Regulation and Business Behavior

If socio-legal research has taught us anything, it is that legal coercion is expensive and difficult. Law can rarely hope to be meaningful and effective without the cooperation, indeed the normative accord, of the vast majority of populations it hopes to control. Thus after years of researching the behavior of regulatory agencies, regulatory scholars increasingly have turned their attention to the principal subjects of regulation, business entities themselves. For while governments promulgate laws and regulations, it is business corporations that must test the safety of products and vehicles, devise ways of reducing workplace hazards, and institute accurate accounting systems. Environmental regulation depends almost entirely on business firms to develop, finance and install pollution measurement and prevention technologies. The day-to-day effectiveness of regulatory compliance measures depends on the training and diligence of the corporate employees assigned to maintain equipment, monitor quality-control systems, train operatives, and take appropriate action when problems occur. For socio-legal scholars, therefore, the key theoretical and empirical issues have come to involve the relationships between regulatory norms and business behavior. What factors, legal and non-legal, influence the incidence of compliance and over-compliance? How do firms respond to different modes of regulation, and to different enforcement styles? What explains variation among enterprises in responsiveness to regulatory goals? How do variations in market structure and conditions affect business attitudes toward legal compliance? How do different modes of regulation affect business decision-making concerning innovation and investment? One particularly salient set of issues, reflected in the several studies in this issue, concerns business motives to comply with (or evade) regulations. How important in bringing about compliance is the imminent threat of legal sanctions—as compared to education, social pressures, and internalized commitments to comply with law? Existing research points to a tension between (a) the common vision of business firms as “amoral calculators,” motivated only by rational self-interest (Kagan & Scholz 1984), and