CAN CORPORATIONS BE TRUSTED? VOLUNTARY COMPLIANCE AND THE LIMITS OF NON-COERCIVE BUSINESS REGULATION

This Article extends the voluntary compliance framework developed in Can the Public Be Trusted? The Promise and Perils of Voluntary Compliance to the corporate context. While recent scholarship has explored when states can rely on non-coercive regulatory approaches with individual citizens, comparatively little attention has been paid to whether these insights translate to business entities. This Article argues that corporations present both greater challenges and greater opportunities for voluntary compliance regimes. On one hand, the instrumental orientation of corporate decision-making, amplified by fiduciary duties and competitive pressures, may systematically undermine the intrinsic motivations that voluntary compliance frameworks depend upon. Drawing on behavioral ethics research demonstrating that organizational settings can serve as "hotbeds for unethicality," this Article identifies structural features of corporate environments that impede genuine voluntary compliance. On the other hand, corporations possess characteristics that may actually facilitate trust-based regulation: they are repeat players sensitive to reputational consequences, they operate through transparent bureaucratic processes amenable to monitoring, and they cannot claim violations of personal autonomy when past behavior informs regulatory treatment. This Article synthesizes these competing considerations into a differentiated framework for corporate regulation, identifying the conditions under which non-coercive approaches are most likely to succeed across securities regulation, environmental compliance, and corporate governance more broadly.