Slide- CH 10

• Regulation


  • Government
  • Self-regulation
  • Private regulation
  • Market forces
• Government regulation of business

  • Architect of economic growth
  • Major purchaser of goods and services
  • Major promotor and subsidizer of business
  • Provider of financial capital
  • Rescuer of failed business corporations
  • Owner of business enterprises
• Government regulation of business (cont'd)

  • Prescribing legal rules of conduct
  • Protecting interests of business
  • Protecting interests of various stakeholders
  • Using regulation to manage large areas of business activity
• Deregulation


  Reduction of government influence or impact over the economy, allowing for a freer and more efficient marketplace
• Privatization


  Strengthening of the market at the expense of the state
• Self-regulation


  Regulation imposed by the corporation or industry, not directly by the government or market forces
• Self-regulation


  • Faster, cheaper and more efficient than government regulation
  • More likely to be accepted, allows government to focus on other priorities
  • Impairs business competition and innovation
  • May result in lower standards
  • Ineffective whenever membership not compulsory
  • Administration presents challenges
• Self-regulatory organizations (SROs)


  Industry or professional groups that are delegated a regulatory function including the development, use and enforcement of standards
• Private or civil regulation

  Non-profit, independent organization that sets standards for responsible business practices
• Third-party certification


  Approval by an organization independent of government and business after reviewing production or provision of good or service to ascertain if the product complies with specific standards
• Market regulation


  In competitive markets, less need for government-imposed laws or regulations
• Laissez-faire approach


  Government does not interfere with business
• Corporate self-discipline


  Form of regulation where norms or standards are developed, used and enforced by corporation itself
• Government involvement in corporate social responsibility (CSR)

  • Legislation
  • Regulations
  • Encouraging CSR or sustainability practices
• Morality legislated through legal system

  • Laws against dishonest business practices
  • Laws to prevent monopolistic behavior
  • Laws relating to health and safety of employees
  • Laws prohibiting conducting business with corrupt foreign regimes
• Corporate crimes were difficult to detect and prosecute
• Corruption of Canadian public officials was covered by the Criminal Code of Canada
• Corruption of Foreign Public Officials Act (CFPOA) was passed

  1999
• Corruption of Foreign Public Officials Act (CFPOA)

  Laws to discourage Canadian corporations from engaging in corrupt acts at home or abroad
• Government's Integrity Framework


  Established to protect the integrity of procurement and real property transactions managed by the department by ensuring that these transactions are free from corruption, collusion and fraud
• Remediation agreements


  Voluntary agreement between a government prosecutor and corporation accused of committing an offence that establishes undertakings to avoid criminal charges
• Tax havens


  Jurisdictions with one or more of the following characteristics: no tax or very low rates, strict bank-secrecy provisions, lack of transparency, lack of effective exchange of information with other countries
• Argument for lower corporate taxation

  Corporate taxation in Canada must be comparable to other countries; if not, operations will be transferred to other countries
• Preferential tax rate for small businesses


  Governments believe that small businesses are a major creator of jobs in the economy and should receive a preferential tax rate
• Support for preferential tax rate for small businesses

  Small businesses should be compensated for their limited access to capital, the high costs of compliance to various laws and regulations, and cash flow concerns facing smaller businesses
• Federal government's tax system is increasing proportion of total income tax revenue that is received from individuals
• Increasing the taxation of the rich is advocated by many Canadians
• Higher taxation of the rich has not been successful in other countries
• Issues associated with involvement of business in politics

  • Corporations have a moral responsibility to take part in the political system
  • Appropriateness of government involvement and interference in business operations; lack of transparency
  • Involvement might be interpreted as being biased, thus having an adverse effect on customers or shareholders, or conflicts of interest might exist
  • Favouritism to some corporations regarding loans, grants, or protection
  • Endorsement of political candidates or parties can be perceived as expecting favours in future
• Ways business is involved in politics

  • Financing of political parties
  • Publicly expressed support for a candidate or party
  • Publicly expressed views on political issues
  • Executives running for public office
  • Management's position on employee participation
• Lobbying


  All attempts to influence directly or indirectly any government activity, including making or amending legislation and regulations, making or changing government policies or programs, government decisions in the awarding of grants, contracts, contributions, or any similar benefits, and government appointments
• Types of business lobbyists

  • Business corporations that attempt to influence government through lobbying performed by business interest groups or associations
  • Consultant who specializes in government–business relations and is paid by corporation(s) or a business association
  • Corporations develop lobbying capability "in-house," often referred to as government relations or public affairs staff
• Pros to lobbying


  • Offset the influence of other groups
  • Opinions or perspectives must be made known to governments if informed decisions are to be made about public policies affecting business
• Cons to lobbying


  • Practices unethical (e.g., bribes, gifts, improper political contributions, blackmail, etc.)
  • Business lobby too powerful and one-sided
  • Business is over represented
  • Cost of business lobbying passed on to consumers
• Corporate public affairs


  Management function responsible for monitoring and interpreting the governmental environment of the corporation or industry and for managing the responses necessary to protect the interests of the corporation or industry
• Corporate agenda


  Real or imagined alleged domination of public policy or government programs by corporations or business organizations in their own best interests
• Includes in corporate agenda

  • Reduction of government involvement in economy
  • Deregulation of business and industry
  • Advocacy of deficit and debt reduction
  • Reduction in government expenditures on social services
  • Enactment of free trade agreements and support for globalization
  • Weakening of unions and workers' right to organize
  • Increasing lobbying in the political process by business