Contextual Compliance: Situational and Subjective Cost‐Benefit Decisions about Pesticides by Chinese Farmers

• Date: 01 July 2015
• DOI: http://doi.org/10.1111/lapo.12035
• Author: Benjamin Rooij,Jeroen Heijden,Huiqi Yan
• Published date: 01 July 2015

Contextual Compliance: Situational and

Subjective Cost-Benefit Decisions about

Pesticides by Chinese Farmers

HUIQI YAN, BENJAMIN VAN ROOIJ, and JEROEN VAN DER HEIJDEN

This article analyzes how cost-benefit calculation influences compliance with

pesticide regulation by Chinese farmers. Building on a study including 150

farmers and experts, it studies how operational costs and benefits and deterrence

affect compliance. Moreover, it studies what variation in cost-benefit perceptions

there are with different types of rules, farms, and villages. It finds that, in this

context, cost-benefit calculation matters for compliance; with operational costs

and benefits being more clearly related to compliant behavior than deterrence. It

highlights that perceptions about costs and benefits are situational and vary along

the type of legal rule and the type of regulated actor. It also shows that such

perceptions are individually subjective, as even with similar rules and similar types

of actors, perceptions vary. The paper concludes by stating expectations on how

the situational and subjective nature of cost-benefit calculation can inform regu-

lators seeking to enhance compliance.

INTRODUCTION

Chinese regulation continues to suffer from an enforcement gap. Many of the

country’s regulatory laws are weakly enforced. China’s administrative agen-

cies tasked to enforce regulatory laws have been experiencing difficulties

detecting violations of regulatory law including labor (Cooney 2007), food

safety (Liu 2011), environmental law (Van Rooij and Lo 2010), and intellec-

tual property rights (Dimitrov 2009; Mertha 2005b). Moreover, they have

been lacking sufficient legal authority to issue strong sanctions, and even

within their authority, they often issue sanctions far below the maximum

allowed (i.e., SEPA 2007). Consequently violations of regulatory law are

quite common.

Van Rooij’s contribution to this research was made possible through a generous VENI grant

from the Netherlands Organization for Scientific Research. Van der Heijden’s contribution was

made possible through another VENI grant. The authors thank the reviewers and editors of the

journal for helpful comments to earlier versions of this article.

Address correspondence to Benjamin van Rooij, John S. and Marilyn Long Chair Professor

for US-China Business and Law, Director, Long US-China Institute for Business and Law,

University of California, Irvine, 401 East Peltason Dr. Suite 4800K, Irvine, CA, USA, 92697-

8000. Telephone: 949-824-0082; E-mail: bvanrooij@law.uci.edu.

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LAW & POLICY, Vol. 37, No. 3, July 2015 ISSN 0265–8240

© 2015 The Authors

Law & Policy © 2015 The University of Denver/Colorado Seminary

doi: 10.1111/lapo.12035

There has been much scholarly attention to this problem. Scholars have,

for instance, studied how regulatory law is enforced in China and what

variation there has been in terms of enforcement styles (i.e., Lo, Fryxell, and

Van Rooij 2014; Lo and Fryxell 2003). Among others, their work indicates

that the picture of weak enforcement in China is more complicated than it is

sometimes depicted, as there is much variation both in time and space, with

some locations in China recently seeing more formalistic and coercive forms

of enforcement than others. Scholars have also looked at the organization of

regulatory law enforcement, aiming to understand better what has influenced

the prevalence of weak enforcement (Cooney 2007; Lo and Tang 2006;

Mertha 2005a). This strand of literature indicates that regulatory enforce-

ment is weak because administrative regulators lack independence and

capacity, and operate in an environment with limited vertical coordination,

with limited authority, with close state-enterprise relations, and in an envi-

ronment lacking sufficient civil society and media oversight (Van Rooij

2012).

Much less is known about how regulated actors in China respond to

regulation and its (weak) enforcement. As such we have little insight into

what the current enforcement practices mean for individuals and businesses

subject to regulation. We know very little about how regulated firms make

decisions about whether to obey or break regulatory rules in China and what

role enforcement plays in such decisions. For instance, a key finding from a

unique study on tax compliance by Chinese lawyers is that, even when state

enforcement is weak to nonexistent, these lawyers still perceived a high risk of

breaking the law, because such risk came from other sources, including

clients and their own firms. In other words, weak enforcement in China does

not necessarily mean that there is no deterrence effect (Van Rooij 2015). For

improved compliance behavior in China a better understanding of such

issues is necessary. Moreover, a better understanding of such behavior in

China has broader implications for policy and theory alike, as noncompli-

ance with regulation is not solely a Chinese problem.

Responding to such issues, this article makes an exploratory study of how

a particular subset of Chinese actors, vegetable farmers in Hunan province,

make decisions about compliance with a particular set of legal rules: pesticide

rules. It studies two main questions. First, how do perceptions about both the

costs and benefits of legal and illegal pesticide usage shape their compliance

behavior? Second, what is the variation in how these farmers perceive such

costs and benefits? Building on the rich rational choice literature on compli-

ance (i.e., Simpson and Rorie 2011; Thornton, Gunningham, and Kagan

2005; Winter and May 2001; Paternoster and Simpson 1993, 1996), it

approaches cost-and-benefit decision making by studying both the perceived

operational costs and benefits of using pesticides in a compliant or violating

manner, as well as the perceived risks of being caught and punished for

violations (subjective deterrence). The study explores these perceptions in

a qualitative and inductive way, seeking to understand how the farmers

Yan et al. CONTEXTUAL COMPLIANCE 241

© 2015 The Authors

Law & Policy © 2015 The University of Denver/Colorado Seminary