Compliance – establishing values in an enterprise

Competence in matters of the law is a basis for successful business in the long term. This includes both understanding and complying with relevant legal and ethical norms. A significant success factor comes from designing firms and business models to manage legal risks safely and to take advantage of legal opportunities.  

In this sense, compliance includes the strategies, processes, and measures necessary for leading businesses successfully, responsibly and in harmony with relevant legal norms, guidelines and ethical values. Compliance protects the firm and its stakeholders.

Selected research results:

Compliance-Management in medium-sized firms

Compliance management is an important success factor of value-based management. Medium-sized firms are supposedly more susceptible to compliance risk because they have fewer resources and have a lower level of organization. The study shows that compliance management in medium-sized firms does not need the extensive structures common at large scale enterprises. Rather, the respective tasks can be fulfilled by other functions or directly by the top management. Firms with a functioning compliance system are characterized by an integrated approach: compliance is not seen as the isolated task of a single individual or department, but rather as a necessary part of the business processes.

Schulz, M. 2015. Compliance-Management im Mittelstand – Grundlagen und Gestaltungshinweise, Compliance-Berater, Heft 9/ 2015, S. 309 ff.

Supplier sustainability beyond compliance

In order to be successful in today’s competitive market environment, firms cannot be content with just complying with legal norms. Firms need to go beyond compliance; they need to prove that they are following sustainable business practices.  For firms that are part of a supply chain this means that sustainability needs to be demonstrated throughout the supply chain. This study explores the drivers of first-tier supplier engagement in sustainable supply chain management. Suppliers need to understand the sustainability priorities of their customers to derive effective policies for their upstream sub-suppliers. Therefore, the integration between the two functions that manage the relevant external interfaces, namely marketing (downstream and stakeholder communication) and procurement (upstream), are the essential cornerstone to move beyond first-tier supplier compliance to actual commitment to sustainability practices. The study shows that this integration is motivated by the opportunity to leverage sustainability initiatives in the product offerings and by obtaining sustainability certificates recognizable by customers. Pressure by customers is therefore not enough.

Foerstl, K., Azadegan, A., Leppelt, T., & Hartmann, E. 2015. Drivers of Supplier Sustainability: Moving Beyond Compliance to Commitment. Journal of Supply Chain Management 51(1), 67-92. [Link]

Kjaergaard, T., Schleper, M. C., & Schmidt, C. G. 2015. Current Deficiencies and Paths for Future Improvement in Corporate Sustainability Reporting. In: H. Zijm, M. Klumpp, U. Clausen, M.t. Hompel (Eds.), Logistics and Supply Chain Innovation. Bridging the Gap Between Theory and Practice, Cham: Springer International Publishing, 67-84.

Corporate Social Responsibility in China

This book offers an in-depth analysis of Corporate Social Responsibility (CSR) in China. CSR is defined as an engagement for sustainable economic development that goes beyond legal requirements (Compliance). It analyzes obstacles for the implementation of CSR in emerging markets and discusses the adoption of CSR by private Chinese enterprises. It offers insights into how CSR can contribute towards a more balanced urban–rural development in China, how Chinese firms adopt CSR for global competitiveness, and how CSR can constrain company growth. The book provides the perspective of authors from various countries, cultures, and political systems.

Schmidpeter, R., Lu, H., Stehr, C. & Hunag, H. (Eds.), 2015, Sustainable Development and CSR in China, Berlin: Springer.