2005 by Nelson, a division of Thomson Canada Limited.

1
Business,
Government,
and Regulations
+ Canadian
Business
Ideologies

2005 by Nelson, a division of Thomson Canada Limited.

2
Governments Role in
Influencing Business
1. Prescribes the rules for business
2. Purchases business products and services
3. Contracts power to get business to do things
it wants
4. Is a major promoter and subsidizer of
business
5. Is the owner of vast quantities of productive
equipment and wealth






2005 by Nelson, a division of Thomson Canada Limited.

3
Governments Role in
Influencing Business
6. Is an architect of economic growth
7. Is a financier
8. Protects society against business
exploitation
9. Directly manages large areas of private
business
10. Acts as a social conscious and redistributes
resources to meet social objectives

2005 by Nelson, a division of Thomson Canada Limited.

Chapter 10
Business Involvement in
Politics: Examples
1. Financing of political parties
2. Publicly expressed support for a candidate
or party
3. Publicly expressed views on political issues
4. Executives running for public office
5. Managements position on employee
participation

2005 by Nelson, a division of Thomson Canada Limited.

5
Roles of Government and
Business
What should be the respective roles of
business and government in our
socioeconomic system?
Which tasks should be handled by
government and which by business?
How much autonomy are we willing to allow
business?

2005 by Nelson, a division of Thomson Canada Limited.

6
Canadian Business Ideologies
Government
Business
Liberals Conservatives NDP
Collectivism/Monopoly Mentality/Mixed Economy/Corporatism/Managerialism/Neo-conservatism
Left Right
Relative Involvement of Govt in Business

2005 by Nelson, a division of Thomson Canada Limited.

7
Roles of Government and
Business
Business Beliefs
Maximizes concession to
self-interest
Minimizes obligations
society imposes on the
individual (personal
freedom)
Emphasizes inequalities of
individuals
Government Beliefs
Subordinate individual goals
and self-interest to group goals
and group interests
Maximized obligations
assumed by the individual and
discouraging self-interest
Emphasize equality of
individuals




Clash of Beliefs

2005 by Nelson, a division of Thomson Canada Limited.

8
Influence of Government on
Business
Nonregulatory
Issues
Industrial policy
Privatization
Regulatory Issues
Economic Regulation
Social Regulation


2005 by Nelson, a division of Thomson Canada Limited.

9
Governments Nonregulatory
Influence on Business
Pros
Decline of national
competitiveness
Use by other nations
Ad hoc system

Cons
Reduces market efficiency
Promotes political
decisions
Foreign success variable
National attempts
uncoordinated and
irrational
Industrial Policy

2005 by Nelson, a division of Thomson Canada Limited.

10
Governments Nonregulatory
Influence on Business
Privatization
Producing versus providing a service
Privatization debate
Use markets to discipline delivery of
goods and services
Federalization of certain functions
Airport security

2005 by Nelson, a division of Thomson Canada Limited.

11
Governments Regulatory
Influence on Business
Controls natural monopolies
Controls negative externalities
Achieves social goals
Other reasons
Controls excess profits
Controls excessive competition


Reasons for Regulation

2005 by Nelson, a division of Thomson Canada Limited.

Chapter 10
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

2005 by Nelson, a division of Thomson Canada Limited.

Chapter 10
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

2005 by Nelson, a division of Thomson Canada Limited.

Chapter 10
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


2005 by Nelson, a division of Thomson Canada Limited.

15
Governments Regulatory Influence
on Business
Economic regulation
Transport Canada
CRTC
Social regulation
Employment Equity
Occupational Safety and Health
Human Rights Commission



Types of Regulation

2005 by Nelson, a division of Thomson Canada Limited.

16
Governments Regulatory
Influence on Business
Fair treatment of employees
Safer working conditions
Safer products
Cleaner air and water



Benefits of Regulation

2005 by Nelson, a division of Thomson Canada Limited.

17
Governments Regulatory
Influence on Business
Costs of Regulation
Direct costs
Indirect costs
Induced costs
Effects
Reduced innovation
Reduced investment in plant and equipment
Increased pressure on small business

2005 by Nelson, a division of Thomson Canada Limited.

18
Deregulation
Purpose
Intended to increase competition with
expected increased efficiency, lower prices,
and innovation
Dilemma
Must enhance competition without sacrificing
applicable social regulations (e.g., health and
safety requirements).


Purpose & Dilemma

2005 by Nelson, a division of Thomson Canada Limited.

19
Canadian Business Ideologies
Government
Business
Liberals Conservatives NDP
Collectivism/Monopoly Mentality/Mixed Economy/Corporatism/Managerialism/Neo-conservatism
Left Right
Relative Involvement of Govt in Business

2005 by Nelson, a division of Thomson Canada Limited.

20
Collectivism
Control of economic
activity by the state
Socialist ideals
Govt needed to correct
defects of market
Health care, CPP,
NEP, subsidies
New Left

2005 by Nelson, a division of Thomson Canada Limited.

21
Monopoly Mentality
Allowable domination
of sector by public or
private ownership
Canadas markets are
too small & spread out
for US competitive
ideal to work well
Hudsons Bay Co.
Canadian Wheat Board

2005 by Nelson, a division of Thomson Canada Limited.

22
Mixed Economy
Compromise of
collectivism and
conservatism
Business and
government cooperate
informally
Best description of
how things actually
work

2005 by Nelson, a division of Thomson Canada Limited.

23
Corporatism
Formalized
cooperation among
business, govt and
labour = Tripartitism
Sweden, Japan, France
Quebec Inc.
Can lead to emergence
of sector elites who
decide what is best


2005 by Nelson, a division of Thomson Canada Limited.

24
Managerialism
Competitive Enterprise
System
The Chamber of
Commerce view
Assume corporations
operate in the best
interests of society
Trust it

2005 by Nelson, a division of Thomson Canada Limited.

25
Neoconservatism
Get government out of
business (and peoples
lives in general)
Privatize and let the
market discipline
Voucher systems
Social policy is against
subsidies, welfare,
transfer payments

2005 by Nelson, a division of Thomson Canada Limited.

Chapter 10
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

2005 by Nelson, a division of Thomson Canada Limited.

Chapter 10
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

2005 by Nelson, a division of Thomson Canada Limited.

Chapter 10
Ethical Implications in
BusinessGovernment 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