Bending or Bowing to the Rules? A Thought Experiment on Tech Firms' Responses to Misaligned Policy Goals and Legal Constraints

Abstract

This paper examines the tension that emerges when policy objectives and regulatory requirements are misaligned. While legislation sets enforceable legal boundaries, policies often offer incentives with less legal force. Through a thought experiment, we investigate whether profit-driven tech firms adhere strictly to legal requirements or pursue financial gains despite potential penalties. Our findings challenge the simplistic assumption that the threat of penalties alone ensures compliance or risk-averse behaviour. Instead, tech firms appear to navigate these misalignments strategically, balancing potential rewards against legal exposure. The study highlights the critical need for governments to better align their regulatory efforts to guide corporate behaviour effectively.