Theories of why states and

GROSSMAN, ZAELKE 73
1 INTRODUCTION
Theories about compliance provide
different accounts of why international and
domestic actors – States, firms, and indi-
viduals – comply with or do not comply with
international and domestic laws. These
theories are useful lenses for viewing and
understanding compliance-related behav-
ior and the reasons behind that behavior.
Because they provide distinct perspectives
on what motivates compliance and non-
compliance, these theories suggest differ-
ent approaches that state and non-state
actors can use to influence States and
firms to comply with laws designed to fur-
ther environmental protection and sustain-
able development.
Theories about international com-
pliance are largely about the behavior of
States – about how and why they comply
with international law. Theories about
domestic compliance, on the other hand,
focus more on the behavior of firms and
individuals. In two important ways, howev-
er, theories about international and domes-
tic compliance are remarkably similar.
First, international law, especially
in the environmental realm, generally is
given effect through implementation of
domestic laws and regulations. So on the
practical level, theories of domestic compli-
ance are in many instances also theories
about international compliance. According
to one prominent author, “no significant dis-
tinction exists between international
regimes and the rules of purely domestic
regimes once the international rules have
been domesticated through the passage of
implementing legislation.”1 Of course,
important distinctions remain between the
domestic and international spheres. Inter-
national agreements must be agreed to by
States, and States must pass implementing
legislation and provide the resources for
enforcement and compliance, at least for
environmental agreements. In addition to
providing frameworks for domestic regula-
AN INTRODUCTION TO THEORIES OF WHY STATES AND
FIRMS DO (AND DO NOT) COMPLY WITH LAW
GROSSMAN, DAVE1 and ZAELKE, DURWOOD2
1 Staff Attorney, INECE Secretariat and Institute for Governance & Sustainable
Development
2 Director, INECE Secretariat; President, Institute for Governance & Sustainable
Development; and Co-Director, Program on Governance for Sustainable Development,
University of California, Santa Barbara’s Bren School of Environmental Science
& Management
2141 Wisconsin Ave. NW, Suite D2, Washington, DC 20007, United States,
dgrossman@inece.org, dzaelke@inece.org
SUMMARY
Theories about compliance provide different accounts of why States, firms, and
individuals comply with or do not comply with international and domestic laws. The discus-
sion in this paper focuses on theories of compliance behavior at two principal levels of gov-
ernance – international and domestic – and the interplay between them.

tion, treaties also can regulate the conduct
of States, as with nuclear test ban treaties.
The international and domestic realms also
differ in the tools, resources, and strategies
available to encourage compliance.
Second, both domestic and inter-
national theories of compliance can be
grouped into similar categories. Broadly
speaking, they tend to fall into either:
(1) “rationalist” models that focus on deter-
rence and enforcement as a means to
prevent and punish non-compliance by
changing the actor’s calculation of ben-
efits and costs, or
(2) “normative” models that focus on coop-
eration and compliance assistance as a
means to prevent non-compliance. Both
domestic and international compliance
theories also vary according to the
degree they disaggregate the targets of
regulation, either treating States and
firms as unitary entities or recognizing
that both are made up of multiple
actors.
2 THE LOGIC OF BEHAVIOR:
CONSEQUENCES VS.
APPROPRIATENESS
At the broadest level, questions of
compliance are questions about behavioral
motivations. What leads a State, firm, or
individual to act in compliance with laws?
In The Institutional Dynamics of Interna-
tional Political Orders, James March and
Johan Olsen divided the basic logic of
human action into the “logic of conse-
quences” and the “logic of appropriate-
ness.”2 The “logic of consequences” views
actors as choosing rationally among alter-
natives based on their calculations of
expected consequences, whereas the
“logic of appropriateness” sees actions as
based on identities, obligations, and con-
ceptions of appropriate action. While not
mutually exclusive, these broad categories
provide a useful starting point for dis-
cussing the particular international and
domestic theories of compliance, and the
specific approaches that flow from these
different logics of action.
3 THEORIES OF INTERNATIONAL
COMPLIANCE
Scholars in international law and
international relations have developed a
variety of theories about why States do (or
do not) comply with international law; each
theory provides useful and often comple-
mentary insights into the puzzle of compli-
ance.
3.1 Logic of Consequences:
Rationalist Theories
Rationalist theories, following the
logic of consequences, are utilitarian at
their core. They posit States as unitary,
rational, self-interested actors that calcu-
late the costs and benefits of alternative
actions in an anarchic international world
order. Given this view of States as rational-
choice actors, rationalist theories – at least
those that see international law as having
any effect – suggest that enforcement and
deterrence are the main ways to prevent
non-compliance.
The principal rationalist theories
that view international law as having little or
no effect are realism and neorealism, in
which “considerations of power rather than
of law determine compliance.”3 Combined,
the two realist theories explain compliance
with international rules as being a result of
one of three situations:
1) a hegemonic State or group of powerful
States forces other States to comply;
2) the international rules merely reflect
current practice or expected future
practice; or
3) the international treaty resolves a
situation in which no party has an
incentive to violate the treaty.
In the modern international arena,
States are no longer the only actors that
can exert sufficient power by themselves to
influence the behavior of other States;
major sources of finance such as multina-
tional corporations and multilateral devel-
opment banks are increasingly important
players in international power dynamics, as
are NGOs. Regardless of the source of
74 SEVENTH INTERNATIONAL CONFERENCE ON ENVIRONMENTAL COMPLIANCE AND ENFORCEMENT

