Covenants with weak swords: ISO 14001 and facilities' environmental performance

Voluntary environmental programs are codes of progressive environmental conduct that firms pledge to adopt. This paper investigates whether ISO 14001, a voluntary program with a weak sword—a weak monitoring and sanctioning mechanism—can mitigate shirking and improve participants' environmental performance. Sponsored by the International Organization for Standardization (ISO), ISO 14001 is the most widely adopted voluntary environmental program in the world. Our analysis of over 3,000 facilities regulated as major sources under the U.S. Clean Air Act suggests that ISO 14001‐certified facilities reduce their pollution emissions more than non‐certified facilities. This result persists even after controlling for facilities' emission and regulatory compliance histories as well as addressing potential endogeneity issues between facilities' environmental performance and their decisions to join ISO 14001. © 2005 by the Association for Public Policy Analysis and Management     

What drives compliance with COVID-19 measures over time? Explaining changing impacts with Goal Framing Theory

The COVID-19 pandemic provides a unique opportunity to study which factors drive compliance and how the evolving context in society –virus fluctuations and changing government measures – changes the impact of these factors. Extant literature lists many factors that drive compliance – notably enforcement, trust, legitimacy. Most of these studies, however, do not look across time: whether a changing context for citizens changes the impact of factors driving compliance. In this study, we use Lindenberg's Goal Framing Theory to explain the dynamics of these drivers of compliance during the COVID-19 pandemic. We formulate hypotheses for pro-socialness, trust in government, observed respect for rules, rule effectiveness, rule appropriateness, fear of COVID-19 (severity and proximity), opportunities for pleasure and happiness, as well as worsened income position. We test our hypotheses with data collected at three different moments during the beginning of the COVID-19 crisis in Flanders, Belgium. Findings show that over time the constellations of factors that drive compliance change and, later in the pandemic, more distinct groups of citizens with different motivations to comply are identified. The overall conclusion is that the voluntary basis for compliance becomes more fragile over time, with a more differentiated pattern of drivers of compliance emerging. Public policy and communication need to adapt to these changes over time and address different groups of citizens.     

Compliance costs,regulation, and environmental performance: Controlling truck emissions in the US

When explaining regulatory policymaking and the behavior of regulated business firms, scholars have supplemented economic models by emphasizing the role of public‐regarding entrepreneurial politics and of normative pressures on firms. This article explores the limits of such entrepreneurial politics and “social license” pressures by examining regulation of emissions from diesel powered trucks in the US. We find that the economic cost of obtaining the best available control technology – new model lower emissions engines – has: (i) limited the stringency and coerciveness of direct regulation of vehicle owners and operators; (ii) dwarfed the reach and effectiveness of the governmental programs that subsidize the purchase of new less polluting vehicles; and (iii) elevated the importance of each company’s “economic license”– as opposed to its “social license”– in shaping its environmental performance. The prominence of this “regulatory compliance cost” variable in shaping both regulation and firm behavior, we conclude, is likely to recur in highly competitive markets, like trucking, that include many small firms that cannot readily either afford or pass on the cost of best available compliance technologies.     

The Regulation Dilemma: Cooperation and Conflict in Environmental Governance

Across the United States and around the world, businesses have joined voluntary governmental and nongovernmental environmental regulations. Such codes often require firms to establish internal environmental management systems to improve their environmental performance and regulatory compliance. Meanwhile, governments have been offering incentives to businesses that self-police their regulatory compliance and promptly report and correct violations. This article examines how governmental regulatory enforcement can influence firms' compliance with mandatory and voluntary regulations. Cooperative regulatory enforcement—in which firms self-police their environmental operations and governments provide regulatory relief for voluntarily disclosed violations—yields optimal win–win outcomes, but only when both sides cooperate. If firms are likely to evade compliance, governments are better off adopting a deterrence approach. If governments insist on rigidly interpreting and enforcing laws, firms may have incentives to evade regulations and not voluntary codes. Cooperation is possible through credible signals between firms and government.     

The politics of regulatory enforcement and compliance: Theorizing and operationalizing political influences

There is broad consensus in the literature on regulatory enforcement and compliance that politics matters. However, there is little scholarly convergence on what politics is or rigorous theorization and empirical testing of how politics matters. Many enforcement and compliance studies omit political variables altogether. Among those that address political influences on regulatory outcomes, politics has been defined in myriad ways and, too often, left undefined. Even when political constructs are explicitly operationalized, the mechanisms by which they influence regulatory outcomes are thinly hypothesized or simply ignored. If politics is truly as important to enforcement and compliance outcomes as everyone in the field seems to agree, regulatory scholarship must make a more sustained and systematic effort to understand their relationship, because overlooking this connection risks missing what is actually driving regulatory outcomes. This article examines how the construct of “politics” has been conceptualized in regulatory theory and analyzes how it has been operationalized in empirical studies of regulatory enforcement and compliance outcomes. It brings together scholarship across disciplines that rarely speak but have much to say to one another on this subject in order to constitute a field around the politics of regulation. The goal is to sharpen theoretical and empirical understandings of when and how regulation works by better accounting for the role politics plays in its enforcement.     

