Search for:

Posted on April 21st, 2014, by

Another weakness of self-regulation is the lower efficiency of corporations to command compliances compared to the government[1]. As a rule, the government can impose sanctions on corporations violating existing rules and norms, while corporations and their compliance groups may have limited possibility to influence individuals or groups that violate internal rules set by self-regulation of those corporations[2]. For instance, often top executives are not vulnerable to rules and norms set by codes of conduct or other self-regulatory policies and bodies within corporations. The low efficiency of corporations to command compliances raises the problem of possible negligence of self-regulatory rules by employees and managers of corporations. If they are aware of the inability of corporations to impose strict sanctions on them, even when they violate self-regulatory norms and rules, employees and managers may continue ignoring self-regulatory rules. In such a context, self-regulation becomes pointless. However, such cases are quite rare and, as a rule, they involve top executives mainly[3]. At the same time, often negligence of self-regulatory norms and rules leads to dropping out of those professionals, who ignore self-regulation. Moreover, if top executives ignore self-regulatory norms and rules for a long time, they may slip to white collar crimes because they believe they are almighty and non-punishable within their corporation[4]. However, this is exactly when self-regulation becomes particularly efficient, because self-regulation is more effective in revelation of white collar crimes compared to the government regulation[5].

7 The risk of the lack of full independence of compliance groups within corporations

Compliance groups within corporations may fail to be absolutely independent. Instead, they may be dependent on top executives, who may appoint members of those groups, for instance[6]. The lack of independence of compliance groups decreases the overall efficiency of self-regulation. This is a serious challenge for corporations to overcome because self-regulation as a tool of corporate control is very important in terms of the development of transparency of corporations and formation of their positive brand image and reputation[7]. However, the problem of independence of compliance groups is the problem of self-regulatory rules and functions granted to self-regulatory bodies. In other words, corporations have to set clear rules which grant compliance groups with full independence but, at the same time, they should impose on them respective obligation to avoid misuse of power by compliance groups.

V Command and control in the context of self-regulation

1 Self-regulation as the enhancement of command and control

Self-regulation contributes to the enhancement of command and control because all internal business operations are under the supervision of control officers and compliance groups, who may monitor internal business operations and prevent any violations or misuse of existing rules and norms[8]. Self-regulation opens larger opportunities for internal control and command because internal inspectors are better trained and acquainted with specificities of corporations than government inspectors or external auditors[9]. Self-regulation also facilitates command because the personnel grow more responsible under the impact of self-regulation since managers and employees are aware of monitoring of their performance and decisions.

2 Self-regulation as a form of internal control

Self-regulation is a form of internal control since corporations set their rules and conduct regulatory policies relying on internal resources solely[10]. The rules may be negotiated with the government or external auditors but the regulation process is conducted by corporations proper. The internal control is efficient because it stimulates professionals working in corporations to act and to take decisions responsibly. Self-regulation enhances internal control because employees and managers are under the permanent monitoring and control of internal inspectors and compliance groups. In addition, self-regulation as a form of internal control minimises the risk of corporate crimes, especially white collar crimes.



[1] Ibid.

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Walley, N. & Whitehead, B. (1994). It’s Not Easy Being Green, Harvard Business Review, 50

[7] Ibid.

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

[9] Ibid.

[10] Ibid.

Posted in Term paper writing | Tagged | Leave a comment

Leave a comment

Your email address will not be published. Required fields are marked *





0 Comments