Improving regulatory enforcement and inspection activities based on evaluation of business motives behind regulatory compliance

Regulatory enforcement is one of the important areas of public administration in Russia. Its successful implementation is largely determined by the key factors influencing the level of business regulatory compliance. The paper identifies the key motives of voluntary compliance with regulatory norms and establishes the areas for improvement in regulatory enforcement activities in Russia based on the empirical data obtained from a representative survey of private businesses in Russia. Methodologically, the paper relies on theoretical regulatory enforcement models such as deterrence-based enforcement, risk-based enforcement, cooperative enforcement and procedural justice model. Using correlation analysis, we identify the key factors of regulatory compliance in Russia: compliance with the results of inspection, labor costs incurred in the implementation of inspection, and informal payments. The article demonstrates that regulatory compliance also correlates with business perceptions of complexity and adequacy of the regulatory framework. The results of the analysis suggest that the traditional deterrence-based enforcement model involving significant number of business inspections is ineffective in Russia. The key areas of improvement in regulatory enforcement in Russia include implementing the risk-oriented approach, combating corruption, reducing administrative costs, and radical optimization of regulatory requirements as part of the ‘regulatory guillotine’ efforts.