State environmental regulators: perspectives about trust with their regulatory counterparts

Although numerous studies explore the regulatory enforcement styles of regulators and the regulated community's compliance motivations, existing research does not provide adequate insight into regulatory interactions themselves. We use data from a nationwide survey of more than 1200 state environmental regulators to empirically assess the role of trust in regulatory interactions. We find statistical support of trust in these regulatory interactions and find that trust appears to be a function of cooperative behavior, information sharing, respect, perceptions of motivations, and proactive assistance seeking. These findings could support the increasing calls for a fundamental restructuring of environmental regulation in favor of a next‐generation approach to environmental policy that calls for more collaborative working relationships between regulators and their regulatory counterparts. Copyright © 2014 John Wiley & Sons, Ltd.     

Regulation and Compliance Motivations: Examining Different Approaches

This research examines how traditional regulatory and voluntary approaches affect motivations to address potential harms to water quality. The traditional approach consists of governmental enforcement of mandatory requirements; the voluntary approach consists of government calling attention to potential harms and facilitating actions to address them. These approaches are best thought of as ends of a continuum rather than as the sole choices. Three sets of findings emerge from the research. One, not surprisingly, is that traditional regulation is more effective than the voluntary approach alone. A second shows that deterrent fears and the sense of duty to comply are important motivations for action. A third concerns factors that account for the variation in each motivation for which inspections, peer reputation, and attitudes toward government are shown to be important considerations. These findings point to the duality of deterrent fears and civic obligations as motivations to address potential harms.     

Codes in context: How states,markets, and civil society shape adherence to global labor standards

Transnational business regulation is increasingly implemented through private voluntary programs – such as certification regimes and codes of conduct – that diffuse global standards. However, little is known about the conditions under which companies adhere to these standards. We conduct one of the first large‐scale comparative studies to determine which international, domestic, civil society, and market institutions promote supply chain factories' adherence to the global labor standards embodied in codes of conduct imposed by multinational buyers. We find that suppliers are more likely to adhere when they are embedded in states that participate actively in the International Labour Organization treaty regime and that have stringent domestic labor law and high levels of press freedom. We further demonstrate that suppliers perform better when they serve buyers located in countries where consumers are wealthy and socially conscious. These findings suggest the importance of overlapping state, civil society, and market governance regimes to meaningful transnational regulation.     

Accountability infrastructures: Pragmatic compliance inside organizations

We trace the pragmatic turn in regulatory governance from the level of the state and civil society to the coalface of the regulated organization. Since the 1980s, an array of new regulatory models has emerged. These models, while distinct, are unified in two related tendencies. First, they support the devolution of responsibility for standard setting, program design, and enforcement to the regulated organization. This delegation of governance to the organization itself has catalyzed the creation of accountability infrastructures within organizations, a network of offices, roles, programs, and procedures dedicated to aligning the organization's operations with external standards, codes of conduct, ethical and normative expectations, and regulations. Second, the diverse regulatory models depend, often implicitly, on organizational accountability infrastructures that incorporate the tenets of pragmatist philosophy: inquiry through narration, adaptation to context, and problem-solving through experimentation. Reviewing the empirical literature on organizational compliance, we find ample evidence of inquiry through narration at the organizational coalface. However, we find limited evidence of narrating plurality in the organization and narrating experimentation as problem-solving, as these activities create tensions with internal and external parties who expect singular, stable representations of governance. These tensions reveal an important incongruity between pragmatic governance across organizations and pragmatic governance within organizations. We contribute to the regulatory governance literature by documenting this important shift in the locus of governance to the organizational coalface and by charting a new research agenda. We argue that examinations of regulatory governance should be retraced in three ways. First, attention should shift to the organizational coalface, recognizing and analyzing accountability infrastructures as the central contemporary mechanism of governance. Second, the long-standing focus in regulatory studies on why parties comply should shift to understanding how regulated parties manage themselves to achieve compliance. Third, analyses of compliance should examine the tensions in narrating adaptation and experimentation, and the implications of such tensions for the achievement of prosocial outcomes.     

