Reputation collectives: how international industry associations influence China’s safety standards in high-risk technologies

Emerging economies face challenges in managing safety risks from powerful technologies. Indeed, some analysts identify China as the most likely source of an accident linked to emerging technologies. Yet, China has achieved a remarkable safety record in certain technological domains, such as civil aviation and nuclear power. How? We theorize that, for industries in which one firm’s accident damages the reputation of all others, international industry associations can contribute to improved safety standards in emerging economies. These associations subsidize laggards’ efforts to raise their safety standards and exert peer pressure through internal benchmarking efforts. This departs from existing theories on certification clubs that set standards to deny association benefits to nonmembers. To demonstrate these different pathways of international private regulation, we study interactions between international industry associations and Chinese firms in three domains: nuclear power, civil aviation, and chemicals. The evidence supports a novel mechanism based on reputation collectives.