Policy entrepreneurship and regulators: a missing link

Policy entrepreneurs are innovative individuals from the private, public or third sectors (Kingdon Reference Kingdon1995, 122) who are willing to invest resources – time, energy, expertise or money – to either advocate for major policy changes or to resist them (Mintrom and Norman Reference Mintrom and Norman2009, 650; Mintrom et al. Reference Mintrom, Salisbury and Luetjens2014, 424; Sætren Reference Sætren2016; Lavee and Cohen, in press). They are energetic actors who work with others in and around policy-making venues, leveraging resources to promote a favoured policy change (Zahariadis and Exadaktylos Reference Zahariadis and Exadaktylos2016; Ackrill et al. Reference Ackrill, Kay and Zahariadis2013). Lacking the resources required to achieve this goal on their own, they stand ready to exploit opportunities to influence policy outcomes (Cohen Reference Cohen and Zahariadis2016a).

The focus on policy entrepreneurs is relatively recent (Mintrom Reference Mintrom2013, 443) and based mainly on John Kingdon’s (Reference Kingdon1995) work. Kingdon’s multiple streams framework presents problems, policies and politics as a threefold policy process. Problem recognition may depend on a focusing event that signals a need for change. Policies are usually proposed solutions to perceived problems. Finally, politics refers to elements of the constantly changing political environment (Sætren Reference Sætren2016, 72). When a window of opportunity for change opens, there is a limited time frame for action which may derive from various events such as technological change, political vacuum, revolution, political changes, demonstrations, trends in the media and so on; the policy entrepreneur plays a key role in connecting problems and solutions and emphasising the importance of new ideas (Kingdon Reference Kingdon1995; Zahariadis Reference Zahariadis2016; Bakir and Jarvis Reference Bakir and Jarvis2017). The success of a new policy – in our case, changing the regulation – thus depends on individuals and collective actors identifying problems, presenting solutions that work in a particular context and leveraging the political situation to enact the new policy (Sætren Reference Sætren, Raffel, Leisink and Middlebrooks2009; Jones et al. Reference Jones, Peterson, Pierce, Herweg, Bernal, Raney and Zahariadis2016).

Although most policy changes are not driven by policy entrepreneurs but rather can be explained by the interaction between various players and groups (Sabatier and Jenkins-Smith Reference Sabatier and Jenkins-Smith1988), in some cases one cannot fully explain or understand policy outcomes without considering the role of policy entrepreneurs. In these cases, it is clear to all players in the arena that without the presence of the entrepreneur the policy change would not have occurred. These entrepreneurs are persistent individuals who use strategies and new ideas to promote desired policy outcomes (Mintrom and Norman Reference Mintrom and Norman2009).

The literature has described the work of policy entrepreneurs in various fields, including public education, child support, energy policy, environmental policy, health care policy, disposal of radioactive waste, anti-corruption policy and foreign affairs (for elaboration, see Cohen Reference Cohen and Zahariadis2016a; Gunn Reference Gunn, Howlett and Mukherjee2017). Policy entrepreneurs have been shown to play a role in many countries, including Australia, New Zealand, the United Kingdom, Sweden, Israel, Spain, China, India, Turkey, Italy, Greece, and the United States (US) (Cohen Reference Cohen and Zahariadis2016a). To date, however, and as mentioned earlier, the literature has not yet fully discussed regulators who act as policy entrepreneurs.

The regulatory process is a complex one that combines professional and political elements. The players are political players, and the results of the game usually affect the distribution of wealth within society (Hendrickson Reference Hendrickson2011; Cafaggi and Pistor Reference Cafaggi and Pistor2014). Compared with politicians, regulators have a broader horizon. They are appointed and do not have to be elected and reelected by the public. In some cases, because regulatory institutions are structured as independent agencies, regulators are completely, or almost completely, immune to political influence (Thatcher Reference Thatcher2002). Moreover, whereas politicians always face the danger of early elections or not being reelected, regulators know they are appointed for a given amount of time and usually cannot be discharged in the middle of their term. Furthermore, as opposed to most politicians, regulators are experts in their field and can use this expertise to promote regulatory reforms.

Although 40 years of policy entrepreneurship analysis have passed, we lack an understanding of how to decontextualize the model and adapt it to the literature on regulation. A focus on policy entrepreneurship may yield some new understandings of policy making in regulatory reforms. First, it is an easily applied, flexible model that allows scholars in diverse fields such as health, education and environment, to analyse policy making in their field. Second, it highlights policy-making opportunities ostensibly available to many stakeholders such as academics, private sector and third sector organisations. In an era of governance and network management (Stoker Reference Stoker1998), this focus is needed in order to better understand the policy process.