Using the institutional grammar tool to understand regulatory compliance: The case of Colorado aquaculture

What is the relationship between the design of regulations and levels of individual compliance? To answer this question, Crawford and Ostrom's institutional grammar tool is used to deconstruct regulations governing the aquaculture industry in Colorado, USA. Compliance with the deconstructed regulatory components is then assessed based on the perceptions of the appropriateness of the regulations, involvement in designing the regulations, and intrinsic and extrinsic motivations. The findings suggest that levels of compliance with regulations vary across and within individuals regarding various aspects of the regulatory components. As expected, the level of compliance is affected by the perceived appropriateness of regulations, participation in designing the regulations, and feelings of guilt and fear of social disapproval. Furthermore, there is a strong degree of interdependence among the written components, as identified by the institutional grammar tool, in affecting compliance levels. The paper contributes to the regulation and compliance literature by illustrating the utility of the institutional grammar tool in understanding regulatory content, applying a new Q‐Sort technique for measuring individual levels of compliance, and providing a rare exploration into feelings of guilt and fear outside of the laboratory setting.     

Information, Interests, and Environmental Regulation

This study contributes to the understanding of informational approaches to bringing about compliance with environmental regulations with particular attention to differences in the influence of information provided by different information sources. Based on theorizing from a combination of information processing and interest group literatures, we develop hypotheses about regulatees' reliance upon and the influence of different sources of information. We test these hypotheses for Danish farmers' compliance with agro-environmental rules. Our findings show that information plays a role in bringing about regulatory compliance, but its influence is not as strong and is less direct than might be thought to be the case. In addition, we show that not all information sources have the same influence. The findings demonstrate that interest groups have important roles in information provision and legitimization of policies that have often been assumed in the literature but have rarely been empirically examined.     

Nurturing regulatory compliance: Is procedural justice effective when people question the legitimacy of the law?

Procedural justice generally enhances an authority's legitimacy and encourages people to comply with an authority's decisions and rules. We argue, however, that previous research on procedural justice and legitimacy has examined legitimacy in a limited way by focusing solely on the perceived legitimacy of authorities and ignoring how people may perceive the legitimacy of the laws and rules they enforce. In addition, no research to date has examined how such perceptions of legitimacy may moderate the effect of procedural justice on compliance behavior. Using survey data collected across three different regulatory contexts – taxation (Study 1), social security (Study 2), and law enforcement (Study 3) – the findings suggest that one's perceptions of the legitimacy of the law moderates the effect of procedural justice on compliance behaviors; procedural justice is more important for shaping compliance behaviors when people question the legitimacy of the laws than when they accept them as legitimate. An explanation of these findings using a social distancing framework is offered, along with a discussion of the implications the findings have on enforcement.     

Green Clubs and Voluntary Governance: ISO 14001 and Firms' Regulatory Compliance

Voluntary programs have become widespread tools for governments and nongovernmental actors looking to improve industry's environmental and regulatory performance. Voluntary programs can be conceptualized as club goods that provide nonrival but potentially excludable benefits to members. For firms, the value of joining a green club over taking the same actions unilaterally is to appropriate the club's positive brand reputation. Our analysis of about 3,700 U.S. facilities indicates that joining ISO 14001, an important nongovernmental voluntary program, improves facilities' compliance with government regulations. We conjecture that ISO 14001 is effective because its broad positive standing with external audiences provides a reputational benefit that helps induce facilities to take costly progressive environmental action they would not take unilaterally .     

Institutionalizing fairness in financial markets: Mission impossible?

This article analyzes the institutionalization of process‐oriented regulation, namely: regulatory institutions that allow firms to adapt regulation to their individual circumstances, while holding them to account for the adequacy and efficacy of their internal compliance systems. The article's main focus is on the strategies sought by compliance professionals to attain managers' receptiveness to regulatory expectations. It analyzes British financial firms' responses to a process‐oriented regulatory initiative, which sought to transform the widespread culture of product “mis‐selling” in this industry. Three key arguments and hypotheses are put forward: first, it is suggested that the existing theoretical literature on process‐oriented regulation overly stresses managers' rational, profit‐maximizing motivations for (non‐)compliance, whilst overlooking their emotive motivations. Second, it is proposed that managers' emotive resistance is expected when regulatory expectations challenge firms' “organizational identities” and thereby their individual identities. Third, it is hypothesized that when process‐oriented regulation poses a threat to organizations' identities, its institutionalization will entail delegation of the design and subsequent implementation of compliance systems to managers outside compliance, and reframing of regulatory expectations into existing businesses discourses and methodologies.     

