Organisational culture and trust

Evidence from research

• Organisational culture matters – and is difficult to change
• Administrators’ trust in citizens affect citizen behavior
• Responsive regulation is possible, but consistency in practice is crucial

Organisational culture matters – and is difficult to change

Enachescu et al. (2019) study the implementation of Horizontal Monitoring (HM) in Austria – a cooperative compliance project representing a shift in the prevailing command-and-control paradigm towards enhanced cooperation between taxpayers and tax authorities. Perceptions and experiences among tax officials and employees in participating companies were monitored over a period of three years, including both officials and employees who were directly involved in the project and officials and employees who were not. The authors find that employees of companies taking part in the project were highly positive – whether they were directly dealing with HM procedures in their company or not.

For tax officials, however, those who were directly involved were significantly more positive than those not directly involved, and the latter group remained considerably more skeptical throughout the evaluation period. Thus, the study illustrates that a shift towards cooperative compliance regimes requires a new mindset within a tax authority, which may appear difficult to reconcile with the prevailing culture for many tax officials trained in a more classical, deterrence-based tradition. This indicates – not surprisingly – that changing the prevailing mindset and culture within a tax authority may take time.

Administrators’ trust in citizens affect citizen behavior

While citizens’ trust in administrators has received a lot of attention in research, the opposite relation – administrators' trust in citizens – has received only marginal attention. Yang (2005) has characterized this as a 'missing link' in the field of trust research, motivating the examination of the factors that influence public administrators’ trust in citizens and the relevance of that trust to citizen involvement efforts in citizen participation programs – i.e., a voluntary, prosocial form of behavior not unlike voluntary compliance in taxation. Based on a survey of 320 public administrators, the study shows that administrators tend to hold a neutral view of citizens – neither trusting nor distrusting – and that public administrators’ trust in citizens is positively related to proactive citizen involvement efforts. The author concludes that the results indicate that public administrators have to be trustworthy in order to win citizens’ trust.

Responsive regulation is possible, but consistency in practice is crucial

Research on the daily work of street-level bureaucrats at the front lines of regulatory enforcement has shown that inspectors do indeed utilise different enforcement styles. May & Wood (2003) study the impact of inspectors' differing enforcement styles on compliance in the context of municipal enforcement of building regulations. While the study finds no direct effect of differing enforcement styles on compliance, enforcement styles do influence homebuilders' knowledge of rules and the degree of cooperation between homebuilders and inspectors. Thus, the authors conclude that consistency in enforcement style across inspectors is crucial, because inconsistencies tend to immunize homebuilders to stylistic differences among inspectors. This indicates that the recently much revered idea of 'responsive regulation' is highly sensitive to consistent application among the front-line bureaucrats who are to implement this regime in practice, because inconsistencies undermine regulatees' understanding of rules and the development of shared expectations concerning compliance.