Chapter 7 Business-Government Relations Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Ch. 7: Key Learning Objectives ▪ Understanding why sometimes governments and business collaborate and other times work in opposition to each other. ▪ Defining public policy and the elements of the public policy process. ▪ Explaining the reasons for regulation. ▪ Knowing the major types of government regulation of business. ▪ Identifying the purpose of antitrust laws and the remedies that may be imposed. ▪ Comparing the costs and benefits of regulation for business and society. ▪ Examining the conditions that affect the regulation of business in a global context. Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-2 How Business and Government Relate ▪ Seeking a collaborative partnership ▪ Government cooperates with business for mutually beneficial goals. ▪ Influenced by nation’s values and customs. ▪ Working in opposition to government ▪ Government’s goals and business’s objectives are in conflict and results in an adversarial relationship. • Legitimacy issues • Companies operating globally may find governments whose legitimacy or right to be in power is questioned. Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-3 Government’s Public Policy Role ▪ Public policy: A plan of action undertaken by government officials to achieve some broad purpose affecting a substantial segment of a nation’s citizens. ▪ Public policy sets the goals, plans, and actions that each national government follows in achieving its purposes. Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-4 Elements of Public Policy ▪ Public policy inputs: external pressures that shape a government’s policy decisions and strategies to address problems. ▪ Public policy goals: can be broad and high-minded or narrow and self-serving. ▪ Public policy tools: incentives and penalties that government uses to achieve policy goals. ▪ Public policy effects: the outcomes arising from government regulation. Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-5 Types of Public Policy Economic policies ▪ Fiscal policy: patterns of government collecting and spending funds to stimulate or support the economy. ▪ Monetary policy: policies that affect the supply, demand, and value of a nation’s currency. ▪ Other types of economic policies: ▪ Taxation policy ▪ Raising or lowering taxes on business or individuals ▪ Industrial policy ▪ Directing economic resources toward the development of specific industries ▪ Trade policy ▪ Encouraging or discouraging trade with other countries Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-6 Types of Public Policy ▪ Social assistance policies ▪ Policies that concern social services for citizens such as health care and education. Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-7 Government Regulation of Business ▪ Regulation ▪ The action of government to establish rules of conduct for citizens and organizations. ▪ It is a primary way of accomplishing public policy. ▪ Reasons for regulation ▪ Market failure: marketplace fails to adjust prices for the true costs of a firm’s behavior. ▪ Negative externalities: the manufacture or distribution of a product gives rise to unplanned or unintended costs (spillover effects). ▪ Natural monopolies: without competition, firms could raise prices as much as they want. → Example: electric utility ▪ Ethical arguments: consequences, fairness issues. Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-8 Types of Regulation: Economic ▪ Economic regulations ▪ Aim to modify the normal operation of the free market and the forces of supply and demand; the oldest form of regulation. ▪ Includes regulations that ▪ Control prices or wages ▪ Allocate public resources ▪ Establish service territories ▪ Set the number of participants ▪ Ration resources Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-9 Antitrust: A Special Kind of Economic Regulation ▪ Antitrust laws prohibit unfair, anticompetitive practices by business. ▪ Predatory pricing ▪ The practice of selling below cost to drive rivals out of business. ▪ Two main antitrust enforcement agencies ▪ Antitrust Division of the U.S. Department of Justice ▪ Federal Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-10 Types of Regulation: Social ▪ Social regulations ▪ Aimed at such important social goals as protecting consumers and the environment and providing workers with safe and healthy working conditions. ▪ Includes regulations which apply to all businesses: ▪ Equal employment opportunity ▪ Protection of pension benefits ▪ Health care for all citizens ▪ Pollution control ▪ Safety and health concerns Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-11 Types of Regulation & Regulatory Agencies Figure 7.1 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-12 The Effects of Regulation ▪ Government hopes that the benefits arising from regulation outweigh the costs. ▪ The Costs and Benefits of Regulation ▪ Cost-benefit analysis helps the public understand what is at stake when new regulation is sought. → Example: ▪ Spending on U.S Regulatory Activities ▪ Staffing of US Regulatory activities Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-13 Spending on U.S. Regulatory Activities Figure 7.2 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-14 Staffing of U.S. Regulatory Activities Figure 7.3 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-15 The Effects of Regulation ▪ Continuous Regulatory Reform ▪ Deregulation: the removal or scaling down regulatory activities of government →Example: “get government off the back of the people” campaign in early 1980s ▪ Reregulation: the expansion of government regulation →Example: reregulation of the securities and financial services industries in the 2000s Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-16 Regulation in a Global Context ▪ Government established rules to protect the interests of the their citizens. ▪ International regulatory agreements and cooperation ▪ Sometimes, nations negotiate agreements directly with one another. ▪ Sometimes, they do so under the auspices of the United Nations or regional alliances. Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7-17 Running head: Corporate Social Responsibility and Corporate Citizenship Discussion Board Forum 2: Corporate Social Responsibility and Corporate Citizenship Melletta Spinner Liberty University BMAL 560-B03 – Corporate Responsibility 1 DB FORUM 2 2 Discussion Board Forum 2: Corporate Social Responsibility and Corporate Citizenship Corporate Social Responsibility Based on the ‘root term’ responsibility, Lawrence and Weber (2017) define corporate social responsibility (CSR) as how a corporation should act in regard to enhancing society and its inhabitants, as well as being accountable for “any of its actions that affect people, their communities, and their environment” (p. 48). Through the articulating clear and ethical activities that support sustainable development and consideration of expectations of parties interested in activities of an organization (Wolak-Tuzimek, Tarnawska, & Chmiel, 2017). By way of improving environmental, social, or cultural deficits. Corporate Citizenship Corporate citizenship is defined as the when an organization puts CSR practices in action. The underlining reason for corporate citizenship is for the company to conduct business in an ethical manner while harmonizing the needs of stakeholders and working to protect the environment. Stakeholders encompass community, consumers, employees, investors, and suppliers (Lawrence & Weber, 2017). The overall concept of being a ‘good citizen’ is giving back to community in a positive manner. In business, community can be considered local community or global community. This makes corporate citizenship significant on multiple organizational levels. Comparative and Contrasting Factors William C. Frederick, simply defines corporate citizenship as “learning to live with, and respect, others” (Lawrence & Weber, 2017). Based on this definition, Frederick’s belief is CSR grew from ‘stewardship, to strategic responsiveness, to an ethics-based understanding based in culture’ which is considered the current phase of CSR as corporate citizenship (Lawrence & DB FORUM 2 3 Weber, 2017). As a contrasting factor, ‘social responsibility is totally dictated at the “discretion” of the organization, as there are no laws or codified expectations that guide the corporations’ activities” (Camilleri, 2017). Biblical Intergration Dr. Fischer reminds us that evil, greed, and corruption are conditions of the human heart, which can be exaggerated by government regulations and competition (Fischer n.d.). Additionally, he states that globalization plays a important role in how businesses participate in other countries, it is important for organizations to refrain from villainizing competitors; a countries quality of life is in existence before an organization inhabits its region. Genesis 12:1 The LORD had said to Abram, “Go from your country, your people and your father’s household to the land I will show you” (NIV). Keeping this in mind the idea of globalization brings about a ‘mixed bag’ of opinions (Fischer n.d.). Hebrews 13:5 tells us, “Keep your lives free from the love of money and be content with what you have, because God has said, “Never will I leave you; never will I forsake you” (NIV). While business maybe to the target of contempt for working condition of those beyond boarders, as Christians we must not fall to vilifying business when living or working condition were present without prior knowledge. On the other snd of the spectrum big business should not continue to do business or persecute others knowingly and willing. As a part of corporate responsibility and corporate citizenship, there is a responsibility to ‘do better’ and ‘improve’ by meeting the need where required. DB FORUM 2 4 References Camilleri, M. A. (2017). Corporate citizenship and social responsibility policies in the United States of America. Sustainability Accounting, Management and Policy Journal, 8(1), 7793. doi:10.1108/sampj-05-2016-0023 Fischer, K. (n.d.). Globalization and big business. Retrieved from https://learn.liberty.edu/webapps/blackboard/content/listContent.jsp?course_id=_383873 _1&content_id=_19361500_1 Lawrence, A. T., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy. New York, NY: McGraw-Hill Education. Wolak-Tuzimek, A., Tarnawska, J., & Chmiel, M. (2017). The natural environment as an area of Corporate Social Responsibility. Ochrona Srodowiska i Zasobów Naturalnych, 28(3). doi:10.1515/oszn-2017-0021 Running head: Corporate Social Responsibility and Corporate Citizenship Discussion Board Forum 2: Corporate Social Responsibility and Corporate Citizenship Melletta Spinner Liberty University BMAL 560-B03 – Corporate Responsibility 1 DB FORUM 2 2 Discussion Board Forum 2: Corporate Social Responsibility and Corporate Citizenship Corporate Social Responsibility Based on the ‘root term’ responsibility, Lawrence and Weber (2017) define corporate social responsibility (CSR) as how a corporation should act in regard to enhancing society and its inhabitants, as well as being accountable for “any of its actions that affect people, their communities, and their environment” (p. 48). Through the articulating clear and ethical activities that support sustainable development and consideration of expectations of parties interested in activities of an organization (Wolak-Tuzimek, Tarnawska, & Chmiel, 2017). By way of improving environmental, social, or cultural deficits. Corporate Citizenship Corporate citizenship is defined as the when an organization puts CSR practices in action. The underlining reason for corporate citizenship is for the company to conduct business in an ethical manner while harmonizing the needs of stakeholders