GSR (Good Governance and

Social Responsibility
Chapter 5
Business and the
Government
 Learning Objectives
1. Understand the obligations of business
towards government
2. Comprehend certain ethical standards
which business must observe in its
dealings with the government
3. Learn the role of government to
protect businesses, society and
environment
Relationship between Government
and Business Organizations
The main goal of businesses is to
make profit and governments’ goal
is to ensure economic stability and
growth.
Both of them are different but very
co-dependent.
Relationship between Government
and Business Organizations
For this, the government and
organizations or businesses always try
to influence and persuade each other
in many ways for various matters.
A balanced relationship between the
government and businesses is required
for the welfare of the economy and the
nation.
 Government’s Role in
Influencing Business
Several of the varied roles that
government has assumed in its
relationship with business are worth
exploring because they suggest the
influence, interrelationships and
complexities that are present.
These roles indicate that government:
 Government’s Role in Influencing
Business
1.Prescribes the rules of the game for
business.
2.Purchases business’ products and
services.
3.Uses its contracting power to get
business to do things it wants.
4. Is a major promoter and subsidizer
of business.
 Government’s Role in Influencing
Business
5. Is the owner of vast quantities of
productive equipment and wealth.
6. Is an architect of economic growth.
7. Is a financier.
8. Is the protector of various interests in
society against business exploitation.
 Government’s Role in Influencing
Business
9. Directly manages large areas of
private business.
10.Is the repository of the social
conscience and redistributes
resources to meet social objectives.
How Government Influences the
Business Organizations
The government attempts to shape
the business practices through both,
directly and indirectly, implementing
rules and regulations.
How Government Influences the
Business Organizations
The government most often directly
influences organizations by
establishing regulations, laws, and
rules that dictate what organizations
can and cannot do.
How Government Influences the
Business Organizations
To implement legislation, the
government generally creates special
agencies to monitor and control certain
aspects of business activity.
These agencies directly create,
implements laws and monitor its
application in the organization
How Government Influences the
Business Organizations
Governments sometimes take an
indirect approach to shaping the
activities of business organizations.
These are also done by implementing
laws or regulations but they are not
always mandatory.
How Government Influences the
Business Organizations
For instance, the government could
give tax incentives to companies that
have an environment-friendly waste
management system in a production
factory.
 Government In Society

Government plays a role in all

economic systems.
 Roles of Government

1. Providing services for members of

society
2. Protecting citizens, consumers,
businesses, and workers
3. Regulating utilities and promoting
competition
 Roles Of Government
4. Providing information and support
to businesses
5. Buying goods and services
6. Hiring public employees
7. Raising revenue
 The Roles of
Government and Business
• For effective management,
government’s role as a stakeholder
must be understood.
• What should be the respective roles
of business and government in our
socioeconomic system?
 The Roles of
Government and Business
• If the role of business were simply
production and distribution of goods
and services, business would need
little regulation.
 The Roles of
Government and Business
• But other goals exist – safe working
environment, equal employment
opportunities, fair pay, clean air, safe
products – which business does not
automatically factor into the business
decision making process.
• As a result, it falls to government to
ensure those goals are achieved.
 The Roles of
Government in Business
• Government is a very powerful
institution which can create a favorable
business environment.
• Governments create the rules and
frameworks in which businesses are
able to compete against each other.
 The Roles of
Government in Business
• From time to time the government will
change these rules and frameworks
forcing businesses to change the way
they operate.
• Business is thus keenly affected by
government policy.
 Why government
controls business activities?
Businesses are usually profit
motivated.
Many times in order to gain more profit
the business might neglect issues like
environmental protection and
production of harmful and dangerous
products
 Why government
controls business activities?
Large business might take the
advantage of their size and exploit
consumers, employees and even use
unfair tactics to overcome competition
from small businesses.
Business might use media to portray a
wrong image of their product or may
even mislead customers to buy
products.
 How government
controls business activities?
Government control the business
activities in many ways both direct
and indirect.
Government can control business
activities in a more direct ways.
These are as follows:
 How government
controls business activities?
1. Controlling what to produce
– In order to safeguard the interest of
the community government may ban
or limit the production of certain
goods and services.
• For example, selling of guns, explosive
and dangerous drugs are illegal in many
countries.
 How government
controls business activities?
1. Controlling what to produce
– Goods which harm the environment
are also totally banned or strictly
controlled in many countries, e.g.
aerosol cans that use CFCs which
has been banned because of their
damaging effect on the ozone layer.
 How government
controls business activities?
2. Employees Protection legislations
– Government may pass laws to
protect the interest of employees
such as laws against unfair
discrimination at work.
– When applying for jobs. There is no
unfair discrimination on the basis of
race, religion, sex, age, or color.
 How government
controls business activities?
3. Legislations for health and Safety at
work:
– To protect workers from dangerous
machinery
– Workers should be provided with
proper safety equipments and
clothing.
 How government
controls business activities?
3. Legislations for health and Safety at
work:
– A reasonable workforce temperature
is maintained for workers.
– Proper hygienic conditions and
washing facilities are provided.
– Workers get adequate breaks
between shifts.
 How government
controls business activities?
4. Protect employees against
unfair dismissal
– Business can not dismiss the
workers because they have joined a
trade union or for being pregnant.
 How government
controls business activities?
4. Protect employees against
unfair dismissal
– There should be proper warning
before dismissing a worker otherwise it
will be treated as unfair dismissal.
 How government
controls business activities?
5. Ensure fair wages for the employees
– In many countries, government makes
it mandatory to have a written contract
of employment.
– It contains the details of the wage rate;
working hours, deductions and other
necessary details regarding working
conditions.
 How government
controls business activities?
5. Ensure fair wages for the employees
– Minimum wages paid to different
types of workers are also determined
by the government.
 How government
controls business activities?
6. Consumer Protection legislations
– Most of the countries have consumer
protection laws aimed at making sure
that businesses act fairly towards
their consumers:
 How government
controls business activities?
6. Consumer Protection legislations
– A few examples are:
• Weight and Measures Act:
–goods sold should not be
underweight.
–Standard weighting equipments
should be used to measure goods.
 How government
controls business activities?
6. Consumer Protection legislations
– A few examples are:
• Trade Description Act:
–deliberately giving misleading
impression about the product is
illegal
 How government
controls business activities?
• Consumer Credit Act:
–According to this act consumers
should be given a copy of the
credit agreement and should be
aware of the interest rates,
length of loan while taking a
loan.
 How government
controls business activities?
• Sale of Goods Act:
• It is illegal to sell products with
serious flaws or problems and
goods sold should conform to the
description provided.
 How government
controls business activities?
7. Environment protection
 In the recent years government
across the globe have passes
legislations to control business
activities from harming the
environment.
 How government
controls business activities?
7. Environment protection
 This includes setting limits to the
pollution, making it mandatory for
businesses to treat their wastes etc.
Regulation - What Does It Mean?