Based on these, we suggest conceptualising the phenomenon of regulators who seek to promote reform as “regulatory entrepreneurship.” Among regulators, there are a few entrepreneurs who are unique in their motivation and ability to promote reforms. Like other policy entrepreneurs, they are not satisfied with merely promoting their goals within existing institutions but, rather, try to reduce certain practices or change the institutional setting in order to achieve regulatory reform. Regulatory policy entrepreneurs attempt not only to design a desirable reform but also to convince others which practices should be followed, why it is important to promote the reform and how to implement it. When they succeed, they make a difference, sometimes more than any other single player in the policy arena.

Regulatory policy entrepreneurs: barriers, goals and strategies

Regulators who act as policy entrepreneurs face several challenges and barriers. One such barrier is that regulators are somewhat dependent on politicians in order to promote their reforms. The relationship between politicians and regulators can sometimes be viewed as a two-sided monopoly. Politicians depend on regulators to advance their agendas through regulation which promotes social welfare. In turn, regulators depend on politicians to fund their departments, to enact laws enlarging their regulatory boundaries or, sometimes, even to appoint them to their jobs. This is especially true when the regulatory authority is not completely independent of government control. In these cases, regulators’ and politicians’ agendas may differ. Politicians want to reach the average voter, whereas regulators want to display their professional skills. This difference in agendas can occasionally lead to a clash between the two players. Thus, lack of trust, a clash of interests or lack of understanding on the part of politicians might be a serious obstacle to regulatory reform.

A second barrier relates to the activity of interest groups (Sabatier and Jenkins-Smith Reference Sabatier and Jenkins-Smith1988), particularly by the regulated industry that usually stands to lose from regulations that prevent it from doing as it pleases. Were the regulatory reform to succeed, it would generally require the firms whose activity falls under the regulation to internalise their externalities. It is therefore not surprising that firms in regulated industries usually oppose most regulatory reforms (Becker Reference Becker1983).

A third barrier concerns the public’s lack of understanding of the reform, which, in turn, influences the politicians’ agendas. Regulatory reforms may be quite complex, especially in the fields of financial or competition regulation. These fields are not self-explanatory and require expertise, the kind of expertise that regulators possess but the public usually lacks. It is very difficult to galvanise the public and the politicians to support a reform they do not understand.

A fourth barrier arises from the interaction between regulators and other bureaucrats and/or regulatory authorities. Given that regulators are usually active in an arena that includes additional regulators as well, other obstacles may create difficult circumstances; these include technical, bureaucratic difficulties related to competition with other regulatory agencies, the inability of the regulatory body to cooperate with other regulators, overlapping responsibilities and coordination problems (Jabotinsky Reference Jabotinsky2017b).

Other barriers involve structural issues such as lack of funding, personnel and other resources. If the regulatory authority is financially independent of the government, it might not have sufficient funds due to, for example, a slowdown in the economy, which translates into a decline in the number of regulated firms that pay fees to fund the regulator. In addition, while regulatory entrepreneurs are experts in their own field, they might lack information about other fields, leaving them unaware of the entire picture. All of these barriers must be overcome in order for regulatory entrepreneurs to achieve their reform objective.

Like other bureaucrats, regulatory entrepreneurs may be driven by different goals. Usually, their motivations and goals derive from their position in society. Without minimising the intensity of the challenges involved, taking an active part in regulatory activities and policies may offer policy entrepreneurs multiple opportunities for advancing their personal interests. We can categorise regulatory entrepreneurs into one of three groups: ideological or value based, organisational or professional, or narrow self-interest. Hence, they may include several elements such as their ideology (Rainey Reference Rainey1982; Romzek Reference Romzek1990; Crewson Reference Crewson1997; Brewer and Selden Reference Brewer and Selden1998), their desire for more power (Allison Reference Allison1969; Dunleavy Reference Dunleavy2014) or their attempt to secure their future jobs (DeHaan et al. Reference DeHaan, Kedia, Koh and Rajgopal2012). In periods of public debate, regulatory entrepreneurs can establish their reputation as skilled and persistent regulators. Bureaucrats may engage in changing and influencing policies in order to increase the value of their services in the future and enhance their career opportunities.

Whatever their motivation is, using entrepreneurial strategies, mainly identifying and using windows of opportunity, bringing in new ideas to the table and engaging in coalition building increase the odds of success. Given that one of their defining characteristics is a lack of resources to promote a desirable change on their own, regulatory entrepreneurs are well versed in the social-political context in which they operate and demonstrate high levels of social acuity in understanding others and what others may need. This assists them in bargaining and persuading. They describe problems in a manner that relates to people’s own interests. For example, regulators may use government instability or uncertainty as a window of opportunity to promote their agenda or form a coalition with others to promote the reform. They might also identify organisational deficiencies and bring about organisational change which is needed for the success of promoting their agendas (e.g., introducing a new research department in the regulatory institution).

