ESRC Seminar Regulation

1. The emotionality of regulation:
emerging thoughts
Paul Richter (Newcastle University Business School)
Simon Down (Anglia Ruskin University)
Jane Pollard (CURDS, Newcastle University)

2. the received wisdom in the UK (Baldwin, 2004; FSB, 2011)
• small businesses disproportionately affected by regulatory
requirements (higher compliance costs; less resilient to regulatory
shocks/uncertainties; lack regulation specialists…)
• regulation can undermine competitiveness, capacity to grow, viability
• ‘better regulation’ (taking into account SMEs circumstances) needed

3. reflected in government policy:
regulations – one of the ‘enemies of enterprise’
The deluge of new regulations has been
choking off enterprise for too long. We must
move away from the view that the only way
to solve problems is to regulate.
(Business Secretary Vince Cable, 2010)
‘Freedom day’ (5th April 2013)
Setting business free from the restrictions
that hold back enterprise is a compulsory
step on the road to growth. We’ve listened to
firms and taken prompt action where
regulation presents barriers - but there is a
huge amount still to do.
(Business Minister, Michael Fallon)

4. the critique
• regulation as burden – a simplification…
• ‘business-burden’/‘cost-compliance’ statistical analyses are simple snapshots
(at best) of firm attitudes
• various forms of resistance and compliance contingent on business resources
and market contexts (Blackburn et al., 2005; Edwards, et al., 2003)
• often a low awareness of (H&S) regulation within small firms; varied response
strategies – Avoiders/Outsiders; Reactors; Proactive learners (Vickers et al.
2005)
• regulatory compliance may in fact promote business performance by acting as
an enabler or motivator to beneficial change (Kitching, 2006, 2007; Kitching et
al., 2008, 2013, 2015)
• aspatial, acontextual and asocial conceptualisation of firms…context
matters
• firms as material geographical constellations of relations and practices,
territorialized networks of interdependencies (Storper, 1995; Dicken and
Malmberg, 2001; Herod, 2007) in which learning, the accumulation of knowledge
and rules and norms shape expectations, beliefs and decision-making in
conditions of uncertainty (Hodgson, 1988)

5. outcomes
insights for small firms
encouraging better regulation to support growth
deepening the knowledge base
the project
REBEL (REgulation in
Business Employing a
Longitudinal perspective)
Simon Down, Jane
Pollard, Paul Richter,
Monder Ram
project focus
How are regulatory
changes understood and
internalised by SMEs?
How significant are sectoral
and spatial variations?
How do SME’s
understandings/responses
to regulation change over
time?
what we did
14 growth-oriented small firms in
the North East and East Midlands
over 28 months (3 sweeps)
workers at all levels
interviews with policy
makers/trade bodies

7. sample of firms
Sector Firm Approx size Year
founded
Location
Bio-Business Bio 1 (bio-tech software development) 30 1989 North East
Bio 2 (drug manufacture) 50 2008
Bio 3 (drug delivery technologies) 15 2002 East Mids
Bio 4 (drug development) 52 2007
Environmental
Services
ES 1 (waste treatment ) 20 2002 North East
ES 2 (environmental testing service) 40 1999
ES 3 (pollution control ) 10 1995
ES 4 (sustainable energy) 20 2007 East Mids
Security S1 (vision technology) 32 1992 North East
S2 (imaging technologies) 40 2003
S3 (clothing/armour protection) 40 1989 East Mids
Film & Media FM 1 (digital communications) 10 2000 North East
FM2 (design agency) 7 1990 East Mids
FM3 (TV facilities company) 7 1998

8. prospective academic contributions
• A relational examination of regulation and the entrepreneurial small
firm
• organisational activities and behaviours prompted by regulation should be seen
through a relational epistemology and ontology
• Financial intermediaries and the regulation of small firms
• integrates usually disparate literatures in economic geography and
management concerned with regulation, production networks and
financialisation
• Emotionality of regulation…

