European Business Ethics Network

Workshop 1: Self-regulation of Market Ethics

First session: April 21st, 2021
Second session: May 20th, 2021

This workshop will special Issue associated with the EBEN Online Workshops, June 2021

Background

There are several mechanisms that enforce companies to refrain from unethical behaviour. Each mechanism creates certain incentives that benefit the company, when the rule is followed, then when it is broken.

Reputation mechanism — the company wants to be ethical, because otherwise its stakeholders refuse to cooperate with it. State regulation — the state establishes formal compulsory norms of ethical behaviour (laws) and punishes violators. Self-regulation — an association of participants within the same profession or market sets ethical rules of conduct and punishes violators. What is the best model for regulating unethical behaviour?

Reputation mechanism is an ideal mechanism in terms of costs and benefits, as it automatically works in any market economy without additional effort from society. However, there are two problems that can account for this failure:

  1. insufficient information (when the consumer does not notice unethical behaviour or cannot tell other consumers about it)
  2. insufficient incentives (market power, free rider problem and low level of solidarity in the society).

State regulation has an advantage of using legal enforcement in the form of laws and sanctions, but it cannot design and enforce ideal legal norms because it does not possess enough information about all markets and cannot adapt its regulation quickly enough.

Self-regulation can lead to more effective results when government regulation is lagging behind, or is unable to qualitatively solve the problem in principle. An effective self-regulatory mechanism requires three elements:

  1. a code of conduct,
  2. monitoring of compliance with a code of conduct,
  3. punishment for violation.

 

Research questions and themes

  • How to design effective mechanisms of self-regulation?
  • Code of conduct for industrial or professional association
  • Monitoring system of compliance with the code
  • Punishment system for violators of the code
  • Platforms for collecting company reviews
  • Certification and licensing systems
  • Rating systems of ethical behavior
  • Corporate compliance systems and their certification
  • Co-regulation as combination of state regulation and self-regulation
  • What do we know about self-regulation in various industries?
  • Banking
  • Microfinance
  • Securities
  • Insurance
  • Debt collection
  • Retail
  • Oil and Gas
  • Construction
  • Telecom
  • IT and computers
  • Education
  • What do we know about self-regulation in various professions
  • Marketing managers
  • Advertising
  • PR managers
  • HR managers
  • Financial managers
  • Auditors
  • Consultants
  • IT specialists
  • Corporate lawyers
  • Ethics and Compliance managers
  • Sustainability and CSR managers

Please send your proposals by e-mail to Maxim Storchevoy at m.storchevoy@rben.ru by March 15,

Literature

Bartle, I., & Vass, P. (2007). Self‐regulation within the regulatory State: towards a new regulatory paradigm?. Public Administration, 85(4), 885-905.
Barnett, ML, & King, AA (2008). Good fences make good neighbors: A longitudinal analysis of an industry self-regulatory institution. Academy of Management Journal, 51(6), 1150-1170.
Fligstein, N., & McAdam, D. (2011). Toward a general theory of strategic action fields. Sociological theory, 29(1), 1-26.
Aldrich, HE, & Staber, UH (1988). Organizing business interests: Patterns of trade association !foundings, transformations, and deaths. Ecological models of organization, 111, 126.

EBEN
Ms. Lynda Sion
EDHEC BUSINESS SCHOOL
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F-59057 ROUBAIX CEDEX 1
FRANCE
Tel. : + 33 (0)3 20 15 45 47