Abstract
In management research, regulatory structures are generally associated with formal regulations such as laws, rules, and sanctions (North 1990; Scott 1995). However, this limited association discounts the importance of informal regulations and firm self-regulation. This paper develops a process model to clarify the relationships between regulatory structures in order to provide an explanation as to why firms self-regulate. The process model outlines the impacts of (1) formal regulations on firm self-regulation, (2) informal regulations on firm self-regulation, (3) firm self-regulation on norms and the institutional environment, and (4) the institutional environment on the creation of and firm compliance with new formal regulations. I develop propositions that outline these relationships based on specific tactics and contexts.
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