Compliance and Legal Performance

Abstract

The intangible heritage of a business, consisting of elements such as intellectual property rights, know-how, brand image, and more globally a company’s reputation, is essential for its activity. It contributes to the construction and maintenance of the company’s image and can put the organization into an advantageous position compared to others. Unethical behavior can undermine consumer and public trust and can lead to a variety of sanctions. Consequently, in recent years many companies have adopted ethical codes, reports, or other documents to promote their values. In this context it must be highlighted that employees and potential recruits increasingly consider reputation as a key factor when deciding whether to stay at or join a company. Rating agencies and investors are pushing for details on compliance programs and punish companies that fall short. Nongovernmental organizations, media, and the public at large are also demanding business integrity and are spotlighting perceived abuses. Compliance serves to preserve a positive image of the company. It is also a guarantee of a secure, responsible, and effective governance for shareholders and stakeholders in general, while limiting the risks to which the company may be exposed. Often felt as a bureaucratic and costly constraint by companies, this chapter highlights how a corporate strategy based on compliance can pay off. After a discussion on understanding (non)compliance, the chapter highlights how compliance can become a strategic tool for the company as a risk management tool and as part of a corporate culture.