Chapter 10: Government's Role in Business

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Questions and Answers

What is the purpose of government in society according to the content?

Manufacturer of goods

Environmental watchdog

Architect of economic growth (correct)

Promoter of individual interests

Deregulation involves increasing government influence over the economy.

False

Define privatization based on the information provided.

Privatization involves strengthening the market at the expense of the state by transferring ownership of state-owned enterprises to private entities.

Worker capitalism means that employees own a part of the company they work for, giving them a say in how the company is run and a share in its ___.

profits Signup and view all the answers

Match the following principles of ethical analysis to their descriptions:

Utilitarian ethic = Seeks to maximize overall benefits and minimize harms for all stakeholders Individual rights ethic = Based on protecting fundamental rights that apply to everyone Ethic of caring = Gives attention to specific individuals or stakeholders harmed or disadvantaged and their particular circumstances Ethic of justice = Focuses on achieving fair outcomes and balancing conflicting rights or interests Signup and view all the answers

What is moral reasoning?

Moral reasoning refers to the process of making decisions about what is right or wrong based on ethical principles or values. Signup and view all the answers

Which of the following are challenges associated with ethical reasoning?

All of the above Signup and view all the answers

A situation where someone's personal interests could influence their professional decisions is known as ________.

conflict of interest Signup and view all the answers

Ethics officers report to the board of directors or CEO for making ethical decisions.

False Signup and view all the answers

Match the following generations of codes of conduct with their emphasis:

First generation = Conflict of interest Second generation = Proper business practices and fair dealings Third generation = Employee rights and motivation Fourth generation = Wider responsibility, environment, and community respect Fifth generation = International concerns, human rights Signup and view all the answers

What is the purpose of the Competition Act in Canada?

The Competition Act establishes basic principles for the conduct of business in Canada to encourage and maintain competition, and prevent companies from forming monopolies. Signup and view all the answers

What is the main motivation for managers to adopt strategies of compliance with environmental regulations?

To gain a competitive edge and improve reputation Signup and view all the answers

What does EMS stand for and what is its purpose for corporations?

EMS stands for Environmental Management Systems. It helps corporations integrate environmental practices into their overall strategy. Signup and view all the answers

Linear economy promotes recycling and reuse of materials.

False Signup and view all the answers

Bribery involves making questionable payments to government officials to influence their ________.

decisions Signup and view all the answers

Match the following sectors with their descriptions:

Private sector = Part of the economy NOT controlled by government Social sector = Includes charities and non-profit organizations Public sector = Operated by government departments, agencies, and organizations Signup and view all the answers

Study Notes

Scope of Government in Society

Architect of economic growth: government buys goods and services, such as building roads and schools
Major purchaser of goods and services
Promoter and subsidizer of business
Provides financial capital through loans and grants
Saves businesses in trouble
Owner of business enterprises (e.g. Canada Post, Via Rail)

Government Influence on Business Ethics

Prescribes legal rules of conduct
Protects interests of business
Protects interests of stakeholders
Uses regulation to manage large areas of business activity

Deregulation

Reduction of government influence over the economy
Allows for a freer and more efficient marketplace
Pros: more competitive business environment, higher productivity, lower prices
Cons: reduced environmental quality standards, market control by monopolies

Privatization

Strengthening of the market at the expense of the state
Examples: Canada Post
Self-regulation: regulation imposed by the company, not the government or market forces
Pros: faster, cheaper, efficient
Cons: impairs business competition and innovation

Third Party Certification

Independent organization that sets standards for responsible business practices
Examples: quality inspector

Laissez-Faire Approach

Government does not interfere with business

Corporate Self-Discipline

Form of regulation where norms are developed and used by the corporation itself

Remediation Agreements

Voluntary agreement between government prosecutor and corporation accused of committing an offence
Examples: corporation acknowledging wrongdoing, paying penalties, undertaking anti-corruption policies

Tax Havens

No tax or very low rates

Involvement of Business in Politics

Moral responsibility to take part in the political system
Issues: lack of transparency, favouritism
Ways business is involved in politics: financing of political parties, publicly expressing support for a candidate, publicly expressing views on political issues

