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Turning Corporate Compliance Into Competitive Advantage

University of Pennsylvania Journal of Business Law, Vol. 19, No. 2, 2017

55 Pages Posted: 12 Apr 2016 Last revised: 22 May 2017

Robert C. Bird

University of Connecticut - School of Business

Stephen Park

University of Connecticut - School of Business

Date Written: March 15, 2017

Abstract

Compliance is a core concern for corporate governance. Firms devote tremendous amounts of money, personnel, and attention to ensure compliance with regulatory mandates — and yet compliance failures proliferate. This is because the current static and binary view of compliance hinders both efficient compliance by firms and effective regulation by government. Understanding the reality that compliance is both dynamic and driven by efficiency empowers firms to evolve past mere conformance and into wealth maximizing innovation. This Article develops an efficient investment-risk (EIR) model of compliance that captures the tradeoffs between cost and risk, parses the oft-commingled concepts of technical efficiency and allocative efficiency, and enables firms to obtain a competitive advantage through compliance. We also turn our attention to regulators, and highlight how the EIR model can enhance regulatory design, foster regulator-firm cooperation, and advance the mutual goals of business and society.

Keywords: corporate compliance, risk-intelligent compliance, New Governance, collaborative regulation, disclosure regulation, organizational integrity, enterprise risk management

Suggested Citation

Bird, Robert C. and Park, Stephen, Turning Corporate Compliance Into Competitive Advantage (March 15, 2017). University of Pennsylvania Journal of Business Law, Vol. 19, No. 2, 2017. Available at SSRN: https://ssrn.com/abstract=2763348

Robert Bird

University of Connecticut - School of Business ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

HOME PAGE: http://businesslaw.business.uconn.edu/robert-bird/

Stephen Park (Contact Author)

University of Connecticut - School of Business ( email )

Storrs, CT 06269
United States

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