Motivating Financial Companies Towards Compliance: The Effects of a Cooperative and Deterrent Regulatory Style in a Letter Experiment

The aim of this research was to examine the effects of a cooperative and deterrent style, portrayed through regulatory letters, on motivation and compliance. Study 1 examined a general sample ( N = 492) in an online experiment, to assess motivation and compliance‐intentions. Study 2 focused on non‐compliant financial service providers ( N = 2803), assessing objective compliance in a field experiment. Both studies tested the impact of letters written in three different styles (i.e., neutral, cooperative, or deterrent), which did or did not include a procedural justice paragraph (resulting in six different letters). As hypothesized, the cooperative style as well as the deterrent style increased compliance (intentions), but results pointed to different motivational processes driving this effect. Whereas the cooperative style evoked internalized types of motivation through perceptions of a cooperative regulator, the deterrent style evoked external motivation and amotivation through perceptions of a deterrent regulator. In this context, procedural justice did not influence motivation or compliance (intentions). Thus, regulators that aim to stimulate internal motivation to comply, are advised to adopt a cooperative style when writing to regulatees.