Lobbying

All attempts to influence directly or indirectly any government activity
Pros: substitute the influence of other groups
Cons: unethical, too powerful and one-sided, over-represented

Corporate Governance

Rules that guide how a company is managed and overseen to ensure it operates ethically, responsibly, and in the best interests of shareholders and stakeholders
Board of Directors: group of individuals elected by shareholders to govern or oversee the corporation's affairs
Fiduciary duties: obligations owed by directors to shareholders that are prescribed by laws or regulations
Independent director: unbiased advice and oversight

Shareholder Democracy

Exercise of power of owners to ensure they are treated fairly and enjoy equally the privileges and duties of ownership
Basic shareholder rights: voting power, transfer of ownership, entitlement to dividends
Several stakeholders attempt to ensure shareholder rights: governments, self-regulatory agencies, shareholder activists

Business Ethics

Rules, standards, codes, or principles that provide guidelines for morally right behaviour
Value judgements: subjective evaluations of what is considered important
Moral standards: the means by which individuals judge their actions and the actions of others

Influences on Business Ethics

Five categories: individual, corporate, economic, government, and social
Seven most cited principles of ethical analysis: self-interest, personal values, caring, utilitarian benefits, universal rules, individual rights, and justice

Ethical Dilemmas

Situation where a person has to make a difficult decision
Moral reasoning: process of making decisions about what is right or wrong based on ethical principles or values
Steps: define moral issue, gather information, identify stakeholders, develop alternative solutions, identify harms/benefits, decide on action

Kohlberg's Stages of Moral Development

Six stages: pre-conventional, conventional, and post-conventional
Level 1: Pre-conventional (self); Level 2: Conventional (others); Level 3: Post-conventional (humankind)

Challenges to Ethical Behaviour

Too simplistic approaches
Myths
Lack of awareness (four biases: prejudice, favouritism, overclaiming credit, and conflict of interest)

Leadership and Ethics

Three forms of leadership: ethical, responsible, and servant leadership
Code of conduct: tells employees what behaviours are okay and not okay
Code of ethics: a statement of principles and values

Wider responsibility, attention to the environment, and respect for communities
Five generations of codes: conflict of interest, proper business practices, employee rights, wider responsibility, and international concerns

Ethics Officer and Compliance Officer

Ethics officer: independent manager who reports to the board of directors or CEO
Compliance officer: ensures all employees are familiar with company's policies and codes

Whistleblowing

Reporting wrongdoings like fraud or safety violations
Issues: who is responsible, and is it heroic or snitching?

Classification of Programs

Four approaches: formal, monological, dialogical, and classification of programs

Benefits of Ethics Programs

Business practices more beneficial to society
Increased awareness

Types of Executive Ethical Leadership

Four types: hypocritical, unethical, ethical, and ethically silent

Work Ethic and Employee Loyalty

Set of values that holds what work is important to a member of society
How to improve employee loyalty: communicate, reward, corporate priority, involvement, and time

Workplace Privacy

Protection of employee's personal information
Discrimination: preferential treatment on bases not directly related to qualification or job performance
Employment equity: fair and equal treatment of employees

Managing Employment Diversity

Diversity management: voluntary initiative beyond what's required by law to eliminate discrimination
Connection between CSR and employee engagement

Consumer Sovereignty

Characteristics: consumers decide what products businesses should make, voting through purchase decisions, consumers free to make their own choices, and businesses make what consumers want
Consumerism: social movement seeking to protect and augment the rights and powers of buyers in relation to sellers

Ethical Consumerism

Form of activism where consumers buy products, goods, and services that are ethically produced and not harmful to the environment or society

Factors Motivating Ethical Purchases

CSR information must be available
Consumers are more likely to buy from companies whose actions and values match their own beliefs
Products must be considered affordable

Competition

Necessary for an effective market economy
Benefits the consumer
Encourages innovation, productivity, entrepreneurship, and efficiency

