Ethical corporate cultures – and the role of the government

Here  is part one of a dialogue with Steve Priest on ECOA Connects looking at various issues involving corporate culture and ethics.

We hope you find it interesting.

  1. Margot Priest 9 years ago

    Terrific debate but maybe shows the influence of different cultures–neither more or less inclined to stress the importance of ethics. Ethics are interwoven with compliance and vice versa. The term “compliance” as used in the regulatory context means adherence with the rules but it also carries other freight. There is a field of study, compliance theory, that deals with psychological, economic and sociological elements of compliance. Australians have been leaders here–John Braithwaite and Neil Gunningham, to name two. A corporate environment that stresses compliance will be an important signal to regulators; similarly, regulatory responses can affect the degree or level of compliance (e.g., compliance is reduced if enforcement across an industry is reduced, even among current compliers; unfair processes will affect future willingness to comply). It may be in a firm’s or industry’s self-interest to be what is called a “super-complier,” that is, moving beyond the letter of the law. Following an industry code, such as Responsible Care, can avoid further regulation even though, technically, activities go beyond current regulatory requirements. Super compliance also signals a regulator that is trying to deal with strategic enforcement and reduced resources that less attention may be paid to the compliant firm–but it shouldn’t be ignored since that element of surprise is always helpful. So when the SEC or another regulator talks about “compliance,” I (as a former regulator here in Canada) hear background notes of those interwoven elements that ultimately make up a corporate culture. It goes way beyond technical adherence. As noted before, culture will trump and regulatory incentives (such as sentencing criteria) can promote a culture of compliance–which might be called a term of art. But I appreciate attention being drawn to assumptions that might be created by loose applications of the term. By the way, Steve, I don’t think we’re related.

    • Jkaplan 9 years ago

      Margot, thanks for your excellent comment, which for some reason I didn’t see until just now. Happy new year, Jeff

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