1. Archie B. Carroll Ann K. Buchholtz
Business & Society Ethics, Sustainability, and Stakeholder Management Eighth Edition
Archie B. Carroll
Ann K. Buchholtz
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2. Chapter 11 Business, Government, and Regulation
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Learning Outcomes
Articulate a brief history of government’s role in its relationship with business.
Appreciate the complex interactions among business, government, and the public.
Identify and describe government’s nonregulatory influences, especially the concepts of industrial policy and privatization.
Explain government regulation and identify the major reasons for regulation, the types of regulation, and issues arising out of deregulation.
Provide a perspective on privatization versus federalization, along with accompanying trends.
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Chapter Outline
The Pendulum of Government’s Role in Business
The Roles of Government and Business
Interaction of Business, Government, and the Public
Government’s Nonregulatory Influence on Business
Government’s Regulatory Influences on Business
Deregulation
Summary
Key Terms
Discussion Questions
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5. Government’s Role in Influencing Business
A regulator of business that can determine the rules of the game.
A major purchaser with buying power that can affect a business’ or industry’s survival.
Can elevate some industries while devaluing others through government policy.
Can create new businesses and industries through subsidies and privatization.
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6. Interaction of Business, Government, and the Public
Government/Business relationship
Lobbying
Public/Government relationship
The Public
Voting and electing officials
Special interest groups
The Government
Politicking and public policy formation
Business/Public relationship
Business
Advertising, public relations, and other forms of communication
Public
Special interest and protest groups
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7. Government’s Nonregulatory Influence on Business
Two major nonregulatory issues
Industrial policy
Concerned with the role of government in a national economy.
Privatization
Should currently public functions be turned over to the private (business) sector?
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Industrial Policy
Industrial policy
Every form of state intervention that affects industry as a distinct part of the economy.
Trend toward stronger industrial policy.
Current industrial policy supports new winning industries and fosters growth.
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Privatization
Privatization
The process of turning over to the private sector some function that was previously handled by a government body.
An integral part of the 21st century strategies of most nations.
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10. Producing versus Providing a Service
Producing or providing a government service?
Providing
Has a program for and pays for a service.
Producing
Has its own employees who do the service.
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11. The Privatization Debate
Pro-Privatization
Government has no comparative advantage in many functions.
Government is less efficient and less flexible.
Anti-Privatization
Some activities cannot be effectively handled by the private sector (such as airlines or the postal system).
Privatization produces uneven results in efficiency gains and cost savings.
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12. What Does Regulation Mean?
The act of governing, directing according to rule, or bringing under the control of law or constituted authority.
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13. Characteristics of a Federal Regulatory Agency
Has decision-making authority.
Establishes standards or guidelines conferring benefits and imposing restrictions on business conduct.
Operates principally in the sphere of domestic business activity.
Has its head and/or members appointed by the president (generally subject to senate confirmation).
Has its legal procedures generally governed by the Administrative Procedures Act.
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14. Reasons for Regulation
Most regulation arises out of a market failure.
Controlling negative externalities
Achieving social goals
Controlling excess profits
Controlling natural monopolies
Controlling excessive competition
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15. Types of Regulation Economic Regulation Interstate Commerce Commission
Civil Aeronautics Board
Federal Communications Commission
Interstate Commerce Commission
Economic Regulation
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16. Types of Regulation (continued)
Occupational Safety and Health Administration
Equal Employment Opportunity Commission
Environmental Protection Agency
Social Regulation
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Costs of Regulation
Direct costs
Number of new agencies created, expenditures, and growth patterns of the budgets of federal regulatory agencies.
Indirect costs
Forms, reports, and questionnaires that businesses must complete.
Induced costs
Innovation
New investments in plant and equipment
Small business
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Deregulation
What are the purposes of deregulation?
What are benefits and problems associated with it?
What are major industries affected by deregulation?
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Key Terms
Collectivistic ethic of government
Deregulation
Direct costs
Economic regulation
Excess profits
Excessive competition
Federalization
Indirect costs
Individualistic ethic of business
Induced costs
Industrial policy
Market failure
Natural monopoly
Negative externalities
Privatization
Regulation
Social costs
Social goals
Social regulation
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