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Testing an Expected Utility Model of Corporate Deterrence

Published online by Cambridge University Press:  01 July 2024

John Braithwaite  and
Toni Makkai
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Abstract

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This article reports on the first quantitative perceptual deterrence study of corporate (rather than individual) deterrence. The study is based on interviews with 410 chief executives of small organizations and their officially recorded compliance with regulatory standards. We find partial support for the certainty of detection as a predictor of both self-reported and officially recorded compliance but no support for the certainty or severity of sanctioning. The narrow range of sanctions available in the particular regulatory domain studied (regulation of nursing home quality) has enabled a fuller specification than was possible in previous studies of an expected utility model for all available sanctions. Managers' expected corporate disutility from all sanctions fails to explain compliance. Deterrence does not work significantly more effectively for chief executives (a) of for-profit versus nonprofit organizations, (b) who are owners compared with those who are not owners, (c) who say they think about sanctions more (sanction salience), (d) who may better fit the rational choice model in that they are low on emotionality, (e) who have a weaker belief in the law. Nor is deterrence more effective when compliance costs are low.

Type
Research Article
Information
Law & Society Review , Volume 25 , Issue 1 , 1991 , pp. 7 - 40
Copyright
Copyright © 1991 by The Law and Society Association

Footnotes

This project has enjoyed the funding support of the Australian Department of Community Services and Health, the Australian Research Council, the American Bar Foundation, and the Australian National University. The authors are indebted to their colleagues on the Nursing Home Regulation in Action Project—Valerie Braithwaite, Diane Gibson, and David Ermann—for their support and to a number of others for helpful comments—Geoffrey Brennan, Jack Gibbs, Harold Grasmick, Stuart Hills, Jonathan Kelley, Philip Pettit, and Pat Troy. We are also grateful to three unusually helpful reviews and Editor Shari Diamond.

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