A spirited debate explores the comparative merits of two different approaches to the enforcement of regulatory law: the coercive approach, which emphasises the deterrence of noncompliance through inflexibly imposed sanctions, and the cooperative approach, which emphasizes the inducement of compliance through flexibility and assistance. Both scholarly and policymaking communities are interested in this topic of enforcement approach within the realms of finance, tax compliance, occupational safety, food and drug safety, consumer product safety, and environmental protection. To inform this debate, our study explores enforcement of environmental protection laws where the debate has been especially spirited yet lacking in much empirical evidence. Specifically our study empirically analyzes the effects of these two approaches on environmental management practices linked to compliance with wastewater discharge limits imposed on chemical manufacturing facilities. For this analysis, we view the enforcement approach as representing a relationship between a regulator and a regulated entity that is measured in multiple dimensions so that we are able to explore the extent of cooperation or coercion. The empirical results reveal that a more cooperative relationship induces better environmental management.
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