“`html

EXPERT Q&A

Government oversight is essential in achieving a balance between competition and equity in commerce. But how are these determinations reached, and what elements characterize the connection between business and government—particularly during times of increased political pressure and policy fluctuations?

Norm Bishara, professor of business law and ethics at the University of Michigan’s Ross School of Business, elaborates on the intricacies and realities of this connection.

In what ways have public policy and corporate governance influenced business practices?

Historically, corporations emerged as entities created by the monarchy or the state, typically to distribute financial risk and achieve social benefits, such as trade and exploration. In return, these entities owed certain obligations to the state, such as providing value through taxes and services.

It’s no surprise that this dynamic has become increasingly complex as governance and business operations have advanced. Regulation, whether welcomed or not, is still a critical method to uphold various aspects including consumer protection, public health, workplace safety, environmental safeguards, and fair competition, all while facilitating tax collection that sustains the infrastructure and stability of successful economic systems.

Currently, opinions vary on how much regulation is excessive and could potentially hinder business operations, which may also stifle innovation and national security. The relationship between businesses and regulators can oscillate between hostile and collaborative, with each extreme arguably serving a vital function in our commercial and policy landscapes.

How has this relationship evolved over time?

There are cycles in the intensity of regulation and government monitoring, with increased scrutiny typically emerging following crises or public demands. Historical instances include new labor protections initiated in response to the injustices of the Industrial Revolution or antitrust legislations established after significant corporate abuses were exposed in the late 19th century United States.

An ongoing and substantial debate continues regarding the role of businesses within society and their responsibilities beyond mere legal compliance.

This conversation has notably resurged, accompanied by the sensation of policy volatility. A few years back, firms aggressively pursued diversity initiatives. Those efforts have since diminished, facing substantial political resistance and regulatory examination.

Some aspects remain consistent: Businesses still favor predictability in their interactions with policymakers and regulators to facilitate long-term strategic investments. They also strive to be seen as positive societal contributors to enhance their employee recruitment and retention while avoiding adverse publicity. However, the prevailing trend leans towards maintaining a clear distance from contentious social or political matters.

Are there any significant transformations anticipated in the near future?

The initiative to bring manufacturing back to the United States is occurring concurrently with an unparalleled surge in automation and artificial intelligence capabilities, in addition to rising energy consumption demands. This will notably impact the types of work and skills required for employees to remain relevant and successful.

While new, unpredictable jobs will emerge, there will also be social unrest and job dislocation. I am particularly interested in how this evolving landscape of work will unfold for employees, and the collaborative efforts that companies and governments can undertake to facilitate this transition, ensuring a balance between business interests and innovation, as well as equity for workers.

What significance do public-private partnerships hold in addressing present-day business and public policy challenges?

There is a general consensus that the government ought to enhance its efficiency by learning from the private sector. However, there is a growing recognition that governmental objectives cannot always be measured by business efficiency standards. For example, I ponder whether the majority of Americans will support the privatization of the U.S. Postal Service or reductions in government healthcare when they personally encounter these transformations.

What importance does transparency have in fostering trust between businesses and local or federal governments?

Transparency is essential for effective governance and decision-making, yet it is merely the starting point. The substantial pressure experienced by government employees and agencies currently does not alter the fact that identifying policy issues and their optimal solutions takes time, rather than hastily implementing changes that could yield unforeseen negative consequences.

Such alterations could adversely impact individuals and create chaos that is difficult to reverse. Businesses can insist that bureaucracy remains impartial and generates credible data. For example, companies rely on unbiased research from institutions such as the Bureau of Labor Statistics and the Congressional Budget Office.

As the faculty director of the Carson Scholars program, what critical insights do students gain from engaging with policymakers and business leaders?

For nearly two decades, the program has aimed to educate students on navigating the public policy landscape. A profound understanding of the system and the mechanisms at businesses allows them to engage effectively and secure a competitive advantage.

Conversely, if businesses choose not to engage, they risk being subjected to detrimental policies. This insight is integral to the program’s framework, originally designed by Ross School of Business alumnus David Carson and founding faculty director George Siedel. It focuses on comprehending sound policy without getting entangled in the pressures of the political moment.

Students leave with a realistic understanding of how business and government can cooperate—and where they often fall short—in achieving both business and societal goals. They gain in-depth knowledge on campus and observe governmental functions by closely engaging with policymakers, including lawmakers, regulators, lobbyists, think tank specialists, and various policy advocates.

The program will evolve over the coming years to adapt to funding alterations, but the fundamental experience of immersion in D.C. must continue.

Written by JT Godfrey, Ross School of Business

“`