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Enlisting commitment to internal compliance via reframing and delegation

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Regulators in different countries and domains experiment with regulatory strategies that allow firms to adapt regulation to their individual circumstances, while holding them to account for the adequacy and efficacy of their self-regulation systems. In this article, I use the term 'process-oriented regulation,' to denote this family of similar, albeit not identical, regulatory institutions, which include management-based regulation and new forms of principles-based regulation. Notwithstanding the diversity of labels and configurations of process-oriented regulatory institutions, a key question regards the extent to which they are likely to enlist firms' commitment to regulatory goals. To contribute to the emerging empirical research on this question, the article analyzes financial firms' responses to a process-oriented regulatory initiative, which sought to transform the widespread culture of product 'mis-selling' in this industry. The article's main focus is on the strategies sought by internal supporters of this initiative to overcome their organizations' resistance and to attain managers' commitment to its implementation. It is suggested that under conditions of substantial discrepancy between regulatory expectations and firms' organizational and individual identities, commitment to process-oriented regulation entails its reframing into alternative business discourses and a leading role to non-compliance professionals and other managers in this process. These strategies, while neutralizing resistance and enhancing commitment, run the risk of altering regulatory goals.

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en

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http://eprints.lse.ac.uk/36545/

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