Implementing a compliance program in a subsidiary: A practice lens approach

The practice of implementing compliance programs (CP) has become increasingly widespread all around the world, following the enforcement of national regulations in response to fraud scandals. Indeed, great emphasis on this kind of governance mechanism is placed in companies operating in regulated industries. Previous studies that have investigated CP implementation within companies have highlighted the need to locate the role of organizational actors to understand the actual functioning of these programs. However, the reciprocal and concurrent interactions between the perception of the organizational members and the execution of a CP constitute a matter which, to the best of the authors’ knowledge, no previous studies have empirically explored. This paper aims to fill this gap by investigating the process of implementation of a CP in a multinational’s subsidiary operating in a regulated industry. It explores the perceptions and actions of “practitioners” involved in practising this governance mechanism in accordance with both the foreign parent company policies and the national regulation. The Schatzki’s approach to practice helps interpret CP as a practice and discuss how its implementation relies on rules, practical understandings and teleoaffective structures. The empirical analysis reveal how this governance mechanism, while being implemented over time, is influenced by the gradual understanding of what the mechanism entails in terms of daily activities and accountability duties. Individual expectations and beliefs also play a role in influencing how the related rules are perceived, interpreted and adopted. The findings have theoretical and practical implications as they indicate that CG functioning cannot be ascribed to the adoption of a single governance mechanism or to the introduction of dedicated governance bodies imposed by regulation or controlling entities: CG works as the contingent result of the array of interactions and processes mobilized within the organizational context in which CG activities take place. The paper contributes to international CG literature by highlighting the role of practical understanding in the actual implementation of CG mechanisms. By providing evidence for the potential of this practice approach to the study of CG, this paper also offers a basis for further investigations of international CG in the stream of interpretative research