The Emergent Role of Normative Social Pressure

Both compliance and conformance, established institutional theory perspectives, are considered in this chapter. Here, compliance refers to meeting legal and other formal obligations, while conformity refers to meeting and potentially exceeding societal and other informal norms and obligations. This social impetus driven by normative pressure chimes with the globalized public call for a new form of ethical capitalism. Adopting a systems perspective, the authors argue that while markets may have traditionally been viewed as efficient, they are increasingly seen as insufficient—with the decentralized market system publicly perceived as incomplete but not fundamentally invalid. Therefore, the mainstream system of markets does not necessarily need to be discarded, but it needs to be repaired and further developed. Changes need to reflect fairness, well-being, equity, transparency in business, and a balance of exchanges and interdependencies in international affairs—fundamentally both ends and means underwritten by the social license to operate.