Regulatory entrepreneurs use their knowledge and expertise to convince or manipulate others to accept new ideas and proposals. Indeed, participants in the policy process must specialise if they want to be influential (Sabatier and Jenkins-Smith Reference Sabatier and Jenkins-Smith1988). Policy entrepreneurs articulate or define the problem for different stakeholders, linking the problem to a given policy or solution, and actively promoting the need for a solution (Kingdon Reference Kingdon1995). This can be done by using the entrepreneur’s original idea or by promoting ideas suggested by others. In this context, another key strategy is “venue shopping” – identifying venues (e.g., branches or levels of government) thought to be more (or less) conducive to initiating policy change (Pralle Reference Pralle2006). Armed with new ideas and knowledge, these players will try to convince all other players to react and choose solutions which they believe are best in an ever-changing reality (Arieli and Cohen Reference Arieli and Cohen2013).

These strategies are sometimes based on unorthodox thinking and methods. They also tend to be innovative in nature, especially during the stage of setting the agenda, defining the problem, framing the solution in a new manner and presenting it to the other players in the arena. Successful regulatory entrepreneurs work as team players. Most of their strength comes from their ability to work effectively with other players in the policy arena. Entrepreneurial regulators utilise their bargaining power to promote their reforms. In this way, they use the power and position of others to overcome obstacles such as lack of resources and limited funds. Their success must be based on persuasion, pragmatism and willingness to compromise. In other words, they must bargain (Cohen Reference Cohen and Zahariadis2016a). They must have strong powers of persuasion and a pragmatic attitude, and know when to press others and when to step back. Used effectively, the composition of a coalition can help deflect the arguments of opponents of change. A successful entrepreneur needs to create a political coalition through which to challenge the status quo (Schneider and Teske Reference Schneider and Teske1992, 742; Schneider et al. Reference Schneider, Teske and Mintrom1995).

Finally, like other entrepreneurs, they often lead by example and take actions intended to reduce the perception of risk among decisionmakers (Mintrom and Norman Reference Mintrom and Norman2009). Regulatory entrepreneurs make use of their knowledge as to who sits where and who wants what in order to further their goals by giving each player what he or she wants in exchange for supporting their reform.

The context: competition policy and financial regulation

Competition policy can be broadly defined as a set of rules and regulations that maintain competition in all markets in order to promote economic welfare (Motta Reference Motta2004). Financial regulation, on the other hand, refers to a set of rules and regulations that govern the financial markets with the objectives of maintaining stability and protecting consumers (Goodhart et al. Reference Goodhart, Hartmann, Llewellyn, Rojas-Suarez and Weisbrod1998).

The discussions regarding competition policy and financial regulation in the literature are concerned mainly with the economic effects of the regulation or the harm it tries to prevent. In general, these studies leave aside questions about the interactions between regulators and politicians (e.g., Gordy and Howells Reference Gordy and Howells2006; Drumond Reference Drumond2009; McAleer et al. Reference McAleer, Jiménez-Martín and Pérez-Amaral2013). The literature on regulation and the regulatory process focuses mainly on questions related to the efficiency of regulation and on problems such as regulatory capture (Stigler Reference Stigler1971; Peltzman Reference Peltzman1976), agency problems (Weingast Reference Weingast1984; Spiler Reference Spiler1990) and asymmetric information (Baron and Besanko Reference Baron and Besanko1984). However, although interactions between politicians and regulators also contribute to the efficiency of regulation, the investigation of this factor remains undeveloped. The understanding of these interactions is critical in order to explain how regulation evolves.

Policy entrepreneurship and regulatory reforms: regulatory reforms in Israel in the areas of competition policy and regulation of banks

In this section we analyse the activities of two of the most influential regulatory entrepreneurs in Israel: Rony Hizkiyahu, a former supervisor of banks, and David Gilo, a former head of the Israel Antitrust Authority (the IAA). As explained in the theoretical section and here, too, in both cases, the reforms cannot be described as the products of the efforts of an independent regulatory authority, but are clearly the work of the individual regulatory entrepreneurs. Our entrepreneurs stepped into a situation that others had already identified as a market failure. However, the solutions suggested by others were different from those that these regulatory entrepreneurs regarded as optimal. Based on their expertise, they devised new solutions and changed the course of the reform. In both our cases, their goal was clear: enhancing competition in the market (Interviews: Hizkiyahu; Gilo), and so was their declared motivation – both stressed they wanted to “do the right thing” (Interviews: Hizkiyahu; Gilo).

