics may affect the application of regulatory standards through delegated regulatory authority, and highlight the relevance of knowledge management literature for public administration studies.

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48 Introd uction In the study of regulatory administration, scholars are paying increasing attention to the delegation of regulatory authority to organizations outside of central government agencies. This scholarship documents a shift in some regulatory programs f through multiple levels of government and third party organizations (Black, 2002, 2008; May, 2002, 2007). Under such non traditional regulatory arrangements, regulatory agenc ies establish regulations through agency rule making but rely on indep endent outside organizations the third parties for the monitoring and enforcement of those regulations. A primary presumption underlying this delegation of regulatory authority is that third party administrators possess the requisite expertise, both in terms of their regulatory tasks and the substantive operations they oversee, to effectively monitor rd party administrators are increasingly characterized by variety of organizational forms, however, including organizations from across the public, nonprofit, and private sectors (van der Heijden, 2010; Levi Faur, 2011). As a consequence, third party admi nistrators can vary widely in regards to organizational factors that may affect administrators acquisition and use of organizational expertise. Expertise is centrally linked to many aspects of organizational capacity within public administration literature (Page, 2010; Wiig, 2002). The ability to access and apply knowledge pertinent to programmatic operations is held as important not only to orga nizational effectiveness, but also to the realization of policy goals (Weber &

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49 Khademian, 2008). Expertise is particularly relevant in a regulatory context, in which an information asymmetry often exists between the organizations that are charged with reg ulatory administration and the firms that they are responsible for monitoring (Macher, Mayo & Nickerson, 2011). Addressing this asymmetry requires a regulatory administrator to poses proficiency in the inspection and enforcement practices of a particular regulatory program, combined with a familiarity with regulatee practices and behaviors, to identify and appropriately sanction for instances of noncompliance (May, 2007; Schol regulatory administrators can have an impact on regulatee compliance (May, 2005; Winter & May, 2001), indicating that administrators that are perceived as having higher levels of expertise may be more effective in furthering regulatory program objectives. Given the variety of organizational forms that characterize third party administrators combined with the importance of expertise for effective regulatory administration this study is concerned with how regulatory administrator expertise varies as a function of organizational form. Although it is recognized in the public administration literature that central functions of public sector organizations are developing and s upplying expertise (Luen & Al Hawamdeh, 2001; Wiig, 2002), with a Willem & Buelens, 2007) management of expertise in the public sector has received little scholarly attenti on, and no systematic comparisons of how expertise differs across organizational forms were identified at the time of this study. A body of literature in organization and management studies, however, examines how knowledge is acquired, managed, and transf erred within and among organizations (e.g.: Hislop, 2013),

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50 shedding light on how differences in organizational characteristics associated with organizational form might influence the relative expertise third party administrators leverage in the execution o f their regulatory duties. The study draws on knowledge management literature to examine how expertise differs between third party regulatory administrators through an investigation of the entities charged with administering the United States Department standards for the practices that are allowed and prohibited in the production of food party administrators from across the public, nonprofit, and private sectors to certify the study is: To what extent is organization form (public, nonprofit, private) associat ed with third party administrators expertise in the a pplication of regulatory standards? The study draws on regulatee perceptions of third party administrator expertise, while taking into account third party administrator and regulatee characteristics th at might influence how a regulatee perceives the expertise of their regulatory administrator The study is outlined in six sections. The first section integrates lessons from the public administration literature and knowledge management studies to theo retically link organizational form and relative levels of organizational expertise. The second section provides background on the study context party regulatory arrangement. The third section presents the study design, data collection m ethods and measures. The fourth section presents study findings. A discussion of the findings is provided in the fifth section, followed by future research opportunities for better

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51 understanding the links between third party regulatory administrator org anizational form, expertise, and program outputs Expertise, Organizational Form, and Knowledge Management Expertise is held to be reflective of specialized knowledge within a defined subject area that individuals acquire through education, training, and experience (Page, 2010; Van der Wal, Graff, Lasthuizen, 2008). According to this definition, expertise is a nalogous to knowledge, but as it relates to a specific topic. 10 Two types of expertise are particularly relevant in the context of regulatory administration (Scholz, 1994), and are thus accounted for in this study. The first is expertise in mandated regul atory tasks, knowledge and skills that regulatory officials exhibit regarding the regulatory directives that they are charged with enforcing and associated monitoring an d enforcement procedures. The second is expertise in the substantive operations that regulatory administrators are responsible for monitoring at officials exhibit regarding the operative and commercial practices associated with the industry being regulated. This study examines the extent to which expertise both regulatory and substantive differs as a function of third party administrator o rganizational form. Knowledge management studies indicate a number of organizational factors that may 10 The conceptualization of expertise used in this study follows the approach of Nicolini, Gherardi, and Yanow (2003) that considers knowledge not as a process, but rathe r as an object that can be possessed, managed, and shared. Knowledge and expertise, therefore, are valuable organizational assets that can reside within, and be shared among, organization members as a form of intellectual capital (Bates & Robert, 2002; We ber & Khademian, 2008).

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52 notable intersections with public administration literature on differ ences between with external knowledge sources influence the level of external expertise that an organization can access, receive, and internalize (Easterby Smith, L yles & Tsang, 2008). encourage intra organizational knowledge sharing and dissemination (Willem & Buelens, 2007). By taking into account how these factors typically diff er across organizational forms, expectations can be drawn regarding the relative levels of expertise that public, nonprofit, and private sector administrators leverage in the execution of their regulatory duties. External Sources of Expertise A third par ty administrator s associations with external knowledge sources can influence the level of regulatory and substantive expertise available to the organization (Easterby Smith, Lyles & Tsang, 2008). In the knowledge management literature, such associations are characterized as more formally organized networks of competitor and/or collaborator organizations, or less formal relationships with individuals and Davenport, 2001; Powel l, Koput & Smith Doerr, 1996; Wenger, McDermott & Snyder, 2002). The manners in which these associations vary by organizational form provide an indication of the expertise that a third party administrator can access, internalize, and apply in the executio n of their regulatory duties.

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53 Public sector organizations often play central managerial and coordination roles in the governance networks to which they belong, resulting in networks that are collaborative in nature but restricted in terms of network member ship These networks resembl e knowledge management literature (Herranz, 2007; Weber & Khademian, 2008). 11 Because they are often established with an express interest in promoting information s haring and learning, collaborative networks are generally more conducive to inter organizational knowledge transfer when compared with networks established among competing organizations. Networks in which membership is restricted and actively managed by a central firm or government organization, however, tend to display lower such as those to which nonprofit organizations are likely connected (Carlsson, 2003; Easterby Smith, L yles & Tsang, 2008). Nonprofit organizations develop a variety of organizational and individual relationships in pursuit of financial and human resources, for example through external funding, private contributions, or membership fees (Chang & Tuckman, 1994; Fischer, Wilsker, & Young, 2011; Moore, 2000), and organizational partnerships and volunteers (Frumkin, 2002; Leete, 2006). These relationships are reflected in open collaborative networks includ ing membership and volunteer bodies resembling what k nowledge networks are held to be the effective at supplying knowledge because they expose an 11 Collaborative networks established to promote information sharing and learning are 1997),

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54 organization to the greatest number and variety of knowledge sources, are often ch aracterized by greater flexibility to allow for communication across boundaries, and are associated with more intense communication related to cooperative challenges and tasks (Cross & Parker, 2004; Grover & Davenport, 2001; Willem & Buelens, 2007). 12 Open networks consisting of individuals organized around a shared interest communities of practice appear to be the most effective network form for transferring instructions or codified data (Wenger, McDermott & Snyder, 2002). Private sector organizations concerned with gaining and maintaining competitive advantage are most likely to engage in networks that are compet itive in nature (Herranz, 2008). In competit ive network s, inter organizational knowledge sharing is generally limited to strategic alliances in which organizations, through mutual knowledge sharing, seek win win scenarios that provide allied organizations simultaneous advantages (Easterby Smith, Lyl es & Tsang, 2008; Hamel, 1991). 13 As a result, knowledge acquisition in competitive networks is low, something private sector organizations may attempt to address by establishing limited relationships with individuals and communities of practice, particula rly through relationships with customers (Carlsson, 2003). 12 The extent to which knowledge transfer is effective in networks is contingent on generally associated with less ambiguous knowledge content, organizational objectives that align, and a high degree of individual member social ties that span network organization borders (Carlsson, 2003; Easterby Smith, Lyles & Tsang, 2008). 13 Such win win situations have been shown to be vulnerable to selectiv e knowledge sharing that leads to a more formidable alliance member receiving a disproportionate amount of alliance benefits (Becerra, Lunnan & Huemer, 2008; Hamel, 1991).

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55 Expertise Transfer and Organization Structure The internal structure of a third party regulatory administrator may influence the extent to which expertise is shared among organization members by i mpacting the types and extent of communication and coordination that occurs within the organization (Carlsson, 2003; Willem & Buelens, 2007). Organizational structure may vary in the extent to which it is centralized the degree to which authority is con centrated. Organizational structure can also vary in the extent to which it is formalized the degree to which organization practices and functions are codified in policies and prescribed procedures (Kim & Lee, 2005; Mintzberg, 1979; Rainey, 2003). Publ ic administration scholars have long documented differences in organization 1983, 1989; Rainey, Backoff & Levine, 1976), and these differences suggest manners in which in tra organizational knowledge sharing and dissemination may differ across public, nonprofit, and private sector third party regulatory administrators Public sector organizations are generally characterized by an emphasis on accountability and equitable tr eatment, and associated political oversight, resulting in (Nutt, 2000, pg. 81), rigid operating rules, and regulatory and accountability procedures (Boyne, 2002; Nutt & Backoff, 1993; Perry & Porter, 1982; Rainey, Backoff & Levine, 1976). Higher levels of centralization and formalization limit the number of authoritative information sources from which knowledge is disseminated, and the pathways by which knowledge can be spread. As a result, formal and centralized organization internal structures are thought to impede intra organizational knowledge

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56 sharing and dissemination (Carlsson, 2003; Claver Cortes, Zaragoza Saez & Pertusa Ortega, 2007; Willem & Buelens, 2007). N onprofit organizations, while exhibiting considerable intra sectoral variation, are typically characterized by more decentralized and less formal organization structures than public sector organizations (Euske, 2003; Nutt & Backoff, 1993 ). At the same tim e, Boards of Directors governance and related constraints may result in more formal internal structures than found in the private sector. Empirical research has found private sector organization internal structure to vary considerably, reflecting the grea ter flexibility that private sector organizations have in terms of structural centralization and formalization in comparison with public and nonprofit organizations (Nutt & Backoff, 1993; Wamsley & Zald, 1973). In the knowledge management literature, dece ntralization and informal internal structures are generally associated with higher levels of intra organizational knowledge transfer, suggesting that nonprofit and private sector organization internal structures may be more effective at intra organizationa l knowledge sharing when compared with their public sector counterparts. Decentralization is associated with a greater number of communication channels consequently improv es the quality and quantity of ideas and information that may be lateral coordination is associated with greater flexibility in transferring relevant knowledge across de partmental units, a wider intra organizational diffusion of knowledge, and stronger inter personal relationship characteristics that are associated

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57 with knowledge transfer such as personal connectivity and trust (Claver Cortes, Zaragoza Saez & Pertusa Orte ga, 2007; Cross & Parker, 2004; Willem & Buelens, 2007). Informal internal structures allow for voluntary, spontaneous coordination that encourages a greater level of personal connectivity and social ties that are conducing to knowledge transfer (Bate & R obert, 2002; Willem & Buelens, 2007). Informal structures have also been shown to be more effective in the transfer of tacit knowledge, that is often best transferred via personal contact and experience (Claver Cortes, Zaragoza Saez & Pertusa Ortega, 2007 ; Hansen, 1999). Theoretical Expectations linking Organizational Form & Expertise The preceding discussion of how organizational factors are expected to differ as a function of organizational form, and the impact these organizational factors have on orga nizational knowledge acquisition and intra organizational transfer, provide an indication of how regulatory and substantive expertise might differ between public, nonprofit, and private sector third party administrators. These differences and the resultin g theoretical expectations are summarized in Table 2 .1. Table 2.1. Generalized differences between public, nonprofit, and private organizational forms and the theorized relationship between organizational form and third party administrator expertise Organizational form External network characteristics Organization internal structure Expected relative level of organizational expertise Public Closed collaborative Formal centralized Regulatory: Low Substantive: Low Nonprofit Open collaborative Less formal decentralized Regulatory: High Substantive: High Private Closed competitive Variable Regulatory: Moderate Substantive: Moderate

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58 Nonprofit organizations, with connections to open collaborative networks and expected to have the highest access to external knowledge. Furthermore, nonprofits are less likely to be hampered by formal centralized internal structures in the intra organizational dissemination of knowledge compared to their public sector peers Wit h the greatest access to knowledge and modest barriers to intra organizational knowledge sharing nonprofit third party administrators are likely to exhibit the highest levels of expertise. The resulting theoretical expectation is worded to recognize the d ata employed in this study regulatee perceptions of third party administrator expertise: H1: Nonprofit third party administrators will be perceived as exhibiting the highest levels of regulatory and substantive expertise, compared to their public and private sector counterparts. A tendency towards closed collaborative networks and more formal, centralized internal organizational str uctures suggests that public sector organizations will experience the greatest barriers in knowledge acquisition and intra organizational knowledge dissemination. Consequently, public sector third party administrators are likely to display the lowest leve ls of expertise. Private sector organizations, while benefiting from flexible internal structures, are restricted in their acquisition of knowledge by closed competitive networks. The potential to leverage limited consumer connections, however, suggests that private sector organizations may be able to access knowledge not readily available to their public sector peers The resulting theoretical expectation is:

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59 H2: Private third party administrators will be perceived as exhibiting higher levels of regulat ory and substantive expertise than their public sector counterparts. These hypothesized differences in expertise between public, nonprofit, and private sector third party administrators are examined here in the context of third party administration of NOP regulations. The extent to which such expectations generalize to other third party regulatory arrangements, or apply in other regulatory program design contexts, is returned to in the conclusion. Regulatory and substantive expertise measures and data ar following a description of the NOP third party regulatory arrangement in the next section. Third Party Monitoring of U.S. Organic Food Regulations As required by the 1990 Organic Foods Production Act (OFP A), operations that certification and adhere to national organic standards. 14 In 2012, this included 12,220 US based certified organic producers. Reflecting the diversity of US ag riculture, generally, certified organic operations produce a wide variety of products, and are categorized according to four organic certification types: crops, wild crops, livestock and handling. The NOP program is based on International Organization for Standardization principles for third party accredita tion and certification systems (see Figure 1.2) As such, the NOP is responsible for accrediting third party organizations, to serve as 14 Operations that earn less than $5,000 a year from organic product sales are exempt from this requirement.

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60 regulatory administrators These third party administrators in turn certify operations according to national organic regulations, and then inspect certified operatio ns for regulatory compliance. The NOP accredited 48 US based accredited third party administrators as of 2013. These organizations vary widely in the n umber of operations that they certify, ranging from just over a dozen (Monterey County Organic) to 2,800 (California Certified Organic Farmers [CCOF]). Seventeen are private, for profit organizations, eleven are nonprofits, and 20 are from the public sect or. Public sector administrators can be further broken down into three different types: 17 fall under state government programs, such as the Colorado Department of Agriculture Organic Program, two fall under California county governments, and one operates out Organic food production has exhibited double digit year over year growth since the 1990s, accounting for a $59 billion market (Sahota, 2012). This sustained growth highlights the practical impo rtance of the NOP and understanding the implications of its third party regulatory arrangement. This paper seeks to provide a better understanding of the NOP, and the factors that influence the organizational capacity of third party regulatory organizatio ns generally, through an investigation of difference in Study Design For this study, data on NOP third party administrators substantive expertise are drawn from a survey of regulated operations (certified organic producers), in which regulatees were asked several questions regarding the expertise of their third party regulatory administrators This section first discusses the

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61 regulatee sample. Next, study variable s and measures are presented. O perationalizations for all measures are provided in Appendix D Regulatee Sample Organic third party administrator expertise data were collected through an online survey of NOP certified organic producers in the winter of 2 013 2014. All domestic certified operations holding any combination of crops, wild crops, and livestock certifications for which the USDA listed a valid email address were included, representing approximately half of all certified organic producers. 6,27 3 domestic certified organic producers were sent a survey request. Responses were received from 1,055 producers for a response rate of 17 percent. Three important considerations regarding the sample require attention, as they limit the generalizability of analysis results considerably. First, the USDA list of certified organic producer emails is made up of operations certified by 41 of the 48 domestic accredited third party administrators The study results, therefore, cannot be generalized to the seve n administrators missing from the sample. Second, operations for which the USDA does not report a valid email address were excluded from the percent. Farmers are a n otoriously difficult population to survey, and a response rate of 17 percent is consistent with other farmer survey research (Pennings, Irwin & Good, 2002), however, the relatively low response rate suggests the study findings are particularly susceptible to nonresponse bias. Three steps were taken to gauge the impact of nonresponse bias in the study. First, a wave analysis was conducted based on the assumption that the answers of

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62 survey late responders are more likely to approximate the answers of non res pondents than those of individuals that readily respond to survey requests (e.g.: Kauppi & van Raaij, 2014; Rainey, Pandey & Bozeman, 1995). The analysis compared the responses of early survey respondents to those that responded after follow up survey req uests measure responses of different survey waves were found ( p <0.05). Second, 20 non respondents were contacted by phone and verbally administered five survey questions. Nonparametric tests (due to the extreme difference in group size) comparing these responses with those of the online sample revealed no statistically significant differences ( p <0.05). Although these do not eliminate the possibility of nonrespo nse bias impacting the findings of the study, the results suggest that the threat of nonresponse bias may be small. USDA data indicates a fair, but not perfect, representation of the U.S. certified organic size relative to the size of other operations producing similar products, 51 percent ports that a majority of organic farmers are characterized by relatively small operations (Greene, Slattery, & McBride, er organic farmers were appropriately incorporated in study findings. The reported location s of survey respondents suggest a fairly representative geographic distribution of certified organic operations, with the exception of underrepresentation among Mid west organic farmers, at 16 percent of

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63 respondents. The highest percentage of survey respondents were from the West (29 percent), followed by the Northwest (22 percent) and Northeast (18%). Collectively, the Southwest and Southeast made up 15 percent of the survey respondents. Of the four USDA organic certification types, the vast majority held organic crop certification, 17 percent held organic livestock certification, and less than four percent held organic certification for wild crops. The most freque ntly reported commodity types produced by survey respondents were vegetable, grain, fruit, and herb crops. A much smaller percentage of respondents reported eggs, dairy, poultry, or livestock commodities. The breakdown of survey respondents by certificat ion and commodity types roughly mirrors production trends in U.S. organic food production writ large (Dimitri & Oberholtzer, 2009; Greene, Slattery, & McBride, 2010). Study Variables and Survey Measures Third party administrator expertise was measured by asking regulatee survey respondents to indicate their level of agreement with statements regarding their third party administrators point Table 2 .2 Because the attributes and behaviors of inspectors the regulatory actors that regulatees are most frequently in contact with generally reflect but may sometimes diverge from the attributes and behaviors of the regulatory organizations they represent (May & Burby, 1998; Scholz, 1994), separate questions queried survey respondents about the expertise o f their third party administrator organizations generally, and their inspectors, specifically.

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64 Table 2.2. Regulatory and substantive expertise construct measures Construct Query Regulatory expertise My certifier is highly competent regarding the National Organic Program regulations. My inspectors are highly competent regarding the National Organic Program regulations. Substantive expertise My certifier understands the intricacies of my organic business. My inspectors understand the intricacies of my organic business. NOTE: Respondents were asked to indicate their level of agreement with each statement on a five The primary independent variable of interest third party administrator organization form was operationalized as a third party administrator designation as public, nonprofit, or private. Accredited third party administrators were also identified as members (or not members) of the Accredited Certifiers Association (ACA) the principle organic certification trade organization with the purposes of Program, third party monitor training, support and networking opportunities and 15 In an attempt to account for organizational attributes other than organization form (public, nonpr ofit, private) that might impact third party administrator expertise, such as third party administrator size, data regarding the number of operations that each accredited third party administrator certifies were gathered from the NOP database. Because this study relies on regulatee survey perceptions to measure third party administrator expertise, data on survey respondent characteristics were also included in the analysis. First, the more a producer values expertise in selecting from among 15 A publicly available list of all ACA members is available at the ACA website ( http://www.accreditedcertifiers.org/ ).

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65 organic regulat ion administrator choices, the more likely the producer is to report high perceptions of third party administrator expertise. To account for this, survey respondents were asked to indicate the extent to which expertise was important in their selection of organic administrator pursuing organic certification may impact their perceptions relative to the administration of regulations. A survey measure regarding a respondent ccount for the extent to which supporting the organic movement motivates a respondent to pursue organic certification. Third, the challenges respondent s encounter in complying with regulations may impact their perception of regulatory administration, ther efore a survey measure asked respondents to indicate the level of difficulty they experience in maintaining compliance with NOP regulations was included. Similarly, the stringency with which third party administrators enforce regulations may affect a res expertise. A third party administrator interprets NOP regulations. Fifth, as a proxy for operation characteristics such as regulatee professionalization and operational sophistication, an operation size question was included, measured on a five each respon dent held were gathered, to account for differences in expertise perceptions across certification types.