GROSSMAN, ZAELKE 75
influence, realist theories view “compli-
ance” with international law as largely
either a coincidence or a result of interna-
tional power dynamics.
Unlike realist theories, institutional-
ism sees a role for international institutions,
namely to facilitate cooperation that is in
the States’ long-term interests and to pre-
vent short-term defections that might jeop-
ardize those long-term interests. Institution-
alism, unlike realism, sees compliance with
international law as strategic. One strain of
institutionalism known as enforcement the-
ory or political economy theory focuses
more on the costs end of the cost-benefit
compliance calculation. As international
agreements get “deeper” – demanding
greater changes in the actors’ behavior
from the status quo – enforcement theory
argues that the incentives for States to vio-
late the agreement also grow, thereby
requiring greater punishments to deter non-
compliance and sustain cooperation.
These punishments can be retaliatory,
monetary, political, or reputational.
Liberalism or liberal international
relations theory is largely a rationalist
model, but it discards the assumption that
States are properly viewed as unitary
rational agents. Liberalism disaggregates
the State and places the focus on domestic
political processes. Compliance comes
from the favorable effect of international
law and legal institutions on domestic inter-
ests, who mobilize to pressure the govern-
ment to comply – a phenomenon more like-
ly to be found in liberal States. While losing
the simplicity and clarity of the theories just
discussed, liberalism seems to more fully
capture the complexity of state decision-
making, and highlights the role that NGOs,
businesses, the media, and international
organizations, including financial institu-
tions, can play in generating compliance.
3.2 Logic of Appropriateness:
Normative Theories
Normative theories, following the
logic of appropriateness, focus more on the
normative power of rules, the persuasive
power of ideas and legal obligations, and
the influence of shared discourse and
knowledge on States’ interests. According-
ly, normative theories suggest a more
cooperative approach to obtaining compli-
ance. Even though they provide a different
lens on compliance behavior than “rational-
ist” models, normative models do not
assume States are acting irrationally;
rather, they broaden the focus to include
influences that are not as readily reducible
to costs and benefits. Compliance, under
this view, is less about rational calculation
or imposed sanctions and more about
norms of behavior and norms of obligation
flowing from law’s special role as an order-
ing principle of societies.
The banner of normative theory
encompasses a range of perspectives.
One theory in this vein, articulated most
prominently by Thomas Franck, is legitima-
cy theory, which maintains that “in a com-
munity organized around rules, compliance
is secured – to whatever degree it is – at
least in part by the perception of a rule as
legitimate by those to whom it is
addressed.”4 Legitimacy – which is largely
based on process, clarity, and fairness –
determines the rules’ “compliance-pull” on
governments.
Managerialism, developed by
Abram and Antonia Chayes, starts with the
premise that States have a propensity to
comply with their international commit-
ments because:
(1) treaties generate legal norms, which
carry a widely accepted obligation of
obedience;
(2) States rationally have an interest in
complying with rules they helped to
create;
(3) compliance is efficient from a
bureaucratic inertia or internal
decisional perspective.5
Given this propensity, managerial-
ism argues that instances of non-compli-
ance are often inadvertent, stemming from
lack of capacity or resources, ambiguous
commitments and provisions, and time lags
between commitment and performance. As
such, these sources of noncompliance can

