Table of Contents

Explaining Compliance

Explaining Compliance

Business Responses to Regulation

Edited by Christine Parker and Vibeke Lehmann Nielsen

Explaining Compliance consists of sixteen specially commissioned chapters by the world’s leading empirical researchers, examining whether and how businesses comply with regulation that is designed to affect positive behaviour changes.

Chapter 5: To Comply or Not to Comply – That Isn’t the Question: How Organizations Construct the Meaning of Compliance

Lauren B. Edelman and Shauhin A. Talesh

Subjects: law - academic, corporate law and governance, regulation and governance


Lauren B. Edelman and Shauhin A. Talesh* INTRODUCTION Most analyses of business compliance with legal regulation view law as exogenous to organizations; that is, they assume that law is formulated and defined outside of organizations and prior to reaching organizational domains. Furthermore, the extant literature tends to focus on organizations’ strategic motivations for complying or not complying (Simpson, 1992, 1998; Vaughan, 1998), social and legal license pressures (Kagan and Scholz, 1984; Kagan et al., 2003) or moral value laden concerns (Tyler, 1990). In contrast we argue that the nature of organizational compliance is best illustrated not by a compliance versus noncompliance dichotomy, but rather by a processual model in which organizations construct the meaning of both compliance and law. Further we argue that organizations must be understood as social actors that are influenced by widely institutionalized beliefs about legality, morality and rationality. We show how institutionalized conceptions of law and compliance first become widely accepted within the business community and eventually – as these conceptions become widely institutionalized – come to be seen as rational and legitimate by public legal actors and institutions and thus influence the very meaning of law. We begin by articulating a theoretical framework for understanding compliance as a process and by specifying the institutional and political mechanisms through which organizations shape the content and meaning of law. We then discuss empirical work in the civil rights context, which shows how ambiguous civil rights legislation led employers to create a variety of symbolic forms of compliance that, despite...

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