Regulation is an important issue in business management. The United States government has set many standards to regulate business, employees’ rights and environment. In any case, demand from stockholders or customers to go "greener" or threat to increases spending due to new carbon pricing. Additionally, environmental considerations are among the largest problems facing businesses today. Regulation shows concern of the involved body in the intervention. The Intervention runs from legal control to unofficial peer control by government or other powerful authorities. This paper highlights the various theoretical issues in regulation to enhancing understanding of regulation arena. However, a clear understanding of regulation is necessary if the force that drives regulations is to be applied.
Regulation theories have been conflicting for long now.
“ ..Up to late 1960s, business people thought regulation was a trial by the government to advance allocation of resources…(Gunningham, 2005)”
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In an attempt to examine origin and practice of regulation, we consider two major regulation theories: capture theory and public interest theories. when supplied in public demand for a correction of inequitable or inefficient in market practice arises, regulation is required. According to research, up to late 1960s, business people thought regulation was a trial by the government to advance allocation of resources ( Gunningham, 2005). This belief was based on the assumption that, many businesses and activities cannot run without government intervention. Regulation has a long antecedent: for a long duration of time, regulation followed a stream of problems or public dissent. Additionally, businesses have relied upon government involvement in regulation. For example, the protest of the farmers against the exploitation rates applied by rail that led to the formation of interstate commerce commission in the USA. Regulation as a form of management has helped significantly. The implicit assumption being regulation is aimed at protecting the public.
Main types of regulations
Self-regulation
Government regulation
Government regulations are mostly given by government agencies or parastatals. They are usually supported by statue laws formed by parliament. Such regulations are helpful to the business because, they have punishment for those who break them, and hence people comply with them
For instance when it comes to pollution cases, manufacturing and processing companies has to adhere to the limits on carbon emissions by power plants. However, government regulations have their drawbacks. Statute laws, for instance, are usually content with the provision of minimum standards. Government regulations have however protected business largely. On the other hand, self-regulation is the act of an organization creating its own rules which govern with certain behavior in the organization. These rules are administered and enforced by the people whose behavior is to be governed. In the management settings, these rules are formed to regulate some behaviors in the industry. For example in a company where flammable goods are produced, smoking is prohibited by the management, and it is illegal to smoke on the premises.
To sum up this discussion, a clear understanding of regulation should be put in place if the force that drives regulations is to be applied. This paper has examined different theories of regulation and the two major types of regulations. Also, clear examples in regulations are given in the article. Finally, we found that regulation is an important issue in management and management cannot work without set regulations by the government and by its personnel.
Reference
Gunningham, N., & Kagan, R. A. (2005). Regulation and business behavior. Law & Policy, 27(2), 213-218.
