Introduction
Literature Review and Hypotheses
The Regulatory Context
Organizational Responses
Applicability of Laws and Regulations and the Scope of Trade-Compliance Programs
Decision-Maker Awareness and the Scope of Trade-Compliance Programs
Supply Chain Position and the Scope of Trade-Compliance Programs
Data and Methodology
Sample, Measurement Issues, and Descriptives
Variable | Mean |
---|---|
Scope of trade-control compliance program (number of programs) | 1.53 |
Awareness | 27.89 |
Red flag | 53.98 |
B2B high (share of sales) | 85.98 |
B2B low (share of sales) | 7.93 |
Firm size (in number of employees) | 71.90 |
Firm size categories | |
Micro SMEs (< 10 employees) | 28.79 |
Small SMEs (10–49 employees) | 33.31 |
Medium-sized SMEs (50–249 employees) | 28.45 |
Large SMEs (250–499 employees) | 9.45 |
Firmage (in years) | 58.55 |
Foreign operations | 36.33 |
Performance | 15.22 |
CEO | 57.44 |
Manufacturing | 17.65 |
Trade | 14.88 |
IT | 5.88 |
Language region: German-speaking Switzerland | 86.00 |
Awareness | |||
---|---|---|---|
No | yes | ||
Red Flag | No | 37.27 | 43.15 |
Yes | 60.91 | 80.73 |
Operationalization of the Variables
Variables of major Interest
Control Variables
Variable name | Description |
---|---|
Scope of trade-control compliance program | Number of trade-compliance measures implemented by the company [0 to 10] |
Awareness | Company’s management awareness of trade-compliance issues [1 to 8] |
Red flag | At least one warning indicator (red flag) indicates that the company is affected by trade compliance [1 = Yes, 0 = No] |
B2B high | Company generates more than 50% of its revenues in the business-to-business (B2B) segment [metric, 0 = otherwise] |
B2B low | Company generates up to 50% of its revenues in the business-to-business (B2B) segment [metric, 0 = otherwise] |
Firmsize (log) | Number of full-time employees worldwide in 2016 (log) |
Firmage | Age of the company [in years] |
Foreign operations | Company is active in foreign trade or employs employees abroad [1 = Yes, 0 = No] |
Performance | Company has grown in the last two years and expects to continue to grow in the next 12 months [1 = yes; 0 = otherwise] |
CEO | The person providing the information is the owner, partner, associate or employed managing director of the company [1 = Yes, 0 = No] |
Manufacturing | Branch of industry: Manufacturing sector [1 = yes; 0 = otherwise] (reference category: others) |
Trade | Branch of industry: Trade sector [1 = yes; 0 = otherwise] (reference category: others) |
IT | Branch of industry: IT sector [1 = yes; 0 = otherwise] (reference category: others) |
Language region | Company’s head office is located in the German-speaking part of Switzerland [1 = yes; 0 = no] |
Estimation Strategy
scope_compliance_programi = β0 + β1awarenessi + β2redflagi + β3interactioni + β4B2B_highi + β5B2B_lowi + β6(log)firmsizei + β7firmagei + β8foreign_operationsi + β9performancei + β10CEOi + β11manufacturingi + β12tradei + β13ITi +β14language_regioni + ηi
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Scope of trade control | 1.000 | |||||||||||||
Awareness | 0.282 | 1.000 | ||||||||||||
Red Flag | 0.350 | 0.134 | 1.000 | |||||||||||
B2B high | 0.061 | 0.141 | 0.161 | 1.000 | ||||||||||
B2B low | − 0.036 | − 0.079 | − 0.028 | − 0.505 | 1.000 | |||||||||
Firmsize (log) | 0.206 | 0.018 | 0.110 | − 0.142 | 0.093 | 1.000 | ||||||||
Firmage | − 0.063 | − 0.020 | − 0.036 | − 0.175 | 0.010 | 0.215 | 1.000 | |||||||
Foreign operations | 0.556 | 0.123 | 0.308 | 0.290 | − 0.197 | 0.055 | − 0.099 | 1.000 | ||||||
Performance | 0.156 | 0.060 | 0.082 | 0.015 | − 0.051 | 0.131 | 0.061 | − 0.020 | 1.000 | |||||
CEO | − 0.195 | − 0.088 | − 0.051 | 0.032 | − 0.062 | − 0.399 | − 0.115 | − 0.121 | 0.014 | 1.000 | ||||
