Enforcement of environmental protection protocols and compliance among micro, small and medium enterprises in Zimbabwe: is institutional credibility effective in the presence of corruption tendencies?

Abstract We explore the effectiveness of regulatory inspections in promoting compliance with environmental protection standards and the variations influenced by institutional trust and corruption. We utilize a nationally representative dataset of manufacturing micro, small and medium enterprises (MSMEs) in Zimbabwe using the Inverse Probability Weighted Regression Adjusting estimation method. We find that, first, regulatory inspections promote MSMEs’ compliance with environmental protection standards. Second, the impact of regulatory inspections on compliance is stronger when MSME owners have trust in regulatory institutions compared to when they do not. Third, regardless of entrepreneurs’ trust levels in institutions, the possibility of bribing regulatory agency officers dilutes the effectiveness of regulatory inspections in fostering compliance. Finally, in cases where entrepreneurs lack trust in institutions, regulatory inspections have no statistically significant effect on compliance for corrupt entrepreneurs.