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Towards An Ecology Of China’s Legal System
Betancourt, Nathan Krug, Barbara
Betancourt, Nathan
Krug, Barbara
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Abstract
China’s legal system has undergone remarkable development over the past thirty years. Legal institutions now regulate every extant area of market activity, extending governance throughout every corner of China’s market economy. However, national rules and regulations will be unable to stimulate corporations to act with integrity in the absence of compelling incentives that encourage compliance. The provision of compliance incentives is an enormous problem; laws must change so that they keep pace with their business environment, but firms are slow to adopt new laws due to their cost. Thus, the incentives of new laws may appear worse in comparison with the incentives of older laws, which would have a negative effect on compliance. In order to compare incentives, we utilize legal ecology, a research methodology that examines changes to the legal system over time. We propose that organizations, which use the law, are a key actor in determining the survival of a new law. If the incentives of a new law are unclear to the users of the laws, then, from the organization’s perspective, the cost of using the new law is higher than the cost of using the old law. A new law will survive if the incentives are clear, which leads to lower costs for the organizations that use the law.
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2009
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With permission of the license/copyright holder