In Israel, regulators usually enjoy a certain amount of discretion with regard to regulatory decisions made in accordance with the authorising law. However, if the regulator wishes to promote a reform which is outside the scope of the authorising law, he or she needs to gain the support of the Knesset and change the authorising law so that it gives the regulator the authority to regulate and conduct a reform in these areas. In the Israeli political climate it is very challenging to promote professional reforms, as the political arena and culture are characterised by nongovernability (Nachmias and Sened Reference Nachmias, Sened, Nachmias and Menahem1999; Cohen Reference Cohen2016b) and a strong emphasis on centralised control. Nongovernability is the inability of decisionmakers, politicians and bureaucrats to devise long-term public policy which is effectively implemented on the ground (Cohen Reference Cohen2013). In Israel, nongovernability is mainly linked to frequent government changes and to security challenges. In such an environment, long-term strategic considerations take a backseat to short-term considerations in the conduct of the various players in the public policy arena (Cohen Reference Cohen2013). According to this insight, even if there is some motivation to promote ideological ideas and reforms, structural conditions usually prevent Israeli decisionmakers from following through with them to the successful completion of the reform.

In this context, it is important to note that the existing empirical data on policy entrepreneurs is specific in context and based on case study analyses. In addition, the research focuses mainly on successful policy entrepreneurs who led successful changes in policy (Zahariadis Reference Zahariadis2008). We know, however, that in the case of regulatory entrepreneurs, their efforts are not always successful. Indeed, when Gilo, as a regulatory entrepreneur, tried to change policy with regard to the natural gas agreements in Israel and failed, he resigned from his position as head of the IAA.

To put things into perspective, out of 32 attempts to reform the Israeli financial sector between 1985 and 2005, only 11 reforms were carried out and accepted by the Knesset, and the average time to achieve success was about 11 years (Ben-Bassat Reference Ben-Bassat2011). Therefore, our findings may be of interest since in Israel, adoption of reforms introduced by regulators have a higher probability of failure than success. The cases we analyse are different. We show that the presence of a regulatory entrepreneur may effectively combat nongovernability and allow for professional reforms to take place over a short period of time when an entrepreneur is present.

The 2008 Bank Fees Reform

The regulatory entrepreneur behind this reform was the supervisor of banks at the time, Rony Hizkiyahu, who introduced the Bank Fees Reform for Household Consumers in mid-2008. Prior to the reform, each bank could set its own fee structure for each type of service it offered household consumers and call it by a different name. The reform restricted banks to a given number of fees attached to financial products purchased by household consumers, which now had the same name in each bank, thus enabling consumers to compare the prices charged by each bank for the same service. The website of the Bank of Israel (the BOI), which supervises Israeli banks, provides a comparison of various bank fees. The reform resulted in a 7% drop in the average cost of having a credit card, in an average drop of 10%–21% in the cost of fees for basic services in current accounts and in some banks offering consumers a fee-free account (BOI press release, 15 November 2009). Obviously, this reform also resulted in a loss for the powerful banking industry. In addition, and unprecedented, the bank fees that were the subject of the reform were not increased since the reform and up until the end of 2016.

As we suggested in our theoretical section and here, too, Hizkiyahu had to overcome significant barriers which involved both structural conditions and obstacles related to governmental and nongovernmental players in the policy arena. One of the most significant barriers in this case was the opinions and will of the politicians, who wanted a different solution, mainly given the fact that they lacked professional knowledge and had their own political interests. At first, the members of the Knesset (MKs) wanted to supervise the pricing of the bank fees by determining the amount of each fee (Shor Reference Shor2007). The politicians, mainly two (then) young MKs Gilad Ardan and Moshe Kahlon (Likud), saw the issue as an opportunity to increase their political power (Interview: Aflalo; Knesset protocol 566 2008, 5). The idea of reforming bank fees for the household consumers sector came from the politicians following the decision of one of the largest banks (Bank HaPoalim) to increase one of its fees (Interviews: Aflalo; Hizkiyahu; Strum). The media covered this increase in fees extensively, creating unprecedented public pressure to address the issue of bank fees for household consumers (Bron Reference Bron2006). While the politicians, the press and the public were in favour of regulating bank fees (Knesset protocol 283 2007, p. 4), in Hizkiyahu’s opinion the solution suggested by the politicians was not optimal. Hizkiyahu had to convince the politicians to withdraw from their initial “non-market” idea of setting the fees and, instead, adopt the idea of increasing transparency and competition (Lavi Reference Lavi2008).

A second set of barriers came from the interest groups. The Consumer Council, which exists to protect consumer rights, strongly favoured eliminating all bank fees and was lobbying in that direction (Rosenberg Reference Rosenberg2009; Interview: Strum). In addition, naturally, the banking industry was very opposed to any kind of reform, and threatened that if it were enacted they would have to issue a profit warning which would have a negative impact on the value of their stock and on their stability (Interviews: Aflalo; Hizkiyahu).

A third set of barriers came from high-ranking bureaucrats in the BOI who had various organisational and personal interests including increasing the BOI’s power, promoting their own professional careers and establishing themselves as experts. In fact, as will be discussed, prior to Hizkiyahu’s term, an internal BOI committee had already started to work on finding other solutions to this issue (Interview: Hizkiyahu).