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66 Findings The hypotheses outlined in this paper suggests that when comparing the expertise of public, nonprofit, and private sector third party administrators in the administration of uniform regulatory standards nonprofit third party administrators are likely to exhibit the highest levels of regulatory and substantive expertise (H1), followed by private third party administrators (H2), with publi c third party administrators exhibiting the lowest levels of expertise. Table 2. 3 presents descriptive findings for the regulatory and substantive expertise measures according to organizational form. 16 According to these descriptive findings, public sect or third party administrators and inspectors exhibit the lowest relative level of regulatory and substantive expertise, private sector administrators exhibit the highest, and nonprofit sector level of expertise is situated between that of t heir public and private sector counterparts across all measures. Practically, the differences in expertise between the sectors are minor, on the order of a fraction of a standard deviation. Differences between the mean expertise values were found to be s tatistically significant ( p <0.05) for one measure third party administrator regulatory expertise. 16 Relatively high correlations ( r = 0.58 0.78) between the four dependent variables indicate strong inter measure relationships. A principal components factor analysis identified two factors underlying the four measures based on the underlying factors, the administrator and inspector meas ures of each type of expertise could be justifiably combined resulting in a single measure for regulatory expertise and a single measure for substantive expertise. Because of the clear conceptual distinction between the attributes and actions of regulator y organizations (level of analysis = organization) and the inspectors that represent them (level of analysis = individual inspector; May & Burby, 1998; Scholz, 1994 ) the results of individual measures as distinct variables are reported and analyzed here.

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67 Table 2.3. Regulatory and substantive expertise construct descriptive statistics by third party administrator organizational form Mean Public Mean Nonprofit Mean Private Overall Mean SD Min Max Third party administrator regulatory expertise 1.16 1.31 1.32 1.26 0.76 2 2 Inspector regulatory expertise 1.11 1.17 1.25 1.17 0.81 2 2 Third party administrator substantive expertise 0.76 0.84 0.95 0.84 0.96 2 2 Inspector substantive expertise 0.80 0.90 1.00 0.90 0.97 2 2 NOTE: Values reflect mean respondent agreement with construct measure queries (see Table 2. 2); Higher values correspond with higher reported levels of expertise; = statistically significant differences at p <0.05 M ultiple regression analyses were next conducted to account for the influence that third party administrator characteristics other than organizational form, as well as party administrator expertise. Robust standard errors with clustering by third party administrator were used because co llecting administrator expertise data from multiple clients per third party administrator violates the independence of observation assumption underlying basic linear regression (Wooldridge, 2012). 17 Dummy variables for nonprofit and private third party administrators represent third party administrator organizational form, with public sector administrator serving as the 17 Fixed effects analyses were not used due to the constant relationship between individual third party administrator and organization form. Multilevel and ordered logit analyses with clustering by third party administrator were also conducted, with no sub stantial differences from the reported results. OLS results are reported for ease of interpretation.

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68 with non members constituting the reference group. Th e number of operations that a third party administrator certifies as organic is log transformed due to the wide range of operations by third party administrator and to facilitate interpretation of the results. Analysis results are reported in Table 2. 4. The overall variance explained in each model ranges from 29 percent in the case of inspector substantive expertise, to 43 percent in the case of third party administrator regulatory expertise. The results indicate that taking into account the influence o f third party administrator and survey respondent characteristics, nonprofit third party administrators exhibit higher levels of both regulatory and substantive expertise than their public sector counterparts. The difference is statistically significant a t the p <0.05 level for three expertise measures ( administrator regulatory expertise, administrator substantive expertise, and inspector substantive expertise), and statistically significant at the p <0.10 level in the case of inspector regulatory expertise. In contrast, the difference between public and private third party administrator regulatory expertise is not statistically insignificant for any of the expertise measures.

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69 Table 2.4. Farmer perceptions of third party administrator and inspector expertise as explained by administrator and farmer attributes A dministrator regulatory expertise Inspector regulatory expertise A dministrator substantive expertise Inspector substantive expertise Nonprofit administrator (Reference = Public) 0.15 (0.06) ** 0.11 (0.06) .018 (0.09) ** 0.21 (0.09) ** Private administrator (Reference = Public) 0.08 (0.06) 0.08 (0.06) 0.10 (0.07) 0.13 (0.10) ACA member 0.08 (0.05) 0.09 (0.05) 0.24 (0.10) ** 0.27 (0.10) ** Number of clients (Log transformed) 0.02 (0.03) 0.06 (0.02) ** 0.11 (0.03) *** 0.10 (0.03) *** Importance of expertise 0.12 (0.02) *** 0.11 (0.02) *** 0.18 (0.03) *** 0.17 (0.03) *** Organic movement motive 0.05 (0.02) ** 0.06 (0.02) ** 0.11 (0.02) *** 0.11 (0.02) *** Difficulty maintaining compliance 0.03 (0.02) 0.05 (0.03) ** 0.09 (0.03) *** 0.07 (0.03) ** Perceived strictness 0.54 (0.04) *** 0.50 (0.04) *** 0.45 (0.04) *** 0.45 (0.05) *** Operation size 0.02 (0.02) 0.01 (0.03) 0.01 (0.03) 0.02 (0.04) Handling scope 0.05 (0.04) 0.07 (0.06) 0.05 (0.08) 0.07 (0.08) Constant 0.12 (0.22) 0.38 (0.23) 0.05 (0.31) 0.24 (0.28) F 128*** 155*** 124*** 97*** R 2 0.43 0.33 0.31 0.29 n 817 815 812 812 NOTE: *significant at p < 0.10, ** significant at p <0.05, ***significant at p <0.01; Robust standard errors in parentheses, clustered by administrator ( n = 41) Third party administrator ACA membership shares a statistically significant relationship with producer perceptions of both third party administrator and inspector substantive expertise, indicating that ACA membership is associated with lower levels of expertise concerning organic p ractices. The number of certification clients a third party administrator has is negatively associated with all third party administrator

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70 expertise measures, suggesting that the more operations a third party administrator certifies, the less likely they a re to be perceived as exhibiting regulatory and substantive expertise. A number of the producer respondent characteristic variables displayed statistically significant relationships with perceptions of third party administrator expertise. Predictably, t he more a producer reported valuing expertise in the selection of their administrator the more likely they were to perceive higher third party administrator regulatory and substantive expertise. Higher levels of motivation to support the organic movement through certification are also positively associated with both types of expertise, as is respondent perception that their administrator strictly interprets the NOP regulations. The relative difficulty a respondent experiences in maintaining compliance wi th the NOP regulations is negatively associated with expertise, indicating that the more difficulty a respondent experiences the lower they are likely to rate their third party expertise. Neither operation size nor handling certification t ype have statistically significant relationships with respondent perceptions of third party administrator expertise. To summarize the analysis findings, partial support for the expected relationships between third party administrator organizational form and expertise were indicated. The findings clearly indicate that nonprofit third party administrators exhibit higher levels of regulatory and substantive expertise than their public and private counterparts. Countering study expectati ons, no apparent differences were party administrator expertise. These findings are discussed in the following section.

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71 Discussion This study investigated the extent to which organizational form (public, nonprofit, or private) affects third party administrators expertise in the application of regulatory standards. The empirical setting for the investigation was organic food regulation in the U.S., drawing on regulatee perceptions of third party administrator substantive (i.e.: pertaining to organic practices) and regulatory expertise. The study applied knowledge management literature to develop expectations regarding the relative levels of expertise that might be exhibited by public, nonpr ofit, and private sector third party administrators Based on the assumptions that nonprofit third party administrators can more easily access external expertise sources through open collaborative networks, and more easily transfer expertise through less formal and decentralized organizational structures, it was suggested that nonprofit administrators are most likely to exhibit high levels of expertise. The findings of the study support this expectation. It was also theorized that private sector third p arty administrators flexibility in organizational structure would facilitate intra organizational knowledge transfer, resulting in higher levels of expertise than their public sector counterparts. This expectation was not supported by study results, as n o differences were found between private and public sector third party administrators substantive or regulatory expertise. One explanation for these results is that regardless of the effectiveness of intra organizational knowledge transfer in private thi rd party administrator organizations, it may not be sufficient to adequately make up for the lack of access to external expertise resulting from competitive network connections. Another possible

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72 explanation is that public third party administrators are less hampered in intra organizational knowledge transfer by formal, centralized internal structures than assumed in this study. Such explanations offer future research opportunities for examining how organizational expertise may be influenced by organizat ional characteristics. Examining such explanations would be aided by the incorporation of network characteristic and organizational structure data, which is addressed further in the limitations section below. To account for how third party administrator e xpertise might vary as a result of organizational characteristics other than organizational form, such as organization size, the number of operations that an administrator certifies as organic was included in the analysis. The results indicate a negative relationship between third party administrator size (as measured by number of certified operations) and expertise. These findings counter some studies from the knowledge management literature that find larger organizations exhibit higher knowledge managem ent capacity (Wijk, Jansen, & Lyles, 2008). The findings are consistent with the theoretical logic of this paper, however, if larger organizational size is associated with more rigid, bureaucratic structures that can impede intra organizational knowledge transfer (Frost, Birkinshaw, & Ensign, 2002). An interesting finding from analysis results is that third party administrator membership in the ACA, an organic certifier professional organization, is negatively associated with both regulatory and substantiv e expertise. This is somewhat surprising, given that an express goal of the ACA is to facilitate the sharing of information related to organic food practices and regulation (ACA, 2014). One

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73 explanation for the find is that it is indicative of an endogeno us relationship that third party administrators with lower levels of expertise self select into the ACA precisely because they seek to increase relatively low levels of organizational knowledge. Alternatively, the finding could reflect a lesson drawn fr om the knowledge management literature earlier that formal closed networks are less effective at knowledge transfer than less formal, open networks, particularly when network ties are between competitors (Easterby Smith, Lyles & Tsang, 2008). While a c entral premise in this paper is that organizational factors play an important role in explaining differences in third party administrators expertise, survey respondent attribute s were included in the analysis to account for variations in regulatee percept expertise is voluntary regulatory program. Fur with regulations appears to have a negative impact on perceptions of third party administrators f competence on the part of regulatory administrators can have a measurable impact on regulatee compliance (May, 2005; Winter & May, 2001), this finding supports the recommendation that both regulatory stringency and regulatee motivation be taken into acco unt in the examination of regulatory compliance (Potoski & Prakash, 2011).

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74 Limitations and Directions for Future Research There are several limitations of this study that deserve mention and represent opportunities for future third party administrator expertise research. First, it is and transfer external network characteristics and organizational structures were not measured in this study. Rather, assumptions were developed from the public administration literature regarding how these characteristics vary by organizational form. Measuring and accounting for how these mechanisms vary in the empirical organization sample under study would provide a better understand ing of not just how expertise varies as a function of organizational form, but could help provide indications of why. Incorporating such data in future analyses offers a promising next step in leveraging the intersection of knowledge management and public administration theory. Second, data were collected from a considerably limited sample of certified organic producers. The sample was made up of certified operations for which the USDA lists a valid email address approximately half of all USDA o rganic operations. The impact of this limitation is minimized by the national scope of the sample, however, the results are nonetheless constrained to half of the USDA certified organic producer population. More importantly, the findings are based on a s urvey with a response rate of 17 percent. As noted earlier, a response rate of 17 percent is consistent with other farmer survey research, as farmers are a notoriously difficult population to survey (Pennings, Irwin & Good, 2002), and a comparison of samp le characteristics with

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75 available USDA population data suggests a fairly representative sample. The restricted sample and response rate, nonetheless, preclude broad generalization of study findings. Finally, the data used in this study regulatee perce ptions of third party administrator expertise represent both a limitation and strength of the study. Regulatee perceptual date diverges somewhat from past studies of regulatory administration. Cross sectional survey data does not provide, for example, the rich descriptive data captured by in depth case studies (e.g.: Hawkins, 1984; Hutter, 1997). Additionally, surveying regulatees limits the collected data to third party characteristics that are observed, remembered, and reported by regulated entities A strength of the approach over past studies that have relied on self reported regulator data (e.g.: Gormley, 1998; May & Burby, 1998; May & Winter, 2000), however, is that regulatees may face fewer pressures to report higher levels of expertise in mann ers that could bias study findings. Future research can compare expertise measurement approaches to gauge the empirical validity of different data types. Conclusion This study examined the extent to which organizational form (public, nonprofit, private) is association with third part regulatory administrators expertise in the application of regulatory standards. Organizational form and expertise were linked theoretically through differences in organizational factors identified by the knowledge management literature as being important to knowledge acquisition and transfer. Comparing regu latee perceptions regarding the expertise of U.S. organic food regulation third party administrators study findings indicate that nonprofit third party administrators exhibited the highest levels of both substantive and regulatory

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76 expertise, while no sign ificant differences were found between the expertise of public and private administrators The primary contribution of this study is to our understanding of third party regulation. The delegation of regulatory authority to third party administrators is increasingly common in a variety of regulatory areas, including forestry (Meidinger, 2006; Pattberg, 2005), health care (Relman, 1991), and food safety (Havinga, 2006). An assumption made under such delegation is that the entities charged with regulatory administration hold the requisite expertise to examine the regulated processes in question and effectively apply regulatory standards. With the increased presence of varied organizational forms assuming regulatory functions, concerns have been raised ove r the levels and types of expertise that different organizational forms may possess, or more importantly, lack (May, 2007). In particular, van der Heijden (2008, 2010) suggests that public sector administrators reflect higher levels of what this study ref ers to as regulatory expertise, while private sector administrators may have higher levels of substantive expertise. The findings of this study suggest that, in the case of U.S. organic food regulation, such concerns may not be warranted. irical context is likely a key factor in explaining the results of this study. For example, organic food production as an industry has historically been characterized by tightly networked producer communities (referenced in this study as (Hassanein, 2003). As a consequence, nonprofit third party administrators have played a central role in the development of the organic food industry and organic food regulation (Bostrm & Klintman, 2006). The extent to which the relatively high levels

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77 of expertise found to be exhibited by nonprofit administrators of organic food regulation hold through changes in the organic food industry over time, or for other industries in which nonp rofit organizations have not played such an integral role, offer questions for advancing knowledge in the delegation of regulatory authority across contexts. A second contribution made by this study is the incorporation of knowledge management literature t o explain how expertise may differ according to organizational form. Public administration literature recognizes that public sector organizations are often principally established to develop, provide and apply knowledge (Luen & Al Hawamdeh, 2001; Wiig, 20 02), however, limited attention has been paid in this knowledge management compares to that of other organizational forms. This study joins a few prior studies (Bate & Rob Rowland, 2004; Willem & Buelens, 2007) in demonstrating that the lessons drawn from knowledge management studies can be effectively leveraged in the examination of public administration questions. Further integra tion of knowledge management and public administration theory thus offers the potential not only of improved understandings of regulatory delegation, but of knowledge and expertise as pivotal elements of public program delivery.

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78 CHAPTER III SERVICE DIVERS IFICATION AND SERVIC E QUALITY DIFFERENCE S AMONG PUBLIC, NONPROFIT, AND PRIVA TE THIRD PARTY ADMINISTRATORS OF U.S. ORGANIC REGULATIONS Abstract The study of regulatory administration has long focused on the stringency of regulatory standards and the enforce ment practices of regulators. This paper makes programs in which the administration of regulatory standards is deferred to multiple independent organizations in competition for regulatee cl ients draw attention to the service provision aspect of regulatory administration. Recognizing that organizational responses to competitive pressure often differ according to organization form (organizational ownership as public, nonprofit, or private), the study asks: To what extent do third party r egulatory administrator services differ according to administrator organizational form in the context of a competitive service provision arrangement? The question is examined in the context of third party a dministration of U.S. organic food re gulations. Third party services are assessed in two manners. Service diversification is studied through the services that are evident on third party regulatory administrator websites. Regulatee client perceptions of service quality are studied through a survey of certified organic producers. The findings indicate systematic differences in service diversification and quality according to third party administrator form. The study findings offer insights into the impli cations of

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79 competitive third party regulatory arrangements, and show the promise of taking a service provision perspective on the administration of regulatory standards. Introduction The study of regulatory administration has long focused on the stringency of regulatory standards and the enforcement practices of regulators. Contemporary regulatory arrangements, however, call for the consideration of regulatory administration from alte rnative perspectives. This paper makes the case that programs in which the administration of regulatory standards is deferred to multiple organizations independent of a central government agency in compe tition for regulatee clients draw attention to the service provision aspect of regulatory administration. As third party administrators emphasize organizational services to attract and retain regulatee clients, differing third party administrator organi zational characteristics may result in a diversity of services being offered in the administration of regulatory standards and systematic variances in service quality. Traditional regulatory programs rely on government agency control over a regulated in dustry through rule making and hierarchical enforcement of required rules (May, 2002; Selznick, 1985). Competitive third party regulatory arrangements are among the more dramatic innovations on this design observed in the regulatory literature (Black, 200 2, 2008; Havinga, van Waarden & Casey, 2015; May, 2002). Following arguments associated with New Public Management (NPM), competitive third party arrangements are held to encourage client relevant services and higher service quality through an emphasis on efficiency, customer satisfaction, and

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80 performance (Barzelay, 1992; NPR, 1993; Osborne & Gaebler, 1993). However, organizational responses to competitive pressures often vary based on the characteristics of the organizations in question (Henderson & Mitc hell, 1997), indicating that program administration through competing organizations can lead to unintended variation in program services. In the context of regulatory administration such arrangements may also introduce incentives to provide a diversity of services at the cost of obscuring regulatory program objectives (Black, 2002; van der Heijden, 2010a, 2010b) Furthermore, in the case of a multidimensional construct such as organizational performance (Boyne, et al., 2005; Sowa, Selden & Sandfort, 2004) services while discounting others (Amirkhanyan, Kim & Lambright, 2008). A notable manner in which third party organizations can differ is organizational form organizat ional ownership as public, nonprofit, or private (Salamon, 2002; van der Heijden, 2010a ). It is long recognized that a key distinction between the public, nonprofit, and private organizations is their relative exposure to competitive pressures (Boyne, 20 02; Bozeman, 1987, 2007; Dahl & Lindblom, 1953; Rainey, 1983; Wamsley & Zald, 1973), suggesting that organizational form may be a source of divergent responses to a competitive service provision arrangement. Additional d ifferences associated with organiza tional form, including missions and organizational governing structures, are thought to result in services and service quality which vary depending on whether an organization is public, nonprofit, or private (Allison, 1979; Boyne, 2002 ). This paper argue s that in the context of a competitive third party reg ulatory arrangement the services of third party administrators are likely to differ as a function

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81 of organizational form. As a result, the inclusion of third party administrators from the nonprofit and private sectors may lead to service diversification through peripheral in service quality. These assertions are investigated through a study of third party administ Organic Program (NOP). The NOP determines national standards for the practices that the USA. To enforce these standards the NOP relies on third party administrators from administer organic food regulations. Third party administrator service areas that overlap geographically, combined with the fact that operations choose their administrator, creates a competitive service provision environment in which third party administrators compete for regulatee clients. The question guiding the study is: To what extent do the diversification and quality of services offered by third party regulatory administrators differ according to administrator organizational form (public, nonprofit, private), in the context of a competitive service provision arrangement? Drawing on mul t iple data sources, the services of NOP regulation third party administrators are studied from two angles. Service diversification is examined through the services that are evident on third party administrator websites. Regulatee client perceptions of ser vice quality are examined through a survey of certified organic producers. The study is outlined in six sections. The first section describes the theoretical relationship between organization form and third party regulatory administrator

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82 service provisio empirical context: third party administration of U.S. organic food regulations. The third section details the multi method study design, and the fourth section relays study findings. T he implications of the findings for our understanding of third party contributions highlighted in the conclusion. Organization Form and Services in Third Party Regulatory Admi nistration Regulatory administration is a function that is traditionally assumed to be a function carried out by government organizations for the purpose of protecting citizens from specified risks or harm (Levi Faur, 2011; May, 2002). As a result, schola rs have had little cause to examine regulatory administration through the lens of service provision, and instead have focused on the monitoring and enforcement of regulatory standards. Regulatory scholars, for example, have devoted considerable effort to categorizing and assessing the enforcement styles of agencies charged with regulatory administration (Braithwaite, Walker & Grabosky, 1987; Gormley, 1998; May & Burby, 1998; Scholz, 1991) and the inspection practices of regulatory inspectors (May & Winter, 2000; May & Wood, 2003). This focus extends to voluntary programs in which regulatee firms opt into regulatory oversight, the study of which emphasizes the stringency of voluntary regulations while discounting voluntary programs as services regulatee fir ms pursue (e.g.: Potoski & Prakash, 2011). This study recognizes that competition among multiple third party regulatory administrators draws attention to the service provision aspect of regulatory administration, as third party administrators respond to competitive pressures by

