Their perception of justice is the biggest factor why companies decide to break laws and regulation, i.e. the perception of business people that laws do not apply to everyone equally.
This is the main conclusion of the study called “The Analysis of Legally and Illegally Doing Business” which USAID did as a part of ”Business Enabling Project”.
“If there is no perception of justice, there is a collapse of personal moral norms,” psychologist Jelena Pavlovic said at the presentation of this study, adding that moral can be developed by educating individuals.
According to Pavlovic, in its study about tax regulation in 55 countries, the OECD said that many companies in Serbia had “an extreme disrespect for tax regulation”.
A survey was conducted among business people where they were asked in which instances they chose to disrespect the existing regulation. They said that the main reason was “unpredictability of regulation”, followed by inefficiency of administrative procedures and unnecessary spending of resources. Also, one of the factors cited was “a lack of tradition in terms of respecting rules and regulations”.
When asked how do they perceive inspection services, the business people said that the first thing that comes to mind was fear of penalties, but also extortion because they see inspectors as an extended arm of the government who are keen to fill up the state budget. “Inspectors will dig and dig until they find something”, one of the surveyed business people said.
The unpredictability in the implementation of laws also contributes to arbitrariness in the interpretation of regulation. In practice, inspectors are so fearful that they don’t miss out on something that they often apply the strictest fines.
Among the companies that choose not to adhere to all the relevant regulation, many of them do so because they feel they are protected from prosecution. It is this perception that some companies enjoy unfair protection, while some are constantly frequented by inspectors is something that bothers business people the most.
This post is also available in: Italiano