Hizkiyahu’s policy entrepreneurship strategies: how the regulator did it

As suggested in the theoretical section, in order to succeed, Hizkiyahu had to use entrepreneurial strategies. He did so mainly by identifying and using a window of opportunity, bringing in new ideas to the table and unorthodox thinking, using his knowledge and expertise and engaging in coalition building. All this proved essential to passing the reform.

On 1 January 2007, after decades of working in the banking industry, Hizkiyahu became the supervisor of banks. Although the supervisory unit is a department within the BOI, the position of the supervisor of banks enjoys a great deal of discretion and autonomy. As a regulatory entrepreneur, he stepped into an open window of opportunity to tackle an existing problem using political acumen in order to influence policy. Following pressure from the public, the Knesset proposed a bill restricting bank fees. The governor of the BOI, Stanley Fischer, managed to convince the Knesset to postpone legislation until after the BOI had studied the situation in other countries. An internal committee had already been formed and was ongoing in the BOI when Hizkiyahu entered his position. In addition, Hizkiyahu enjoyed unanimous support for some sort of bank fee reform in the BOI. This support was demonstrated in Stanley Fischer’s claim that bank fees were not understandable even to him and that “the BOI must do anything to strengthen competition in the banking sector” (Shavit Reference Shavit2007).

As explained, one of the characteristics of a policy entrepreneur is identifying the barriers and using strategies to overcome them. Hizkiyahu identified the many contradictory interests of the significant players in the arena and worked pragmatically to align them with his innovative ideas. With regard to barriers put up by politicians, instead of just performing as the politicians’ executor, Hizkiyahu, as a regulatory entrepreneur, did not hesitate to question the politicians’ solution to the problem and push for a different solution which, at first, went against their will (Interview: Hizkiyahu). Following the findings of the BOI committee, which showed that bank fees in Israel were not higher than those in Europe (Interview: Hizkiyahu), Hizkiyahu’s strategy was to reframe the reform as increasing transparency and competition in the market by using his expertise and many years of banking experience, drawing also on the data in the BOI committee report. His practical experience in the banking industry allowed him to refute the claims made by the banks that the reform would jeopardise their stability. Using his expertise, he came to the negotiating table with a ready-made solution that others could not counter (Knesset protocol 279 2007, p. 6).

Here, bargaining appeared as one of his strategies and was an integral part of the process (Interviews: Strum; Zaza). At first, the MKs wanted to supervise the pricing of the bank fees by determining the amount of each fee (Shor Reference Shor2007). Hizkiyahu convinced them that price supervision would defeat the goal and instead steered the reform towards increasing transparency and competition in the market (Interviews: Hizkiyahu; Vangerko).

As explained, another significant barrier came from the interest groups. Bargaining also took place with the regulated industry, which claimed that if the reform were passed, the banks would become unstable (Interviews: Aflalo; Hizkiyahu). Hizkiyahu countered that he did not regard this proposal as a threat to the stability of the banks and suggested that if it were defeated, the pricing of the fees would have to be supervised instead (Interview: Hizkiyahu). The banking industry and the consumer nongovernmental organisations (NGOs) tried to pressure the politicians, each trying to influence the reform in the direction that best fit their interests (Knesset protocol 279 2007, p. 20).

To convince potential holders of veto power to adopt his point of view, Hizkiyahu invested a great deal of time and energy, holding personal meetings with relevant politicians, NGOs and industry members (Interview: Radai). In these meetings he bargained with the players and tried to persuade them to adopt his solution while demonstrating willingness to compromise on issues that he saw as less important. For example, in order to satisfy the needs of the politicians to provide the public with a tangible solution to the problem, he agreed to put 14 fees that were unreasonably high under the price supervision of the BOI. Given the media’s extensive coverage of the reform, he risked his reputation while promoting the solution he saw as optimal (Lavi Reference Lavi2008).

Hizkiyahu focused on setting agendas and building coalitions. This too makes him stand out as an entrepreneur, as in most cases “regulators do not prepare themselves well enough [for discussions at the Knesset, the authors], they don’t build coalitions” (Interview: Smaya). In order to set the agenda and moderate the effectiveness of the massive lobbying by the industry, Hizkiyahu turned to the press (Interviews: Aflalo; Strum). Here, it is important to note that regulators who are not policy entrepreneurs hardly turn to the press; they tend to focus on doing the regulatory work and believe that this will be enough in order for reforms to pass (Interview: Smaya). Identifying the social equity in this case (Mintrom and Norman Reference Mintrom and Norman2009), Hizkiyahu’s strategy was to go public. He reasoned that if the topic and the lobbying of the industry were in the public eye, politicians would be less likely to surrender to the industry’s demands (Interview: Hizkiyahu). It is important to stress that the press in Israel consists of very few media outlets. Therefore, each outlet has significant and influential power over the salience of issues which reach the public eye.