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83 emphasizing the provision of services to attract and retain regulatee clients ( Coglianese & Lazer, 2003; van der Heijden, 2010a ). Organization theory indicates that a central organizational response to competitive pressures is to alter services to better meet consumer desires or appeal to new consumer groups (Grnroos, 1994; Schnieder, 1994 ). It is this logic that underpins the NPM argument that competition encourages client relevant services and higher service quality as organiza tions pay greater attention to customer desires and perceptions of service quality in order to attract and retain clients (Barzelay, 1992; NPR, 1993; Osborne & Gaebler, 1993). Organizational responses to competitive pressure include an expansion of servi ce areas into new geographic locations in search of a wider client base (Carman & Langeard, 1980). Organizations may also offer peripheral services beyond their core functions in order to enhance service portfolios and establish market niches through dist inctive service bundles (Agarwal & Chatterjee, 2002; Andrews, Boyne & Walker, 2006; Carman & Langeard, 1980). Understanding how the services of public, nonprofit, and private sector third party regulatory administrators vary requires taking into account h ow differences in organization form affect the relative levels of competitive pressure an organization faces. Thus, the greater exposure a third party administrator is faces the more likely it is to diversify the services it offers beyond its core regula tory function and the greater attention the organization will pay to regulatee perceptions of service quality. The ability of a third party regulatory administrator to alter its services in the described manners is impacted by organizational mission and goals, as well as the constraints placed on a third party administrator by its governing structure

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84 characteristics that are frequently cited to differ according to organization form (Nutt & Backoff, 1993; Rainey, 1983, 1989). For example, a nonprofit or ganization motivated in part by a desire to influence policy may be more likely to diversify its services by emphasizing advocacy activities (Frumkin & Andre Clark, 2000). In another example, a public sector organization constrained by political and burea ucratic oversight faces imposed limits on its ability to expand the number of services it offers in responses to competitive pressures ( Andrews, Boyne & Walker, 2006). The remainder of this section discusses how differences in relative exposure to competi tive pressure, mission and goals, and governing structures typically differ across public, nonprofit, and private sector organizations, and the expected influence these differences are likely to have on third party regulatory administrator services and ser vice quality. Public Sector Third Party Regulatory Administrator Services Public administration studies suggest a number of reasons that public third party regulatory administrators are likely to experience lower levels of competitive pressure, and by exte nsion fewer incentives to emphasize service provision in pursuit of competitive advantage, when compared with their nonprofit and private sector counterparts. Public sector organizations, while not immune to special interest influences and regulatory capt ure, face greater levels of political and bureaucratic amenities over clients paying for regulatory services (Bozeman, 2007; Nutt & Backoff, 1993; Ranson & Stewart, 1994 ). Political and bureaucratic jurisdictions may limit the overlaps (Andrews, Boyne & Walker, 2006). Revenue streams that include inter

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85 departmental transfers and budget app 2011). In addition to having lower levels of exposure to competitive pressure, public sector third party administrators are lik ely to face greater constraints on their ability to alter their services in response to competitive pressures. Beyond confining the geographic area in which a public sector organization operates, for example, legislation and associated statutes often limi t the range of services that a public sector organization is able to offer (Andrews, Boyne & Walker, 2006). As a result, with a few exceptions (Walker & Jeans, 2001; Walker, Jeans & Rowlands, 2002), public sector organizations tend to refrain from diversi fying their services beyond mandated core functions. Finally, public third party regulatory administrators are likely to experience a number of goals such as transparency, accountability, and equity, which may conflict with service quality objectives and regulatory administration as service provision (Bozeman, 1987; Nutt & Backoff, 1993; Wamsley & Zald, 1973). Relatively low exposure to competitive pressures suggests that public sector third party administr ators are likely to experience fewer incentives to emphasize service provision in the administration of regulatory standards, when compared with their nonprofit and private sector peers. Furthermore, the ability of public sector third party administrators to adapt services in response to the limited competitive pressures they experience is likely to be constrained by their political and bureaucratic constraints. These factors, combined with organizational goals that conflict with an

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86 emphasis on regulatee client centered services, suggest that public sector administrators are less likely to either engage in service diversification or focus on client perceptions of service quality in the administration of regulatory standards: H1: Public sector third party regulatory administrators will exhibit fewer, and lower quality, services than their nonprofit and private sector counterparts. Nonprofit Sector Third Party Regulatory Administrator Services Nonprofit service delivery is frequently assumed to be aimed at furthering a social or principled cause, the subject of which is generally mission oriented (Moore, 2000; Powell & Steinberg, 2006). Nonprofit organizations often draw on an array of revenue sources, from private contributions and endowment funds to membe rship and client service fees (Chang & Tuckman, 1994; Fischer, Wilsker, & Young, 2011; Moore, 2000). Mission oriented service delivery and diverse revenue sources, while not completely sheltering nonprofit third party regulatory administrators from a comp etitive environment, suggest that they will face lower levels of competitive pressures than primarily profit driven private sector administrators that rely entirely on client fees. At the same time, some reliance on fees for service means that they are li kely to face more competitive pressures than their public sector peers. Due to their reliance on a mix of revenue sources, and Boards of Directors governance structures, nonprofit organizations face a number of pressures and constraints beyond competitive pressures (Mendel, 2010; Rose Ackerman, 1990). For example, resource de pendence theories indicate that external funding sources such as private donations can have an impact on the manners in which nonprofit organizations

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87 fulfill their organizational goals, and the services that they offer (Barman, 2008; Schervish, 2005). Per haps more importantly, organizational missions and the goals organizations to emphasize services that align with organizational missions, even at the cost of decreased re venue (Brown & Slivinski, 2006; James, 1983). A principal function of many nonprofit interests is to represent the political and policy interests of select underrepresented groups (Andrews & Edwards, 2004; Jenkins, 2006). Along these lines, social and po litical movement perspectives on nonprofit management suggest that nonprofit organizations founded in support of a social or political cause will devote organizational services to the realization of that cause (Smith & Gronbjerg, 2006). Thus, nonprofit th ird party regulators established to encourage the organic food movement are expected to diversify their services by emphasizing services intended to Gronbjerg, 2006): H2: Nonprofi t sector third party regulatory administrators are more likely to exhibit service diversification, and higher quality of services, in services that align with social and advocacy goals. Private Sector Third Party Regulatory Administrator Services When comp ared with public and nonprofit organizations, private sector the central revenue source for private service provision organizations is fees for services (Nutt & Backoff, 1 993). Private sector service areas are not typically bound geographically by political jurisdictions, opening private regulatory organizations to a

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88 greater potential for service area overlap with competitors, and at the same time the ability to expanding services in new geographical areas. In contrast with nonprofit organizations tend to alter their services to meet consumer desires in the manner that is most likely to maximize organizational revenue (Grnroos, 1994; Schnieder, 1994). For private sector organizations, altering services for competitive advantage often involves expanding existing services into new markets or replicating existing services to appeal to new consumer bases. The replication of existing services with similar service offerings thus can attract new clients while requiring minimal input e system with a fair chance of unwelcomed negative entirely new service offerings (Carmen & Langeard, 1980, pg. 8). In the context of food certification and labeling, suc h replication of services is most likely to take form in the diversification of a third standards labeling services. With high levels of exposure to competitive pressures, organizational goals that align with a service provision emphasis, and a tendency to respond to competitive pressures by expanding geographic service areas and/or diversifying service offerings through the replication of existing services, private sector third party administrators are expected to emphasize the replication of core services:

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89 H3: Private sector third party regulatory administrators will exhibit service diversification, and higher quality of services, in the replication of core services. These hypothesized differences between public, nonprofit, and private sector regulatory administrator service diversification and quality are examined through this study in the context of third party admi nistration of NOP regulations. The extent to which the expectations offered here generalize to other third party regulatory arrangements, or apply in other regulatory program design contexts, is returned to in the conclusion. Service diversification and service quality measures are discussed along party regulatory arrangement. Third Party Regulatory Administration under the National Organic Program Organic food gained public notice in the U.S. in the 1960s and 1970s, when, suspicion of detrimental impacts resulting from conventional farming practices motivated consumer interest (Baker 2005; Vos 2000). As the popularity of organically produced food rose among consumers throughout the 1970s and 1980s, a variety of certification bodies emerged to provide third through certification labels. A proliferation of such or ganizations ultimately led to Organic Foods Production Act (OFPA) was passed with the goa l of encouraging an

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90 organic foods market through unified organic standards and an official organic labeling system under the NOP. As required by the OFPA, operations that market or label food products as tion and adhere to national organic standards. 18 In 2012, this included 12,220 U.S. based certified organic producers. Reflecting the diversity of US agriculture, generally, certified organic operations produce a wide variety of products, and are categori zed according to four organic certification types: crops, wild crops, livestock and handling. The NOP is based on International Organization for Standardization principles for third party accreditation and certification systems (see Figure 1.2) As such the NOP is responsible for accrediting third party organizations to serve as administrators. These third party administrators in turn certify operations according to national organic regulations, and then inspect certified operations for regulatory comp liance. Operations seeking organic certification are allowed to choose their third party administrator, and pay the third party administrator a certification fee. The NOP accredited 48 US based accredited third party administrators as of 2013. These o rganizations vary widely in the number of operations that they certify, ranging from just over a dozen (Monterey County Organic) to 2,800 (California Certified Organic Farmers [CCOF]). Seventeen are private, for profit organizations, eleven are nonprofits and 20 are from the public sector. Public sector administrators can be further broken down into three different types: 17 fall under state government programs, such as the Colorado Department of Agriculture Organic Program, two fall 18 Operations that earn less than $5,000 a year from organic product sales are exempt from this requirement.

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91 under California cou Department of Plant Industry. Organic food production has exhibited double digit year over year growth since the 1990s, accounting for a $59 billion market (Sahota, 2012). This sustained gro wth highlights the practical importance of the NOP and understanding the implications of its third party regulatory arrangement. This paper seeks to provide a better understanding of the NOP, and the factors that influence regulatory administration throug h third party organizations generally, through an investigation of differences in s Study Design The services emphases of third party administrators under the NO Program were examined quantitative data were collected in successive stages, and the research design evolved with learning at each stage (Onwuegbuzie & Collins, 2007). Three data collection methods were used Interviews with organic food regulation experts informed study design and data collection measures. Coding of third party regulatory administrator websites was used to assess third party administrator service diversification. A survey of certified org anic producers the regulatees in this context was conducted to compare regulatee client perceptions of service quality. Interviews The first stage of data collection involved semi structured interviews with six individuals identified as experts in th e U.S. organic industry and organic food regulation. The sample frame was purposeful: individuals were chosen based on the

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92 official positions that they held within the organic industry combined with extended (five years or longer) involvement with organic food production and regulation. 19 Questions asked in the interviews covered descriptions of the organic certification process and differences and similarities between third party organic regulation administrators. Interview data were used in two manners. First, interviews were reviewed to identify and confirm the services that NOP third party regulatory administrators offered in addition to those that are regulatory in nature. Second, interview transcripts were reviewed for themes related to the provisi on of these services, as well as services related to administrators themes were used in a supplementary manner, to help explain and provide descriptive detail to the other data collection findings. 20 Interview respondents confirmed that some third party administrators under the NOP perform advocacy related services, while others offer additional certification/ labeling services such as foreign or international organic standards certification (e.g.: Ca nadian Organic Regime, Taiwan Export Standards) and food labeling programs other than USDA organic (e.g.: Food Alliance Certified, Certified Fair Trade). Interview respondents also indicated a third service area in which certified organic producers rely o n third party administrators: educational services, such as trainings and 19 Interview participants came from the foll owing organizations: the National Organic Program, the Accredited Certifiers Association, the Northeast Organic Dairy Producers Association, an organic certification consultant, and two third party administrator organizations. 20 See Creswell (1994, pg. 203 ) for the use of qualitative data to supplement quantitative findings.

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93 workshops in organic food production. 21 These identified service categories informed data collection in the later website coding and certified organic producer survey stages of data collection, as described in the remainder of this section, and summarized in Table 3. 1. 21 Interview respondents were quick to recognize a tension regarding third party administrators offering education services under the NOP, as the NOP regulations incorporate conflict o f interest provisions that explicitly forbid accredited third party administrators from consulting while concurrently administering regulations. Nonetheless, interview responses indicated that third party administrators are an important educational source for organic producers, and for this reason, and the lessons of the regulatory literature which suggest that education from regulatory administrators is an important component of regulatory administration generally (e.g.: in the study.

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94 Table 3.1. NOP third party administrator service categories and associated website coding and survey variables Service category Definition Associated website coding variables Associated producer survey variables Educational services Education related to organic food production practices including in person workshops, webinars, a nd other training opportunities Education Organic systems plan guidance a Additional certification services Certification and labeling services in addition to domestic USDA organic certification, including international organic standards certification and other labeling programs such Additional labeling Additional labeling services Advocacy services Political representation of organic producer interests such as in Washington DC and at National Organic Standards Board meetings Advocacy services Advocacy services NOTE: Variable measure details provided in the appendices. a = As part of an application for organic certification under the NOP an operation must develop and will ensure conformity with the NOP regulation organic standards.

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95 Website Coding To identify the services emphasized by third party regulatory administrators, each third party administrator website was coded for the services explicitly advertised or mentioned. Service categorie s were identified first through the aforementioned interviews, and indicators were developed inductively as coding was conducted. In addition to organic certification, service categories that were coded included international services and certification se advocacy services related to organic policy. Each third party administrator website was coded for the service categories evident throughout the website, according to the definitions provided in Appendix F When an indicator for one of the codes was identified a snapshot of the specific softw are program. NVivo was then used to call up indicators and codes from across websites, allowing for a coding comparison and facilitating a qualitative interpretation of service claims. Certified Organic Producer Survey Data regarding the quality of third party administrator services under the NOP were collected through an online survey of NOP certified organic producers in the winter of 2013 2014. All domestic certified operations holding any combination of crops, wild crops, and livestock certifications for which the USDA listed a valid email address were included, representing approximately half of all certified organic producers. Processing operations that held only organic handling certification were

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96 excluded. 6,27 3 domestic certified organic producers were sent a survey request. Responses were received from 1,055 producers for a response rate of 17 percent. 22 Three important considerations regarding the sample deserve attention, as they limit the generalizability o f analysis results considerably. First, the USDA list of certified organic producer emails is made up of operations certified by 41 of the 48 domestic accredited third party administrators. The study results, therefore, cannot be generalized to the seven third party administrators missing from the sample. Second, operations for which the USDA does not report a valid email address were excluded rate of 17 percent. Farm ers are a notoriously difficult population to survey, and a response rate of 17 percent is consistent with other farmer survey research (Pennings, Irwin & Good, 2002), however, the fact that the sample is limited to USDA reported email addresses, in conjun ction with the relatively low response rate, suggests serious caution should be exercised when generalizing the results. Three steps were taken to gauge the impact of nonresponse bias in the study. First, a wave analysis was conducted based on the assumpt ion that the answers of survey late responders are more likely to approximate the answers of non respondents than those of individuals that readily respond to survey requests (e.g.: Kauppi & van Raaij, 2014; Rainey, Pandey & Bozeman, 1995). The analysis c ompared the responses of early survey respondents to those that responded after follow up survey requests measure responses of different survey waves were found ( p < 0.05). Second, 20 non 22 Survey respondent demographic characteristics are provided in Appendix C

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97 respondents were contacted by phone and verbally administered five survey questions. Nonparametric tests (due to the extreme difference in group size) comparing these responses with those of the online sample revealed no statistical ly significant differences ( p <0.05). Although these do not eliminate the possibility of nonresponse bias impacting the findings of the study, the results suggest that the threat of nonresponse bias may be small. raphic characteristics with available USDA data indicates a fair, but not perfect, representation of the U.S. certified organic size relative to the size of other operatio ns producing similar products, 51 percent farmers are characterized by relatively small operations (Greene, Slattery, & McBride, 2010). Notably, 17 percent of responde incorporated in study findings. The reported location of survey respondents suggest a fairly representative geographic d istribution of certified organic operations, with the exception of underrepresentation among Midwest organic farmers, at 16 percent of respondents. The highest percentage of survey respondents were from the West (29 percent), followed by the Northwest (22 percent) and Northeast (18%). Collectively, the Southwest and Southeast made up 15 percent of the survey respondents. Of the four USDA organic certification types, the vast majority held organic crop certification, 17 percent held organic livestock certi fication, and less than four percent held organic certification for wild crops. The most frequently reported commodity

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98 types produced by survey respondents were vegetable, grain, fruit, and herb crops. A much smaller percentage of respondents reported eg gs, dairy, poultry, or livestock commodities. The breakdown of survey respondents by certification and commodity types roughly mirrors production trends in U.S. organic food production writ large ( Dimitri & Oberholtzer, 2009; Greene, Slattery, & McBride, 2010). Organic Producer Survey Variables and Measures Service quality is a construct defined by both the performance of a service delivery organization and the expectations of service recipients (clients; Cronin & Taylor, 1992; Mwita, 2000). Third party a dministrator service quality was measured their NOP third party administrator, measured on a five aforementioned interviews, included: organic systems plan guidance (education services), advocacy related to organic policy, and additional product certification and 23 The independent variable of interest third party regulatory administrator organization form was operationalized as a third designation as public, nonprofit, or private. To account for organizational attributes o ther than organization form that might impact third party administrator services, such as size, data regarding the number of operations that each third party administrator certifies were gathered from the NOP database. As the level of competitive pressure s 23 As part of an application for organic certification under the NOP an operation must the operation will ensure conformity with the NOP regulation organic standards.

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99 an organization experiences is a central theoretical element of the study, a Herfindahl Hirschman Index (HHI) measure of market concentration was constructed as a proxy for the competitive pressures third party administrator s might face by geographical a rea (e.g.: Hannan, 1997). The HHI roughly represents the proportion of third party administrator s to the number of certified operations within a state (the designated mar ket share value for each third party administrator operating in a given state was calculated by dividing the number of clients for each administrator in the state by the total number of certified operations in the state. Each third party administrator mar ket share value was then squared, and the results summed for all administrators in a given state, producing a state HHI with potential to range from 0 (not concentrated) to 10,000 (highly concentrated). 24 Because this study relies on regulatee survey percep tions to measure third party administrator service quality, data on survey respondent characteristics were also administrator for the services it offers may impact their perce service quality, and could lead to biased results if this selection effect differs systematically by third party administrator form. Respondents were therefor asked to 24 An alternative manner of constructing the market concentration measure is to calculate the proportion of clients an administrator certifies relative to all of the certified operations across the same geographical area. The chosen method was preferred due to the difficulty in determining the boundaries of administrator xample, assuming the states that an administrator offers services in constitute the market is contradicted by the fact that many administrator states, while extending to only a few operatio ns immediately across the geographical boundaries of those states.

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100 rank how important the particular services of their third par ty administrator were in their decision to select the administrator. Second, the stringency with which a third party admini services may be perceived as more valuable if the administrator is more stringent in the perceptions of the strictness with which their administrators inte rpret the NOP regulations was included. their perceptions of services related to the administration of those regulations. This is particularly the case with advocacy services, which are likely to be correlated with a desire to further the organic movement through participation in the NOP. A survey measure regarding a respondent for the extent to which supporting the organic m ovement motivates a respondent to pursue organic certification. Fourth, as a proxy for operation characteristics such as regulatee professionalization and operational sophistication, an operation size question was included, measured on a five point scale on the type of organic certification (livestock, crops, handling) each respondent held were gathered, to account for differences in expertise perceptions across certification types. Findings Empirical findings o f service similarities and differences among the third party administrators of NOP regulations are presented according to data type. First, NOP

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101 third party regulatory administrator service diversification is examined through coded website data. A compari son of the quality of third party administrator services as measured through the perceptions of surveyed certified organic producers follows. Service Diversification According to Website Coding A central expectation of this study is that involving public nonprofit, and private sector organizations as third party regulatory administrators will lead to peripheral administration of regulatory standards. Furthermore, it was propose d that differences in organizational form would result in public sector third party administrators exhibiting the fewest services beyond regulatory functions (H1), nonprofit sector third party administrators being the most likely to offer services that ali gn with nonprofit organizational missions (H2), and private sector organizations will diversify their services through the replication of core services (H3). Coding of the services evident on NOP third supports the overall expectation that third party administrator services will extend beyond the organic certification and regulatory administration function, as indicated in Figure 3. 1 (a summary table of service coding on third party administrator websites is also provided in Appendix G ). Of the 48 websites coded, 17 indicated one or more certification or labeling services in addition to USDA organic, eleven indicated education servic es through some sort of trainings or workshops, and five indicated policy matters.

