A business is affected by various regulations that determine its success. These regulations are meant to guide and control the running of a business. If a business does not adhere to policies, then it may end up collapsing. Most entrepreneurs that do not meet guidelines required by the government end up lobbying to avoid its closure. The following essay discusses two theories that affect the progress of a company. The public interest theory operates under two assumptions: Firstly, abandoned markets will not serve the public interest, thus the need for supervision and control. The set Policies ensure that the company’s employees serve the public and not their interests (Philipsen, 2018, 1-3). Thus, most companies ensure the guidelines of their legislators, accountants, and auditors are followed to protect the public and make sure a company has not collapsed. Secondly, the public interest theory assumes that the cost the government uses to regulate is zero. The government’s interest is to protect the rights of consumers and employees, thus no cost is incurred by a business to follow up on the directives.
Unlike the public, private interest theory addresses policies made by interest groups. The decision to transfer Wealth to interest groups may be made because the groups seem more effective than the company doing the shifting. The interest groups examples are unions, firms, regulators, staff and, consumers. Royalty in Kind Program is an example of a company where private interest theory was applicable. Gregory W Smith was sued for involving himself in outside employment that conflicted with his position as a program director in the company. George is accused of receiving gifts from Oil and Gas companies, thus being an advocate of private interest theory.
A business would use its resources in lobbying activities if a top employee was facing termination or resignation due to a case in a court of law. Productive employees need to be protected from a business since their exit could greatly affect the business. If a company is accused of causing some harm to a small group in the community, then it may be closed down. However, the company would survive if the owners influence the government. The government regulations are meant to protect the lives of the public, thus the need to lobby to avoid facing charges in court that would affect the running of a business. From the above discussion, it is evident that economic theories affect the running of a business now and in the future.
Bibliography
Philipsen, Niels J. “The Role of Private Actors in Preventing Work-Related Risks: A law and Economics Perspective.” European Public Law 24, no. 3 (2018).