Section 6: Compliance and Firm Dynamics
In the final section of the questionnaire, firms were asked in general terms about the impact compliance has had on the firm. The first question concerned their perception of whether the time and effort that they have put into compliance has changed over the previous year or two. Given that this study was undertaken as a pilot, this question was included to provide MED with a point of comparison for any surveys that follow.
In this section of the questionnaire respondents were also asked to comment on the particular effects complying has had on internal firm dynamics, in relation to a set of factors that the researchers derived from previous research on compliance (including the New Zealand Ministerial Panel) and from the comments made within the focus groups. This question was designed to assess the degree to which the managers of New Zealand firms feel that compliance is having a stifling effect on their ability to be innovative.
Changes in Compliance
Respondent firms were asked to consider whether the overall time and effort that firms like theirs have been required to put into complying with acts and regulations have changed over the last 2 years. As Figure 26 shows, the perception of most respondents is that the compliance burden has increased over the last two years.
Figure 26: Changes in Compliance over Time
| | Number of Respondents | Percentage |
| Has become less over the past year or two | 10 | 2.0% |
| Has stayed much the same | 197 | 40.2% |
| Has increased, or become more, over the past year or two | 273 | 55.7% |
| Don't know | 10 | 2.0% |
| Total | 490 | 100% |
Respondents were then asked whether any particular government act or regulation creates one or more of nine effects for the firm. As noted above, the researchers selected these factors (listed in Figure 27) after reviewing the international literature and the previous studies undertaken in New Zealand.
Figure 27: Indirect Effects of Compliance
| | | Number of respondents | Percentage | Ranking |
| A | Especially distracts and diverts senior staff time | 283 | 57.8% | 1 |
| B | It's ambiguous to interpret or apply | 178 | 36.3% | 4= |
| C | Draws you into legal expenses | 179 | 36.5% | 4= |
| D | Generates conflict and disagreement with regulatory agency staff | 121 | 24.7% | |
| E | Dampens manager's enthusiasm for innovating | 177 | 36.1% | 4= |
| F | Impacts the value or speed with which your industry can grow export earnings | 118 | 24.1% | |
| G | Obliges you to engage outside consultants | 189 | 38.6% | 2= |
| H | Leaves a sense of unfairness with your firm | 189 | 38.6% | 2= |
| I | Draws me into conflict with staff | 64 | 13.1% | |
As Figure 27 shows, factor A ("especially distracts senior management time") was clearly the most important factor. Factors G ("obliges you to engage outside consultants") and H ("leaves a sense of unfairness with the firm") elicited similar levels of response.
Those who responded "yes" to any of these factors were then asked to identify the particular piece of legislation that was of concern to them. Figure 28 summarises the responses, showing that of all those who answered yes to any factor in the previous set of questions (as listed in Figure 27) more than 26% identified employment legislation as the piece of legislation that generated the effect.
Figure 28: Legislation Identified as Having an Indirect Effect on Firm Dynamics
→ Large version of "Figure 28: Legislation Identified as Having an Indirect Effect on Firm Dynamics"
Another way of representing this ranking is the following table, which rank orders the legislation for all those who responded "yes" in relation to each of the nine effects. This analysis shows the respondents' concerns with employment legislation, the Resource Management Act, MAF and OSH (the four pieces of legislation that received a first place ranking in relation to one of the nine effects).
Figure 29: Legislation and Firm Dynamics (Factors Ranked by Respondent Group)
| | Staff
Con-
flict | Im-
pacts
Ex-
port
Ear-
nings | Con-
flict
with
Reg.
Agency | Sense
of
Unfair-
ness | Dam-
pens
Enthu-
siasm | Ambi-
guous | Legal
Ex-
pense | Out-
side
Consul-
tants | Dis-
tracts |
| Employment | 1 | 3 | 10 | 1 | 1 | 4 | 1 | 3 | 1 |
| MAF | 5 | 2 | 1 | 3 | 6 | 6 | 5 | 8 | 5 |
| OSH | 2 | 8 | 3 | 6 | 3 | 1 | 4 | 6 | 2 |
| Resource Mgmnt | 8 | 1 | 2 | 2 | 2 | 2 | 2 | 1 | 3 |
| Inland Revenue | 4 | 4 | 5 | 3 | 5 | 3 | 5 | 2 | 4 |
| GST | 8 | 10 | 11 | 9 | 13 | 10 | 10 | 6 | 9 |
| ACC | 3 | 11 | 11 | 7 | 9 | 10 | 10 | 9 | 6 |
| Statistics | 8 | 11 | 11 | 13 | 11 | 13 | 13 | 13 | 11 |
| Food & Drink | 8 | 6 | 5 | 8 | 8 | 7 | 7 | 4 | 7 |
| Customs & Excise | 8 | 9 | 8 | 9 | 10 | 12 | 12 | 12 | 13 |
| LTSA | 8 | 11 | 9 | 12 | 12 | 11 | 9 | 10 | 12 |
| Other | 5 | 4 | 4 | 5 | 7 | 8 | 3 | 4 | 8 |
| All | 5 | 7 | 7 | 11 | 4 | 5 | 7 | 10 | 10 |
Summary
- In relation to whether the time and effort that respondents have put into compliance has changed over the previous year or two, 273 (56%) said there had been an increase. Respondents who said that there had been an increase were more likely to be from firms that were contracting, and were from the food and primary sectors.
- In terms of the potential for compliance commitments to impact on firm dynamics, 283 (58%) respondents said they could identify a particular piece of legislation in relation to the nine factors that were read to them. This compares to 206 (42%) who said they could not identify a piece of legislation that had this effect.
- Respondents who could identify particular pieces of legislation that they saw as having the potential to "distract and divert senior staff", were most likely to be from firms that: employ more than 11 FTEs and employ 6-10 FTEs, export, are "mature", are contracting and are from the food, non-food and primary sectors.
- 312 (64%) respondents could identify particular pieces of legislation that they saw as having the potential to be "ambiguous to interpret or apply". This compared to 178 (36%) who said no to this question.
- 179 (36%) respondents could identify particular pieces of legislation that they saw as having the potential to "draw the firm into legal expenses". This compared to 310 (63%) who said no to this question.
- 121 (25%) respondents could identify particular pieces of legislation that they saw as having the potential to "generate conflict and disagreement with regulatory agency staff". This compared to 368 (75%) who said no to this question.
- 177 (36%) respondents could identify particular pieces of legislation that they saw as having the potential to "dampen the manager's enthusiasm for innovating". This compared to 312 (64%) who said no to this question.
- 118 (26%) respondents could identify particular pieces of legislation that they saw as having the potential to "impact on the value or speed with which your industry can grow export earnings". This compared to 363 (74%) who said no to this question.
- 189 (38%) respondents could identify particular pieces of legislation that they saw as having the potential to "oblige the firm to engage outside consultants". This compared to 301 (62%) who said no to this question.
- 162 (33%) respondents could identify particular pieces of legislation that they saw as having the potential to "leave a sense of unfairness with your firm". This compared to 328 (67%) who said no to this question.
Back to Top