be managed by routine, non-confrontation-
al international political processes – such
as dispute resolution procedures, technical
and financial assistance, and transparency
– aimed at the collective improvement of
performance.
Transnational legal process, a the-
ory put forth by Harold Koh, posits that
States obey international rules when they
internalize the norms and incorporate them
into their own value system.6 This process
begins when one or more transnational
actors (diplomats, NGOs, issue networks,
etc.) work with other such actors on a legal
issue, over time requiring interpretation and
enunciation of the norms applicable to the
interaction. These norms are then internal-
ized into domestic structures through exec-
utive, judicial, and legislative action.
Repeated international participation leads
to a continued process of creating and
internalizing legal norms, which leads
nations to reconstitute their own interests
and identities, and to obey international
law. Like liberalism, this theory disaggre-
gates the State, highlighting the role that
non-state parties such as NGOs, business-
es, scientists, and networks can play in
enunciating norms in the international
arena and internalizing them domestically.
4 THEORIES OF DOMESTIC
COMPLIANCE
Theories of compliance at the
domestic level study responses not of
States, but of citizens and firms, to laws
and legal commands. At the domestic level,
coercive enforcement measures are usual-
ly more readily available than at the inter-
national level; indeed, many theorists mark
the absence of formal sanctioning authority
at the international level as a critical distinc-
tion between domestic and international
law. (Although in States that lack capacity
to impose meaningful sanctions, this dis-
tinction may be irrelevant in practice.)
While there are significant similarities
between international and domestic theo-
ries – including the distinction between
rationalist and normative approaches –
they also differ as they address, and are
shaped within, a different context.
4.1 Logic of Consequences:
Rationalist Theories
Like its international counterpart,
the rationalist model of domestic compli-
ance follows the logic of consequences,
positing regulated firms as rational actors
that act to maximize their economic self-
interest. Accordingly, these theories
emphasize enforcement and deterrence to
change the firm’s calculation of benefits
and costs.
Seminal early work on domestic
theory of compliance and enforcement was
done by Gary Becker, addressing the
enforcement of criminal law.7 His basic
insight is that potential offenders respond
to both the probability of detection and the
severity of punishment if detected and con-
victed. Thus, deterrence may be enhanced
either by raising the penalty, by increasing
monitoring activities to raise the likelihood
that the offender will be caught, or by
changing legal rules to increase the proba-
bility of conviction.
Deterrence theory extends the
Becker model to corporate non-compliance
and maintains that there must be a credible
likelihood of detecting violations; swift, cer-
tain, and appropriate sanctions upon detec-
tion; and a perception among the regulated
firms that these detection and sanction ele-
ments are present. The job of an enforce-
ment agency under this view is to make
penalties and the probability of detection
high enough that it becomes irrational for
firms to violate the law. As with the more
nuanced international rationalist models
such as institutionalism, a view of “costs”
broader than merely monetary costs opens
up a range of enforcement options, includ-
ing extra-legal “punishments” such as
moral stigma and loss in reputation.
Behavioral decision theory adds a
deeper dimension to rationalist theories by
acknowledging the role that people’s cogni-
tive biases can play in their “rational” calcu-
lations and highlighting the importance of
factors such as how a particular choice is
framed (e.g., people choose differently

GROSSMAN, ZAELKE 77
when a choice is framed as the number of
lives that will be saved instead of the num-
ber of lives that will be lost) or how proba-
bilities of detection, prosecution, and pun-
ishment are presented (e.g., people
choose differently when probabilities for
each stage in a chain of events are pre-
sented instead of when the overall proba-
bility is presented).
4.2 Logic of Appropriateness:
Normative Theories
As in the international arena, nor-
mative theories of domestic compliance fol-
low the logic of appropriateness, viewing
regulated entities as good-faith actors that
want to obey the law but cannot. The heart
of normative theories is that firms are insti-
tutions that are generally inclined towards
compliance with environmental laws,
whether because of civic motives, social
motives, or internalization of societal norms
favoring environmental protection. But gen-
erally, the theory holds that firms comply
because of a “compliance norm”, fueled by
the belief that laws that are developed and
implemented fairly should be followed. As
in some of the international normative the-
ories, compliance is expected to be higher
when individuals and firms believe the rules
are legitimate and fairly applied. Under the
normative model, this compliance norm
affects behavior even absent legal sanc-
tions.
Like their international counter-
parts, normative domestic theories posit
that noncompliance occurs largely because
of the regulated entities’ lack of “capacity”
(knowledge of the rules, and financial and
technological ability to comply) and “com-
mitment” (determined by norms, percep-
tions of the regulators, and incentives for
compliance). Accordingly, these theories
call for a more cooperative approach to
ensuring compliance, with the full range of
compliance assistance strategies such as
dissemination of information, technological
assistance, and inspections designed to
enable inspectors to provide compliance
advice.
The complexity critique, although
more about bureaucratic and administra-
tive limitations than about norms, focuses
on the “capacity” of the regulated firm,
charging that environmental regulations
are:
(1) too numerous,
(2) too difficult to understand,
(3) too fluid, or ever-changing, and
(4) too hard to find.8
According to proponents of this cri-
tique, most firms do not know what consti-
tutes perfect compliance and so cannot
achieve it. This would particularly be the
case for small businesses, which generally
lack the resources to stay apprised of com-
plicated, changing regulatory requirements.
The role of regulated firms’ “com-
mitment” is most evident when considering
firms’ perceptions of the legitimacy of the
regulatory authorities, which is influenced
by the firms’ views of how fairly the regula-
tions are created, implemented, and
enforced.
4.3 Disaggregating the Firm and
Broadening the Field of Players
Like some international theories,
the usual forms of both the rationalist
(deterrence-based) and normative (cooper-
ative) domestic models treat the regulated
entity as a unitary actor — the “firm” calcu-
lates penalties or the “firm” has a compli-
ance norm. However, firms are composed
of multiple actors. The focus on the unitary
actor can mask strategies that incorporate
a broader range of players, both within and
outside the regulated entity.
By disaggregating the firm, for
example, additional considerations enter
into play as forces influencing compliance
behavior. For instance, because firms are
made up of human beings, the inner work-
ings of firms are heavily influenced by the
effect of norms on the behavior of firm
employees. In a fascinating article, Michael
Vandenbergh explored the influence of
eight norms (law compliance, human
health protection, environmental protection,
autonomy, fair process, good faith, reci-

