Constructing the Content and Meaning of Law and Compliance

Abstract

This chapter argues that organizational compliance is best illustrated not by a compliance versus noncompliance dichotomy, but by a processual model in which organizations construct the meaning of both compliance and law. I argue organizations must be understood as social actors that are influenced by widely institutionalized beliefs about legality, morality, politics, and rationality. I review the empirical research in this vein and show how institutionalized conceptions of law and compliance first become widely accepted within the business community and eventually come to be seen as rational and legitimate by public legal actors and institutions and thus influence the very meaning of law. Through two distinct waves of research, I offer a theoretical framework for understanding compliance as a process and by specifying the institutional and political mechanisms through which organizations shape the content and meaning of law. First wave studies laid out the initial framework for how to understand organizations as constructers of legal meaning while second wave studies refined and extended the theory in multiple ways. I suggest the increasing complexity and ambiguity of legal rules provides legal intermediaries greater opportunities to influence what compliance means by filtering what law means through non-legal logics. I conclude by discussing the implications of organizational construction of law and compliance for studies of law, business, and the state and suggest directions for a third wave of research.