Essay on LLM – Regulating Corporate, Social and Environmental Behaviour

Table of contents:


I Governance and self-regulation

1 The efficiency of self-regulation

2 Government-corporation interaction and self-regulation

3 Codes of conduct as a form of self-regulation

4 Implementation of self-regulation

II Drivers of self-regulation

1 The rise of social responsibility of corporations

2 The growth of the global value chains

3 The increased significance of brands and corporate reputation

4 Modern telecommunication systems and information technologies

5 The resistance of corporations to the growing impact of government

III Strengths of self-regulation

1 Lower costs of self-regulation

2 Greater inspectorial depth compared to government regulators and inspectors

3 Better training of corporate inspectors

4 The greater power of corporate inspectors

5 The high efficiency of internal compliance groups

IV Weaknesses of self-regulation

1 Free-riders

2 Unwillingness of many corporations to implement self-regulation

3 Higher costs of regulation

4 The weakness of self-regulation’s legal background compared to laws and common legal norms

5 Particularistic rules in terms of self-regulation as weakening factor of laws that are universal

6 Lower efficiency of corporations to command compliances compared to the government

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

V Command and control in the context of self-regulation

1 Self-regulation as the enhancement of command and control

2 Self-regulation as a form of internal control

3 Self-regulation and external control

Internal control but rules are set externally.

4 More efficient command and control

VI Reasons of self-regulation success

1 The readiness of corporations to self-regulation

2 The public positive feedback to self-regulation

3 The higher level of transparency brought by self-regulation and positive company-customer relationships

4 The higher efficiency of the organisational performance due to self-regulation

5 Rules match corporate needs




























Today, the improvement of the corporate control is an essential condition of the transparency, efficiency and social responsibility of large corporations. Large corporations play an important, if not to say determinant, part in the contemporary business environment. Many corporations operate internationally. International operations and the growing power of multinational corporations raise the problem of the efficient control over their performance and policies. In actuality, national governments can hardly cope with the function of control over large multinational corporations because they can conduct different policies in different countries. For instance, they can respect human rights and legal norms of the UK, but they may ignore basic human rights in countries of the third world. As a result, large multinational corporations may use the child labour somewhere in Thailand, for instance, and operate in the UK respecting local legal norms. Formally, the UK government can hardly influence such policies, while the impact of the public opinion, being important, is not always sufficient to force corporations to change their policies. In such a context, the need for an efficient corporate control arises and self-regulation may be a good solution for corporations as well as other organisations. In fact, the need for corporate control model raises self-regulation as a possible solution of the problem of poor corporate control and corporate crimes. In actuality, self-regulation implies internal regulation of employees’ conduct, corporate policies and organisational performance, including social and environmental responsibilities of organisations, which is efficient, regardless of possible challenges, such as high costs, unwillingness of some corporations to implement self-regulation, and others. In fact, willing or not, corporations are often forced to implement self-regulation not only because of its benefits and efficiency but also because of the growing public pressure, while the brand image and company-customer relationships are crucial in the contemporary business environment.

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