Manufacturing | 0.247 | 0.038 | 0.118 | 0.260 | − 0.148 | 0.131 | − 0.027 | 0.349 | − 0.070 | − 0.097 | 1.000 | |||
Trade | 0.017 | − 0.028 | 0.113 | − 0.019 | − 0.009 | − 0.009 | − 0.024 | 0.169 | 0.012 | − 0.053 | − 0.194 | 1.000 | ||
IT | 0.055 | 0.022 | 0.113 | 0.131 | − 0.047 | − 0.049 | − 0.072 | 0.147 | 0.017 | − 0.023 | − 0.116 | − 0.105 | 1.000 | |
Language region | − 0.092 | 0.017 | − 0.017 | 0.128 | 0.026 | 0.040 | 0.017 | 0.018 | -0.021 | 0.031 | 0.006 | -0.025 | 0.102 | 1.000 |
Multivariate Results
Model 1 | Model 2 | Model 3 | VIF | |
---|---|---|---|---|
Awareness | 0.181*** (0.042) | 0.059 (0.057) | 2.047 | |
Red Flag (Dummy) | 0.788*** (0.228) | 0.327 (0.428) | 4.241 | |
Interaction: Red Flags*Awareness | 0.253*** (0.083) | 5.722 | ||
B2B high | − 0.007** (0.003) | − 0.008** (0.003) | 1.636 | |
B2B low | 0.004 (0.009) | 0.003 (0.009) | 1.401 | |
Firmsize (log) | 0.182* (0.072) | 0.135* (0.069) | 0.131* (0.068) | 1.335 |
Firmage | − 0.002 (0.002) | − 0.002 (0.001) | − 0.002 (0.001) | 1.100 |
Foreign operations (Dummy) | 2.713*** (0.265) | 2.510*** (0.263) | 2.484*** (0.259) | 1.445 |
Performance (Dummy) | 1.026*** (0.315) | 0.919*** (0.300) | 0.923*** (0.295) | 1.049 |
CEO (Dummy) | − 0.405 (0.249) | − 0.339 (0.237) | − 0.266 (0.234) | 1.252 |
Manufacturing | 0.133 (0.336) | 0.304 (0.325) | 0.396 (0.322) | 1.403 |
Trade | − 0.560* (0.337) | − 0.574* (0.320) | − 0.503 (0.316) | 1.181 |
IT | − 0.241 (0.500) | − 0.237 (0.477) | − 0.298 (0.470) | 1.141 |
Language region: German-speaking Switzerland | − 0.687 (0.322) | − 0.576 (0.309) | − 0.435 (0.308) | 1.076 |
Constant | 0.829 (0.429) | − 0.082 (0.468) | 0.273 (0.475) | |
R-square | 0.397 | 0.464 | 0.481 | |
Corrected R-square | 0.373 | 0.438 | 0.455 | |
Number of observations | 289 | 289 | 289 |
Model 4 | Model 5 | Model 6 | VIF | |
---|---|---|---|---|
Awareness (Dummy)a | 0.644*** (0.221) | 0.050 (0.268) | 1.614 | |
Red Flag (Dummy) | 0.856*** (0.231) | 0.609 (0.406) | 3.812 | |
Interaction: red flags*awareness | 0.321*** (0.074) | 4.592 | ||
B2B high | − 0.006** (0.003) | − 0.008** (0.003) | 1.636 | |
B2B low | 0.004 (0.009) | 0.003 (0.009) | 1.402 | |
Firmsize (log) | 0.182* (0.072) | 0.130* (0.070) | 0.129* (0.068) | 1.334 |
Firmage | − 0.002 (0.002) | − 0.002 (0.001) | − 0.002 (0.001) | 1.100 |
Foreign operations (Dummy) | 2.713*** (0.265) | 2.515*** (0.268) | 2.495*** (0.260) | 1.450 |
Performance (Dummy) | 1.026*** (0.315) | 0.994*** (0.305) | 0.934*** (0.296) | 1.049 |
CEO (Dummy) | − 0.405 (0.249) | − 0.432* (0.240) | − 0.260 (0.236) | 1.265 |
Manufacturing | 0.133 (0.336) | 0.299 (0.331) | 0.407 (0.322) | 1.401 |
Trade | − 0.560* (0.337) | − 0.601* (0.326) | − 0.503 (0.317) | 1.182 |
IT | − 0.241 (0.500) | − 0.231 (0.486) | − 0.331 (0.472) | 1.143 |
Language region: German-speaking Switzerland | − 0.687** (0.322) | − 0.608* (0.315) | − 0.392 (0.309) | 1.083 |
Constant | 0.829 | 0.485 (0.446) | 0.497 (0.433) | |
R-square | 0.397 | 0.444 | 0.480 | |
Corrected R-square | 0.373 | 0.418 | 0.453 | |
Number of observations | 289 | 289 | 289 |
Awareness: Noa | Trade-control compliance measure | ||
---|---|---|---|
Zero | At least one | ||
Red Flag | No | 29.61 | 17.07 |
Yes | 21.27 | 31.85 |
Awareness: Yesb | |||
---|---|---|---|
Red Flag | No | 24.33 | 17.28 |
Yes | 10.59 | 45.77 |
Discussion and Conclusion
Theoretical Contributions
Red flag | |||
---|---|---|---|
No | Yes | ||
Awareness | Yes | Proportionate response: deliberately reduced scope of compliance program | Proportionate response: deliberately broad scope of compliance program |
No | Happy-go-lucky response: reduced scope of compliance program | Disproportionate response; underreaction: inadequately reduced scope of compliance program |