Why Be Accountable? Exploring Voluntary Accountability of Australian Private Ancillary Funds

The aim of this paper is to consider why Private Ancillary Funds (PAFs), endowed philanthropic foundations with no public reporting requirements, engage in accountability in its various forms. This exploratory, qualitative study reports on perspectives on accountability from 10 semi‐structured interviews with PAF managers and/or trustees from three Australian states. Through the lens of March and Olsen's (2011) logics of action and Karsten's (2015) typology of motivational forms for voluntary accountability, findings show that although logics of appropriateness and consequentiality explain many reasons why PAFs engage in voluntary accountability, some reasons do not fit comfortably within either logic. The findings challenge conceptions embedded in much non‐profit accountability literature that motivations for and purposes of accountability are linked with sustainability and survival. By examining this subset of non‐profit organisations subject to limited regulatory accountability, a clearer understanding of motivations for voluntary accountability is achieved.     

An analysis of budget compliance measurement in South African local government best‐practice financial management technical assistance programs, 2001—2003

South Africa's local government financial management best‐practice technical assistance program (known as MFMTAP) was to reform municipal financial management; achieve credible, realistic budgets and prevent financial failure. We consider whether a budget compliance procedure, developed by National Treasury (NT) to measure funding requirements compliance with the Municipal Finance Management Act (MFMA) focusing on ‘realistic’ revenue budgeting, improves our understanding of technical assistance effectiveness. We assess a metropolitan municipality's compliance before, during and after advisory assistance. The compliance procedure was robust. Potential exists for wider application to assess best‐practice technical assistance (BPTA) program financial reform effectiveness. The findings from this single, important sample suggest that MFMA funding requirements are not being sustained 4 years after MFMTAP commencement, attributable to either BPTA performance or termination effects. We conclude that MFMA financial performance can be assessed by the procedure, from analysis of the metropolitan municipality performance assisted by a BPTA advisor for approximately 3 years. The analysis raises questions about BPTA program reform sustainability, but we add the caveat that conclusions cannot be drawn from a single sample metropolitan municipality, but a larger sample need be used for further methodology development to confirm its efficacy. Copyright © 2009 John Wiley & Sons, Ltd.     

Incentivizing self‐regulation: Federal vs. state‐level voluntary programs in US climate change policies

How does program sponsorship influence the design of voluntary programs? Why and how do voluntary programs on climate change sponsored by the state and federal governments in the United States vary in their institutional design? Scholars emphasize the signaling role of voluntary programs to outside stakeholders, and the excludable benefits that induce firms to take on non‐trivial costs of joining voluntary programs. Scholars have noted several types of benefits, particularly reputational benefits programs provide, but have not systematically studied why different programs emphasize different types of benefits. We suggest that excludable benefits are likely to take different forms depending on the institutional context in which program sponsors function. We hypothesize that federal programs are likely to emphasize less tangible reputational benefits while state programs are likely to emphasize more tangible benefits, such as access to technical knowledge and capital. Statistical analyses show the odds of a voluntary program emphasizing tangible benefits increases by several folds when the program is sponsored by the state as opposed to federal government.     

Voluntary Regulations and Innovation: The Case of ISO 14001

Governments enact environmental regulations to compel firms to internalize pollution externalities. Critics contend that regulations encourage technological lock‐ins and stifle innovation. Challenging this view, the Porter‐Linde hypothesis suggests that appropriately designed regulations can spur innovation because (1) pollution reflects resource waste; (2) regulations focus firms’ attention on waste; and (3) with regulation‐induced focus, firms are incentivized to innovate to reduce waste. This article explores the regulation–innovation linkage in the context of voluntary regulations. The authors focus on ISO 14001, the most widely adopted voluntary environmental program in the world. Examining a panel of 79 countries for the period 1996–2009, they find that country‐level ISO 14001 participation is a significant predictor of a country's environmental patent applications, a standard proxy for innovation activity. The policy implication is that public managers should consider voluntary regulation's second‐order effects on innovation, beyond their first‐order effects on pollution and regulatory compliance.     

Counting on codes: An examination of transnational codes as a regulatory governance mechanism for nanotechnologies

This article examines the rise of nanotechnology‐specific codes of conduct (nano‐codes) as a private governance mechanism to manage potential risks and promote the technology. It examines their effectiveness as well as their legitimacy as regulatory instruments in the public domain. The study first maps the rise of voluntary nano‐codes and the roles played by different actors. Focusing on five specific nano‐codes, the article then discusses their adequacy in terms of scientific uncertainty, gaps in existing regulatory regimes, and broader societal concerns. It concludes that these voluntary nano‐codes have weaknesses including a lack of explicit standards on which to base independent monitoring, as well as no sanctions for poor compliance. At the same time it also highlights the potential power of these governance mechanisms under conditions of uncertainty and co‐regulation with government. It is likely that nano‐codes will become the “first cut” of a new governance regime for nanotechnologies.