General Deterrence and Corporate Environmental Behavior

This research addresses the assumption that "general deterrence " is an important key to enhanced compliance with regulatory laws. Through a survey of 233 firms in several industries in the United States, we sought to answer the following questions: (1) When severe legal penalties are imposed against a violator of environmental laws, do other companies in the same industry actually learn about such "signal cases"? (2) Does knowing about "signal cases " change firms ' compliance-related behavior? It was found that only 42 percent of respondents could identify the "signal case, " but 89 percent could identify some enforcement actions against other firms, and 63 percent of firms reported having taken some compliance-related actions in response to learning about such cases. Overall, it is concluded that because most firms are in compliance already (for a variety of other reasons), this form of "explicit general deterrence " knowledge usually serves not to enhance the perceived threat of legal punishment, but as reassurance that compliance is not foolish and as a reminder to check on the reliability of existing compliance routines. In most regulatory programs, officials formally prosecute and obtain lega