Origins, Challenges and Evolutions in Regulatory Inspections
Chapter 3: Theoretical underpinnings: costs and effectiveness, compliance drivers, discretion issues, risk and regulation
A widespread, traditional vision is that businesses only comply if they are afraid of control and punishment, and that frequent controls and stricter enforcement increase compliance. More sophisticated models, incorporating psychological and sociological perspectives, appear to explain compliance and behaviour change better. In particular, procedural justice supports voluntary compliance, while excessively burdensome enforcement can decrease it. Inspections and enforcement have significant costs and adverse effects, even though they are difficult to assess precisely, and it is thus important to ensure optimal efficiency. Moreover, compliance itself may not be the ultimate goal because of the inherent imperfection of norms. This requires inspector discretion, which itself must be structured in a transparent and predictable way. Regulatory inspections’ goal should be to decrease and manage risks, defined as combining probability and magnitude of harm. While there are technical and legal challenges in so doing, there is evidence that this is possible and appropriate.
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