9. compliance – more than a ‘cost-resource’ burden?
• dominant views of the act of regulatory compliance
• impassive (cerebral, prosaic, formalised, technical)
• …or where portrayed in more emotional terms,
overriding sentiment – frustration (at having to
comply with externally derived directives, diverting
attention/scarce resources)
• our data suggest this representation is inadequate
• complying with certain regulations can give rise to a
set of intensely personal, emotional effects

10. emotionality and management: contributions from organizational
emotion theory
• persuasive critique of the idea that organization is (and should be) a rational, unemotional
endeavour (Ashforth and Humphrey, 1995; Callahan and McCollum 2002; Fineman, 2003;
Rafaeli and Worline, 2001; Rumens, 2005; Sturdy, 2003)
• traditionally, “both managers and organizational theorists conspired to keep emotion out of
organizations and organizational theory” (Rafaeli and Worline, 2001: 99)
• something to be kept under control/regulated – construed as “feminine and therefore
secondary, personal and weak” (Rafaeli and Worline, 2001: 100)
• more recently…“even the most intractable managers must now come to understand that the
management of emotion is an inherent component of managerial work in the 21st century”
(Rumens, 2005: 117)
• concept of ‘emotional intelligence’ has gained traction
• at the same time…self-management of emotion in the service of corporate objectives takes
on darker overtones – ‘emotional labour’ (Hochschild, 1979, 1983 and many others since)
• viewed through an emotionality lens: What does our research say about the emotionality
of regulatory compliance?

11. the small firm experience of redundancy regulations
• previous studies (Kets de Vries and Balazs, 1997; Wright, 1998) have
conceptualised the ‘executioner’s burden’ from corporate downsizing – less is
understood about the small firm setting
• our research data support this phenomenon, but…we are concerned to
understand the emotionality of specific act of regulatory compliance (not
wider event)
• importantly, compliance event tends to be framed by a fear of legal action –
hence, firms secure professional HR guidance
…I think there was an element of…being
concerned about being taken to tribunal
(Operations Director, drug delivery
technology firm)
once you realise the consequences of not going
through the process in the right way, and the cost
implications of it…we did decide to bring in...
(CEO, drug delivery technology firm)
…being watchful of treating new staff with kid
gloves a little bit because you’re fearful of what
could happen, I think is a real concern for
businesses
(MD, digital comms firm)

12. emotional burden of compliance: sticking to the script
…we had to be very, very careful because we couldn’t actually let
anybody in [the principal lab] know because you have to go through
this process of consultation…what we had to feed back to managers
was – and no doubt the rumours would get round – very limited
sketchy information. Because the consultation process started by
notifying the…whole of [secondary lab], that we were no longer in a
position to maintain that level of business, we had to cut costs. The
only way we could see cutting costs was to close [secondary lab] and
put those guys at risk
(Director, environmental services firm)
What you had to do was, you had to have a meeting with them and talk to
them about, 'We are considering…' so you had to kind of pre-warn them, and
then you had to have like a 4 week stay of…where you had to leave that time
in between you informing them that you are 'thinking about' redundancy, and
they may be made redundant, to actually 4 weeks later going to them and
saying, 'You are made redundant.' And I just thought it was really cruel!
(MD, digital comms firm)
‘Stick to the script.’
‘Stick to this’… ‘do
not deviate from the
script’. And if I did,
she would interrupt
…they seriously
mentored me
through the
whole of the
redundancy
process

13. emotional burden of compliance: regulating emotion
I was very conscious of the wording – because you get the wording wrong, someone
may pick you up on that and may trip you up on that. And you lose the personal
touch. You can’t sit there as I’m talking to you, having a friendly chat, it becomes
formalised…it becomes very formal. I mean, to the point, you’re having to really
look that person in the eye and say ‘the business isn’t working and you’re at risk,
there’s nothing else I can do’.
(Director, environmental services firm)
…it's very emotional, because you've built your company up, you're doing something you
don't want to do, a lot of the staff you're letting go are often very good…
It was horrific, absolutely…It was terrible. It was inhumane really. And it made me a far
worse boss, I felt, having to sit there to listen to them give me the reasons why I should
keep them on…It was dreadful. It’s really ill-conceived and giving people false hope and
all of that, dreadful, dreadful.
…I really hated it, it was horrible. If you think about, not just in terms of how you are
restricted legally…but it's part of business and I know that, and I did it as gently as I
could, but the legal side of it kind of made me act completely out of character…
(MD, digital comms firm)

