CH10 - Regulating Business' Ethics and Responsibilities Flashcards
Types of regulations
1) Government
2) Self-regulation
3) Private regulation
4) Market Forces
Government regulation of business (scope of gov in society)
scope of government in society:
- Architect of economic growth
- Major purchaser of goods and services
- Major promoter and subsidizer of business
- Provider of financial capital through loans and grants
- Rescuer of failed business corporations
- Owner of business entreprises
Example of crown corps.
Canada Post, Via Rail Canada, Petro-Canada
4 other areas gov, influences business ethics
1) prescribing legal rules of conduct
2) Protecting interests of business
3) Protecting the interests of various stakeholders
4) Using regulation to manage large areas of business activity
How does the government regulate businesses
commissions, tribunals, agencies and boards
Deregulation def (pros and cons)
def = reduction of gov. influence or impact over the economy, allowing for a freer and more efficient marketplace
-> pros: more competitive business environment, resulting in higher productivity, more efficiency and lower prices
-> cons: reduced environmental quality standards, greater financial uncertainty, and market control by monopolies
Privatization def
def = strengthening of the market at the expense of the state
Self-regulation def (pros and cons)
def = regulation imposed by the corporation or industry, not directly by the government or market forces
-> pros: faster, cheaper and more efficient than gov. regulation; more likely to be accepted, allows gov to focus on other priorities
-> cons: impairs business competition and innovation, may result in lower standards, ineffective whenever membership not compulsory, administration presents itself
Self-regulation orgs.
def= (SROs) industry or professional groups that are delegated a regulatory function including the development, use and enforcement of standards
ex. the Canadian Real Estate Association (CREA)
Private or civil regulation
def= non-profit, independent orgs. that set standards for responsible business practices
-> private: non-involvement of gov sector
-> civil: org that contributes to functioning of society but not related to or support by government
Third-party certification
(private regulation)
def= approval by an organization independent of gov and business after reviewing production or provision of good or service to ascertain if the product complies with specific standards relating to such things as safety, quality, performance, etc.
ex. “Fairtrade”
Market regulation def
-> in competitive markets, there is less need for gov.-imposed laws or regulations
-> corp. regulated by dynamic forces of free market
-> consumers can force corporation to behave in particular ways by refusing to purchase goods or services, or through boycotts or social media pressure
Laisser-faire approach def
government does not interfere with business
corporate self-discipline def
form of regulation where norms or standards are developed, used and enforced by corporation itself
How does the government involve itself in CSR (+laws)
through legislation, regulation + simply encouragement
Legal system:
- laws against dishonest business practices
- laws to prevent monopolistic behaviour
- laws relating to the health and safety of employees
- laws that prohibit conducting business with corrupt foreign regimes
what are government attempts at dealing with corruption
- corp. crimes were difficult to detect and prosecute
- corruption of Canadian public officials was covered by the Criminal Code of Canada
- in 1999, the Corruption of Foreign Public Officials Act (CFPOA) was passed, covering foreign officials
-> laws to discourage Canadian corps from engaging in corrupt acts at home or abroad
Gov’s Integrity Framework
-> introduced in 2012
- established to protect the integrity of procurement and real property transactions
- ensures that the gov of Can does not inadvertently support suppliers involved such illegal activities
- safeguard public funds, promote conduction of business in a fair, open, transparent; ethical conduct
2015 = renamed Integrity Regime
Remediation agreements def
def = voluntary agreement between a government prosecutor and corporation accused of committing an offence that establishes undertaking to avoid criminal charges
-> also known as Deferred Prosecution Agreements (DPA)
Ethics and responsibilities of Taxation (Corporations)
- corporate tac rate for corporations has been lowered and is now perceived to be lower than rate paid by individuals
- argument for lower corporate taxation: corp taxation in Can must be comparable to other countries, if not, operations will be transferred to other countries
Ethics and responsibilities of Taxation (Small Business)
- social case is made for lower taxation on small business enterprises
-> govs believe that small businesses are a major creator of jobs in the economy and should receive a preferential rate - support for a preferential tax:
-> small biz 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
Tax haven def
def = jurisdiction with one or more of the following characteristics:
- no tax / very little
- strict brank-secrecy provisions
- lack of transparency int he operation of its tax system
p lack of effective exchange of information with other countries
Ethics and responsibilities of Taxation (Individuals)
- Federal gov’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
- rich do not spend all their income
- reducing taxes on lower income earners who spend all their income sparks economic growth
- higher taxation of the right has not been successful in other countries
- does not raise more revenue
- increases the legal avoidance of taxes through tax shelters
The ethics of business involvement in politics (issues)
- corps are an institution in society and thus have a MORAL RESPONSIBILITY to participate in the pol. sys.
- appropriateness of gov involvement and interference in business operations, lack of TRANSPARENCY
- involvement might also be interpreted as being biased, thus having an ADVERSE EFFCT on CUSTOMERS or shareholders, conflicts of interest
- favoritism to some corps regarding loans, grants or protection
- endorsement of pol. candidates or parties can be perceived as expecting favours in the futures
Ways businesses get 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 def
def = all attempts to influence directly or indirectly any gov activity, and includes any attempt to influence legislators, their staff members, public administrators, and members regulatory agencies
-> making or amending of legislation and regulations
-> making or changing government policies or programs
-> gov decisions in the awarding of grants, contracts, contributions, or any similar benefits
-> government appointments to boards, commissions, and any other public offcie
types of business lobbyists
-> business corps. that attempt to influence gov through lobbying performed by business interest groups of associations
-> consultants who specializes in government-business relations and is paid by corps or a biz association to make contact with the gov, or to tell business how to influence gov
-> corps develop lobbying capability “in-house,” often referred to as gov relations or public affairs staff
Pros and cons to lobbying
pros:
- offset the influence of other groups
- opinions/perspectives must be made known to govs if informed decisions are to be made about public policies affecting business
cons:
- practices unethical (bribes, gifts, blackmail, etc.)
- biz lobby too powerful and one-sided
- biz if over-represented
- cost of biz lobbying passed on to consumers
corporate public affairs def
def = 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
corporate agenda def
def = real or imagined alleged domination of public policy or gov programs by corps or business orgs in their own best interests
includes:
- reduction of gov involvement in eco.
- deregulation of biz and industry
- advocacy of deficit and debt reduction
- reduction in gov 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
