Compliance Dynamism: Capturing the Polynormative and Situational Nature of Business Responses to Law

Abstract

Studying compliance, in terms of the business responses to legal rules, is notoriously difficult. This paper focuses on the difficulty of capturing the behavioral response itself, rather than on difficulties in explaining compliance and isolating particular factors of influence on it. The paper argues that existing approaches to capture such compliance, using surveys and governmental data, run the risk of failing to capture compliance as it occurs in the reality of day-to-day business responses to the law. It does so by means of a unique ethnographic approach to study compliance. Drawing from data of deep participant observation about responses to legal rules in two small businesses, the paper finds that in this context there is Compliance Dynamism. This means that compliance varies for different rules, it varies over time, and businesses learn from one response to the law to the next on a daily basis. Compliance is also situational, and there is an Indirect Observer Effect, where the way compliance is measured, especially when using data derived from inspections, shapes what compliance is observed and what is not. Therefore, compliance should be captured not as a singular state but as a string of reiterative processes that occur in their situational context. And this fundamentally challenges most existing methods to capture compliance and thus our understanding of what compliance occurs and what may shape it. In its conclusion, the paper draws out the implications this has for studies that seek to find simple and usable findings about compliance.

RETRACTED ARTICLE: Compliance as a Cost-Effective System of Interaction Between Business and Government

“…The problem of determining the effectiveness of regulations is observed in the constant coverage in the literature of the facts of non-compliance (the English term “non-compliance” is used). Some of the key issues include a lack of consensus on how to actually measure compliance, frequent regulatory changes due to the dynamic nature of society, and inadequate monitoring of compliance (Wu & van Rooij, 2021 ).…”

Different encounter behaviors: Businesses in encounters with regulatory agencies

“…Wu and van Rooij (2019) study regulatory compliance among small businesses as a process that involves both complying with the law, going beyond the letter of the law to over-comply (committed complying), playing games with the inspector to eschew compliance (resistance or game playing) as well as a learning process. Thus, compliance comes in degrees and forms, but it is also situational in the sense that a business can change behavior over time and depending on the context (Wu & van Rooij, 2019). While studies such as these do offer insights on behavior, behavior is not the focal point or they study one aspect of behavior, such as compliance, albeit nuanced.…”

“…Thus, Pautz and coauthors' studies of trust in regulatory encounters identify “cooperative behavior,” information sharing and communication as key precursors of trust (Pautz & Wamsley, 2012). Wu and van Rooij (2019) study regulatory compliance among small businesses as a process that involves both complying with the law, going beyond the letter of the law to over‐comply (committed complying), playing games with the inspector to eschew compliance (resistance or game playing) as well as a learning process. Thus, compliance comes in degrees and forms, but it is also situational in the sense that a business can change behavior over time and depending on the context (Wu & van Rooij, 2019).…”

“…There are studies on regulatee behavior, by‐and‐large case studies focusing on one aspect of behavior, (e.g., Gunningham et al's, 2003 work Shades of Green ; Wu & van Rooij, 2019). However, regulatee behavior in relation to public authorities is bound to be multidimensional, that is, each encounter involves a composite of multiple behaviors on the part of the regulatee.…”

Major Barriers and Best Solutions to the Adoption of Ethics and Compliance Program in Chinese International Construction Companies: A Sustainable Development Perspective

“…The variable B03 "insufficient support from the government" was ranked second (mean value 3.920). It is notoriously tricky for ICCs to develop the ECP that should adapt to their external contexts and rule pressures [51]. Overly burdensome local compliance requirements, coupled with language barriers, go beyond the companies' cognition and ability, thus government support and assistance are a prerequisite for ICCs to adopt the ECP [21,52].…”