Global Journal of Management and Business Research, A: Administration and Management, Volume 23 Issue 10

Sustainable Compliance Programs in Complex Organizations Global Journal of Management and Business Research ( A ) XXIII Issue X Version I Year 2023 14 © 2023 Global Journals Value added per employee is positively and statistically significantly related to overall business compliance unit quality, even after controlling for other other governance, compliance level and disclosure quality measures outlined above. These results affirm that the ability of sample firms to generate value added per employee is associated with their investment in sustainable compliance of organisations with various information and governance requirements, as proxied by the quality of the business compliance control unit. VI. C onclusion Prior literatures on the organisational challenges and information systems strategy implications of regulatory compliance issues post-Enron has focused on the corporate governance, and business compliance implications of these changes as if they were independently determined. This study is the first to explicitly recognise the inter-disciplinary inter-relation- ships by investigating the contributing factors that potentially influence the quality of information management strategy, and internal audit functions of management that are responsible for monitoring compliance programs within organizations within a multi-disciplinary framework that draws on information systems, regulation, management and auditing disciplines. Specifically, we examine the sustainability of regulatory compliance programs by exploring the strength of relationship between corporate risk management policies, as proxied by the desire to smooth income and/or cash flows, and the quality of the internal control departments responsible to monitor their effectiveness. Our study focuses on multinational European firms that are subject to both national and international factors, as well as country specific influencers on these policies. Our investigation of these supply and demand side influencers broadly centres is based on a survey of best practices across a broad cross-section of sample European firms, in three main areas – Board/Manage- ment influence, information management strategy and organization design (including people, process, structure). The qualitative comparison of the ‘influencers’ from the industry survey against the literature reviews found culture and training, as the most crucial elements for organizations looking to build sustainable compliance IT programs. While organization culture was rated as crucial for the compliance management in the case studies, there were no suggestions in the broader survey on the usage of incentives to affect this employee behaviour towards compliance, which is contrary to proposals from Hartman (2000) and industry findings [CEB (2004)]. Firms instead try to leverage the standard processes in achieving compliance supported by regular training provided to the process owners and employees, via the e-learning platform within these firms. While all the surveyed firms had an infrastructure to train employees on ethical behaviour, there were no indications of an overarching umbrella programme that linked compliance and ethics in any of these organizations, running contrary to proposals discussed in the literature [Hartman (2000), Anstead (1999)]. By examining the association between alternative forms of risk management strategy and regulatory compliance business unit quality, the survey of European firms corroborated the inter-relationship between supply side and demand-side influencers’, which firms consider to be critical for managing their compliance programs. The results support the hypothesis that UK firms’ internal audit control department quality is associated with earnings at risk strategy. Financial firms’ regulatory compliance business unit quality is also associated with asset- liability at risk. However no statistically significant relationship is found with cash flow at risk faced by Continental European firms. We further find that surviving firms subsequently exhibited a positive and statistically significant relationship between the quality of their internal control department and value added per employee. The board and management’s influence on compliance programs sustainability is an area that needs further research. Our results were limited to examining indirectly the cultural/institutional setting which effectively drives board composition. Future research could focus greater attention to the ‘supply side’ explanatory variables that influence the sustainable compliance program. While this paper tries to capture elements of the non-information systems management factors that influence the sustainability of compliance programs, there might be an opportunity to research on additional variables, especially within the organization context, including, ‘middle’ management’s influence, globalisation of the business and the consequent social implications to compliance program management. The results of our analysis should be treated with extreme caution for a number of reasons. First, the literature seeking to identify and explore various factors affecting the sustainability of regulatory compliance programs and their connection with broader information management strategy, operational risk management is not well developed. Second, the survey evidence used to garner evidence on the implementation of these policies are subject to the limitations of sample selection and statistical inference. Third, our analysis and inferences from our results was restricted to European multinational firms that were faced with an uncertain and changing multinational regulatory environment. Finally, our empirical evidence on the relationship between the quality of internal control departments and corporate risk cash flow and income smoothing policies is based on the implied assumption that these proxy for the broader relationship between the sustainability of regulatory