Chapter 11: Government, Regulation, and Business Ethics

How can government act as a stakeholder of business?

Government can act in two ways:

• As the representative of citizens

• As an actor with its own interests

How does government influence business when acting for citizens?

• Restricts business (e.g., rules, limits)

• Enables business (e.g., support, resources)

What does government do when acting in its own interest?

• Depends on business

• Competes with business

What is the government’s role as the representative of citizens?

• Represents the whole community

• Sets the licence to operate for businesses

• Decides conditions under which business can exist + behave

What debates exist about how active government should be in the economy?

• Laissez-faire: minimal government involvement; markets should run freely.

• Forceful industrial policy: active government shaping markets and industries.

What does “government as an actor with its own interests” mean?

Government also acts to protect its own goals, like maintaining power and political survival.

Why does government face ethical problems in its relationship with society?

Because it has a fiduciary duty to act in society’s best interest

Why can government end up in a conflict of interest?

Government must balance obligations to society with its reliance on business (taxes, jobs, investment)

What exchanges create tension between business, government, and society?

• Business → Government: taxes, jobs, investment

• Government → Business: stable and profitable economic environment

• Society → Government: consent and legitimacy

• Government → Society: regulation that protects societal interests

What is corporate political activity?

Any business effort to influence government or public policy

Why does business influence create ethical concerns?

Because business can heavily shape how government policies are designed and implemented, raising worries about fairness and public sector ethics.

What are the two main ethical issues with business political influence?

• Legitimacy: Should business have this much influence?

• Accountability: Who holds business and government responsible for this influence?

Why should the public know about government’s dealings with business?

the public has a right to transparency so it can judge whether government decisions truly serve society

What is lobbying?

• A direct, often private effort by businesses to influence government decisions through information and persuasion.

• Considered a weak form of influence.

What makes lobbying “weak influence”?

Because it relies mainly on persuasion, access, and information-sharing — not force, money pressure, or coercive power.

What are the main types of lobbying?

• Atmosphere setting

• Monitoring

• Providing information to policymakers

• Advocacy & influencing

• Applying pressure

Why are political donations by businesses ethically risky?

• Create conflicts of interest

• Suggest potential preferential treatment

• Risk harming company image and encouraging questionable behaviour

Why do businesses donate to political parties despite risks?

to gain influence, access, and strong relationships with policymakers

What is the “revolving door” and why is it a problem?

• Movement of individuals between business and government roles.
  

• raises major conflicts of interest, between private interests over public ones.

What is corruption in the context of business and government?

Corruption = abuse of entrusted power for private gain.

Occurs when businesses influence policy-making, enforcement, or decisions through payments or improper benefits to officials.

What conditions allow public corruption to occur?

• Benefits shared among political elites

• Distance between elites and citizens

• Scapegoats + “pacts of silence” that hide wrongdoing

what are scapegoats?

a person who is blamed for the mistakes or wrongdoings of others to deflect attention from the real issues

What is state capture?

situation where private firms shape the formulation of regulation by payments to public officials and politicians

What is global governance?

management of social, ethical, and environmental issues across countries through rules, standards, and norms created by governments, international organizations, civil society, and businesses.

How do international trade regimes affect business?

Double-edged impact:

• Benefits: access to cheap labour, bigger markets, easier trade.

• Challenges: more competition, and regulations that can limit business freedom.