Share This Article:

Institutions and the Regulation of Business—An International Firm-Level Study of Regulatory Compliance Costs

Abstract Full-Text HTML Download Download as PDF (Size:180KB) PP. 1-11
DOI: 10.4236/ajibm.2013.36A001    3,047 Downloads   4,966 Views   Citations

ABSTRACT

Prior work has established the negative effects of many regulations on business and policy.These negative effects have been a key driver for many of the so-called better regulation programmes. Despite all efforts, however, deregulation programmes have had inconclusive results and their success remains the subject of ongoing debate. We suggest that the public policy efforts have largely overlooked a business perspective of regulation and its institutional determinants. We argue that the institutional determinants of regulation include the regulation stock, the quality of regulation and the predictability of regulation application. This study is among the first to examine the impact of these institutional determinants on regulatory compliance costs for firms using a unique dataset from companies in OECD countries. Our results convincingly support our approach to the study of regulation.

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

G. Jong and R. Kloeze, "Institutions and the Regulation of Business—An International Firm-Level Study of Regulatory Compliance Costs," American Journal of Industrial and Business Management, Vol. 3 No. 6A, 2013, pp. 1-11. doi: 10.4236/ajibm.2013.36A001.

References

[1] K. Wegrich, “The administrative burden reduction policy boom in Europe: comparing mechanisms of policy diffusion,” CARR Discussion Papers, DP 52, London School of Economics and Political Science, London, 2009.
[2] E. Engel, R. M. Hayes and X. Wang, “The Sarbanes-Oxley Act and Firms’ Going-Private Decisions,” Journal of Accounting and Economics, Vol. 44, No. 1, 2007, pp. 116-145. http://dx.doi.org/10.1016/j.jacceco.2006.07.002
[3] I. X. Zhang, “Economic Consequences of the Sarbanes-Oxley Act of 2002,” Journal of Accounting and Economics, Vol. 44, No. 1, 2007, pp. 74-115.
http://dx.doi.org/10.1016/j.jacceco.2007.02.002
[4] D. R. Helm, “Regulatory Reform, Capture, and the Regulatory Burden,” Oxford Review of Economic Policy, Vol. 22, No. 2, 2006, pp. 169-185.
http://dx.doi.org/10.1093/oxrep/grj011
[5] C. M. Radaelli, “Getting to Grips with Quality in the Diffusion of Regulatory Impact Assessment in Europe,” Public Policy and Management, Vol. 24, No. 5, 2004, pp. 271-276.
[6] T. Keyworth, “Measuring and Managing the Costs of Red tape: A Review of Recent Policy Developments,” Oxford Review of Economic Policy, Vol. 22, No. 2, 2006, pp. 260-273. http://dx.doi.org/10.1093/oxrep/grj016
[7] B. Bozeman, “A Theory of Government ‘Red Tape’,” Journal of Public Administration Research and Theory, Vol. 3, No. 3, 1993, pp. 273-304.
[8] B. Bozeman and M. K. Feeney, “Rules and Red Tape. A Prism for Public Administration Theory and Research,” ME Sharp, New York, 2011.
[9] S. K. Pandey and P. G. Scott, “Red Tape: A Review and Assessment of Concepts and Measures,” Journal of Public Administration Research and Theory, Vol. 12, No. 4, 2002, pp. 553-580.
http://dx.doi.org/10.1093/oxfordjournals.jpart.a003547
[10] OECD, “Business Views on Red Tape: Administrative and Regulatory Burdens on Small and Medium-Sized Enterprises,” OECD, Paris, 2001.
[11] S. K. Pandey and G. A. Kingsley, “Examining Red Tape in Public and Private Organizations: Alternate Explanations from a Social Psychological Model,” Journal of Public Administration Research and Theory, Vol. 10, No. 4, 2000, pp. 779-799.
