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Posted on April 21st, 2014, by

At the same time, the introduction of self-regulation raises the problem of the choice of methods and form of self-regulation. In this regard, codes of conduct are a form of self-regulation, which has emerged since the 1990s[1]. Codes of conduct comprise rules of self-regulation, which the organisation has to follow strictly[2]. In fact, codes of conduct have to be negotiated with regulatory government bodies but often codes of conduct are rather sets of ethical rules and norms than true codes that bear considerable legal value.

However, the main point of introducing self-regulation is the establishment of rules and norms which all employees and managers of the organisation are to follow[3]. In other words, corporations introducing self-regulation have to make self-regulatory rules working. Otherwise, self-regulation will not function properly[4]. Codes of conduct can help to define the ethical framework but corporations should also develop rules that will comprise a part of the contract obligations between the corporation and its employees at all levels, from an average employee to the top executive[5].

Therefore, codes of conduct are a form of self-regulation but to make self-regulation really efficient, corporations have to enhance self-regulation and to bind professionals working within corporations by contractual obligations to fulfil rules set in codes of conduct or just to fulfil rules developed in terms of self-regulation[6]. Thus, corporations will implement self-regulation, while employees and other professionals working in corporations will obey rules of self-regulation. However, possible failure of codes of conducts reveals the vulnerability of self-regulation to the problem of the failure to fulfil rules of self-regulation by all personnel of corporations and the lack of the legally efficient measures to implement self-regulation[7]. At any rate, the enhancement of self-regulation is often needed to make self-regulatory rules a part of contractual obligations of the staff[8].

4 Implementation of self-regulation

Today, self-regulation tends to be implemented in specific sectors, especially trade, textile, chemicals and extractive industries, where social and environmental risks are higher, while high social and environmental risks increase the social responsibility of companies[9]. In fact, the implementation of self-regulation occurs under the impact of the public pressure and growing regulations from the part of the government. Under the public pressure and the threat of the over-regulation from the part of the government, many corporations shift to self-regulation, which allows them to establish the efficient system of regulation, on the one hand, and to increase the public confidence, on the other[10]. In addition, self-regulation allows corporations to negotiate rules which government regulatory agencies can agree upon and which meet needs and interests of corporations[11].

The implementation of self-regulation in specific sectors is, to a significant extent, the result of high risks associated with production process, threats to the environment, or risks of the violation of employees’ rights[12]. For instance, the textile industry is particularly vulnerable to the violation of employees’ rights, when a corporation based in the UK manufacturers apparel items in a country of the third world, where employees’ rights are neglected. As a result, corporations can save costs but the risk of the violation of employees’ rights increases the public pressure on those corporations, while the introduction of self-regulation can help them to avoid slipping to the violation of employees’ rights consciously or not. Similarly, the risk of the negative impact of business activities on the environment can provoke the resistance of local communities and lead to the formation of a negative brand image[13]. Hence, corporations prefer to introduce self-regulation to prevent possible problems with the public and customers in the future.



[1] Jenkins, R. (2001). “Corporate Codes of Conduct: Self-Regulation in a global economy,”¯ Technology, Business and Society Programme, 2, 12

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Kaserman, D. L., and Mayo, J. W. (1995). Government and Business: The Economics of Antitrust and Regulation. Fort Worth, Tex.: Dryden Press, 204

[7] Ibid.

[8] Ibid.

[9] Jenkins, R. (2001). “Corporate Codes of Conduct: Self-Regulation in a global economy,”¯ Technology, Business and Society Programme, 2, 23

[10] Ibid.

[11] Holmes, T. J. (1998). “The Effect of State Policies on the Location of Manufacturing: Evidence from State Borders,”¯ Journal of Political Economy, 106, 671

[12] Ibid.

[13] Peltzman, S. (1976). “Toward a More General Theory of Regulation,”¯ Journal of Law and Economics, 19, 213

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