Explaining Compliance
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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.
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Chapter 2: Fear, Duty, and Regulatory Compliance: Lessons from Three Research Projects

Robert A. Kagan, Neil Gunningham and Dorothy Thornton


Robert A. Kagan, Neil Gunningham and Dorothy Thornton* INTRODUCTION Sociolegal explanations of law-abidingness among regulated business enterprises, as well as among individuals, point to three basic motivational factors: fear of detection and legal punishment; concern about the consequences of acquiring a bad reputation; and a sense of duty, that is, the desire to conform to internalized norms or beliefs about right and wrong. In this chapter, we will draw on three research projects of our own concerning environmental regulation, supplemented by references to other scholars’ research, to explore the interaction of these variables in shaping compliance and ‘beyond compliance’ behavior by business firms. What it means, exactly, to ‘comply’ with regulation is not always straightforward. Sociolegal scholars have emphasized that ‘compliance’ is socially constructed within the regulated enterprise, sometimes in dialogue with regulatory enforcement officials (Hutter, 1997; Edelman et al., 1991). But not infrequently, regulatory officials differ among themselves as to what is required. When mismatches between regulatory standards and particular contexts occur, some (but not all) dedicated enforcement officials may classify ‘substantial compliance’ as adequate (Bardach and Kagan, 2002 [1982]: chapter 5). Furthermore, due to variation in reporting by both regulators and business firms, the regulatory agency databases that researchers use to measure noncompliance vary in quality, while researchers who rely on those databases often differ in what they treat as significant noncompliance. In the three research projects we refer to throughout this chapter, we sought to avoid some of the uncertainties associated with defining and measuring compliance, as...

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