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102 NOTE: Each bar represents the percent of third party administrator websites, by organiz ational form, exhibiting the identified service category. Total NOP third party administrator n = 48; public third party administrators n = 20; nonprofit third party administrator n = 11; private third party administrator n = 17 Figure 3.1. Services diversification identified on NOP third party administrator websites according to organization form Public sector third party administrators exhibited the fewest service categories, supporting study expectations. Of the 20 public sector third party administrators accredited under the NOP, five reference additional labeling services. In all of the case s in which public sector third party administrators offer additional labeling, it was for party administrators exhibited the highest rates of service diversification through certification or labeling services in addition to USDA organic (eight of 17). Two private sector third party administrator websites also indicated educational services through trainings and/or workshops. 0% 20% 40% 60% 80% 100% Nonprofit Private Public Education Advocacy Additional labeling

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103 Nonprofit sector third party administrators demonstrated the greatest diversity of services, with educational services such as trainings and workshops making up the most frequent service category identified, on nine of eleven websites. Additio nally, four websites exhibited other certification or labeling services in addition to USDA organic. Supporting study expectations, only nonprofit third party administrators exhibited advocacy services, which were identified on five of eleven nonprofit we bsites. To summarize the website coding findings, public sector NOP accredited third party administrators exhibit little service diversification beyond USDA organic certification when compared to their nonprofit and private sector peers. Private sector NO P accredited third party administrators were most likely to diversify through other certification and labeling programs. Nonprofit sector NOP accredited third party administrators, while exhibiting diversification through additional certification and labe ling services, also place an emphasis on educational and advocacy services. Service Quality Differences According to the Certified Organic Producer Survey This paper suggests that the inclusion of public, nonprofit, and private sector third party regulato ry administrators leads not only to the inclusion of peripheral services in the administration of regulatory standards, but is also likely to result in systematic differences in service quality according to third party administrator organization form. It was expected that public sector third party administrators will exhibit the lowest levels of service quality (H1), nonprofit sector third party administrators will exhibit the quality of services that align with nonprofit organizational missions (H2), whil e private sector third party administrators will exhibit the highest service quality in the replication of core services (H3). To test these

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104 third services quality were analyzed through OLS regressions with clustering by third party administrator. 25 The findings are presented in Table 3. 2 (descriptive statistics are provided in Appendix H ). Systematic differences in service quality by third party adm inistrator organization form are evident according to the analysis findings, although the results are mixed with respect to support for study hypotheses. Corroborating the first hypothesis, public sector third party administrators exhibit the lowest level s of producer reported service quality across all three service measures. The differences between public and nonprofit sector third party administrator service qualities were statistically significant ( p < 0.05) across all three measures. Differences bet ween public and private sector third party administrator service quality, however, were not statistically significant for two of the measures: educational services and advocacy services. 25 Robust standard errors with clustering by third party administrator were used because collecting service quality data from multiple clients per third party administrator violates the in dependence of observation assumption underlying basic linear regression (Wooldridge, 2012). Fixed effects analyses were not used due to the constant relationship between individual third party administrator and organization form. Multilevel and ordered l ogit analyses with clustering by third party administrator were also conducted, with no substantial differences from the reported results. OLS results are reported for ease of interpretation

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105 Table 3.2. Regulatee client perceptions of third party administrator service quality as explained by third party administrator organizational form and survey respondent attributes Educational services Advocacy services Additional labeling services Nonprofit administrator (Reference = Public) 0.33 (0.12) ** 0.46 (0.18) ** 0.37 (0.12) *** Private administrator (Reference = Public) 0.04 (0.15) 0.19 (0.17) 0.48 (0.14) *** Administrator client number (Log transformed) 0.04 (0.05) 0.06 (0.06) 0.11 (0.07) State HHI 0.17E 4 (0.18E 4) 0.28E 7 (0.27E 4) 0.36E 4 (0.29E 4) Importance of services in selection of administrator 0.21 (0.04) *** 0.12 (0.05) ** 0.24 (0.05) *** Perceived administrator strictness 0.39 (0.06) *** 0.35 (0.07) *** 0.30 (0.11) ** Perception of NOP regulations 0.14 (0.04) *** 0.13 (0.05) ** 0.13 (0.06) ** Organic movement motive 0.07 (0.04) 0.07 (0.04) 0.08 (0.05) Operation size 0.00 (0.03) 0.07 (0.06) 0.07 (0.05) Handling scope (Reference = Crops) 0.02 (0.11) 0.07 (0.12) 0.03 (0.17) Constant 2.36 (0.39) *** 3.23 (0.45) *** 0.02 (0.60) R 2 0.21 0.12 0.22 F 44.05*** 16.54*** 31.30*** n 746 790 368 NOTE: *significant at p <0.10, ** significant at p <0.05, ***significant at p <0.01; Robust standard errors in parentheses, clustered by third party administrator ( n = 41) Nonprofit third party administrators exhibit the highest quality of advocacy services when compared with their public and private sector counterparts, supporting the second hypothesis. When cont rolling for the influence of survey respondent attributes, the mean respondent evaluation of nonprofit sector advocacy service quality is almost half a standard deviation greater than that of public sector advocacy services,

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106 and about a quarter of a standa rd deviation greater than that of private sector advocacy services. The difference between nonprofit sector third party administrator advocacy service quality and that of their public sector counterparts is statistically significant at the p < 0.01 level. Nonprofit sector third party administrators also exhibit the highest quality educational services, while the difference between public and private sector educational services is minimal and statistically insignificant. The findings indicate that privat e sector third party administrators exhibit the highest quality of services similar to organic certification additional certification and labeling services lending measured support to hypothesis three. 26 T he mean respondent evaluation of private secto r additional labeling services quality is 0.4 standard deviations greater than that of public sector additional labeling services, and about 0.1 standard deviations greater than that of nonprofit sector additional labeling services. The difference between private sector additional labeling service quality and that of their public sector counterparts is statistically significant at the p < 0.01 level. No statistically significant relationship was found between the proxy indicator for third party administrator size (number of certified operations) and the assessed quality of their services. Similarly, producer assessments of service quality do not appea r to vary systematically according state organic certification market 26 considerably when compared to the other service categories, as many producers presumably do not acknowledge their third party administrator as providing additional labeling and certification services, as indicated by their selection o response option. Consistent with the theoretical argument of this study, producers when asked to rate their administrator s quality of additional labeling services, while

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107 concentration, as measured by the study HHI variable. In contrast, the importance that administrators adm service quality (significant at p certification in support of the organic farming movement, perhaps unsurprisingly, is positively related to their perception of a third while the variable does not share statistically significant relationships with the other service quality measures. To summarize the service quality survey findings, public sector NOP third party administrators exhibit the lowest quality of services across all three categories measured, while nonprofit third party administrators exhibit the highest q uality of educational and advocacy services, and private third party administrators exhibit the highest quality of certification or labeling services other than USDA organic. These findings lend measured support to the general expectation that systematic differences in service quality exist between third party administrator organizational forms. D iscussion The aim of this study is to examine the extent to which third party reg ulatory differ according to organizational form (public, nonprofit, private) in the context of a competitive regulatory arrangement. It was hypothesized that due to relatively low emphasis on service provision, public sector third party administrators would exhib it the fewest services, and lowest regulatee client perceptions of service quality, when compared to their nonprofit and private sector

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108 counterparts. Nonprofit sector third party administrators were expected to be most likely to diversify through, and exh ibit the highest quality in, mission oriented services. Private sector third party administrators were expected to be most likely to diversify through, and exhibit the highest quality in, the replication of core services. The study findings indicate that, in the case of NOP regulatory administration, third party administrators tend to diversify their services beyond regulatory functions in these expected manners. Furthermore, systematic differences in the quality of services performed by NOP accredited t hird party administrators can be explained to a limited degree by the hypothesized relationships with organization form. The remainder of this section discusses the lessons that can be drawn from the study, first considering the implications of study findings for third party regulatory administration, and then by addressing study limitations. This study is based on the premise that a competitive regulatory arrangement incentivizes third party administrators to emphasize service provision in the admin istration of regulatory standards, as administrators seek to attract and retain services beyond those regulatory in nature. Website coding indicates that NOP accredite d third party administrators do offer services beyond those that relate to their collection, furthermore, the premise was corroborated by several interviewees. For example, while reflecting on changes in organic certification before and after NOP

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109 typ 17, 2012). It was also argued that differences in service adaptation responses to competitive pressures would lead to service provision emphases that differ by third part y administrator form. The service diversification and quality difference findings presented here suggests that in contrast with their public sector counterparts, nonprofit sector NOP accredited third party administrators tend to emphasize education and ad vocacy services, while private sector NOP accredited third party administrators place an emphasis providing a variety of certification and labeling services. The degree to which differentiated services represent a threat to regulatory objectives is contin gent on whether peripheral services conflict with or otherwise obscure regulatory program objectives. In the case of the NOP, which has an express interest in encouraging an organic foods market (NOP, 2014), educational services that aid certified produce rs in the production of organic food, representation of producer interests in organic policy matters, and parallel food labeling and certification services that provide producers with a competitive advantage arguably align with this goal. A perhaps more tr oubling implication of a service provision emphasis in the administration of regulatory standards is the potential for third party administrators to treat regulatory administration itself as a service that can be altered in manners that appeal to regulatee clients. As stated by Conglianese and Lazer (2003, pg. 718): challenge of third party certification is that it creates another layer of agency party certifiers probably face incentives to satisfy their clients through at least margin

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110 that the regulatory organizations are in competition with one another, which at times may lead to an inconsis communication, November 12, 2012). 27 While beyond the scope of this study, this regulatory enforcement and service provis ion in third party regulatory administration. A couple of noteworthy limitations caution against overly broad generalizations of study findings and indicate avenues for further research. First, service diversification was identified by coding third party administrator websites for explicit references of service categories. The quality of these data are restricted, therefore, to the extent that website material accurately represents the operations of NOP accredited third party administrators. Furthermore, the approach is subject to biases resulting from systematic differences in the manner in which public, nonprofit, and private sector organizations utilize their website contents. For example, it is possible that public third party administrators were fou nd to exhibit a lower number of services not because these services are not performed by public third party administrators, but because some services are not mentioned on their websites. Second, third party administrator service quality data were collec ted from a considerably limited sample of certified organic producers. The sample was made up of certified operations for which the USDA lists a valid email address approximately half of all domestic USDA organic operations. The impact of this limitati on may be 27 The respondent was quick to add: he NOP is addressing this challenge by keeping an eye on the fees charged by certifiers throu gh audits to ensure they are not cutting

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111 somewhat minimized by the national scope of the sample, however, the results are nonetheless constrained to half of the domestic USDA certified organic producer population. More importantly, the findings are based on a survey with a response rat e of 17 percent. As noted earlier, a response rate of 17 percent is consistent with other farmer survey research, as farmers are a notoriously difficult population to survey (Pennings, Irwin & Good, 2002). The restricted sample and response rate, nonethe less, preclude broad generalization of survey results. These limitations were arguably minimized by a multi method approach to examining d iffering services by sector: assessing service diversification through website coding and service quality differences through a survey of regulated entities, informed by expert interviews. The conclusions drawn from this study could nonetheless be corroborated or tested by future examinations of distinct service performance dimensions (Boyne, et al., 2005; Sowa, Selden & Sandfort, 2004) and qualitative interpretations of how third party administrators utilize the provision of different service categories to appeal to potential regulatee clients. Coupled with an examination of how regulatory administration itself is offe red and executed as a service independent of, and bundled with, the peripheral services studied in this paper, such research stands to leverage the promise of taking a service provision perspective on the administration of regulatory standards through thir d party organizations. C onclusion This study investigated the extent to which, within the context of a competitive regulatory arrangement, the diversification and quality of services performed by third party administrators differ according to organizati onal form. It was argued that

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112 differences in exposure to competitive pressure, combined with differences in organizational responses to competition, will lea d to divergences in the services of public, nonprofit, and private sector third party administrato rs. As a result, peripheral gulatory standards, and service differences are likely to be reflected in service diversity and quality differences across these peripheral services. Drawing on interv iew data with organic regulation experts, third party administrator website coding, and a survey of U.S. certified organic producers, measured support was found for these assertions in the context of third party U.S. organic food regulation. The primary contribution of the study is a better understanding of the implications arising from design innovations that are observable in an increasing number of contemporary regulatory programs (Black, 2002, 2008; van der Heijden, 2010a, 2010b ; May, 2002) in parti cular innovations involving the delegation of regulatory authority to third party administrators operating in a competitive arrangement. Although theoretically such arrangements are argued to encourage client relevant services and higher service quality ( Barzelay, 1992; NPR, 1993; Osborne & Gaebler, 1993), the findings reported here support predictions that organizational responses to competitive arrangements are not uniform, and may vary according to organizational characteristics (Boyne, et al., 2005; So wa, Selden & Sandfort, 2004). Unintended consequences resulting from such design innovations, this study suggests, may include peripheral services that are offered in parallel to the administration of regulatory standards, as well as systematic difference s in the diversity and quality of services performed by third party regulatory administrators.

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113 A second contribution offered by the study is a comparison of organizational forms in a regulatory context. A lthough differences between public and private (an d to a lesser extent, nonprofit) organizations constitutes a small sub literature within the field of public administration (e.g.: Boyne, 2002; Bozeman, 1987, 2007; Dahl & Lindblom, 1953; Rainey, 1983, 1989; Wamsley & Zald, 1973), regulation remains a litt le explored policy area of differences in organizational form. The relatively recent emergence of nongovernmental actors as regulatory administrators offers a new policy environment in which to test enduring assumptions over the purposes, functions, and i mpacts of public, nonprofit, and private organizational forms, and offers great potential in a better understanding of the complicated intersection of public values and private interests (Black, 2002; van der Heijden, 2010a, 2010b; Bozeman, 2007). As menti services in the context of regulatory administration represents a threat to regulatory governance is contingent on whether peripheral services conflict with, or otherwise obscure, regu latory program objectives. While beyond the scope of this study, the question offers a valuable next step in the study of regulatory program design innovations. An equally constructive extension of this study is an investigation of t he extent to which th e findings of this study generalize to other third party regulatory arrangements. The NOP case represents a dramatic innovation of regulatory program design: federally accredited public, nonprofit, and private sector third party organizations administerin g quasi voluntary regulations in a competitive environment. Future research into the effects of such a design on the administration of regulatory standards holds the potential to not only improve theoretical linkages between third

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114 party administrator cha racteristics and program outputs, but to help identify the regulatory program design innovations that hinder and promote regulatory policy goals.

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115 CHAPTER IV PUBLIC, NONPROFIT, A ND PRIVATE SECTOR RE GULATORY APPROACHES IN THIRD PARTY REGULATORY ADMINISTRATION Abstract Many contemporary regulatory programs rely on third party organizations to fulfill monitoring and enforcement functions. Third party regulatory program designs introduce complexity and potentially conflicting incentives that can im pact program delivery. This paper examines how regulatory program outputs are shaped by third party administrators through an investigation of the organizations charged with administering US organic food regulations. Based on the notion that third party arrangements draw attention to administrator organizational characteristics, the paper asks: To what extent does organizational form (public, nonprofit, private) affect third reg ulatory standards? A secondary analysis explores an economic facet of dimensional publicness among nonprofit third party administrators. The study draws on regulatee survey data and uses multilevel analysis to account for how regulatory approaches vary a cross third party administrator characteristics, as well as according to respondent level attributes. The findings indicate that little systematic variation in regulatory approaches can be attributed to administrator organizational form The facet of reg ulatory approach in which organizational form appears to play a role is found in public third when compared to their private sector counterparts. The paper discusses explanations for the limited relationship between third party organizational form and regulatory

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116 approaches, and suggests future research for better understanding the linkage between regulatory program design, administrator organizational characteristics, and program outp uts. Introduction Organizations that are charged with regulatory administration are central to the functioning, and ultimately the effectiveness, of regulatory programs. Although regulations can be relatively static, their interpretation, application, and impacts may vary based on the administrative organization in question. A central source of variation in regulatory administration is the approach that regulatory organizations take in carrying out their monitoring and enforcement responsibilities. In th e simplest characterization, whether an organization emphasizes monitoring and sanctioning for Identifying the factor approach can be important in explaining the relative success of a program at promoting regulatee compliance. This may be especially true in the case for regulatory programs that rely on independ ent third party organizations for program administration. Third party regulatory arrangements introduce complexity and potentially conflicting incentives that may influence the manner in which regulations are administered (Black, 2002; van der Heijden, 201 0a, 2010b) For example, relying on multiple third party organizations for program delivery raises the question of whether organizational differences lead to divergences in the administration of uniform regulatory standards. In another example, third par ty administrators that rely on regulatee service fees for

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117 revenue may be prompted to consider client defection when deciding when and how to sanction for regulatory noncompliances. An innovation in third party program designs includes third party regulat ory organizations from outside of the government sector, highlighting the potential for systematic differences between governmental and nongovernmental regulatory approaches ( van der Heijden, 2010a, 2010b ). This paper examines such potential differences t hrough an investigation of the entities charged with administering the The NOP determines national standards for the practices that are allowed and prohibited in the producti NOP relies on accredited third party administrators from across the public, nonprofit, regulations. Under the NOP administrator service areas that overlap geographically, combined with the fact that operations choose their administrator create a competitive environment in which administrators compete for regulatee clients. The investigation focuses on how organizat ional form as public, nonprofit, or study is: To what extent does organizational form (public, nonprofit, private) affect third es in the administration of uniform regulatory standards? To address this question, the study draws on regulatee perceptions of third party administrator regulatory behavior. In addition to examining the effect of organizational form an aspect of dimensional publicness ( Bozeman, 1987; Dahl & Lindblom, 1953; Wamsley & Zald, 1973) is explored through a secondary

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118 sources and their regulatory approaches. Recognizing that e mpirical examination of governing systems is often inherently hierarchical (Heinrich & Lynn, 2001; Sowa, Seldon & Sandfort, 2004), multilevel analysis is used to account for how regulatory approach varies according to organizational form as well as the in fluence that respondent level attributes have on regulatee perceptual data. The study is outlined in seven sections. The first section provides the conceptual underpinnings of the regulatory approach construct. The second section discusses the theoretical linkage between organizational form and regulatory approach. The third se party regulatory arrangement. The fourth section presents the study design and construct measures. The fifth section presents study findings. A discussion of the findings is provided in the sixth section, followed by futu re research opportunities for better understanding the relationships between regulatory program design, administrator organizational characteristics, and program outputs in Variation in Regulatory Approach Regulatory scholars have e xamined the attitudes and actions with which regulatory organizations conduct their monitoring and enforcement functions from different perspectives. Many are concerned with describing and categorizing regulatory approaches (Braithwaite, Walker & Grabosky 1987; Gormley, 1998; May & Burby, 1998; May & Winter, 2000; May & Wood, 2003) and others explore the impact of different approaches (Bardach & Kagan, 1982; Braithwaite, 1985; May, 2005; Scholz, 1991). Some studies consider the enforcement styles of regu latory agencies as focus of

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119 study (Braithwaite, Walker & Grabosky, 1987; Gormley, 1998; Kagan, 1989; May & Burby, 1998), while others focus on inspectors as front line regulatory actors (May & Winter, 2000; May & Wood, 2003). The study of regulatory appro aches is complicated by terminological confusion in the literature. As noted by May and Winter (2000, pg. 145), a variety of labels have been applied to describe the practices of regulatory agents, such as their regulatory approach, method, style, and str ategy. This study is concerned with how regulatory approaches may vary as a function of third party regulatory organizational form regulatory approach most closely approximates what May and Buby (1998) refer to a s pertain to how organizations perceive their roles, regulatory approaches can be observed and measured through regulatory behaviors and practices. This includes a combina tion of the tools or tactics used by an agency to bring about regulatee s regulatory approach may be observed through the actions of individual inspectors, it is conceptually distinct from inspection styles, which may vary from one inspector to the next (Gormley, 1998; May & Burby, 1998; Scholz, 1994). A number of studies sugg est that regulatory approaches can be characterized as falling along a continuum from an emphasis on enforcement and sanctioning, often referred to as a deterrence approach, to a more flexible or accommodative approach (Bardach & Kagan, 1982; Braithwaite, 1985; Potoski & Prakash, 2011; Kagan, 1989, 1994). Others contend that regulatory approach as a construct can be broken down

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120 into distinct elements. May and Burby (1998) propose two dimensions by which enforcement strategies can depicted, which they labe l facilitative and systematic. Similarly, May and Winter (2000) suggest formalism and coercion underlie inspector enforcement styles. Formalism refers to the relative rigidity and rule adherence that regulators exhibit. Coercion is a willingness to thre aten or impose sanctions for noncompliance. This study seeks a middle ground between single and multiple dimension regulatory approach characterizations by situating regulatory approaches along a single deterrence accommodation continuum, but recognizin g and independently measuring several elements that comprise the dimension. Regulatory approach is regulatory interpretation, propensity to administer threats, flexibility, and willingness to provide assistance. Strictness in regulatory interpretation is intended to reflect May ion or deterrence. regulatees to come into compliance (Gormley, 1998; Scholz, 1994). As displayed in Figure 4.1, contrasted with an accommodative regulatory approach, at th e deterrence end of the regulatory approach spectrum regulatory organizations adopt a strict interpretation of regulatory directives, exhibit a greater propensity to administer threats and sanctions in response to noncompliances, are less willing to make a ccommodations for individual regulatee circumstances, and are less likely to offer technical assistance to regulatees.

