Copyright © 2008 McGraw-Hill Ryerson Ltd.1 Chapter Ten Regulating Business Canadian Business and Society: Ethics & Responsibilities

Chapter 10 Copyright © 2008 McGraw-Hill Ryerson Ltd.2 Chapter Outline Regulation: Market, Self, Government Business Involvement in Politics and Lobbying Corporate Public Affairs Departments Corporate Agenda Impact of Decreasing Government Involvement Ethical Implications in Business– Government Relationship Ethics in Government

Chapter 10 Copyright © 2008 McGraw-Hill Ryerson Ltd.3 Spectrum of Regulation Laissez-faire regulation Corporate self-discipline Industry self-regulation Self-regulation involving stakeholders Negotiated self-regulation Mandated self-regulation Quasi-government regulation Government regulation

Chapter 10 Copyright © 2008 McGraw-Hill Ryerson Ltd.4 Market Regulation No need for government-imposed laws or regulations Corporation influenced by market forces Laissez-faire approach Government does not interfere with business Consumers can force companies to behave in particular ways by refusing to purchase goods or services or through boycotts

Chapter 10 Copyright © 2008 McGraw-Hill Ryerson Ltd.5 Self-Regulation Corporate self-discipline regulation mission, values statement, codes of conduct or ethics Industry self-regulation voluntary codes Self-regulation involving stakeholders Negotiated self-regulation Mandatory self-regulation

Chapter 10 Copyright © 2008 McGraw-Hill Ryerson Ltd.6 Scope of Government Regulation Government: is architect of economic growth prescribes rules businesses must follow is major purchaser of goods and services produced by businesses is major promoter and subsidizer of businesses is a supplier of debt capital to many businesses is a rescuer of failed businesses is the protector of business and producer interests

Chapter 10 Copyright © 2008 McGraw-Hill Ryerson Ltd.7 Business Involvement in Politics: Examples 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

Chapter 10 Copyright © 2008 McGraw-Hill Ryerson Ltd.8 Business Lobbying Business lobbying attempts to influence: Making or amending of legislation and regulations Making or changing of government policies or programs Government decisions in the awarding of grants, contracts, contributions, or any similar benefits Government appointments to boards, commissions, and any other public office Source: Carson, 1998

Chapter 10 Copyright © 2008 McGraw-Hill Ryerson Ltd.9 Business Lobbying: Criticisms Practices unethical (e.g., bribes, gifts, improper political contributions, blackmail) Business lobby too powerful Business has unequal access to government Cost of business lobbying passed on to consumers

Chapter 10 Copyright © 2008 McGraw-Hill Ryerson Ltd.10 Corporate Public Affairs Departments The 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. Role expanded to include community relations, media relations, environmental monitoring, issues management, lobbying, and public relations.

Chapter 10 Copyright © 2008 McGraw-Hill Ryerson Ltd.11 Corporate Agenda The real or imagined alleged domination of public policy or government programs by corporations or business organizations in their own best interests. The corporate agenda might include: Reduction of government involvement Deregulation of business and industry Reduced corporate taxation Enactment of free trade agreements and support for globalization

Chapter 10 Copyright © 2008 McGraw-Hill Ryerson Ltd.12 Impact of Decreasing Government Involvement: Possibilities Privatization of the financing of services that continue to be produced by the public sector Contracting out of the provision of services to the private sector Transfer of state functions to private sector Sale of government-owned enterprises Liberalization of public policy

Chapter 10 Copyright © 2008 McGraw-Hill Ryerson Ltd.13 Ethical Implications in Business–Government Relationship Appropriateness of government involvement and interference in business operations Matter of accessibility to government Favouritism to some corporations regarding loans, grants, or protection Endorsement of political candidates or parties can be perceived as expecting favours in future Lack of transparency in relationship between government and business

Chapter 10 Copyright © 2008 McGraw-Hill Ryerson Ltd.14 Ethics in Government Office of Values and Ethics, Treasury Board of Canada “Principles of the Public Service of Canada” Public Service and Integrity Office Office of the Ethics Commissioner Federal Accountability Act