14. Does regulation have to assume employers are all ‘bastards’?
What I'd rather have done – and I don't know, this is probably protecting employees or something
against crappy employers – I wanted to sit down with them and say, 'Listen, I need to protect the
business and I have to make these redundancies, I am going to give you as much notice as possible.'
I'd rather have given them 8 weeks' notice rather than this charade of, 'I am consulting you that I
may be making you redundant.' And a lot of them felt that there was still hope to retain their jobs,
even though…I mean, I followed it by the letter in terms of what I was meant to say. You had to
give them an option to come back to give you a reason why they could stay, so they were all writing
these documents to say why they should be kept. It was just really unfair and it made me look really
ruthless.
So I think from a legislative point of view…it needs to be looked at because it's really out of kilter
with a small business. Maybe in a much bigger business it maybe works because you're not as close
to the individuals. I don' t know…I mean, I bought them all presents when they left. I felt terrible!
And I gave them all a reference and tried to give them as much…time off to get to go to interviews
and stuff like that…
I think there has to be more of a hand in glove approach. It’s not an ‘us’ and ‘them’
(MD, digital comms firm)
[maternity regulations are] built on a premise that all employers are
bastards;
[“I’m not out to screw people”]
(CEO, drug development firm)

15. emotional relief of compliance
…it was probably one of the hardest things I’ve ever had to do…
I did find it traumatic making the decision
…we didn’t really know how best to go about it. But, basically…I guess what
we had to do was put in place a fair process for selecting the person that was
going to be made redundant because we only had to lose one person. And, I
think, it was good that we had to think about that, you know, how to do it.
(Operations Director, drug delivery technology firm)
So she was fantastic for that. But if she felt the employee wanted to go
down a certain path, she just wouldn’t let that happen, which was great for
me to be honest. So having gone through it once – and it sounds awful – I
have no qualms about doing it again, I really don’t, because it toughens
you up. I’m not going to say it’s easy because it’s very difficult if the
person on the other end is someone you connect with, somebody who’s
done a good job for you. It’s not the person you’re actually making
redundant, it’s the function. And once I got that clear in my head, it’s still
tough but you’re letting the function go, not the… Well, you are letting the
person go but you know what I mean. It’s not personal”
(Director, environmental services firm)
Now although I was
paying £170 a month, it
was more about having
that surety, and if I had
any complexities that I
needed to deal with,
anything, because I
think employers are
really frightened of
employment law, then
I'd go to them straight
away, and they were
really good, and the
lawyer is on the end of
the phone, really
excellent advice, they
really get to know the
company, and it was just
great.
(MD, digital comms
firm)

16. emerging thoughts…
• while organizational theory has moved the debate on from a time when managers faced with difficult
processes (layoffs, downsizing) were advised to ‘remain calm and try not to display any emotion’ (cf.
Moore, 1997:10), our research suggests that compliance with redundancy regulations are inspiring
exactly that kind of outmoded approach
• more…rather than management practice ‘celebrating’ (Ashforth and Humphrey, 1995) emotionality, the
experience of regulatory compliance can imply the suppression of emotion, and with it, authenticity and
empathy
• Can we locate the small firm owner-manager alongside Hochschild’s service agents in engaging in
‘emotion work’, raising the possibility that acts of regulatory compliance can inflict ‘emotional scars’
(see Fineman, 2003) on managers (as well as workers)?
• HR advisor acts to re-draw relationship boundaries by creating distance between ‘executioner’ and
‘executed’ – presence de-personalises the process, giving rise to emotional ‘scarring’ and/or relief
• Whose interests are being served by the enactment of redundancy regulations designed to protect
workers?
• our data locate the origins of self-regulation beyond organizational rules/aims, implicating powerful
‘external’ actors – professional advisors/state legislature
• the small firm setting (often characterised by intimate employee-employer relations) offers a
particularly rich site for exploring these phenomena