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121 Figure 4.1. Regulatory approach spectrum Program Context, Regulatory Organization Characteristics, and Regulatory Approach Regulatory program designs relying on third party organizations for regulatory administration draw attention to how the organizational characteristics of administrative organizations may affect program delivery. O rganizational form as public, nonprofit, o r private shapes several organizational attributes that can influence a third Organizational form the principal bene bureaucratic limits placed on an organization. To understand how organizational form as public, nonprofit or private affects a third o take into account how such organizational characteristics interact with a regulatory context to create incentives, opportunities and constraints for regulatory administrators (May, 2002; van der Heijden, 2013). A key facet of the NOP regulatory context is that operations seeking

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122 organic certification pay third party administrator s for certification services, and may choose the administrator that they wish to provide these services. This creates a competitive certification environment in which regulatory organizations compete with one another for regulatee clients (Marshal & Standifird, 2005; van der Heijden, 2008). The amount of competitive pressure that a regulatory organization is exposed to can shape the incentives that a regulatory organization fac es when considering its regulatory approach (van der Heijden, 2010a, 2010b). A regulatory organization with higher levels of exposure to competitive pressure may respond by adapting its regulatory behavior to attract and retain clients (Marshal & Standifi rd, 2005). Rather than adopt a legalistic and punitive approach to its regulatory duties, such an regulatory compliance (van der Heijden, 2008). Exposure to competitive pre ssures can therefore be linked theoretically to the deterrence accommodation regulatory approach spectrum. In a third party regulatory system such as the NOP, accreditation standards establish baseline regulatory practices, however, the greater the compet itive pressures a regulatory organization is exposed to, the more likely the organization is to exhibit regulatory behaviors characteristic of an accommodative regulatory approach. Figure 4.2 displays this theorized relationship.

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123 Figure 4.2. Theorized relationship between exposure to competitive pressure and regulatory approach The extent to which an organization is exposed to competitive pressures is determined in part by organizational characteristics (Boyne, 2002; Bozeman, 1987, 2007). 28 By accounting for how such organizational characteristics vary as a function of organizational form expectations can be drawn on the relative level of competitive pressures faced by third party regulators. For example, a for profit organization that rel ies fully on user fees for revenue is likely to experience a higher level of competitive pressure than a governmental organization that derives operating expenses from state budget appropriations. Similarly, a private regulatory organization motivated to generate a profit is likely to experience greater competitive pressures than a nonprofit organization established to fulfill a societal goal. Finally, a regulatory organization with a service area that significantly overlaps with the service area of sever al competitors will experience greater competitive pressures than an organization with a limited geographic service area in which only a single competitor operates. It is long recognized in the public administration and management literatures that a key distinction between the public, nonprofit, and private sectors is the extent to which the organizations within them operate in competitive market environments 28 As one reviewer of this paper indicated, it is also the case that organization members facing competition may choose organizational structures and stra tegies according to the nature of the competitive environment in question. While this may be true and is a potential limitation to this study, choices in organizational form as a function of competitive environments is beyond the scope of this paper.

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124 (Boyne, 2002; Bozeman, 1987, 2007; Dahl & Lindblom, 1953; Rainey, 1983, 1989; Wamsley & Zald, 197 3). Public regulatory organizations, while not immune to special interest influences and regulatory capture, face greater levels of political and regulatory services over clients paying for regulatory services (Bozeman, 2007; Nutt & Backoff, 1993; Ranson & Stewart, 1994). Political jurisdictions may limit the number Revenue streams f Together these factors indicate that public regulatory organizations face a lower level of competitive pressure th an nonprofit or private sector regulatory organizations. Within the theoretical relationship displayed in Figure 4. 2, a lower level of exposure to competitive pressures is expected to be associated with a regulatory approach that falls closer to the deter rence end of the deterrence accommodation regulatory approach spectrum. As this study measures third through the perceptions of regulatees the expectation is: H1: Public third party regulatory organizations are mo re likely to be perceived by regulatees as exhibiting a deterrence regulatory approach when compared with their nonprofit and private counterparts. objective is assumed to be revenue generation, and the primary revenue source for private regulatory organizations is fees for services. Furthermore, private regulatory organ ization service areas are not likely bound geographically by political jurisdictions,

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125 opening private regulatory organizations to a greater potential for service area overlap with certification competitors. Private regulatory organizations are thus expect ed to face a high level of competitive pressures, and the greater exposure to competitive pressures is expected to situate private third party regulators closer to the accommodation end of the deterrence accommodation regulatory approach spectrum: H2: Priv ate third party regulatory organizations are more likely to be perceived by regulatees as exhibiting an accommodative regulatory approach when compared to their public and nonprofit counterparts. Often, nonprofit service delivery is aimed at furthering a s ocial or principled cause, the subject of which is generally mission oriented (Froelich, 1999; Moore, 2000). Nonprofit organizations may draw on an array of revenue sources, from private contributions and endowment funds to membership fees to client servi ce fees (Chang & Tuckman, 1994; Fischer, Wilsker, & Young, 2011; Moore, 2000). Nonprofit organizations that rely on a mix of revenue sources face a variety of pressures and constraints in addition to competitive pressure from organizations within the same organizational field (Mendel, 2010; Rose Ackerman, 1990). For example, resource dependence theories indicate that in addition to client pressures, external funding sources such as private donations can have an impact on the manners in which nonprofit org anizations fulfill their organizational goals (Barman, 2008; Schervish, 2005). Mission oriented service delivery and more diverse revenue sources, while not completely sheltering nonprofits from a competitive environment, suggest that they will face lowe r levels of competitive pressures than primarily profit driven private

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126 organizations that rely entirely on client fees. At the same time, some reliance on fees for service means that they are likely to face more competitive pressures than their public sec tor peers. Exposure to competitive pressure that is lower than that of private third party regulators and higher than that of public third party regulators is expected count erparts, towards the middle of the deterrence accommodation spectrum: H3: Nonprofit third party regulatory organizations are more likely to be perceived by regulatees as exhibiting a more accommodative regulatory approach than their private counterparts, and a more deterrent regulatory approach than their public counterparts. While the central focus of this study is the relationship between organizational form and third public administra tion scholars that, in addition to organizational form organizations various dimensions (Bozeman, 1987; Dahl & Lindblom, 1953; Moulton, 2009; Perry & Rainey, 1988; Wamsley & Zald, 1973). Central among such publicness dimensions are the extent to which an organization is influenced by political and economic authority (Bozeman, 1987; Dahl & Lindblom, 1953; Wamsley & Zald, 1973). Thus, an organization may be considered to be economic authority it is exposed to in addition to, or in spite of, its organizational form as public, nonprofit, or private. The variable reliance of nonprofit third party regulatory administrators on client service fees reflects an organizational characteristic analogous to exposure to

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127 economic authority, and a method for exploring dimensional publicness among nonprofit third party regulators. A nonprofit regulator with greater reliance on client fees for service, relative to other revenue sources, can be considered to reflect less revenue also exposes such nonprofits to higher levels of competitive pressures, and thes e organizations are therefore likely to exhibit a more accommodative regulatory approach when compared to within sector organizations with a lower reliance on client fees. Because dimensional publicness is not the central focus of this study, this expecta tion is explored in this paper as an extension of the primary examination into the relationship between organizational form and regulatory approach: H3(b): The proportion of revenues a nonprofit third party regulatory organization derives from client fees is positively related with regulatee perceptions that reflect an accommodative regulatory approach. These hypothesized differences in third party regulatory administrator approaches are examined in this paper in the context of third party administration of NOP regulations. The extent to which such expectations generalize to other third party regulatory arrangements, or apply in other regulatory program design contexts, is returned to in the conclusion. Regulatory approach measures and data are discusse d party regulatory arrangement.

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128 The NOP Regulatory Arrangement As required by the 1990 Organic Foods Production Act (OFPA), operations that certification and adhere to national organic standards. 29 In 2012, this included 12,220 US based certified organic producers. Reflecting the diversity of US agriculture, generally, certified organic operations produce a wide variety of products, and are categorized according to four organic certification types : crops, wild crops, livestock and handling. The NOP program design is based on International Organization for Standardization principles for third party accreditation and certification systems (see Figure 1.2) As such, the NOP is responsible for accred iting third party organizations to serve as regulatory administrators. T hird party administrator s in turn certify operations according to national organic regulations, and then inspect certified operations for regulatory compliance. To attain organic ce rtification, operations must first submit an organic systems plan to a third party administrator. Once an organic systems plan has been reviewed and approved, the operation is then inspected for congruence with the organic systems plan. According to NOP regulations, certification must be renewed once a year, which entails submission of any changes to the organic systems plan and a yearly on site inspection. Unannounced inspections and product chemical residue testing are allowed, but not required, by NOP regulations. 30 29 Operations that earn less than $5,000 a year from organic product sales are exempt from this requirement. 30 Shortly after this study was conducted, the NOP established guidelines that third party administrator s test at least five percent of the products t hey certify for the presence of substances prohibited by NOP regulations.

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1 29 Third party administrator responses to noncompliances follow one of two forms. The first is a written notice of noncompliance, which is simultaneously sent to an operation and filed with the NOP. A notice of noncompliance outlines an ope regulatory violation and the date by which a noncompliance must be corrected. The second response that a third party administrator may take in response to operation te. Although third party administrator s may administer notices of noncompliances and may appeal enforcement decisions through the USDA. Following the NOP regulations, th e USDA may choose to pursue legal action against willful regulatory violations, such as fraudulent organic certifications, through financial penalties of up to $11,000 per violation. The NOP accredited 48 US based third party administrator s as of 2013. Th ese organizations vary widely in the number of operations that they certify, ranging from just over a dozen (Monterey County Organic) to 2,800 (California Certified Organic Farmers [CCOF]). Seventeen are private, for profit organizations, eleven are nonpr ofits, and 20 are from the public sector. Public third party administrator s can be further broken down into three different forms: 17 fall under state government programs, such as the Colorado Department of Agriculture Organic Program, two fall under Cali fornia Industry. Organic food production has exhibited double digit year over year growth since the 1990s, accounting for a $59 billion market (Sahota, 2012). This sust ained growth

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130 highlights the practical importance of the NOP and understanding the implications of its third party regulatory arrangement. This paper seeks to provide a better understanding of the NOP, and the factors that influence the behaviors of third party regulatory organizations generally, through an investigation of difference in public, Study Design Regulatory approach data for this study are drawn from a survey of regulated entities, in which regulatees are asked several questions pertaining to the behaviors of their third party administrator s This section first discusses the regulatee sample. Nex t, regulatory approach measures are presented. Independent variable measures are then provided, including data drawn from two additional data sources: the NOP database of certified organic operations and nonprofit third party administrator Internal Revenu e Service (IRS) Form 990 tax filings. Regulatee Sample Third party administrator regulatory approach data were collected through an online survey of NOP certified organic producers in the winter of 2013 2014. All domestic certified operations holding any combination of crops, wild crops, and livestock certifications for which the USDA listed a valid email address were included, representing approximately half of all certified organic producers. Processing operations that held only handling organic certification were excluded. 6,273 domestic certified organic producers were sent a sur vey request. Responses were received from 1,055 producers for a response rate of 17 percent.

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131 Three considerations regarding the sample are worth noting, as they threaten the generalizability of analysis results considerably. First, the USDA list of cer tified organic producer emails is made up of operations certified by 41 of the 48 domestic third party administrator s. The study results, therefore, cannot be generalized to the seven third party administrator s missing from the sample. Second, operation s for which the USDA does not report a valid email address were excluded from the sample. notoriously difficult population to survey, and a response rate of 17 percent is co nsistent with other farmer survey research (Pennings, Irwin & Good, 2002), however, the relatively low response rate suggests the study findings are particularly susceptible to nonresponse bias. Three steps were taken to gauge the impact of nonresponse bia s in the study, the details of which are provided in Appendix C First, a wave analysis was conducted based on the assumption that the answers of survey late responders are more likely to approximate the answers of non respondents than those of individual s that readily respond to survey requests (e.g.: Kauppi & van Raaij, 2014; Rainey, Pandey & Bozeman, 1995). The analysis compared the responses of early survey respondents to those that responded after follow tically significant differences between the dependent variable measure responses of different survey waves were found ( p <0.05). Second, 20 non respondents were contacted by phone and verbally administered five survey questions. Nonparametric tests (due t o the extreme difference in group size) comparing these responses with those of the online sample revealed no statistically significant differences ( p <0.05). Although these do not

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132 eliminate the possibility of nonresponse bias impacting the findings of the study, the results suggest that the threat of nonresponse bias may be small. USDA data indicates a fair, but not perfect, representation of the U.S. certified organic produce size relative to the size of other operations producing similar products, 51 percent farme rs are characterized by relatively small operations (Greene, Slattery, & McBride, incorporated in study findings. The reported location s of survey respondents suggest a fairly representative geographic distribution of certified organic operations, with the exception of underrepresentation among Midwest organic farmers, at 16 percent of respondents. The highest percentage of survey respondents were from the West (29 percent), followed by the Northwest (22 percent) and Northeast (18%). Collectively, the Southwest and Southeast made up 15 percent of the survey respondents. Of the four USD A organic certification types, the vast majority held organic crop certification, 17 percent held organic livestock certification, and less than four percent held organic certification for wild crops. The most frequently reported commodity types produced by survey respondents were vegetable, grain, fruit, and herb crops. A much smaller percentage of respondents reported eggs, dairy, poultry, or livestock commodities. The breakdown of survey respondents by certification and commodity

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133 types roughly mirrors production trends in U.S. organic food production writ large ( Dimitri & Oberholtzer, 2009; Greene, Slattery, & McBride, 2010). Regulatory Approach Measures In this study, regulatory approach is conceptualized a combination of a trictness in regulatory interpretation, propensity to administer sanctions, flexibility, and willingness to provide assistance. These constructs and their associated survey measures are presented in Table 4.1. For each statement, survey respondents were asked to indicate their level of agreement using a five Table 4.1. Regulatory approach construct measures Construct Query Strictness in regulatory interpretation My certifier strictly interprets the National Organic Program regulations. Propensity to administer sanctions My certifier always administers notices of noncompliance for serious issues. Flexibility Before administering a formal notice of noncompliance, my certifier always allows me to correct the noncompliance issue. Willingness to provide technical assistance My certifier frequently offers information and/or assistance that help me comply with National Organic Program regulations. NOTE: Respondents were asked to indicate their level of agreement with each statement on a five Relying on regulatee perceptual data to measure regulatory approaches deviates from past research on the monitoring and enforcement actions of regulatory organizations and represents trade offs in terms of measurement validity. Cross sectional survey data does not provide, for example, the rich descriptive data captured

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134 by in depth case studies (e.g.: Hawkins, 1984; Hutter, 1997). Additionally, surveying regulatees limits the collected data to regulatory actions observed, remembered, and reported by regul ated entities. A strength of the approach over past studies that have relied on self reported regulator data (e.g.: Gormley, 1998; May & Burby, 1998; May & Winter, 2000), however, is that regulatees may face fewer pressures to report y actions in a manner that could bias study findings. Independent Variable Measures The primary independent variable of interest third party administrator organizational form was operationalized as a third s legal designation as a governmental, nonprofit, or private for profit organization. In addition to third party administrator organizational form the number of operations that an administrator certifies organic was identified via the NOP certified organic operation database, t o capture differences across administrator s separate of organizational form such as number of employees and professionalization. To explore the effect of nonprofit third party administrator dimensional publicness, the proportions of third party administr ator revenue derived from client fees for third party administrator s represented in the regulatee survey, based on revenue data pulled from third party administ rator IRS Form 990 tax filings. 31 31 For seven of the eight nonprofit third party administrator s, revenue derived from organic certification services was listed as a distinct revenue source under the Form 990 program generated revenue category. This was not the case for one of the nonprofit third party administrator s, precluding this organization from this sub sample analysis.

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135 As the level of competitive pressures an organization experiences is a central theoretical element of the study, a Herfindahl Hirschman Index (HHI) measure of market concentration was constructed as a proxy for the compet itive pressures third party administrator s might face by geographical area (e.g.: Hannan, 1997). The HHI roughly represents the proportion of third party administrators to the number of wing previous constructions of HHI measures (e.g.: Hannan, 1997), a market share value for each third party administrator operating in a given state was calculated by dividing the number of clients for each administrator in the state by the total number of certified operations in the state. Each third party administrator market share value was then squared, and the results summed for all administrators in a given state, producing a state HHI with potential to range from 0 (not concentrated) to 10,000 (high ly concentrated). 32 perceptions of regulatory administration, data pertaining to several corresponding variables were collected. These variables are described here, and in Append ix J First, of quasi 32 An alternative manner of constructing the market concentration measure is to calculate th e proportion of clients that a third party administrator certifies relative to all of the certified operations across the same geographical area. The chosen method was preferred due to the difficulty in determining the boundaries of third party administra tor states that a third party administrator offers services in constitute the third party administrator radicted by the fact that many administrator are conc entrated in a limited number of states, while extending to only a few operations immediately across the geographical boundaries of those states.

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136 account for the extent to which increased profits motivate a responden t to pursue for the extent to which supporting the organic movement motivates a respondent to pursue organic certification. appropriateness and the difficulty they experience in complying with those regulations may impact their perception of measure the extent to which the NOP regulations reflect wha t the respondent considers for the relative difficulty the respondent experiences in complying with the NOP gathered to account for the Fourth, as a proxy for production characteristics such as regulatee professionalization and operational sophistication, operation size data were gathe red, measured on a five changes in organic certification resulting from the enactment of NOP regulations may systematically influence regulatee perceptions of organic standard administration To organic certification prior to NOP enactment in 2002. Finally, because operations that include processing and distribution capabilities might differ from their non pro cessing peers, data pertaining to the organic certification scopes (crop, livestock, handling and wild crop) held by each respondent were gathered to distinguish these operations (holding a handling scope).

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137 Findings The central hypotheses outlined in this paper suggest that in the administration of uniform regulatory standards, public third party regulatory organizations are more likely to be perceived by regulatees as exhibiting a deterrence regulatory approach (H1), private third party regulatory organizations are more likely to be perceived as exhibiting an accommodative regulatory approach (H2), and nonprofit third party regulatory organizations will be situated between their public and private counterparts on the regulatory approach spectrum (H3). Study findings are presented in this section in relation to these theorized relationships. Descriptive findings are presented, below, and then multilevel analysis is used to independently account for differences in regu latory approaches associated with third party organizational form and those attributable to respondent level attributes. Table 4. 2 provides the mean survey respondent rating, by third party administrator organizational form for the four regulatory approa ch constructs: strictness of regulatory interpretation, propensity to administer sanctions, flexibility, and willingness to provide technical assistance. Countering study expectations, few noticeable differences (as measured by regulatee perceptions) bet ween public, nonprofit, and private third party administrator regulatory approaches are evident. On average, survey respondents tended to agree that their administrator takes a strict interpretation of the NOP regulations and always administers notices of noncompliance for serious noncompliances, regardless of third party administrator organizational form Nonprofit administrators display the highest mean measure of flexibility, followed by private administrators with public administrators exhibiting the lowest

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138 mean measure of flexibility. Consistent with study hypotheses, public administrators display the lowest mean willingness to provide technical assistance, while the mean willingness to provide technical assistance of private administrators is highe r than that of public and nonprofit administrators Non parametric Kruskal Wallis tests for differences in survey respondent perceptions of regulatory approach according to administrator organizational form find no statistically significant differences fo r any of the measures at the p <0.05 level. Table 4.2. Regulatory approach descriptive statistics by third party administrator organizational form Mean Public Mean Nonprofit Mean Private Overall Mean SD Min Max Strictness of regulatory interpretation 1.17 1.19 1.26 1.20 0.75 2 2 Propensity to sanction for noncompliances 0.84 0.92 0.84 0.88 0.82 2 2 Flexibility 0.27 0.43 0.33 0.36 1.01 2 2 Willingness to provide technical assistance 0.52 0.65 0.73 0.63 1.04 2 2 To further investigate the relationship between third party regulatory organizational form and the regulatory approach constructs, multilevel analyses were conducted. Multilevel analysis was used due to the potential for substantial intraclass correlations that violate basic assumptions of generalized linear regression (Heinrich & Lynn, 2000). For example, taking the mean of multiple respondents to serve as regulatory approach construct indicators at the administrator level violates the indepe ndence of observation assumption, and variance in the number of respondents per administrator violates the assumption that the number of independent observations if equal across variables. Moreover, multilevel modeling allows for the

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139 partitioning of varia tion in regulatory approaches associated with the third party administrator and individual respondent level attributes. Multilevel analysis was performed for each of the regulatory approach constructs, with respondent characteristics situated at the first level of the analysis and administrator variables representing level two. Data were grouped at level two by individual third party administrator ( N =41), and dummy variables for private and nonprofit third party administrator s represent administrator organizational form with private sector administrators serving as the reference group. The number of operations that a third party administrator certifies organic is log transformed due to the wide range of operations by administrator and to facilitate interpretation of the results. Analysis results are reported in Table 4. 3. Mirroring the descriptive statistics results, only limited support for study hypotheses is evident in the findings. In all but one instance, the relationship between third party administrator organizational form and regulatory approach constructs is statistically insignificant at the p <0.05 level. Level two variance estimates indicate that virtually none of the variation observed in the strictness of regulatory interpretation de pendent variable is attributable to level two ( third party administrator ) effects, while around two percent of regulatory construct variance is explained by level two in the remaining three models. 33 33 The limited variation at level two and statistically insignificant likelihood ratio test statistics for th e first two models suggest that multilevel modeling performs no better than standard linear regression in explaining dependent variable variation in some of the models. In addition to the multilevel analyses, ordered logit analyses with clustering by thir d party administrator were conducted, with no substantial difference between the results of the two analytical methods. Fixed effects analyses were not used due to the constant relationship between individual third party administrator and administrator se ctor. Multilevel analysis results are reported for the analytical and theoretical reasons cited in this paper.

