Lords of the harvest: Symbolic signaling and regulatory approval of genetically modified organisms

Abstract

Firms in regulated environments often face a number of challenges in bringing their products to market, yet we know very little about the kinds of strategies they can employ to influence regulatory decision-making. We highlight a firm's strategic use of signaling in generating positive outcomes by examining how consultations with a central institutional actor (the FDA) can serve as a signal of quality of GMOs regulated by the USDA. Although FDA consultations do not provide any substantial information about GMOs, they positively affect their approval rates. Our study further shows that firm and product uncertainty increases the signaling benefits.