Regulation -
• The act of governing, directing
according to rule, or bringing under
the control of law or constituted
authority.
 Government’s
Regulatory Influence on Business
Government regulation has become
the most controversial issue in the
business-government relationship
Government regulation has affected
virtually every aspect of how business
functions.
 Government’s
Regulatory Influence on Business
It has affected the terms and
conditions under which firms have
competed in their respective
industries.
It has touched almost every business
decisions ranging from the production
of goods and services to packaging,
distribution, marketing and services.
 Government’s
Regulatory Influence on Business
Most people agree that some
regulation is necessary to ensure that
consumers and employees are treated
fairly, and not exposed to
unreasonable hazards, and that the
environment is protected.
 Benefits of Regulation

Fair treatment of employees

Safer working conditions
Safer products
Cleaner air and water
 Government Regulation
and Assistance
Regulatory Activities
– Regulation of utilities
– Prevent unfair business practices
 Government Regulation
and Assistance
Why does government regulate utilities?
– Reasons for government regulation of
utilities might include:
• the assurance of fair prices,
• the conservation of resources, and
• to avoid overcrowding of utility poles
and other facilities, such as power
plants.
 Government Assists Business
How does government assist
business?
– The government assists businesses in
a variety of ways, including providing
demographic data
– buying goods and services
– employing workers who then have the
means to buy goods and services.
 Deregulation
Deregulation is the reduction or
elimination of government power in a
particular industry, usually enacted to
create more competition within the
industry
 Deregulation
Purpose:
– Intended to increase competition
with the expected benefits of greater
efficiency, lower prices, and
enhanced innovation.
 Deregulation

Dilemma
– Many competitors are unable to
compete with the dominant firms.
– Must enhance competition without
sacrificing applicable social
regulations (e.g., health and safety
requirements).
 Government Raises Money

Taxes
Borrowing
 Government Raises Money
What is the difference between tax
revenue and borrowing by government?
– Tax revenue is money the government
collects to cover the costs of services.
– This is money that the government is not
required to pay back.
 Government Raises Money
What is the difference between tax
revenue and borrowing by
government?
– The government is required to pay
back money borrowed.
 References
Carrol, A. (2018). Business and Society:
Ethics, Sustainability, and Stakeholder
Management. Boston: Cengage
Learning

Ghillyer, A. (2018). Business Ethics Now.

New York: McGraw-Hill Education.
 References
Hartman, L., Desjardins, J. and
MacDonald, C. (2018). Business
Ethics: Decision-making or Personal
Integrity and Social Responsibility.
New York: McGraw-Hill.

Velasquez, M. G. (2016). Business

Ethics: Concepts and Cases. 7th
Edition. Pearson Prentice Hall
 THE END

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GOD BLESS