Intervening to Legitimize the Digital State: How Institutional Intermediaries Facilitate Inclusive and Effective Regulatory Co-Creation in Emerging Economies

Theory indicates that inclusive online regulatory co-creation between firms and their governments can activate a procedural justice mechanism that improves firm views of state legitimacy and leads to rules that better fit the full spectrum of real-world operating conditions. In emerging economies, however, widely held views of government as corrupt and captured by elite interests raise questions about the typical firms’ willingness to engage in such a process—especially online. To address this challenge, we pilot and test the impact of a third-party intervention that we term the RegRoom, wherein legal experts help firms refine their comments before submission to the state’s digital consultation system. We hypothesize and find evidence through a field experiment in Thailand that access to such institutional intermediation improves firm views of government legitimacy and observable engagement in regulatory co-creation. Further exploration of our data leads us to theorize, more broadly, that, when the trust deficit between market actors is large, the primary role of institutional intermediaries is to raise depressed legitimacy levels, whereas when the trust deficit decreases, their primary role transitions to translating that higher legitimacy into behavioral outcomes. For the Thai RegRoom, this meant more frequent and higher-quality engagement in regulatory co-creation.