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140 Limited support for the study hypotheses is evident in the relationship between third party administrator organizational form and perceived provision of technical assistance. The findings indicate that, nonprofit third party administrator s are less likely than private administrators to be perceived as provid ing information and other assistance that aids regulate e s in complying with NOP regulations, and that public administrators are less likely to be perceived as providing such assistance than their nonprofit and private sector counterparts. The nonprofit th ird party administrator coefficient is not statistically significant, while the public organizational form coefficient is statistically significant at the p <0.05 level.

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141 Table 4.3. Multilevel analysis of the relationship between third party administrator and respondent level characteristic s and the regulatory approach constructs Strictness of regulatory interpretation Administer sanctions Flexibility Provide technical assistance Level 2: Third party administrator attributes Nonprofit administrator (Reference = Private) 0.06 (0.08) 0.10 (0.09) 0.18 (0.11) 0.07 (0.13) Public administrator (Reference = Private) 0.12 (0.09) 0.11 (0.10) 0.11 (0.13) 0.35 (0.14) ** Number of clients (Log transformed) 0.04 (0.03) 0.08 (0.04) 0.11 (0.05) ** 0.10 (0.06) Level 1: Respondent attributes State HHI 0.20E 5 (0.14E 4) 0.50E 5 (0.17E 4) 0.22E 5 (0.21E 4) 0.21E 4 (0.23E 4) Profit motive 0.02 (0.02) 0.06 (0.02) ** 0.01 (0.03) 0.03 (0.03) Organic movement motive 0.10 (0.02) *** 0.03 (0.02) 0.06 (0.03) ** 0.07 (0.03) ** Regulatory assessment 0.11 (0.03) *** 0.03 (0.03) 0.07 (0.04) 0.16 (0.04) *** Regulatory experience 0.02 (0.03) 0.07 (0.03) ** 0.02 (0.04) 0.02 (0.04) Predisposition towards laws 0.00 (0.03) 0.04 (0.03) 0.04 (0.04) 0.00 (0.04) Operation size 0.03 (0.03) 0.08 (0.03) ** 0.06 (0.04) 0.04 (0.04) Pre NOP certification 0.04 (0.06) 0.08 (0.06) 0.05 (0.08) 0.12 (0.08) Handling certification scope 0.07 (0.07) 0.00 (0.08) 0.09 (0.10) 0.08 (0.10) Constant 1.00 (0.25) *** 0.20 (0.31) 0.91 (0.38) ** 1.30 (0.43) *** Percent variation explained by level 2 (certifier) 0.0% 1.9% 1.6% 2.8% Log likelihood 869 913 1077 1113 N 784 766 761 777 NOTE: *significant at p <0.10, ** significant at p <0.05, ***significant at p <0.01; Standard errors in parentheses; Level 2 (certifier) N = 41

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142 Looking to the direction of the relationship between third party administrator organizational form and regulatory approach, as indicated by coefficient signs, the remaining results are mixed in regards to study expectations. The relationship between third party administrator organizational form regulatory ap proach directly counters study expectations. As indicated by coefficient signs, nonprofit and public administrators on average are perceived by regulatees as exhibiting less strict interpretations of NOP regulations than their private counterparts. Consi stent with study expectations, nonprofit third party administrators are on average perceived more likely than private third party administrators to administer sanctions for serious noncompliances, and public third party administrators are on average percei ved more likely to administer sanctions for serious noncompliances than their private and nonprofit counterparts. Flexibility construct findings indicate that nonprofit third party administrators are on average perceived more likely than private third par ty administrators to allow regulatees to correct for noncompliances prior to sanctioning them, while public administrators are perceived to be less likely than private third party administrators to make such an allowance. Notably, market concentration (as measured by state HHI) has a statistically insignificant relationship with regulatee perceptions of regulatory behaviors, third iors. 34 Analysis findings suggest that the 34 To investigate how the relationship between third party administrator sector and perceived regulatory behaviors might be moderated by the com petitive environment in which a third party administrator operates, cross level interactions between the nonprofit/public sector dummy variables and state HHI measure were included in additional analyses. The interactions were statistically insignifica nt, however, and did

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143 third party administrator size, as measured by the number of operations an administrator certifies organic, may explain some variation in third party administrator regulatory approaches. A higher number of certif ication clients is positively associated with a greater perceived propensity to administer sanctions, lower perceived flexibility, and lower perceived provision of technical assistance. These relationships are statistically significant at the p < 0.10 level, and collectively suggest that the more certification clients a third party administrator has, the more likely they are to fall towards the deterrent end of the regulatory approach spectrum. To summarize the multilevel analysis findings, some support for the hypothesized relationship between third party administrator organizational form and regulatory approaches was found in the provision of technical assistance measure. Limited or no support for study expectations linking administrator organi zational form and strictness of regulatory interpretation, propensity to administer sanctions for noncompliances, or regulatory flexibility was indicated by analysis results. Secondary Analysis Findings: Nonprofit Dimensional Publicness and Regulatory Ap proaches As an exploration of the relationship between dimensional publicness and regulatory appro aches, secondary analyses were run including only data pertaining to seven nonprofit third party administrator s reflected in the regulatee sample. In these a nalyses, the proportion of administrator revenues derived from fees for certification services was included as a proxy for economic authority dimensional publicness, with d not substantively affect analysis results. They were omitted from the reported analyses in the interest of parsimonious modeling and easier to interpret findings.

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144 that the proportion of revenues derived from client fees is likely to be positively related with regulatee perceptions that reflect an accommodative regulatory approach (H3(b)). The results of these analyses are reported in Table 4. 4. 35 Analysis results lend little support to the expectation that a higher reliance on client fee revenue is associated with an accommodative regulatory approach. Consistent with the expectation, greater reliance on client fee revenue is negatively associated with regulatee pe rceptions of third party administrator regulatory interpretation. Contrary to the expectation, greater reliance on client fee revenue is positively associated with regulatee perceptions of third party administrator er sanctions, and negatively associated with regulatee perceptions of third party administrator provision of technical assistance. None of these relationships are statistically significant ( p <0.05). The relationship between client fee revenue and third p arty administrator flexibility is statistically significant, however, the finding counters study expectations as it indicates that the greater the proportion of revenue that a nonprofit third party administrator derives from client fees, the less likely a regulatee is to report administrator flexibility. 35 There is some concern that a small n at level two in multilevel analyses, such as that applied in these analyses, may be problematic and can lead to errors such as biased estimates of second level standard errors (e.g.: Maas & Hox, 2005). In addition to the multilevel analyses, ordered logit analyses with clustering by third party administrator were again conducted, with no substantial difference between the results of the two analytical methods. Multilevel analysis results are reported for the analytical and theoretical reasons cited in thi s paper.

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145 Table 4.4. Multilevel analysis of nonprofit third party administrator dimensional publicness measure and respondent level characteristic relationship with regulatory approach constructs Strictness of regulatory interpretation Administer sanctions Flexibility Provide technical assistance Level 2: Third party administrator attributes Client fee revenue .23 (0.30) 0.22 (0.34) 1.08 (0.42) ** 0.59 (0.40) Number of clients (Log transformed) 0.05 (0.06) 0.04 (0.07) 0.04 (0.09) 0.07 (0.08) Level 1: Respondent attributes State HHI 0.50E 4 (0.27E 4) 0.84E 5 (0.31E 4) 0.27E 4 (0.37E 4) 0.26E 4 (0.35E 4) Profit motive 0.00 (0.03 0.04 (0.04) 0.09 (0.05) 0.09 (0.04) ** Organic movement motive 0.09 (0.03) *** 0.02 (0.04) 0.03 (0.05) 0.06 (0.04) Regulatory assessment 0.10 (0.04) ** 0.03 (0.05) 0.02 (0.06) 0.06 (0.06) Regulatory experience 0.03 (0.04) 0.07 (0.05) 0.06 (0.06) 0.04 (0.05) Predisposition towards laws 0.01 (0.04) 0.08 (0.05) 0.07 (0.06) 0.04 (0.05) Operation size 0.01 (0.04) 0.04 (0.05) 0.02 (0.06) 0.10 (0.06) Pre NOP certification 0.04 (0.08) 0.13 (0.09) 0.01 (0.11) 0.23 (0.11) ** Handling certification scope 0.09 (0.10) 0.01 (0.12) 0.10 (0.14) 0.23 (0.14) Constant 1.56 (0.49) *** 0.78 (0.55) 1.06 (0.67) 2.04 (0.64) *** Percent variation explained by level 2 (certifier) 0.7% 2.7% 2.6% 6.1% Log likelihood 415 447 525 512 N 373 364 366 369 NOTE: *significant at p <0.10, ** significant at p <0.05, ***significant at p <0.01; Standard errors in parentheses; Level 2 (certifier) N =7

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146 Discussion The aim of this study is to investigate the extent to which organizational form affects third administration of uniform regulatory standards. The empirical investigation of third party certification organizations administering US organic regulations suggests that, in this case, third party administrator organizational form has an extremely limited approaches. An exploratory analysis of dimensional publicness through nonprofit third party ad between reliance on client fee revenue and perceived regulatory approaches. This In this paper, third party adm inistrator organizational forms and regulatory approach es were theoretically linked through the suggestion that the more competitive pressure a third party regulatory organization is exposed to, the closer they are likely to be situated to the accommodatio n end of the deterrence accommodation regulatory approach spectrum. Hypotheses were derived from the assumptions that public sector organizations are exposed to less competitive pressure than their private and nonprofit counterparts, that private organiza tions experience the highest level of exposure to competitive pressures, and that nonprofit organizations fall somewhere in between. The mostly null findings reported in this paper may reflect faults with these assumptions. For example, a greater amount of competitive pressure variability in each organizational form may result in within sector regulatory approach variance, while not refuting the theorized relationship between competitive pressure and regulatory

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147 approach offered in the paper. Such an expl anation is countered, however, by analysis findings which suggest no relationship between competitive pressures resulting from market concentration and regulatee perceptions of third regulatory behaviors. While the central focus of th is study was the relationship between third party organizational form and regulatory approaches, a secondary analysis explored the relationship that dimensional publicness shares with nonprofit third party fees is negatively associated with perceived regulatory flexibility. One explanation for this finding is that hi gher reliance on client fees for service is reflective of an organizational scope more likely limited to certification and regulatory functions, resulting in lower flexibility in regulatory application. A second explanation is that nonprofit third party a dministrators that are highly reliant on certification fees for service may be more concerned with the possibility of losing NOP accreditation (and thereby certification revenues), resulting in more conservative regulatory behaviors. Such explanations des erve future attention. That flexibility was a regulatory approach measure not significantly related to third party administrator organizational form but both organizationa l form and dimensional notions of organizational publicness offer explanatory potential in the study of organizational behavior (Bozeman & Bretschneider, 1994).

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148 An important regu latory arrangement in question places constraints within which regulatory administrators must operate ( Black, 2002, 2008; May, 2002). In the case of US organic food regulation, the NOP acts as an accreditation body charged with monitoring the third party administrator behavior, in part to ensure consistent application of NOP to align the practices of the various independent third party administrator s to which its re gulatory authority are deferred. Such an explanation is a favorable assessment of the impact of institutional pressures, such as accreditation processes, on organizational operations (Frumkin & Galaskiewicz, 2004; Powell & DiMaggio, 1991). The explanation also has potentially important implications for regulatory and public administration literatures, as addressed further in the conclusion. A central claim in this paper was that a regulatory arrangement that relies on independent third party organizations for program delivery draws attention to the organizational characteristics of the entities charged with regulatory administration (Black, 2002; van der Heijden, 2010a, 2 010b). It is possible that organizational form at least in this case, is not the most important organizational attribute in explaining differences in regulatory approaches. The number of operations that NOP third party administrator s certify was include d in the analysis in an attempt to account for organizational attributes outside of organizational form and the measure indeed had statistically significant relationships with several third party administrator regulatory approach constructs. The finding is consistent with public management literature

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149 indicating that sectoral impacts should be considered in conjunction with other organizational characteristics (Andrews, Boyne, & Walker, 2011; Boyne, 2002; see also Heinrich, Lynn & Milward, 2010). Finally, while it was argued throughout this paper that third party organizational characteristics may play an important role in explaining third party regulatory approaches, multilevel analysis was used to account for variations in regulatory approach perceptual d ata as a function of respondent level attributes. The findings suggest that in this case individual level characteristics are more consistent variables in explaining regulatee perceptions of regulator monitoring and enforcement behaviors than administrato r organizational form evaluation of the extent to which NOP regulations reflect their ideal organic standards strictness of regulatory i nterpretation, propensity to administer sanctions for minor noncompliances, flexibility and provision of technical assistance. Respondents that reported pursuing organic certification to support the organic movement were more likely to rate their administ rators higher on strictness of regulatory interpretation, propensity to administer sanctions, and provision of technical assistance. Higher reported difficulty in complying with NOP regulations was associated with higher regulator administration of sancti ons for noncompliances. Regulatory literature indicates that regulatee perceptions, such as perceived fairness of regulations and competence of regulators, have measureable impacts on levels of compliance (May, 2005; Winter & May, 2001, 2002). In unders tanding the effectiveness of regulatory program delivery, and differences associated with

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150 regulatory administration through third party organizations, the lessons of this literature and the findings of the current study suggest that individual level influe nces matter, and at times may matter more than the context in which regulatees are embedded. Future research can further examine the extent to which regulatee characteristics impact their perceptions of monitoring and enforcement actions, and how this may relate to compliance among regulated entities. C onclusion This paper investigated the extent to which organizational form (public, nonprofit, private) affects third in the administration of uniform reg ulatory standards. Third party administrator organizational form was linked theoretically with monitoring and enforcement behaviors through the competitive pressures to which organizations are assumed to be exposed. Comparing regulatee perceptions regard ing the regulatory behaviors of the public, nonprofit, and private third party organizations charged with US organic regulation administration, little systematic variation in regulatory approaches was found to result as a function of administrator organiza tional form Furthermore, countering the assumption that competitive pressures are likely to influence third party administrator regulatory behaviors, market concentration measures shared no apparent relationship with regulate perceptions of third party a dministrator regulatory behavior. The paper concludes with three central contributions offered by this study. First, study findings suggest that organizational differences among the entities charged with regulatory program delivery do not necessarily lea d to substantial divergences in their administration of uniform standards. Recent regulatory

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151 scholarship draws attention to the broadening of monitoring and enforcement responsibilities to include nongovernmental actors such as for profit organizations, h ighlighting the concern that incentives that conflict with regulatory aims may impair regulatory stringency in application (Black, 2002; van der Heijden, 2008, 2010a, 2010b). According to the data analyzed here, in the case of NOP third party administrati on little evidence is found to substantiate this concern. One possible reason for relative consistency between third party regulatory administration found in this case is that the regulatory arrangement in question in this instance third party accredita tion by the NOP may effectively standardize the practices of regulatory administrators. Future efforts should examine the extent to which, and how, accreditors or other oversight over third party administrators influence regulatory program delivery. Second, although differences between public and private (and to a lesser extent, nonprofit) organizations constitute a small sub literature within the field of public administration (e.g.: Boyne, 2002; Bozeman, 1987, 2007; Dahl & Lindblom, 1953; Rainey, 19 83, 1989; Wamsley & Zald, 1973), regulation remains a little explored policy area of cross sector differences. As was suggested in the discussion, this literature indicates that the impacts of organizational form are often moderated by other organizationa l attributes (Andrews, Boyne, & Walker, 2011; Boyne, 2002), which may impact of regulatory context and external constraints such as those imposed by the NOP as an accre ditation body. These factors imply that scholars interested in differences in organizational form should seriously consider what Bozeman (2013, p. 175) refers to as

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152 based incentive organization differences are examined. Regulatory programs such as the NOP may offer fruitful environments in which to explore the interaction between cross sector organizational charact eristics and the policy environments in which they operate. Third, while this study was primarily concerned with the relationship between third organizational form and their regulatory approaches, exploring the influence of a dimens ional publicness measure among nonprofit third organizational revenue sources are associated with perceived regulatory behaviors. The findings suggest that future research on the rela tionship between third party regulatory administrator organizational characteristics and regulatory behavior would benefit by expanding the focus of inquiry beyond third party organizational form to include dimensional publicness considerations such as pol itical and economic authority (Bozeman, 1987; Dahl & Lindblom, 1953; Wamsley & Zald, 1973). This suggestion corroborates the argument made by organizational scholars that both organizational form and dimensional publicness should be incorporated into comp arative studies of organizational behavior (Boyne, 2002; Bozeman, 1987; Bozeman & Bretschneider, 1994). The extent to which the findings of this study generalize to other third party regulatory arrangements is a promising line of research that can augm ent our understanding of the linkage between regulatory program design and regulatory

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153 design: federally accredited public, nonprofit, and private organizational form third par ty organizations administering quasi voluntary regulations in a competitive environment. As referenced throughout this paper, however, these findings have meaningful implications relative to emerging innovations in regulatory design. For example, van der Heijden (2010a, 2010b) questions whether private sector involvement in Australian building regulation has the potential to negatively impact regulatory stringency. Scholars have raised similar concerns in regards to evolving quasi governmental and volunt ary regulatory regimes ranging from forestry regulation (e.g.: Meidinger, 2006; Pattberg, 2005) to ski industry governance (e.g.: Steelman & Rivera, 2006). While the study presented in this paper is far from an apples to apples comparison to these exampl es, the findings offer an empirically informed tentative proposal that competitive regulatory arrangements relying on cross sector third parties for program delivery do not necessarily lead to acute administrative variances in the enforcement of uniform re gulatory standards. Future research can further examine under which regulatory arrangements third party administrator characteristics do or do not impact regulatory approaches, and how. Such efforts hold the potential to not only improve theoretical link ages between third party regulator characteristics and program outputs, but to help identify the regulatory program design innovations that hinder and promote regulatory policy goals.

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154 CHAPTER V CONCLUSION Recent decades have witnessed the transfor mation of regulatory delivery through a number of innovations deviations from traditional program designs based on government agency control over regulated activities through rule making and subsequent agency monitoring for regulatory compliance (Black, 2002, 2008; Levi Faur, 2011; May, 2007). This research was motivated by the observation that w hile such innovations on regulatory program design are well documented in the regulatory literature (e.g.: Levi Faur, 2011; Potoski & Prakash 2009; van der Heijden, 2008), to da te empirical examination of design innovation implications is notably limited. This dissertation sought to address this limitation through an investigation of certif ication as a mode of regulation to provide a better understanding of the implications of a competitive third party regulatory design. The research was conducted within the context of third party administration of U.S. organic regulations under the National Organic Program (NOP). The investigation focused on the relationship between a key third party administrator characteristic organizational form as public, nonprofit, and private and differences in third party administration of regulatory standards. The research was guided by the ove rarching question: How does organizational form (public, nonprofit, private) affect third The association between third party regulatory administrator organizational form and three facts of regu latory administration were studied: third party administrator expertise, service s and regulatory approaches.

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155 The dissertation was informed by theoretical overlap between public administration and management scholarship regarding organizational differenc es associated with organizational form (e.g.: Boyne, 2002; Bozeman, 1987, 2007; Rainey, 1983, 1989; Wamsley & Zald, 19732) an d three bodies of literature: (i ) knowledge management literature regarding organizational knowledge acquisition and transfer (e.g.: Hislop, 2013), ( ii ) organization theory literature regarding organizational service responses to competitive pressures (e.g.: Andrews, Boyne, & Walker, 200 6 ; Walker & Jeans, 2001; Walker, Jeans & Rowlands, 2002), and ( iii ) r egulatory administration literature regarding variations in regulatory behavior (e.g.: Gormley, 1998; May & Burby, 1998; May & Winter, 2000; May & Wood, 2003). The research was conducted using a mixed method research design (Leech & Onwuegbuzie, 2006; Teddlie & Tashakkori, 2009), with reliance on a survey of certified organic producers (organic food regulatees) for the majority of the empirical analyses. The survey was informed by preced ing in depth interviews with purposively sampled organic regulation experts ( n =6). Interview transcripts were also used to help explain the findings of quantitative data analysis findings. Certified organic producer survey data were compl e mented in the s tudy of third party regulatory administrator services through coding of third party administrator websites. Supplementary data were extracted from the NOP maintained database of certified organic operations and nonprofit third part y administrator IRS tax filings. This conclusion provides a discussion of the findings from this dissertation in four parts. First answer to the research question Second research limitations are disc ussed.

