Abstract
Increasing compliance is a vibrant topic in firms. Recent cases of loss of reputation and customer confidence have underlined the importance of this issue. A critical prerequisite for compliance on the firm level is compliance of the workforce. We address the question of appropriate means for firms to foster compliance of their workforce, in particular, when compliance is not in the monetary interests of workers. We investigate the effects of : (1) increasing the detection probability of non-compliance, (2) monetary incentives to promote compliance (bonuses and penalties), and the interaction of (1) and (2). We find that compared to a situation without any audits, audit systems that penalize non-compliance or reward compliance, but with a low detection probability lead to significantly lower compliance. Increasing the detection probability increases compliance, yet only a penalty system with a high detection probability ensures significantly higher compliance than without audits.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