Hizkiyahu worked closely with the relevant MKs to gain their support. He also identified their political needs and shared the credit with them (Interview: Vangerko; Knesset Protocol 283 2007, p. 6). Ultimately, his skills and efforts proved successful, and the reform was passed in July 2007 [The Banking Law (Consumer Services), 5747-1981, Amendment 2120].

The 2014 bill for promoting competition in the food industry

The reform was the product of a regulatory entrepreneur, namely, the head of the IAA, David Gilo. The Promotion of Competition in the Food Industry Bill, 5774-2013 (the Law) was enacted in March 2014 with the goal of increasing competition in the food market, mainly by regulating the relationship between suppliers and retailers (Eyal-Boger et al. Reference Eyal-Boger, Cohen and Zac2014). The reform was enacted outside the antitrust law. The new bill targeted the food industry specifically and added to the competition legislation by increasing price transparency and regulating supplier–retailer relationships in the following manner: (1) prohibiting suppliers from intervening in retail prices or in the terms and conditions of a product from other suppliers, (2) prohibiting large suppliers from intervening in the shelf arrangements of the large retailers, (3) prohibiting large suppliers from tying the sale of one product to another, (4) prohibiting the transfer and receipt of payments from a supplier to a large retailer and (5) placing restrictions on the geographical proximity of new shops opened by the large retailers.

In addition, the Law empowered the IAA to issue instructions regarding shelf space to large retailers selling large suppliers’ products, and to instruct retailers selling private label products. Furthermore, a retailer could not allocate more than 50% of its shelf space to the large suppliers.

As suggested in the theoretical section, and similar to the banking case, here too, Gilo had to overcome significant barriers which involved structural conditions and those related to players in the policy arena. Some of the obstacles derived from the fact that the arena was comprised of politicians and high-level bureaucrats with considerable discretion, sharing the power between them, with “many conflicting interests and struggles under the table” (Kadosh Reference Kadosh2015). The politicians, mainly Avishay Braverman (Labor) and Yitzhak Vaknin (Shas), regarded the issue as leverage to increase their political power (Interview: Hagalili). The high-ranking bureaucrats in the Ministries of Finance, Agriculture, and Economy and Industry, and particularly those inside the IAA, had various organisational and personal interests, including, or sometimes even exclusively, promoting their professional agenda (Interviews: Gilo; Hagalili; Halperin).

The main barrier in this case came from politicians as well as experts. Even though scholars and competition experts (including former competition regulators) agreed that increasing competition in the food market was a welcome initiative (Interviews: Gal; Halperin), many criticised the bill (Interviews: Anonymous A; Strum), claiming that “The surgical touch needed in such industry-specific regulatory interventions was replaced by a bulldozer trying to level the field…” (Eyal-Boger et al. Reference Eyal-Boger, Cohen and Zac2014). In fact, Braverman himself noted that he did not think this legislation would reduce prices significantly (Interview: Hagalili; Kadosh Reference Kadosh2015; Knesset protocol 1 2013), and one MK noted, “I am very skeptical with regard to the results…we are putting aside the main problems and dealing with shelf arrangement…it’s not the main issue and for sure will not bring down food prices” (Knesset protocol 1 2013, p. 17). In addition, Gilo had to convince people in the IAA to accept his solution and faced opposition in-house (Interview: Gilo). Therefore, given the criticism and the hostile environment from experts, Gilo’s success is a good example of how regulatory entrepreneurs overcome barriers and push through their ideas even if it is not the optimal solution to a problem.

Apart from the objections from other competition experts, other significant barriers to passing the reform came from the industry and the politicians. As in most cases, the industry rightly feared that the regulation would reduce its profits and harm its long-term interests (Interviews: Even-Chen; Halperin). Hence, it attempted to sabotage the reform, threatening that if it passed, many workers would be fired (Knesset protocol 1 2013, p. 18). In this case, in light of the political and public atmosphere fuelled by the press, the industry understood that they could not prevent the reform, so each firm tried to influence the final design of the regulation in a way that would hurt its competitors by suggesting “improvements” to it (Interviews: Gilo; Halperin; Strum; Knesset protocol 1 2013, pp. 12, 14). Part of the strategy of the industry was to hire professional lobbyists to move the legislation from the Arrangements Law to a separate regular law that was easier to influence and change (Interviews: Aflalo; Halperin). In addition, Gilo faced strong political pressure due to public demand for a rapid solution to the problem (Interview: Even-Chen; Knesset protocol 2 2013,pp. 3, 20) and pressure from consumer organisations seeking to dismantle the existing structure of retailers (The Report of the Committee for Increasing Competition and Removing Import Barriers 11 November 2104, 43). This pressure, combined with their lack of knowledge about regulatory solutions to increase competition (Interview: Anonymous B), led politicians to suggest designing the reform in a different way, which Gilo felt was less optimal and more aggressive (Interview: Halperin; Knesset protocol 2 2013, p. 10). In addition, unlike the Bank Fees Reform, Gilo faced a significant structural barrier since at the time of his appointment, the IAA lacked organisational resources, including a research department (Interview: Gilo). Moreover, given that he came from the academic world, he had to prove to the practitioners and his employees that he was familiar with the “real world,” as well as would overcome the traditional thinking in the IAA (Interviews: Even-Chen; Gilo).

