American Better Business Bureaus, the Truth-in-Advertising Movement, and the Complexities of Legitimizing Business Self-Regulation over the Long Term

Abstract

This essay considers the question of how strategies of legitimatizing private regulatory governance evolve over the long term. It focuses on the century-long history of the American Better Business Bureau (BBB) network, a linked set of business-funded non-governmental organizations devoted to promoting truthful marketing. The BBBs took on important roles in standard-setting, monitoring, public education, and enforcement, despite never enjoying explicit delegation of authority from Congress or state legislatures. This effort depended on building legitimacy with three separate groups with very different perspectives and interests - the business community, a fractured American state, and the American public, in their roles as consumers and investors. The BBBs initially managed to build a strong reputation with each constituency during its founding period, from 1912 to 1933. The Bureaus then in many ways adapted successfully to the emergence of a more assertive regulatory state from the New Deal through the mid 1970s. Eventually, however, the resurgence of conservative politics in the United States exposed the challenges of satisfying such divergent stakeholders, and led the BBBs to focus resolutely on shoring up its support from the business establishment. That choice, over time, undercut the Bureaus standing with other stakeholders, and especially the wider public. This history illustrates: the salience of generational amnesia within private regulatory institutions; the profound impact that the shifting nature of public faith in government can have on the strategies and reputation of private regulatory bodies; and the extent to which private regulators face long-term trade-offs among strategies to sustain legitimacy with different audiences. It also suggests a rich set of research questions for longer-term histories of other private regulatory institutions, in the United States, other societies, and at the international level.