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