Importance of Law and Government Regulation as a Force Guiding Business Behavior
Importance of Law and Government Regulation as a Force Guiding Business Behavior
The government interacts with the business environment in various ways. Government regulations involve the interaction of the government with business entities in either producing certain desired outcomes or preventing specific forecasted likely outcomes. These are in the form of policy statements. It gets achieved through controls such as setting market prices, wage rates, establishing standards of production within the industry and setting regulations concerning waste disposal and pollution from the industries (Balleisen & Moss, 2010). At times, these regulations include rules regarding recruitment and employment of people with certain disabilities or from certain ethnic backgrounds.
Government regulation is important due to various reasons. Firstly, it guards against market failure likely to occur in the event that business activities take place without supervision. Most market failures occur due to inadequacy of information on right business practices in the market or even unseen external forces in the market (Balleisen & Moss, 2010). Secondly, government regulations enhance or eliminate social subordination within the market cutting across different social groups.
Regulations and laws guide the business society on how to conduct their business activities in a professional way through requiring players in the business industry to have their employees registered in professional bodies. These bodies instill professionalism and business ethics in their members. According to Strickland (1980), regulations in the business arena are necessary for the prevention of occurrence of irreversible outcomes especially to the environment. That is through emissions of harmful gasses and pollution, which might adversely affect future generations. Some of the government regulations arise because of the occurrence of scenarios where some groups consistently distribute wealth only in their favor (Kaufman, 1997). Government regulations give direction to businesses on the right practices to adopt that are beneficial to both market players and the public.
References
Balleisen, E. J., & Moss, D. A. (Eds.). (2010). Government and Markets: Toward a New Theory of Regulation. New York, NY: Cambridge University Press.
Kaufman B. E. (Ed.). (1997). Government Regulation of the Employment Relationship. Madison, WI: Cornell University Press.
Strickland, A. D. (1980). Government Regulation and Business. Houghton Mifflin Company.
