Strategic Management: Formulation and Implementation

Government Role And Influence On Business And Society

The role of government in business and social actions today is broad in scope. George Steiner has compiled a list of varied roles the federal government plays in its relationships with business and the public.


  1. Prescribes the rules of the game for business
  2. Is a major purchaser of business' products and services
  3. Uses its contracting power to get business to do things it wants
  4. Is a major promoter and subsidizer of business
  5. Is the owner of vast quantities of productive equipment and wealth
  6. Is the architect of economic growth
  7. Is a financer of business
  8. Is the protector of various interests in society against business exploitation
  9. Directly manages large areas of private business
  10. Is the repository of the social conscience and redistributes resources to meet social objectives.

With the growth and expansion of towns and cities the local government and state governments have generated a proliferation of new rules, laws, and regulations of their own. All of this must be taken into consideration when choosing a plant or business location.

When a business moves across international boundaries, the cultural, educational, economic, political, legal, ethical and moral, and social differences are compounded manyfold.

The expansion of multinational corporations into foreign countries is not always an easy. Multinational companies have sometimes some difficulties in managing their enterprises and corporate social performance. Moreover, if the host country attitude is or becomes hostile, such as was the case in Lebanon, the corporation can lose part or all its investments in that country.

Businesses' Role and Influence on the Government. Business influences the government primarily through lobbying groups, political action committees, political power, and public relations.

* Lobbying Groups. Business and trade associations became more sophisticated and active in presenting their ideas and views at the federal, state, and local levels of government. Companies can either support existing groups or hire, form, and support their own people to form a lobbying group for a specific cause. It is then the responsibility of these lobbying groups to contact all involved lawmakers and their staff members who draft the legislation to make certain that they are fully aware of businesses' view on the subject. Letter writing to legislators is also an important aspect of lobbying.

* Political Action Committees. Business is heavily involved in both the electoral and governmental process. For example, in the United States, an amendment to the Federal Election Campaign Act (1974) made it legal for companies to set up political action committees. Political action committees are permitted to solicited funds from employees and stockholders and make contributions to political candidates.

However, the managers of the corporation who must take responsibility to fulfil their duties to their stockholders and to the public at large by extending themselves further by making more personal contact among employees, business management, the academic community, and political groups. This in turn will permit corporate leaders to become influential in political affairs to an extent never before realized.

* Negotiations and Court Actions. Two other mechanisms available to business in its attempt top obtain more favorable conditions for its problems or cause is through negotiations or court action.