Academic journal article Journal of Legal, Ethical and Regulatory Issues

The Regulation of Genetically Modified Foods: A Corporate Ethical and Social Responsibility Challenge

Academic journal article Journal of Legal, Ethical and Regulatory Issues

The Regulation of Genetically Modified Foods: A Corporate Ethical and Social Responsibility Challenge

Article excerpt

ABSTRACT

This study reviews some of the major theories regarding the origin of government regulation of business. It then applies these theories to a specific corporate case, the regulation of genetically modified foods, in order to examine how social, political, economic, and business forces combine to shape government and corporate behavior over time. This case illustrates the influence exercised by business on government, the influence of the government on business, and the influence of society, i.e., public opinion, on both. It also shows the effect that bad management decisions can have on even the most effective use of corporate power.

INTRODUCTION

The study focuses on theories regarding the origin of government regulation of business, including conservative, market failure, utilitarian, normative, and corporate power. These theories are then applied to a specific corporate case, the regulation of genetically modified foods, in order to understand how and why this regulation was created. The case supports the contention that business organizations strongly influence the formulation of government regulation of business. However, this case also demonstrates the role of public opinion as a counterweight to business influence over government, when public opinion is focused.

Public opinion is a force that must be taken into consideration by management if an industry is to be successful in the development of new products, especially controversial ones. The issues are made complex because of the variety of interest groups, differing perceptions of risk and reward, and conflicting views regarding the costs and benefits associated with controversial products. Our experience with the evolution of regulation of genetically modified foods has important implications for the development and marketing of new controversial products.

The paper consists of the following research areas: review of theories of regulations, presentation of the relevant regulatory framework of genetically modified foods, conclusion, and recommendations for future research.

THEORIES OF REGULATION

Among the social and legal issues in management, government regulation of business is one of the most controversial. Enforcement of government regulations and compliance by business involve huge costs. There are also questions as to whether regulatory policy is helpful or harmful. In addition to these practical matters, regulation also raises ideological issues, e.g., free markets. Although the public believes in free markets, people also recognize that imperfections of free markets can lead to non-Pareto optimal distributions of resources. The issue then becomes whether the imperfection itself or the regulation designed to correct the imperfection produces the worse result. However, not all disputes over regulation have to do with the effectiveness and efficiency of regulation. Very often involved are different conceptions of the public interest, or the conflicting interests of different groups in society. In many instances, efficiency is consciously sacrificed for the attainment of social goals, such as greater income equality.

There is a surprisingly wide range of explanations of government regulation. For example, government regulation of business is seen by some as persecution of a powerless business community that is incorrectly considered to be hostile to the public interest and is blamed for numerous ills of society. Others, on the opposite side, see government regulation as an effort by an all-powerful alliance of business and politicians to protect the interests of the business community. According to this second perspective, powerful elite controls both government and business, and regulation is enacted at the invitation of, and in the interest of, big business (Kolko, 1967).

According to a third perspective, government regulation is designed to protect the interests of consumers, without regard to the negative effect of such regulation on economic well-being in general or to the well-being of a particular business. …

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