'Sticks, carrots or sermons?' - Improving voluntary tax compliance among migrant small-business entrepreneurs of a multi-cultural nation

Abstract

The major aim of this working paper is to explore the roles that social networks play in tax evasion and the contributions that an application of network analysis can make to the more general field of compliance research. It examines the role that various social networks play in perpetuating or changing embedded, non-compliant social processes and actual behaviours, which exist within trading-networks and that may be characteristic for particular small-business sectors and service-industries. In particular, the research focuses on a number of trading-networks of immigrant entrepreneurs within a multicultural society—Australia. It approaches the topic, however, by utilising the notion of mixed-embeddedness. The main argument within this approach is that entrepreneurial behaviours can be explained more adequately, if placed within the overall socio-economic and politico-institutional environment of the country of settlement. This has a number of significant implications for the development of more effective policies that involve broader issues pertaining to compliance and defiance of laws and regulatory enforcement strategies. The exploratory study indicates the sort of related difficulties that regulatory authorities may face in their attempts to deal with a range of ‘mixed-embedded’ law-defying practices, which operate both within and among culturally diversified (social) trading-networks of a multicultural nation.