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156 The dissertation concludes with an examination of this contribution to the literature on regulatory program designs in particular, and other elements of the public affairs literature. Key Findings This research sought to better understand the implications of a competitive third party regulatory program design through the question: How does organizational form (public, nonprofit, private) affect third regulat ory program? The answer to this question can be summarized in two sente nces: T he findings from this research indicate that in the context of U.S. organic food regulation, third party administrator organizational form is associated with two facets of regul atory administration : third party party administrators offer and perform. Few systematic differences are found in public, nonprofit, and private third s. These findings are provided in more detail according to the dissertation chapter from which they are drawn, below Table 5.1 presents the findings alongside the relevant theoretical propositions tested in this dissertation Chapter 2 investigated the relationship between third party administrator organizational form and organizational expertise. Two types of expertise were conceptualized and measured: regulatory expertise, the knowledge and skills that regulatory officials e xhibit regarding the regulatory program they are charged with administering, and substantive expertise, in this context the knowledge third party administrators exhibited regarding organic practices. Results from a nation wide survey of certified organic producers indicate that nonprofit third party organic food regulation administrators exhibit higher levels of both regulatory and substantive expertise when compared to their public and private counterparts. No significant

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157 differences in expertise were fo und between public and private third party administrators. Chapter 3 investigated the relationship between third party administrator organizational forms and administrator service s. Third party services were assessed in two manners. First, third party administrator service diversification was studied through an examination of the service categories identified on administrator websites. Second, service quality differences were studied through a nation wi de survey of certified organic producers. The findings indicate systematic differences in service diversification and quality according to third party administrator organizational form Public third party administrators were least likely to emphasize per ipheral services in the administration of organic food regulations. Nonprofit third party administrators seem to emphasize mission oriented services, such as advocacy related to organic food policy and educational services pertaining to organic practices. Private third party administrators appear to emphasize the replication of food labeling and certification Chapter 4 investigated the relationship between third p arty administrator Third party perceptions of third party administrator : (i) strictness of regulatory interpretat ion, (ii) propensity to sanctions, (iii) exhibited flexibility, and (iv) willingness to provide technical assistance. The findings indicate that little systematic variation in regulatory approaches can be attributed to administrator organizational form The facet of

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158 regulatory approach in which organizational form appears to play a role is found in public third vision of technical assistance when compared to their private sector counterparts. Table 5.1. Disser Theoretical expectation Findings Third party regulatory administrator expertise (Chapter 2) H1: Nonprofit third party regulatory administrators will be perceived as exhibiting the highest levels of regulatory and substantive expertise, compared to their public and private counterparts. Supported H2: Private third party regulatory administrators will be perceived as exhibiting higher levels of regulatory and substantive expertise than their public counterparts. Unsupported Third party r egulatory administrator services (Chapter 3) H3: Public third party regulatory administrators will exhibit fewer, and lower quality, services than their nonprofit and private counterparts. Supported H4: Nonprofit third party regulatory administrators are more likely to exhibit service diversification, and higher quality of services, in services that align with social and advocacy goals. Supported H5: Private third party regulatory administrators will exhibit service diversification, and higher quality of services, in the replication of core services. Supported Third party regulatory administrator regulatory approaches (Chapter 4) H6: Public third party regulatory administrators are more likely to be perceived by regulatees as exhibiting a deterrent regulatory approach when compared with their nonprofit and private counterparts. Unsupported H7: Nonprofit third party regulatory administrators are more likely to be perceived by regulatees as exhibiting a more accommodative regulatory approach than their private counterparts, and a more deterrent regulatory approach than their public counterparts. Unsupported H8: Private third party regulatory administrators are more likely to be perceived by regulatees as exhibiting an accommodative regulatory approach when compared to their public and nonprofit counterparts. Unsupported

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159 Other Notable Findings Although the central focus of this research was the relationship between organizational form and third party regulatory administration, the majority of this party regulatory a dministration findings are detailed in the empirical chapters of this dissertation. Two notable observations from these findings are offered here. First, to account for characteristics that might differentiate third party administrat ors of U.S. organic regulations in addition to organizational form, many of party administrator certifies as organic as a proxy for third party administrator size. The number of certification clients held by third party administrators shared a significant relationship with two aspects of regulatory administration. T hird party administrator size was related to administrator expertise: the findings indicate that the larger a third party adminis trator, the lower their perceived levels of expertise, from the perspective of regulatees. T hird party administrator size was also related to the flexibility they exhibit in the application of regulatory standards: the larger the third party administrator the less likely regulatees are to perceive flexibility on the part of a third party administrator. These findings suggest that regulatory administrator size may be an important consideration in attempting to understand administrative behaviors. Second, the analyses conducted in this research included a variety of su rvey respondent characteristics have on perceptual data Analysis findings indicate that several of these variables are

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160 perceptions of regulatory administration. For example, the more a producer is motivated by a desire to further the organic foods movement, the more likely she is to report that her third party regulatory administrator strictly interprets regulations, exhibits flexibility, and provides technical assistance that helps her to comply with regulations. A desire to further the organic foods movement is also positively associated with perceptions of expertise on the part of third party administrators and their inspectors. As a second example, assessments of the NOP regulations as organic standards were associated with assessment of the regulations, the more likely the producer was to report a strict regulatory interpretation, administrator provision of technical assistance, and high quality administrator services. Regulatory literature indicates that regulatee perceptions, such as the apparent fairness of regulations and competence of regulators, have measureable impacts on regulatee compliance levels (May, 2005; Winter & May, 2001, 2002). In understanding the effectiveness of regulatory program delivery, and differences associate d with regulatory administration through third party organizations, the lessons of this literature and the findings of the current study suggest that individual level influences matter, and at times may matter more than the context in which regulatees are embedded. Research Limitations While the results of this dissertation offer valuable theoretical insights for regulatory administration and public administration scholarship, as outlined at the end

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161 of this chapter the research fi ndings should be considered with an appreciation of four limitations regarding the study data, methods, and context First, the majority of the empirical analyses conducted in this research relied on regulatee perceptions to measure third party regulatory admin istration. Relying on regulatee perceptual data to measure regulatory administration deviates from past research on the monitoring and enforcement actions of regulatory organizations and represents trade offs in terms of measurement validity. For example, c ross sectional survey data does not provide the rich descriptive data captured by in depth case studies (e.g.: Hawkins, 1984; Hutter, 1997). Additionally, surveying regulatees limits the collected data to regulatory actions observed, remembered, and rep orted by regulated entities. A strength of the approach over past studies that rely on self reported regulator data (e.g.: Gormley, 1998; May & Burby, 1998; May & Winter, 2000), is that actions in a manner that could bias study findings. Second, regulatee perceptual data were collected from a considerably limited sample of certified organic producers. The sample was made up of certified operations for which the USDA lists a valid email address approximately half of all USDA organic oper ations. The impact of this limitation is minimized by the national scope of the sample, however, the results are nonetheless constrained to half of the USDA certified organic producer population. More importantly, the findings are based on a survey with a response rate of 17 percent. As noted earlier, a response rate of 17 percent is consistent with other farmer survey research, as farmers are a notoriously difficult population to survey (Pennings, Irwin & Good, 2002), and a comparison of sample

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162 characte ristics with available USDA population data suggests a fairly representative sample. The restricted sample and response rate, nonetheless, suggest caution should be exercised when generalizing study findings. Third, it is important to note that this stu organizational form affects third party regulatory administration were not directly influential organizational factor s were identified from a review of the the oretical overlap between public management literature regarding organizational differences associated with organizational form and three bodies of literature: knowledge management literature pertaining to knowledge acquisition and transfer, organization t heory literature pertaining to organizational service responses to competitive pressures, and regulatory administration literature. The manners in which these organizational factors might differ as a function of organizational form were then developed fro m the public administration and management literatures. These assumed differences served as the theoretical mechanisms unobserved in this research Measuring and accounting for how these mechanisms vary in the organization al sample under study would prov ide a better understanding of not just how regulatory administration varies as a function of third party administrator organizational form, but could help provide indications of why. Incorporating such data in future analyses offers a promising next step in understanding third party regulatory administration. Finally, t he NOP case represents an unusual regulatory program design: federally accredited public, nonprofit, and private third party organizations administering quasi voluntary regulations in a comp etitive environment. This case

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163 thus offered an opportunity to better understand the implications arising from innovations on regulatory design the primary aim of this research. The unusual characteristics of the NOP case also represent a threat to broad generalizations of the he necessity of taking into account important contextual considerations when considering how organizational form influences administrative characteristics and behaviors. One example of how this particular context is a potentially important factor in dete rganic food production as an industry has historically been characterized by tightly networked producer communities (Sage, 2003) and organic food advocacy through social action (Hassanein, 2003). As a consequence, nonprofit organizations have played a central role in the development of the organic food industry and organic food regulation (Bostrm & nonprofit thir d party administrators exhibit higher levels of regulatory and substantive expertise than their public and private counterparts. Despite these limitations implications relative to emerging innovations in regu latory design. For example, van der Heijden (2010a, 2010b) questions whether private sector involvement in Australian building regulation has the potential to negatively impact regulatory stringency. Scholars have raised similar concerns in regards to ev olving quasi governmental and voluntary regulatory regimes ranging from forestry regulation (e.g.: Meidinger, 2006; Pattberg, 2005) to ski industry governance (e.g.: Steelman & Rivera, 2006). While the case examined in this research is far from an apples to apples

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164 comparison to these examples, the findings offer insights that can inform future research examining the link between third party administrator characteristics and program delivery The results are also germane to the public affairs literature, g enerally, as discussed in the remainder of this dissertation. Contributions to the Literature The primary aim of this dissertation is to further our understanding of the implications resulting from regulatory program design innovation through an investigat party design. The Introduction of this dissertation identified several concerns associated with such a program design drawn from the regulatory literature and the these concerns. First, s cholars question whether third party organizations, particularly nongovernmental organizations poses the requisite substantive and regulatory expertise to adequately monitor reg ulated activities and hold regulatees accountable for regulatory compliance (van der Heijden, 2008, 2010) The findings of this research indicate that private third party administrators of U.S. organic regulations do not suffer from deficiencies in substa ntive or regulatory expertise, when compared with their public sector counterparts, and in fact nonprofit third might exceed that of their government peers. Second, c ompetition among diverse third party administrators may in troduce incentives to provide a variety of services at the cost of obscuring regulatory program objectives (Black, 2002; van der Heijden, 2010a, 2010b) and t hird party administrators might emphasize the performance of certain services while discounting ot hers

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165 (Amirkhanyan, Kim & Lambright, 2008) Th findings support the general prediction that third party administrators bundle peripheral services with the administration of regulatory standards. The service diversification and quality difference findings presented here suggests that in contrast with their public counterparts, nonprofit third party administrators of U.S. organic food regulations tend to emphasize education and advocacy services, while private third party administrators place an em phasis providing a variety of certification and labeling services. The degree to which differentiated services represent a threat to regulatory objectives is contingent on whether peripheral services conflict with or otherwise obscure regulatory program objectives a question beyond the scope of this study. In the case of the NOP, which has an express interest in encouraging an organic foods market (NOP, 2014), educational services that aid certified producers in the production of organic food, represen tation of producer interests in organic policy matters, and parallel food labeling and certification services that provide producers with a competitive advantage arguably align with this goal. A perhaps more troubling implication of a service provision emp hasis in the administration of regulatory standards is the potential for third party administrators to treat regulatory administration itself as a service that can be altered in manners that appeal to regulatee clients (Conglianese & Lazer, 2003). This empirical investigation of third party organic regulation administrators suggests that, in this case, the concern is likely unfounded. An important findings is that the regulatory arrangement in que stion places constraints within which regulatory administrators must operate ( Black, 2002, 2008; May, 2002). In the case of

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166 organic food regulation, the NOP acts as an accreditation b ody charged with monitoring third party administrator behavior, in part to ensure consistent application of NOP to align the practices of the independent administrators to which its regulatory authority are delegated Such an explanati oversight effectiveness, and is congruent with literatures that highlight the impact of institutional pressures, such as accreditation processes, on organizational operations (Frumkin & Galaskiewicz, 2004; Powell & DiMaggio, 1991). This explanation is supported by comments made in the organic regulation expert interviews that comprised the first stage of this research. For example, a NOP representative interviewee readily recognized the conflicting incentives tha t arise out party design, and emphasized that the NOP is actively working to address incentives that may present barriers to program objectives: The dilemma of organic regulation is that the regulatory organizations are in competition with one another, which at times may lead to an inconsistent application of standards and regulations. The NOP is addressing this challenge by keeping an eye on the fees charged by certifiers through audits to ensure they are not cutting deals with operations and looking for conflicts of interest (Personal communication, November 12, 2012). Furthermore, a n organic certification consultant, with decades of experience in organic regulation, indicated that third party organic food regulation adm inistrators did at one time compete based on their regulatory functions, but turned to service

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167 (Personal communication, September 17, 2012). The findings of this dissertation therefore offer a promising proposition to be tested in future research: The conflicting incentives introduced by a competitive third party regulatory design characterized by third party organizational form diversity may be effectively resolved through adequate accreditation oversight. Future efforts can examine the extent to which, and how, accreditation or other third party administrator oversight procedures promote regulatory program fidelity Contributions beyond the Regulatory Literature While the primary contribution of this research is a better understanding of how regu latory design innovations might hinder or promote regulatory program objectives, the dissertation also offers potentially valuable contributions for multiple disciplines within the field of public affairs. First, although differences between public and private (and to a lesser extent, nonprofit) organizations constitutes a small sub literature within the field of public administration (e.g.: Boyne, 2002; Bozeman, 1987, 2007; Dahl & Lindblom, 1953; Rainey, 19 83, 1989; Wamsley & Zald, 1973), regulation remains a little explored policy area of organizational form differences. This research provided a theoretically informed empirical investigation of public, nonprofit, and private organizations as administrators of regulatory standards examination of organizational from in a regulatory administration context The results suggest that organizational form is associated with the service respons es of regulatory

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168 admini strators in manners similar those found in the areas of hospital administration (Johansen & Zhu, 2013) and social services (Miller & Moulton, 2013). When it comes to regulatory functions in the context of U.S. organic food regulation, however, organizational form appears to matter little. These findings imply that scholars interested in organizational form differences should seriously consider public policy regulations, policy which public, nonprofit, and private sector differences are examined. Regulatory programs such as the NOP may offer fruitful environments in which to explore the interaction between public, nonprofit, and private organizational characteristics and the pol icy environments in which they operate. A second contribution of this study that extends beyond the regulatory literature is a better understanding of how organizational characteristics may influence organizational service responses to competitive press ures. A cited limitation of general organization theorizing is a lack of attention to different organizational types, or Gault, 2013, p. 163). This study responds to this limitation, a nd extends public management scholarship that examines how a combination of context and organizational form impacts organizational service provision (e.g.: Walker & Jeans, 2001; Walker, Jeans & Rowlands, 2002). The findings support service diversification predictions that given relatively uniform external institutional environments organizations will offer peripheral services beyond their core functions in order to enhance service portfolios and establish market niches (Agarwal & Chatterjee, 2002; Andrews, Boyne & Walker,

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169 2006; Carman & Langeard, 1980). It also lends further evidence that nonprofit organizations are most likely to diversify services through services that promote their organizational missions (Brown & Slivinski, 2006; James, 1983), while pr ivate sector organizations are more likely to restrict peripheral services to the replication of core functions (Carmen & Langeard, 1980). A final contribution that this dissertation makes to the general public affairs literature is in demonstrating the p romise of theoretical integration in efforts to understand public programs that deviate from conventional program designs. For example, public administration literature recognizes that public sector organizations are often principally established to devel op, provide and apply knowledge (Luen & Al Hawamd eh, 2001; Wiig, 2002). L imited attention however, has been paid in this knowledge management compares to that of other o rganizational forms. This research Rowland, 2004; Willem & Buelens, 2007) in demonstrating that the lessons drawn from knowledge management studies can be effectively leverage d in the examination of public administration questions. Similarly, the study of regulatory administration has long focused on the stringency of regulatory standards and the enforcement practices of regulators. Regulatory scholars have devoted considerable effort to categorizing and assessing the enforcement st yles of agencies charged with regulatory administration (Braithwaite, Walker & Grabosky, 1987; Gormley, 1998; May & Burby, 1998; Scholz, 1991) and the inspection practices of regulatory inspectors (May & Winter, 2000; May & Wood, 2003).

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170 This dissertation, in contrast, examined regulatory functions as one of three facets of regulatory administration. Widening the consideration of regulatory administration to include organizational expertise and service provision perspectives thus allowed for a more compreh ensive understanding of the effect that organizational form may have on third party regulatory administration. The results of these efforts substantiate calls for public administration scholars to exercise in an effort to address contem hich no one theory or set of theories Conclusion In an era in which regulatory program structures and functions are subject to remarkable transformation t his dissertation sought a better understanding of the implications stemming from regulatory program design innovation. The study examined regulatory administration under the competitive third party program design that characterizes organic food regulation in the U.S. Focusing on the independent organizations charged with administering U.S. organic food regulations, the study asked: How does organizational form (public, nonprofit, private) affect third party ogram? The results of the study suggest that differences in organizational form are associated with variances in the expertise exhibited by third party administrators of organic food regulation s as well as the services that they perform alongside their regulatory functions. Differences in organizational form, however, do not seem to translate into significant disparities in third regulatory monitoring and enforcement tasks. Taken collectively, the results of this

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171 diss ertation offer an intriguing proposition for future research into regulatory design innovations that the conflicting incentives introduced by a competitive third party design characterized by third party organizational form diversity may be effectively r esolved through adequate accreditation oversight. Future research can further examine under which regulatory arrangements third party administrator characteristics do or do not impact regulatory administration, and how. Such efforts hold the potential t o not only improve theoretical linkages between third party regulator characteristics and program outputs, but to help identify the regulatory program design innovations that hinder and promote regulatory policy goals.

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184 APPENDIX A ORGANIC INDUSTRY AND REGULATION EXPERT IN TERVIEW QUESTIONNAIR E 1. What is your role in relation to organic food [regulation/production/processing/certification]? 2. Can you describe the organic certification process? 3. I am going to ask you some more specific questions about composition of organic food operators. What differences in organic food production practices do you observe within your state/across the U.S.? a. To what do you attribute these differences? 4. What reasons for involvement in organic food production have you heard expressed by organic operations? 5. To what extent does the NOP reflect the actual processes used by organic operations? 6. Can you talk about whether operators similar or diverse in the following manners: (1) Size of operation; (2) Product(s); and (3) Financial resources? 7. Do you perceive organic operations to be relatively equal in regards to basic assets (knowledge, finances, people)? 8. Can you describe the organic certifier accreditation process? 9. What differences in organic certification practices do you observe? a. To what do you at tribute these differences? b. In your experience, what values have certifiers expressed as underlying their decision to be involved with organic certification?

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185 10. Can you talk about whether certifiers are similar or diverse in the following manners: (1) Size of operation; (2) Product(s); and (3) Financial resources? 11. Do you perceive organic certifiers in your state to be relatively equal in regards to basic assets (knowledge, finances, people)? 12. Can you suggest other people I should talk with as the research develo ps?

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186 APPENDIX B CERTIFIED ORGANIC PR ODUCER SURVEY QUESTIONNAIRE 1. Please indicate your level of agreement with the following statements: I practice Strongly Disagree ( 2) Disagree ( 1) Neither Agree nor Disagree (0) Agree (1) Strongly Agree (2) results in superior products. (1) reduces exposure to potentially harmful chemicals. (2) decreases the environmental impact of agricultural production. (3) is more efficient, and requires less technology, equipment or inputs. (4) more closely aligns with my personal values. (5) 1.a. For what other reasons do you pursue organic practices?

