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An exploration of organisation culture of compliance
In order to distinguish essays and pre-prints from academic theses, we have a separate category. These are often much longer text based documents than a paper.
posted on 14.02.2017by Interligi, Lisa Jane
Regulatory trends and changes to the law following corporate collapses, such as Enron and Lehman Brothers, have focused legal and industry attention on the need for organisational leaders to establish and foster a culture that encourages individual compliance behaviours to achieve organisational compliance. Called a culture of compliance in practitioner domains, this popular concept lacks a theoretical foundation and empirical evidence for its influence on compliance outcomes. The present thesis had four key aims. The first aim was to define culture of compliance in a contemporary organisational context; the second to develop its theoretical foundation; the third to develop and test a theoretically-defensible method for measuring culture of compliance, and finally to test the relationship between culture of compliance and compliance outcomes. By achieving these four aims, this research not only assists in establishing an organisational psychology and organisational behavioural literature about the organisational culture-compliance relationship, but from an applied perspective, also helps organisational leaders to better understand how to execute their fiduciary duties with respect to culture and compliance.
The overall research was exploratory due to the lack of literature and theory to support a culture of compliance and on this basis was a multi-method design that included qualitative and quantitative elements. It comprised three independent but related studies. The first study was a qualitative study and aimed to define culture of compliance and to develop a substantive, underpinning theory of the concept. Using grounded theory methodology, interviews from a sample (n=28) of compliance experts drawn from industry in Australia were analysed. Findings indicated that the definition of compliance culture needs to be broadened to account for its multi-dimensional nature. The data analyses identified two distinct compliance cultural groups (‘defensive’ or ‘responsive’), defined by two dimensions: primacy of interests (organisational-stakeholder) and power used to motivate employees to comply (coercive-coactive/co-operative).
The second paper further developed the theoretical foundation of culture of compliance and, based on a literature and theoretical review, presented a coherent framework for conceptualising the construct. Integrating neo-institutional theory (DiMaggio & Powell, 1983) and the competing values framework (Quinn & Rohrbaugh, 1983), the paper argued that compliance culture may be profiled with reference to three core dimensions: Legitimacy, Permeability and Control-style. Furthermore, the paper proposed a process that suggests that compliance culture plays an integral role both as background to decisions about stakeholder expectations, and as a mechanism to influence employee behaviour.
The third and final study was a quantitative study. The sample (n=152) on which the analyses were conducted consisted of Australian-based managers with direct responsibility for organisational compliance. This study piloted a new assessment of compliance culture designed to measure four cultural types according to their location on two axes: Permeability (flexibility-stability) and Control-style (rational-normative). Using the two step approach to construct validation (Anderson & Gerbing, 1988), confirmatory factor analysis (CFA) was first conducted to confirm the proposed dimensionality of culture of compliance. The CFA yielded eight distinct and psychometrically defensible factors, therefore attesting to the construct validity of the model and measure. Structural equation modelling was then used to evidence its relationship to organisational compliance outcomes. The results suggested that flexibility-normative culture of compliance is predictive of organisational compliance outcomes, whereas the more traditional stability-rational culture of compliance is not.
Scholarly and practical implications of this research are discussed and limitations of the studies are presented. Recommendations for future research are suggested, including replication of the quantitative study findings in a single organisational sample.