Competition Act

Establishes basic principles for the conduct of business in Canada
Prevents companies from forming monopolies### Sustainability and Ethics in Purchasing
Extended producer responsibility: a producer's responsibility for a product extends to the post-consumer stage, ensuring environmental protection (e.g., collecting and recycling old batteries)
Fair trade: a designation for products involved in sustainability purchasing, focusing on the beginning of the product chain to ensure fair working conditions and environmental practices (e.g., fair trade chocolate)

Criticisms of Fair Trade

Little of the extra paid to farmers actually reaches them
Certification issues can lead to farmers' impoverishment
Labour exploitation still exists

Environmental Issues and Government Involvement

Environmental issues affect all aspects of a corporation, from input of resources to workplace conditions
Commons: resources used as though they belong to all (e.g., public parks)
Government departments regulate corporate activities to protect the environment (e.g., Environment Canada)

Environmental NGOs and Corporate Targeting

ENGOs hold shared values about environmental changes and target corporations based on:
- Environmental impact
- Consequences of environmental harm
- Size and influence
- Consumer connection
- Brand visibility

Approaches to Environmental Concerns

Standard environmentalism: government rules are necessary to protect the environment
Market environmentalism: businesses can earn money by being eco-friendly, making laws unnecessary
Carbon pricing: a way to reduce carbon emissions by putting a price on them (e.g., cap-and-trade, carbon tax)
Carbon capture and storage (CCS): capturing and injecting carbon emissions into underground formations

Environmental Management Systems

EMS helps corporations reduce costs, respond to investor demands, and improve reputation
EMS ensures environmental practices become an important component of corporate strategy

Green Marketing and Human Resources Practices

Green marketing: selling environmentally friendly goods and services to consumers
Human resources practices for a greener workplace:
- Offering recycling programs
- Saving energy and reducing consumption
- Encouraging eco-friendly transportation
- Reducing emissions
- Purchasing renewable energy credits

Evaluating Environmental Performance

Indicators used to evaluate environmental performance:
- Type and amount of materials used
- Energy source and efficiency
- Biodiversity
- Emissions and waste reduction
- Transportation mode efficiency

Sustainability and Criticisms

Criticisms of sustainability:
- Difficulty in defining and understanding the concept
- Constraining economic development
- Lack of market understanding
- Executives being misled
Opportunities and challenges of sustainable development:
- Enhanced reputation and customer attraction
- Increased costs and potential revenue loss

Economy and Environmental Impact

Linear economy: raw materials used, products produced, and waste generated
Reuse economy: some goods recycled and reused, but still generating waste
Circular economy: restorative and regenerative, with materials constantly flowing in a closed-loop system

Globalization and its Impact

Globalization: the process of decreasing constraints on international interactions
Economic globalization: integrating markets into a global economy
Political, social, and cultural globalization: changes in world power relationships, loss of sovereignty, and emergence of a worldwide cultural system
Globalization increases business economic, social, and environmental responsibilities

Globalization Arguments and Criticisms

Globalists' arguments:
- Everyone gains
- Employment and income opportunities in developing countries
- Increased standard of living in developing countries
- Open markets provide better goods and services
Anti-globalists' arguments:
- Unemployment in developed countries
- Poverty and inequality in developing countries
- Human rights violations
- Questionable government payments
- Profit-driven motives

Supranational Institutions and International Trade

World Trade Organization (WTO): the only global international organization dealing with trade rules between nations
International Non-governmental Organizations (INGOs): groups working to improve conditions in developing countries
Supranational institutions: international organizations where countries work together on specific issues (e.g., World Bank, IMF)

Canadian Business and Globalization

Canadian business influenced by globalization:
- Pressure to forge international links
- Meeting global market challenges
- Attracting investment
- Competitiveness
Challenges faced by Canadian business in the global economy:
- Corruption
- Human rights respect
- Sweatshop production
- Reducing poverty

Socialization of capitalism: the process of conforming to societal expectations, resulting in desired, socially responsible outcomes
Social purpose: corporations are responsible to society, aware of and concerned about ethical, social, and environmental issues
Fourth sector: a sector combining elements of the private, social, and public sectors, aiming to make a profit while having a positive social or environmental impact

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Description

This quiz covers the scope of government in society, including its role in economic growth, business promotion, and provision of financial capital. It also explores government's influence on business ethics.