THE MUTUAL REINFORCEMENT OF HARD AND SOFT REGULATION

Abstract

Existing research on global business regulation has examined the interaction of hard and soft regulation. However, less is known about how the development, existence, and evolvement of hard and soft regulation reinforce each other. We argue that the pursuit of legitimacy for both hard and soft regulation can lead to a dynamic interplay between, and reinforcement of, the two regulatory forms. Legitimacy is about the right to exist. The objective of the present article is to provide theoretical insights into the mutual reinforcement of hard and soft regulation from a legitimacy perspective. We discuss four mutually reinforcing effects that impact the respective legitimacy of hard and soft regulation. Our article contributes to the literature on global business regulation, particularly as it pertains to the discussion on whether voluntary or mandatory forms of regulation should be pursued. In addition, it yields implications for global business regulation, for organizational policies on and engagement in soft regulation, as well as for policy-making.