procity, and conformity) on the environmen-
tal compliance decision-making of corpo-
rate managers.9 But norms, including the
compliance norm, only become salient
when the actor gets cues that indicate that
the norm is relevant. This means that the
compliance norm will only get triggered
when the actor:
(1) knows of the legal standard,
(2) is aware of business activities that are
potentially governed by the standard,
and
(3) believes that he or she has the
authority and/or responsibility within
the firm to initiate actions leading to
compliance.10
This reality implicates the impor-
tance of intra-firm informational flows, orga-
nizational theory, and the interactions and
potentially conflicting goals of sharehold-
ers, owners, senior managers, subordinate
managers, and employees.
The focus of domestic compliance
efforts can also be expanded further, taking
a systems approach to describe a multi-
player game. For instance, States can
empower NGOs, investors, consumers,
lawyers, competitors, and others through
mandatory information disclosure laws,
through citizen suit provisions, or simply by
disclosing information about violators to the
public and the media. Regulators also can
facilitate the $500 billion per year environ-
mental goods and services sector to act as
additional “enforcers”, giving incentives to
press their clients (and potential clients) to
improve compliance. Designing effective
compliance systems requires a detailed
understanding of a range of entities, their
relationships, and the motivations of their
behavior.
4.4 Blending Rationalist and
Normative Models
Both rationalist and normative
models provide useful insights into behav-
ior that leads to compliance. As in the inter-
national realm, these models are not mutu-
ally exclusive, but rather are different lens-
es for viewing and understanding influ-
ences on compliance behavior. Both are at
play in compliance decisions.
A synthesis of the two theories
presents a more realistic picture of enforce-
ment and compliance as it actually occurs.
The proper balance of the two models thus
seems to be a compliance enforcement
system that also encourages the norms
and incentives that lead to voluntary com-
pliance, while maintaining the bedrock
foundation of enforcement and deterrence
to alter the calculations of those less
inclined to voluntarily comply. As noted by
the eminent jurist H.L.A. Hart, “what reason
demands is voluntary co-operation in a
coercive system.”11
5 CONCLUSION
These theories provide important
lenses for viewing compliance behavior.
While they focus on different drivers of
behavior, and thus implicate different com-
pliance strategies, these theories should
not be thought of as mutually exclusive. “It
is perfectly possible to argue that soft com-
pliance paths have great potential with re-
gard to regulatory regimes without denying
that there is a hard core of noncompliance
that will not yield to such treatment.”12
Compliance theories need to con-
tinue to help us understand the reality we
face. The more they disaggregate the State
and the firm and focus on the institutions
and individuals within them, the more they
reflect the reality of decision-making and
empower actors of all types in governments
and civil society.
Theories and hypotheses also
need to be tested. Policies and strategies
need to be informed by analyses of what
works and what does not, so that these
approaches can be modified. In other
words, it is important to combine theory and
empirical analysis, so that we can keep
moving towards a system in which we
implement programs, go out and determine
if they are really working, and then adjust
accordingly, “in a continuous information
feedback loop that enables dynamic read-
justment of policy and practice.”13

GROSSMAN, ZAELKE 79
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