Institutional theory and Evolution of 'A Legitimate' compliance culture: the case of the UK financial service sector

Wendy Mason Burdon, Mohamed Karim Sorour

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    9 Citations (Scopus)
    127 Downloads (Pure)

    Abstract

    Over the last decade, scandals within the UK Financial Service sector has impacted their legitimacy and raised questions whether a compliance culture exists or not. Several institutional changes at the regulatory and normative levels have targeted stakeholders’ concerns regarding compliance culture and led to changes in the legitimation process. This paper attempts to address a gap in the literature by asking the following question: How is the UK financial institutions’ compliance culture shaped by the institutional environment and changing legitimacy claims? Towards achieving this objective, the paper draws on the institutional theory and pays attention to the various configurations of the legitimacy notion (property vs. process Suddaby et al. 2017). The paper utilises a longitudinal interpretive design and undertakes a qualitative content analysis of fines issued by the UK regulator and the communicated response of violating firms as well as non-sanctioned firms. Our findings indicate that there is a cyclical ‘evolutionary compliance’ rather than the more widely recognised state of ‘compliance culture’. This culture is fuelled by interchangeable isomorphic forces where the majority of violating firms are seen to issue similar responses to the regulators sanction to maintain their reputation and legitimacy in the market. Notably, legitimacy is now defined within an interactive process between the regulator and firms rather than being static and achieved by ticking the box.
    Original languageEnglish
    Pages (from-to)47-80
    Number of pages34
    JournalJournal of Business Ethics
    Volume162
    Issue number1
    Early online date26 Jul 2018
    DOIs
    Publication statusPublished - Feb 2020

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