Gilo’s entrepreneurship strategies: how the regulator did it

As suggested in the theoretical section and similar to the 2008 Bank Fees Reform, here too, using entrepreneurial strategies proved essential to the entrepreneur’s success. The IAA was established in 1994. However, until Gilo was appointed in May 2011, it refrained from drastic reforms in competition policy and in the market (Interview: Halperin). Gilo recognised the regulatory vacuum as a window of opportunity for regulatory reform and as a chance to solve acute problems in the market by using his political skills in order to bring about policy results. A couple of months after his appointment, in July 2011, the Israeli social justice protests erupted and about 400,000 protesters from a variety of socio-economic backgrounds (mainly people belonging to the middle class) took to the streets to protest the rising cost of living in Israel. The protest led to a political understanding that “something must be done” to reduce the cost of living and completely changed the political discourse in Israel (Interviews: Barkat; Cohen; Halperin; Strum; Observation: 5 July 2016). As a result, the Israeli government set up a public committee headed by Professor Manuel Trajtenberg, which submitted its findings and recommendations in a report dated September 2011. As part of its recommendations, the committee delegated its powers to a specific team, the Kedmi Committee, which analysed the competitiveness in the food and consumer product market and offered recommendations in a report dated July 2012 and discussed it in the Knesset (Knesset protocol 882 2012). This fertile ground contributed to the acceptance of Gilo’s reforms (Interviews: Anonymous A; Even-Chen; Halperin; Strum).

In addition to identifying and using the window of opportunity created by the massive public demand for change, Gilo used entrepreneurship strategies to overcome the barriers listed earlier. The fact that the engine behind these strategies was Gilo himself and not the IAA as a regulatory body is backed up not only by interviews (Interview: Oz) but also by the fact that before he came into office, these strategies were not adopted by the IAA.

To promote his innovative, controversial ideas, he used his expertise as an esteemed professor in the field of competition together with the practical experience of the IAA and his knowledge accumulated from his regular work as a competition regulator (Interviews: Gilo; Halperin; Oz; Knesset protocol 1 2013, p. 7). He based his solution on detailed geographical research conducted by the newly formed research department inside the IAA and brought to the agenda a “ready-made” solution to the problem (Knesset protocol 1 2013, p. 11). As he explained: “…the fact that I am an expert in the field [of competition regulation, the authors] gave my solution more weight…” (Interview: Gilo). Hence, by presenting his ideas in a simple manner, which emerged as an important strategy for regulatory entrepreneurs in the interviews we conducted (Interviews: Aflalo; Gilo; Halperin), Gilo succeeded in using his political abilities to persuade the politicians to adopt most of his initiatives and change their initial opinion with regard to restricting shelf arrangements, instead leaving it to the discretionary power of the IAA to decide on a case-by-case basis.

To overcome the industry’s massive lobbying campaign and promote his ideas among the public and the politicians, Gilo used the press (Interview: Halperin). He gave interviews to many media outlets in which he explained his ideas in an easy-to-understand language, thereby demonstrating his strong political acuity. He himself faced massive criticism from peers and experts who doubted his innovative ideas, charging that such innovative regulatory intervention existed nowhere else and had never been tested (Interviews: Anonymous B; Gal).

Gilo also proved to be very good at coalition building. He met with the representatives of the relevant governmental offices (especially the Ministry of Finance) and convinced them to adopt his ideas. Given their eagerness to find a solution to this pressing problem in the midst of a chaotic situation, his ideas were well received (Interviews: Halperin; Strum). In fact, Gilo himself noted that at first he “tested the water” and brought a more moderate version of the reform to the Knesset. Once he saw that his ideas were well received, he added more provisions to make the regulation tougher (Interview: Gilo). This enthusiasm, together with the connections he established with the press, helped him promote the reform in the manner he saw fit (Interview: Even-Chen). Perhaps one of the major factors that led to the success of his reform was his persistence and effort in promoting a specific issue on the policy agenda (Interview: Halperin; Knesset protocol 2 2013, p. 5).

Discussion and conclusions

We began with the question of how regulatory entrepreneurs promote regulatory reforms. As mentioned in the introduction, our article does not provide an answer to the question of whether regulatory entrepreneurship is a desirable phenomenon. The answer to this question cannot be deduced from our empirical analysis. While it may be desirable in the cases presented here, in other contexts it might lead to undesirable and even dangerous consequences for specific social groups or to society as a whole. Further research is needed to shed light on this issue. Nevertheless, it is important to understand and study the role of regulatory entrepreneurs, as applying policy entrepreneurship to the study of regulatory reforms increases our understanding of the process. Analysing the regulatory entrepreneur’s barriers, goals and strategies helps us gain a better microunderstanding of how regulatory reforms actually come about by focusing on the individual instance. Our case studies, which have diverse time-points, organisational fields and sectors, confirm our claim that the innovative strategies of policy entrepreneurs have an important influence on the ability to promote regulatory reform.

