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19 U. Pa. J. Bus. L. 285 (2016-2017)
Turning Corporate Compliance into Competitive Advantage

handle is hein.journals/upjlel19 and id is 293 raw text is: TURNING CORPORATE COMPLIANCE INTO COMPETITIVE ADVANTAGE Robert C. Bird* & Stephen Kim Park** Compliance is a core concern for corporate governance. Firms devote tremendous amounts of money, personnel, and attention to ensure compliance with regulatory mandates, and yet compliance failures proliferate. This is because the current static and binary view of compliance hinders both efficient compliance by firms and effective regulation by government. Understanding the reality that compliance is both dynamic and driven by efficiency empowers firms to evolve past mere conformance and into wealth maximizing innovation. This Article develops an efficient investment-risk (EIR) model of compliance that captures the tradeoffs between cost and risk, parses the oft-commingled concepts of technical efficiency and allocative efficiency, and enables firms to obtain a competitive advantage through compliance. We also turn our attention to regulators and highlight how the EIR model can enhance regulatory design, foster regulator-firm cooperation, and advance the mutual goals of business and society. * Professor of Business Law, Eversource Energy Chair in Business Ethics, and Co-Director of the Corporate and Regulatory Compliance Graduate Certificate Program, University of Connecticut School of Business. ** Assistant Professor of Business Law and Co-Director of the Corporate and Regulatory Compliance Graduate Certificate Program, University of Connecticut School of Business. Prior versions of this Article were presented at the Symposium on the Preventive and Positive Roles of Law at the University of Michigan, the Kelley School of Business at Indiana University, the Robert Zicklin Center for Corporate Integrity at Baruch College - City University of New York, the Scheller College of Business at the Georgia Institute of Technology, the 2015 Annual Conference of the Academy of Legal Studies in Business, the 2015 Annual Conference of the North Atlantic Regional Business Law Association, and the 2015 Annual Conference of the Southeastern Academy of Legal Studies in Business. The authors wish to thank, in particular, Charlotte Alexander, Tom Barton, Karie Davis- Nozemack, Greg Day, Deven Desai, Lucien Dhooge, Todd Haugh, Tim Lemper, Sarah Light, Julie Manning Magid, David Orozco, Jennifer Pacella, Jamie Prenkert, Angie Raymond, Eric Richards, David Rosenberg, Scott Shackelford, George Siedel, Valerie Watnick, and David Zaring. All errors and omissions are our own. 285

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