‘The future of regulation is culture’: opportunities to change unethical behaviour in business and public administration in Brazil

Abstract

Isolated application of the deterrence theory isn’t enough to solve most of the problems regarding unethical behavior in business and enterprises, as demonstrated by some works cited in the text. If that were the case, Brazil, a country marked by the vigorous application of such theory, as shown by the traditional application of Brazilian legislation, would not suffer from recurring problems of corruption, such as those denounced by the “car wash” operation, “Petrolão”, etc. Differently from this traditional approach, recent studies presented in the body of this article, based in the behavioral science, show that deterrence is frequently ineffective in affecting future behavior, which conducts enterprises to a “compliance trap”: a false belief that the merely institution of compliance policies would reverse the current ethical crises. The thesis of the article is that such change requires the adoption of an ethical culture, which concerns a switch in regulatory approach, able to modify the nature of lawenforcement, but also the engagement of enterprises, it´s directors and collaboratives with this culture. The article also confronts evidence based on behavioral science and recommended by international bodies (such as the OECD) with recent legislative changes in Brazil (in particular the new LINDB and the Economic Freedom Act) that expand the strength of consensus between Public Administration and individuals.