http://dx.doi.org/10.1093/oxfordjournals.jpart.a024291
[12] J. N. Baldwin, “Perceptions of Public versus Private Sector Personnel and Informal Red Tape: Their Impact on Motivation,” American Review of Public Administration, Vol. 20, No. 1, 1990, pp. 7-28.
http://dx.doi.org/10.1177/027507409002000102
[13] G. A. Brewer and R. M. Walker, “Explaining Variation in Perceptions of Red Tape: A Professionalism-Marketization Model,” Public Administration, Vol. 88, No. 2, 2010, pp. 418-438.
http://dx.doi.org/10.1111/j.1467-9299.2010.01827.x
[14] M. K. Feeney and B. Bozeman, “Stakeholder Red Tape: Comparing Perceptions of Pubic Managers and Their Private Consultants,” Public Administration Review, Vol. 69, No. 4, 2009, pp. 710-726.
http://dx.doi.org/10.1111/j.1540-6210.2009.02019.x
[15] B. Arrunada, “Pitfalls to Avoid When Measuring Institutions: Is Doing Business Damaging Business?” Journal of Comparative Economics, Vol. 35, No. 4, 2007, pp. 729-747. http://dx.doi.org/10.1016/j.jce.2007.08.003
[16] W. Harrington, R. D. Morgenstern and P. Nelson, “On the Accuracy of Regulatory Cost Estimates,” Journal of Policy Analysis and Management, Vol. 19, No. 2, 2000, pp. 297-322. http://dx.doi.org/10.1002/(SICI)1520-6688(200021)19:2<297::AID-PAM7>3.0.CO;2-X
[17] S. Djankov, R. La Porta, F. Lopez-de-Silanes and A. Shleifer, “The Regulation of Entry,” Quarterly Journal of Economics, Vol. 117, No. 1, 2002, pp. 1-37.
http://dx.doi.org/10.1162/003355302753399436
[18] E. Helpman, “The Mystery of Economic Growth,” Harvard University Press, Cambridge, 2004.
[19] D. North, “Institutions, Institutional Change and Economic Performance,” Cambridge University Press, Cambridge, 1990.
http://dx.doi.org/10.1017/CBO9780511808678
[20] W. R. Scott, “Institutions and Organizations,” Sage Publications Ltd., Thousand Oaks, 2001.
[21] B. Bozeman, “Bureaucracy and Red Tape,” Prentice Hall, Upper Saddle River, 2000.
[22] A. Ciccone and E. Papaioannou, “Red Tape and Delayed Entry,” Journal of European Economic Association, Vol. 5, No. 2-3, 2007, pp. 444-458.
http://dx.doi.org/10.1162/jeea.2007.5.2-3.444
[23] L. DeHart-Davis, “Green Tape: A Theory of Effective Organizational Rules,” Journal of Public Administration Research and Theory, Vol. 19, No. 2, 2009, pp. 361-384.
http://dx.doi.org/10.1093/jopart/mun004
[24] A. M. Bertelli and A. B. Whitford, “Perceiving Credible Commitments: How Independent Regulators Shape Elite Perceptions of Regulatory Quality,” British Journal of Political Science, Vol. 39, No. 3, 2009, pp. 517-537.
http://dx.doi.org/10.1017/S0007123409000623
[25] , O.E. Williamson, “Economic Institutions of Capitalism,” Free Press, New York, 1985.
[26] H. G. Rainey, S. K. Pandey and B. Bozeman, “Research Note: Public and Private Managers’ Perceptions of Red Tape,” Public Administration Review, Vol. 55, No. 6, 1995, pp. 567-574. http://dx.doi.org/10.2307/3110348
[27] R. C. Hill, W. E. Griffiths and G. C. Lim, “Principles of Econometrics,” 3rd Edition, John Wiley and Sons, London, 2008. http://dx.doi.org/10.1162/1542476054430834
[28] A. Alesina, S. Ardagna, G. Nicoletti and F. Schiantarelli, “Regulation and Investment,” Journal of the European Economic Association, Vol. 3, No. 4, 2005, pp. 791-825.
[29] H. Kaufman, “RedTape: Its Origins, Uses, and Abuses,” Brookings, Washington, D.C., 1977.

  
comments powered by Disqus

Copyright © 2019 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.