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187 2. How important are the following factors in your decision to be certified USDA organic? Not at all Important (1) Slightly Important (2) Somewhat Important (3) Very Important (4) Extremely Important (5) To increase my profits (1) To differentiate my products from other products claiming to or (2) To support the organic movement by participating in the National Organic Program (3) To avoid the penalty of marketing non certified products as Other, please list: (5)

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188 3. Please indicate your level of agreement with the following statements: The National Organic Program regulations... Strongly Disagree ( 2) Disagree ( 1) Neither Agree nor Disagree (0) Agree (1) Strongly Agree (2) reflect what I consider to be idea l organic standards. (1) should allow more synthetic substances. (2) should specify allowed and prohibited production practices more precisely. (3) establish a minimum standard for organic practices, but my operation the requirements. (4)

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189 4. Please indicate your level of agreement with the following statements: The National Strongly Disagree ( 2) Disagree ( 1) Neither Agree nor Disagree (0) Agree (1) Strongly Agree (2) a profitable organic market for my products. (1) increased consumer confidence in the integrity of products marketed as increased consumer understanding of the difference between organic and conventional products. (3) improved environmental conditions and biodiversity. (4) cooptation of the organic potential organic producers opting out of Program participation due to burdensome certification requirements. (6) 5. How often do you interact with other certified organic producers? Never (1) Daily (2) Weekly (3) Monthly (4) Yearly (5)

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190 6. With how many certified organic producers do you interact? None (1) 1 to 5 (2) 6 to 10 (3) 11 to 15 (4) 16 to 20 (5) Over 20 (6) Not applicable (7) 7. Please list the name of your current organic certifier(s). *If you currently have more than one organic certifier, pl ease answer the following questions in relation to the certifier with whom you most frequently interact. 8. Is this organic certifier part of a state or county government department? Yes (1) No (2) I don't know (3)

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191 9. How important were the following f actors in selecting your organic certifier? Not at all Important (1) Slightly Important (2) Moderately Important (3) Very Important (4) Extremely Important (5) Certifier reputation (1) Cost of services (2) Certifier expertise regarding the National Organic Program regulations (3) Certifier expertise regarding your organic products (4) The particular services offered by the certifier (5) Certifier proximity to your operation (6) Other, please list: (7)

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192 10. What is your level of agreement with the following statements regarding your organic certifier and inspectors? Strongly Disagree ( 2) Disagree ( 1) Neither Agree nor Disagree (0) Agree (1) Strongly Agree (2) My certifier is highly competent regarding the National Organic Program regulations. (1) My inspectors are highly competent regarding the National Organic Program regulations. (2) My certifier understands the intricacies of my organic business. (3) My inspectors understand the intricacies of my organic business. (4) My certifier strictly interprets the National Organic Program regulations. (5) My inspectors strictly interpret the National Organic Program regulations. (6)

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193 11. How many times in the last year has your organic certifier conducted the following inspections of your operation? Has not conducted (1) Once (2) Twice (3) Three or more times (4) I don't know (5) Scheduled inspection (1) Unannounced inspection (2) 12. How often do you participate in an exit interview as part of your operation's organic certification inspections? Never (1) Occasionally (2) Every inspection (3) 13. Approximately how many notices of noncompliance has your operation received in the past year? None (1) 1 ( 2) 2 to 3 (3) 4 to 5 (4) Over 5 (5)

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194 Yes (1) No (2) I don't know (3) Yes (1) No (2) I don't know (3) 16 How would you rate the quality of the following services provided by your organic certifier and inspectors? Poor (1) Fair (2) Good (3) Very Good (4) Excellent (5) Not Provided (6) Education related to National Organic Program regulations (1) Education related to organic practices (2) Advocacy related to organic policy (3) Marketing (4) Organic Systems Plan guidance (5) Additional certification labeling such as

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195 Other, please list: (7) 17. What is your level of agreement with the following statements regarding your organic certifier and inspectors? Strongly Disagree ( 2) Disagree ( 1) Neither Agree nor Disagree (0) Agree (1) Strongly Agree (2) My certifier always administers notices of noncompliance for serious issues. (1) My certifier always administers notices of noncompliance for minor issues. (2) Before administering a formal notice of noncompliance, my certifier always allows me to correct the noncompliance issue. (3) My certifier frequently offers information and/or assistance that help me comply with National Organic Program regulations. (4) My inspectors frequently offer information and/or assistance that help me

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196 comply with National Organic Program regulations. (5) 18. What is your level of agreement with the following statements regarding your Strongly Disagree ( 2) Disagree ( 1) Neither Agree nor Dis agree (6) Agree (0) Strongly Agree (1) Maintaining compliance is extremely difficult. (1) My operation is frequently out of compliance. (2) When my operation is not in compliance, it is for administrative requirements such as paperwork. (3) I ignore noncompliances at my operation that I consider to be trivial. (4) I immediately notify my certifier of noncompliances at my operation. (5)

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197 19. How important are each of the following reasons for you in maintaining compliance with National Organic Program regulations? Not at all Important (1) Moderately Important (2) Extremely Important (3) Fear of penalty from your certifier (1) Fear of penalty from the National Organic Program (2) A concern for your reputation (3) A personal sense of duty (4) Pressure from other certified producers (5) Other, please list: (6)

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198 20. What is your level of agreement with the following statements? Strongly Disagree ( 2) Disagree ( 1) Neither Agree nor Disagree (0) Agree (1) Strongly Agree (2) I prefer to have defined rules and procedures to follow.(1) When entering a new situation, it is important for me to identify who has authority. (2) People are better off when their decisions and behavior are not restricted by rules. (3) The more a society is structured by formal laws, the better it functions. (4) I prefer to solve problems by myself. (5) When facing an important task, I prefer to accomplish it with a team. (6) My contributions to society are usually made when I am working as part of a group. (7) Society works better when people are organized into groups. (8)

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199 21. Please indicate your professional role(s) within your organization. Check all that apply. Owner or Manager (1) Field Supervisor (2) Crew Foreman (3) Farm Hand (4) Other, please identify: (5) ____________________ 22. How would you characterize the tasks involved in your role(s)? Primarily administrative (e.g.: paperwork) (2) Primarily operational (e.g.: farming) (4) Both administrative and operational (3)

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200 23. Was your operation certified organic prior to the implementation of the National Organic Program in 2002? Yes (1) No (2) I don't know (3) 24. What was the first year that your op eration held USDA organic certification? 2002 (1) 2003 (2) 2004 (3) 2005 (4) 2006 (5) 2007 (6) 2008 (7) 2009 (8) 2010 (9) 2011 (10) 2012 (11) 2013 (12) 25. In which state is your operation primarily located? Outside of the United States (52) Alabama (1) Alaska (2) Arizona (3) Arkansas (4) California (5) Colorado (6) Connecticut (7) Delaware (8) Florida (9) Georgia (10) Hawaii (11) Idaho (12) Illinois (13) Indiana (14) Iowa (15) Kansas (16) Kentucky (17) Louisiana (18)

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201 Maine (19) Maryland (20) Massachusetts (21) Michigan (22) Minnesota (23) Mississippi (24) Missouri (25) Montana (26) Nebraska (27) Nevada (28) New Hampshire (29) New Jersey (30) New Mexico (31) New York (32) North Carolina (33) North Dakota (34) Ohio (35) Oklahoma (36) Oregon (37) Pennsylvania (38) Rhode Island (39) South Carolina (40) South Dakota (41) Tennessee (42) Texas (43) Utah (44) Vermont (45) Virginia (46) Washington (47) Washington DC (51) West Virginia (48) Wisconsin (49) Wyoming (50)

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202 26. How would you characterize the size of your operation, relative to other operations producing similar certified organic products? Smallest (1) Small (2) Average (3) Large (4) Largest (5) I don't know (6) 27. Please indicate what scope(s) for which your operation is currently certified USDA organic (check all that apply): Crop (1) Livestock (2) Handling (3) Wild crop (4) 28. Please indicate the types of commodities you produce, and whether they are certified organic or not (check all that apply): Certified organic (1) NOT certified organic (2) Vegetable crops (1) Herb crops (2) Nursery, floriculture, greenhouse crops (3) Apiculture (4) Brambles, berries (5) Tree or vine fruit, nut crops (6) Grains, alfalfa, mixed hay, other field crops (7) Beef (8) Poultry (9) Dairy products (10) Lamb (11) Pork (12) Eggs (13) Other, please list: (14)

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203 29. What is your age? Under 25 (1) 26 35 (2) 36 45 (3) 46 55 (4) 56 65 (5) Over 65 (6) 30. Are you male or female? Male (1) Female (2) 31. Would you like to receive a copy of the survey results? Yes (1) No (2) 32. Please share with us any additional thoughts regarding the National Organic Program regulations, accredited certifiers, or certified producers.

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204 APPENDIX C ORGANIC PRODU CER SAMPLE CHECK PRO CEDURES Three steps were taken to assess the potential impacts of nonresponse and selection bias in the certified organic producer survey sample. The details of these steps are provided here. Step 1. Wave Analysis A wave analysis was conducted based on the assumption that the answers of survey late responders are more likely to approximate the answers of non respondents than those of individuals that readily respond to survey requests (e.g.: Kauppi & van Raaij, 2014 ; Rainey, Pandey & Bozeman, 1995). The analysis compared the responses of early survey respondents to those that responded after follow up survey requests dependent variable measure responses of different survey waves were found at the p <0.05 level. Table C. 1. Survey wave analysis results Wave 1 Wave 2 Wave 3 Wave 4 Test statistic p value Strictness in regulatory interpretation 1.16 1.20 1.30 1.23 3.65 0.30 Administer sanctions for noncompliances 0.88 0.88 0.89 0.91 0.18 0.98 Flexibility 0.27 0.46 0.40 0.35 3.49 0.32 Willingness to provide technical assistance 0.52 0.72 0.69 0.69 4.2 0.24 NOTE: Mean value per survey wave and non parametric Kruskal Wallis tests for statistically significant differences across groups reported. Step 2. Non respondent Survey Response Comparison

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205 Twenty non respondents to the online survey were contacted by phone and verbally administered seven survey questions. As seen below, nonparametric tests (due to the extreme difference in group size) comparing these responses with those of the online sampl e revealed no statistically significant differences at the p <0.05 level. While the survey questions asked in the follow up phone calls are not the measures used for the data in this study, a lack of statistically significant differences between phone resp ondent and online survey sample responses suggests that nonresponse bias may not be as grave a threat as one might suspect without such procedural checks. Table C. 2. Online study sample and follow up phone sample response comparison Online study sample Phone sample Test statistic p value I practice organic farming because, compared to conventional practices, it decreases the environmental impact of agricultural production. 1.36 1.10 2.93 0.09 The National Organic Program regulations reflect what I consider to be ideal organic standards. 0.15 0.45 1.17 0.27 The National Organic Program regulations directly result in a profitable market for my products. 0.49 0.45 0.01 0.94 Maintaining compliance with the National Organic Program regulations is extremely difficult. 0.75 0.20 0.13 0.71 How important was the cost of the certifier? 3.17 2.29 1.24 0.26 How important was the particular services offered by this certifier in your selection of certifier? 3.15 2.80 1.76 0.18 How would you rate the quality of your to the National Organic Program? 3.79 3.50 1.04 0.31 NOTE: Mean value per sample and non parametric Kruskal Wallis tests for statistically significant differences between groups reported.

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206 Step 3. Survey Sample Demographic Characteristics Survey sample demographic characteristics were compared with available USDA reports ( Dimitri & Oberholtzer, 2009; Greene, Slattery, & McBride, 2010) regarding the U.S. certified organic producer population. As reported in the Regulatee Sample section, based on the comparison the sample appears to be a fair representation of U.S. certified organic producers. A notable exception is an u nderrepresentation of Midwest organic producers. Sample demographic characteristics are supplied in the tables below. Table C.3. Reported size of survey respondent operations Smallest Small Average Large Largest 10% 41% 31% 16% 1% NOTE: Due to the complications of making comparisons amongst the wide variety of organic operations (e.g.: livestock graze land vs. acres of tree fruit production), relative to other operations Table C.4. Survey respondents by region West Northwest Northeast Midwest Southeast Southwest 29% 22% 18% 16% 10% 5% Table C.5. Survey respondent organic certification types Crop Livestock Handling Wild crop 77% 17% 15% >4% >1% NOTE: Operations can hold more than one type of organic certification

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207 Table C.6. Survey respondent commodity types Certified organic Conventional Vegetable crops 39% 5% Grains, alfalfa, mixed hay, other field crops 31% 5% Tree or vine fruit, nut crops 30% 5% Herb crops 27% 3% Brambles, berries 20% 3% Nursery, floriculture, greenhouse crops 15% 4% Beef 8% 8% Eggs 7% 8% Dairy products 6% 2% Poultry 5% 6% Apiculture 3% 4% Lamb 2% 4% Pork 1% 6% Other 9% 3% Table C.7 Survey respondents by first year of USDA organic certification 2002 36% 2008 7% 2003 4% 2009 7% 2004 5% 2010 7% 2005 5% 2011 6% 2006 7% 2012 7% 2007 7% 2013 1%

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208 APPENDIX D CHAPTER 2 DESCRIPTIV E STATISTICS Table D.1 Chapter 2 descriptive statistics Mean SD Min Max Variable operationalization Expertise dependent variables Third party administrator regulatory expertise 1.26 0.76 2 2 Respondent level of agreement with the highly competent regarding the National Organic Program Inspector regulatory expertise 1.17 0.81 2 2 Respondent level of agreement is highly competent regarding the National Organic Program Third party administrator substantive expertise 0.84 0.96 2 2 Respondent level of agreement understands the intricacies of my Inspector substantive expertise 0.90 0.97 2 2 Respondent level of agreement understands the intricacies of my organic Level 2: Third party administrator attribute independent variables Nonprofit (Reference = public) 48% 0.50 0 1 A dministrator designated as a nonprofit organization Private (Reference = public) 22% 0.42 0 1 A dministrator designated as a for profit private organization ACA member 95% 0.22 0 1 Administrator identified as a member of the Accredited Certifiers Association Clients 1,125 953 28 2,800 Number of operations certified organic Level 1: Respondent attribute independent variables Importance of perceived expertise in selection of certifier (substantive expertise) 3.45 1.19 1 5 Respondent importance of

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209 Mean SD Min Max Variable operationalization Importance of perceived expertise in selection of certifier (regulatory expertise) 3.51 1.19 1 5 Respondent reporting of regarding the National Organic Organic movement motive 3.39 1.30 1 5 Respondent reported level of importance of supporting the organic movement in regards to the decision to be certified USDA Difficulty maintaining compliance 0.54 1.01 2 2 Respondent level of agreement regarding the National Organic Program regulations. Perceived third party administrator strictness 1.20 0.75 2 2 Respondent level of agreement strictly interprets the National 2 = Operation size 2.57 0.93 1 5 Respondent production operation size: 1 = Handling scope (Reference = Crops, livestock, wild crops) 15% 0.35 0 1 Operation holds NOP certification for handling scope

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210 APPENDIX E CHAPTER 3 DESCRIPTIV E STATISTICS Table E.1. Chapter 3 descriptive statistics Mean SD Min Max Variable operationalization Service quality dependent variables Organic systems plan guidance 3.5 1.16 1 5 of the following services provided by your organic certifier and inspectors: Organic systems plan Additional labeling services 2.75 1.3 1 5 of the following services provided by your organic certifier and inspectors: Additional certification labeling Advocacy services 3.69 1.18 1 5 of the following services provided by your organic certifier and inspectors: Advocacy related to organic Third party administrator independent variables Nonprofit (reference = public) 48% 0.50 0 1 Third party administrator designated as a nonprofit organization Private (reference = public) 22% 0.42 0 1 Third party administrator designated as a for profit private organization Administrator number of clients 1,125 953 28 2,80 0 Number of operations certified organic by the third party administrator

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211 Mean SD Min Max Variable operationalization Producer respondent independent variables State HHI 4,379 2,140 1,318 9,022 State market concentration: The extent to which a small number of administrators account for a large proportion of certifying services in a state Importance of services in selection of administrator 3.13 1.20 1 5 particular services offered by the certifier in selecting your Perceived third party administrator strictness 1.20 0.75 2 2 Respondent level of agreement certifier strictly interprets the National Organic Program Perception of NOP regulations 0.12 0.95 2 2 Respondent level of agreement National Organic Program regulations reflect what I consider to be ideal organic Organic movement motive 3.39 1.30 1 5 Respondent reported level of importance of supporting the organic movement in regards to the decision to be certified Operation size 2.57 0.93 1 5 Respondent production Handling scope (Reference = Livestock, crops, wild crops) 15% 0.35 0 1 Respondent operation holds NOP certification for handling scope

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212 APPENDIX F CHAPTER 3 THIRD PARTY ADMINISTRATOR WEBSITE CODING INDICATORS Table F. 1. Third party regulatory administrator website codes, definitions, and example indicators Code Definition Example indicators Education & training Explicit offers of education opportunities or training sessions, directly facilitated or provided by the administrator (but not an outside organization) Organic practices courses Organic practices webinars Farmer mentorship programs Advocacy services Explicit mention of political action or efforts to change organic food policy. Representation of organic producer interests in Washington DC Representation of organic producer interests at National Organic Standards Board meetings Other certifications/ labeling Explicit offers to certify resulting in labels other than organic Certified Gluten Free Food Allia nce Certified Certified Kosher

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213 APPENDIX G CHAPTER 3 THIRD PARTY ADMINISTRATOR WEBSITE CODING FINDI NGS Table G.1 Services identified on third party administrator websites Public (Percent) Nonprofit (Percent) Private (Percent) Total (Percent) Education & training 0 9 (82%) 2 (12%) 11 (23%) Advocacy 0 5 (45%) 0 5 (10%) Other certification services 5 (25%) 4 (36%) 8 (47%) 17 (35%) percent of websites by organizational form. Total NOP third party administrator n = 48; public third party administrators n = 20; nonprofit third party administrator n = 11; private third party administrator n = 17

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21 4 APPENDIX H CHAPTER 3 DESCRIPTIV E STATISTICS Table H.1. Chapter 3 descriptive statistics Mean SD Min Max Variable operationalization Service quality dependent variables Organic systems plan guidance 3.5 1.16 1 5 of the following services provided by your organic certifier and inspectors: Organic systems plan Additional labeling services 2 .75 1.3 1 5 of the following services provided by your organic certifier and inspectors: Additional certification labeling Advocacy services 3.69 1.18 1 5 of the following services provided by your organic certifier and inspectors: Advocacy related to organic Third party administrator independent variables Nonprofit (reference = public) 48% 0.50 0 1 Third party administrator designated as a nonprofit organization Private (reference = public) 22% 0.42 0 1 Third party administrator designated as a for profit private organization Administrator number of clients 1,12 5 953 28 2,80 0 Number of operations certified organic by the third party administrator

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215 Mean SD Min Max Variable operationalization Producer respondent independent variables State HHI 4,379 2,140 1,318 9,022 State market concentration: The extent to which a small number of administrator s account for a large proportion of certifying services in a state Importance of services in selection of administrator 3.13 1.20 1 5 particular services offered by the certifier in selecting your Perceived third party administrator strictness 1.20 0.75 2 2 Respondent level of agreement certifier strictly interprets the National Organic Program Perception of NOP regulations 0.12 0.95 2 2 Respondent level of agreement National Organic Program regulations reflect what I consider to be ideal organic Organic movement motive 3.39 1.30 1 5 Respondent reported level of importance of supporting the organic movement in regards to the decision to be certified Operation size 2.57 0.93 1 5 Respondent production Handling scope (Reference = Livestock, crops, wild crops) 15% 0.35 0 1 Respondent operation holds NOP certification for handling scope

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216 APPENDIX I CHAPTER 3 SERVICE QU ALITY DESCRIPTIVE FI NDINGS Table I.1 Chapter 3 service quality survey descriptive findings by organizational form Mean Public Mean Nonprofit Mean Private Overall Mean SD Min Max Organic systems plan guidance 3.28 3.73 3.49 3.54 1.16 1 5 Additional labeling services 2.21 2.95 2.93 2.75 1.31 1 5 Advocacy services 3.30 3.94 3.66 3.69 1.18 1 5

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217 APPENDIX J CHAPTER 4 DESCRIPTIV E STATISTICS Table J.1 Chapter 4 descriptive statistics Mean SD Min Max Variable description Regulatory approach dependent variables Strictness of regulatory interpretation 1.20 0.75 2 2 Respondent level of agreement strictly interprets the National Organic Program Propensity to administer sanctions for serious noncompliances 0.88 0.82 2 2 Respondent level of agreement always administers notices of noncompliance for minor Flexibility 0.36 1.01 2 2 Respondent level of agreement administering a formal notice of noncompliance, my certifier always allows me to correct the noncompliance 2 = Willingness to provide technical assistance 0.63 1.04 2 2 Respondent level of agreement frequently offers information and/or assistance that help me comply with National Organic 2 = Level 2: Certifier attribute independent variables Nonprofit (reference = private) 48% 0.50 0 1 Certifier designated as a nonprofit organization Public (reference = private) 22% 0.42 0 1 Certifier designated as a for profit private organization Clients 1,125 953 28 2,800 Number of operations certified organic Certification fees as a proportion of nonprofit revenue 0.65 0.18 0.2 0.92 C Form 990s, divided by total organizational revenue

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218 Mean SD Min Max Variable operationalization Level 1: Respondent attribute independent variables State HHI 4,37 9 2,14 0 1,31 8 9,02 2 State market concentration: The extent to which a small number of administrator s account for a large proportion of certifying services in a state Profit motive 3.37 1.2 4 2 2 Respondent reported level of importance of increased profits in regards to the decision to be Organic movement motive 3.39 1.3 0 1 5 Respondent reported level of importance of supporting the organic movement in regards to the decision to be certified USDA Regulatory assessment 0.12 0.9 5 2 2 Respondent level of agreement National Organic Program regulations reflect what I consider to be ideal organic rongly Regulatory experience 0.54 1.0 1 2 2 Respondent level of agreement compliance is extremely Organic Program regulations. 2 Predisposition towards laws 0.01 0.9 7 2 2 Respondent level of agreement society is structured by formal 2 Operation size 2.57 0.9 3 1 5 Respondent operation size: 1 =

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219 Mean SD Min Max Variable operationalization Pre NOP certification 39% 0.4 9 0 1 Operation held organic certification prior to National Organic Program enactment in 2002 Handling scope 15% 0.3 5 0 1 Operation holds NOP certification for handling scope