What are the broader theoretical and practical lessons of our two cases? The comparison between the two cases reveals several insights that might prove useful for understanding the interactions between regulators and politicians in passing regulatory reforms and regulatory entrepreneurship in general. We discovered several factors that proved significant in the regulators’ ability to pass the reforms, contrary to the initial plan introduced by the politicians. First, in both our case studies, the regulators were considered experts in their field. The intensive use of empirical data and professional reports by the regulatory entrepreneurs proved to be very effective. Second, both regulators had exceptional political skills. Their ability to identify social and political processes, and windows of opportunity, form coalitions, bargain, compromise and convince the relevant players of the advantages of the reform was crucial to its success. Third, both regulators provided a ready-made solution to the problem addressed by the reform and which was supported by serious research conducted by the regulatory institution. Fourth, in both cases there was already a demand for regulatory reform (coming from the public, the press or politicians), and an already-existing suboptimal solution. The regulatory entrepreneurs used this fertile ground to change the reform and steer it in a direction they regarded as closer to the optimal one. Fifth, both regulators simplified the complex issues at hand, explained the problem and provided an easy to understand solution in a very simple manner. Finally, both regulators understood the importance of the media and used it to promote the regulatory reform. In both cases, our entrepreneurs countered the sophisticated influence of lobbyists by taking their solutions to the press. The reason for going public and not relying only on their technocratic policy knowledge was that in doing so the entrepreneurs reduced the likelihood of the politicians being convinced by the lobbyists. Hence, although the strategy of going public may have its disadvantages (e.g., it may raise reputational challenges and harm organisational interests), it seems to be effective in cases where the interest groups may critically influence the politicians and jeopardise the reform.

Further insights result from considering the differences between the two cases. First, they differed in how they were viewed by other experts in the field. While Hizkiyahu’s reform was broadly accepted by experts in the field as a good solution to reducing the fees the banks imposed on consumers, Gilo’s reform was widely criticised by experts. This difference demonstrates that when regulators tenaciously employ entrepreneurship strategies, the nature of the solution is less critical to the success of the reform. Second, the cases involved different fields. Thus, we can deduce that our insights regarding regulatory entrepreneurship are generic and do not depend on the specific regulatory field. Third, the nature of the interactions between the entrepreneurs and the politicians, which are usually sensitive to the popularity of regulatory reforms, was different. While in Gilo’s case the politicians strongly favoured the reform, in Hizkiyahu’s case the politicians initially did not like his specific reform and wanted a more radical solution. Given that both reforms passed, it is likely that when regulators are also skilled entrepreneurs, they will be able to steer the reform in the direction they regard as preferable. Fourth, the potency and characteristics of the windows of opportunity were different. We argue that the sensitivity of the politicians to public sentiment provides an effective window of opportunity regardless of the size and strength of public reaction to the unwanted outcomes. While in Gilo’s case, the reform rode on the tailwind of the massive social protest (which was a unique phenomenon in Israel) and helped promote his solution, in Hizkiyahu’s case, the window of opportunity exhibited itself mainly through the economic press. Here, the difference indicates that while the ways politicians gauge public sentiment may vary, as long as politicians believe that the public is in favour of change, the likelihood that reform will succeed increases.

Our two case studies also help to stress the distinction between regulatory entrepreneurship and other cases where policy change takes place. In both cases we can identify the crucial contribution of the specific individual regulatory entrepreneur (rather than an agency or an organisation) to the success of the reform. Even though the two individuals were positioned as high-ranking bureaucrats, they did not initially have all the resources and support needed for the successful execution of their reform. Yet, they identified the social equity and windows of opportunity and succeeded in building coalitions in order to promote the desired change.

Finally, in today’s world where old political barriers, particularly the powerful influence of interest groups on decisionmakers, encounter the power of the press and social media, signs point to regulatory entrepreneurship becoming increasingly prevalent in passing regulatory reforms. Thus, understanding regulatory entrepreneurship is crucial for predicting which regulatory reforms might pass and which might fail. Given the relative lack of theoretical emphasis on individual entrepreneurship and its influence on regulatory reform, one of the main contributions of this article is to assert regulatory policy entrepreneurs as a relevant object of study. Therefore, it is important for future research to examine the conditions that promote policy entrepreneurship among bureaucratic regulators, as well as the strategies they adopt, in varied policy domains and with a comparative perspective. Exploring the theme of regulators engaging in policy design is important not only among competition and financial regulators but also in other professional settings; in various jurisdictions and at the national, regional and global levels.