and working to protect the environment. Stakeholders encompass community, consumers, employees, investors, and suppliers (Lawrence & Weber, 2017). The overall concept of being a ‘good citizen’ is giving back to community in a positive manner. In business, community can be considered local community or global community. This makes corporate citizenship significant on multiple organizational levels. Comparative and Contrasting Factors William C. Frederick, simply defines corporate citizenship as “learning to live with, and respect, others” (Lawrence & Weber, 2017). Based on this definition, Frederick’s belief is CSR grew from ‘stewardship, to strategic responsiveness, to an ethics-based understanding based in culture’ which is considered the current phase of CSR as corporate citizenship (Lawrence & DB FORUM 2 3 Weber, 2017). As a contrasting factor, ‘social responsibility is totally dictated at the “discretion” of the organization, as there are no laws or codified expectations that guide the corporations’ activities” (Camilleri, 2017). Biblical Intergration Dr. Fischer reminds us that evil, greed, and corruption are conditions of the human heart, which can be exaggerated by government regulations and competition (Fischer n.d.). Additionally, he states that globalization plays a important role in how businesses participate in other countries, it is important for organizations to refrain from villainizing competitors; a countries quality of life is in existence before an organization inhabits its region. Genesis 12:1 The LORD had said to Abram, “Go from your country, your people and your father’s household to the land I will show you” (NIV). Keeping this in mind the idea of globalization brings about a ‘mixed bag’ of opinions (Fischer n.d.). Hebrews 13:5 tells us, “Keep your lives free from the love of money and be content with what you have, because God has said, “Never will I leave you; never will I forsake you” (NIV). While business maybe to the target of contempt for working condition of those beyond boarders, as Christians we must not fall to vilifying business when living or working condition were present without prior knowledge. On the other snd of the spectrum big business should not continue to do business or persecute others knowingly and willing. As a part of corporate responsibility and corporate citizenship, there is a responsibility to ‘do better’ and ‘improve’ by meeting the need where required. DB FORUM 2 4 References Camilleri, M. A. (2017). Corporate citizenship and social responsibility policies in the United States of America. Sustainability Accounting, Management and Policy Journal, 8(1), 7793. doi:10.1108/sampj-05-2016-0023 Fischer, K. (n.d.). Globalization and big business. Retrieved from https://learn.liberty.edu/webapps/blackboard/content/listContent.jsp?course_id=_383873 _1&content_id=_19361500_1 Lawrence, A. T., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy. New York, NY: McGraw-Hill Education. Wolak-Tuzimek, A., Tarnawska, J., & Chmiel, M. (2017). The natural environment as an area of Corporate Social Responsibility. Ochrona Srodowiska i Zasobów Naturalnych, 28(3). doi:10.1515/oszn-2017-0021 An Overview of the Corporate Communication Function 63 Corporate Responsibility Many companies have a separate subfunction in the human resources area to deal with community relations and a foundation close to the chairman that deals with philanthropy, but the two should be tied closely together as companies take on more responsibilities in communities in which they operate. Taking on these social responsibilities has a number of positive outcomes for corporate leaders. (See Chapter 5 for more on corporate responsibility.) According to the Edelman Trust Barometer, the most important activity a CEO can do to build trust is to communicate transparently. Additionally, a CEO's personal involve- ment in local charities and good causes was ranked above having an active media presence. 31 There are also serious internal implications of a strong corporate citizenship record: A 2012 survey by Net Impact entitled “What Workers Want” revealed that 45 percent of respondents would take a 15 percent pay cut for a job that makes a social or environmental impact. What's more, when asked to rank the most important factors essential to their ideal job, respondents ranked “contribution to society” and “make a better world” over "advancement opportunities.” Clearly, companies that prioritize corporate social responsibility (CSR) have an advantage An Overview of the Corporate Communication Function 63 Corporate Responsibility Many companies have a separate subfunction in the human resources area to deal with community relations and a foundation close to the chairman that deals with philanthropy, but the two should be tied closely together as companies take on more responsibilities in communities in which they operate. Taking on these social responsibilities has a number of positive outcomes for corporate leaders. (See Chapter 5 for more on corporate responsibility.) According to the Edelman Trust Barometer, the most important activity a CEO can do to build trust is to communicate transparently. Additionally, a CEO's personal involve- ment in local charities and good causes was ranked above having an active media presence. 31 There are also serious internal implications of a strong corporate citizenship record: A 2012 survey by Net Impact entitled “What Workers Want” revealed that 45 percent of respondents would take a 15 percent pay cut for a job that makes a social or environmental impact. What's more, when asked to rank the most important factors essential to their ideal job, respondents ranked “contribution to society” and “make a better world” over "advancement opportunities.” Clearly, companies that prioritize corporate social responsibility (CSR) have an advantage
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