Modern Leadership in Regulation; Lessons from Moral Education

Educational research shows that, under certain conditions, punishment and moral development go hand in hand. In this chapter, we examine whether the conditions recognised in education for achieving higher moral development, in combination with punishment, also apply to the public regulation of companies. This given the assumption that a higher moral development of companies leads to an improvement in their compliance. Based on a metaphorical comparison between education and regulation, we arrive at four factors which determine the effectiveness of a moral message from a public regulator, that is: mutual trust, the regulator's moral authority, the regulator's love for the regulated company and the regulator’s recognition of its identity. A moral message given in the right supportive conditions could fuel the moral development of companies. A regulator who has insight in the moral development of regulated companies and knows how to convert this knowledge into effective interventions demonstrates modern leadership and has an impact on compliance assurance by promoting the intrinsic motivation of companies.