The Effects of Rule Complexity on Organizational Noncompliance and Remediation: Evidence From Restaurant Health Inspections

Abstract

Organizational noncompliance with legal rules can be consequential. The antecedents of such noncompliance as well as the remediation of it thus remain enduring subjects of research inquiry. However, prior studies have implicitly treated all rules alike. In contrast, we argue that rules are not all the same and that differences between rules might be systematically linked to variations in the likelihoods of noncompliance and remediation across the range of organizations under the purview of a rule system. We consider the role of two fundamental but distinct sources of rule complexity: components (i.e., sections that compose a rule) and connections (i.e., functional links to other rules in the same system). We analyzed data from 81,266 rule-level observations from 1,011 health inspections of 289 restaurants in Santa Monica, California, conducted from 2007 to 2010. As hypothesized, increases in either source of rule complexity were associated with higher probabilities of noncompliance. Unexpectedly, however, the two sources of rule complexity had divergent effects on remediation such that increases in the number of connections were associated with higher probabilities of repeated noncompliance, whereas increases in the number of components were not. Taken together, we suggest that our understanding of noncompliance and remediation can be enhanced by viewing them both as rule-level phenomena. A range of implications for theory and practice are discussed.