It is not an overstatement to say that government and business are partners. One cannot be divorced from the other. In other words, there is no way individuals or group of people would discuss about business without making reference to government and vice versa. However, for all businesses the government is a partner- sometimes silent and sometimes quite vocal.
Furthermore, for most businesses, government is one of the greatest influences on activity, and often it is the determining influence on many aspects of the operations of a firm or company in the area of growth, pricing, production, competition, wages, profits and investment.
The roles of both government and business are complementary to one another, in both domestic and international business, government plays major roles. On the other hand, business is involved in the economic growth of A nation and the world as a whole.
Sources of Government Action Toward Business
What is government? According to the Scribner Bantan English Dictionary, (1990), government is the “(1) established system of administering state affairs; (2) persons entrusted with the administration of the affairs of a state, a prime minister and his cabinet; (3) act of governing: (4) guidance, control or regulation, as conduct or household affairs”. To sum up, we are all government-individuals or groups.
Steiner, (1973) stressed that, “there is no such thing as a monolithic government unilaterally exercising power over business enterprises,…” At any one time, the impact of government on business derives from an accumulation of laws applied by individuals in the executive branches of governments or tested in courts of law.
These laws and their implementation are in turn, based upon legal programmes. Some of the economic powers granted the government include:
1. Levy and collection of taxes.
2. To regulate commerce.
3. To issue money and to regulate its value.
4. To establish post offices
5. To promote science and useful arts by granting patents and
6. To punish piracies, etc.
All these laws are made by the representatives of the people in both the senate and house of representative-referred to as national assembly. These laws affect all businesses one way or the other from promotion to control.
The constitutional machinery ensures that decisions by the government are determined popularly rather than autocratically. This machinery is designed to ensure that interests of individuals and groups in society can be focused on government so that governmental policies are determined in the interests of the governed, e.g., the procedure for electing representatives, the rights of individuals and groups to petition the legislature, the machinery for legislative action, the organisation of courts of law and provisions for amending the constitution.
The more important powers exercised by government over business enterprises concern powers to incorporate businesses, power to levy and collect taxes, police power, etc. The power to tax has been used not only to raise revenue, but to regulate and promote business.
The police powers embrace a variety of activities concerning the health, safety, welfare, and morale of people. Such powers enable government to prevent fraud, ensure adequate service at reasonable rates, protect employees from employers exploitation, maintain competition of commodities, establish standards for processing food and drugs, establish standards for safety in mines and factories and in many other ways to regulate and promote business.
There is today practically no aspect of business that the government cannot regulate if the occasion to do so and popular or legislative support exists, The criticisms of business are mounting daily.
These are not generally criticisms but concern specific business activities such as product safety, product labelling, advertising honesty, pollution and workers safely. The government has responded to these criticisms with specific legislation constraining business. This trends however is going up and not down.
On the other hand, government has been supportive of business. Trade negotiations between government and foreign countries seek to benefit export businesses, e.g., export processing zone (EPZ). In conclusion, power of government over business is being used more frequently to achieve the purposes of groups critical of business.
Roles of Business in Economic Growth
The roles of business in economic growth of any nation should not be undermined. The extent to which business is responsible for economic growth could be measured through the contributions of-business to the expansion of Gross National Products (GNP).
The GNP could increase only when there is improvements in technology and organisation of production, and also improvements in the quality of Labour force due to education and expansion in the quantity of capital available.
Business organisation is responsible for developing structures to improve productivity of workers, and business could device a means of raising capital needed to improve worker productivity.
In complementing business efforts, government would be involved in the area of educating workers by developing financial institutions through which capital could be provided and promote economic conditions that helped to expand markets, which in turn increased the demand for business products.
Business as Major Employers
All businesses (small medium and large) are major employers. The workforce of oil producing companies such as Mobil Oil. Shell Petroleum, Agip, Chevron, etc and other companies such as United Africa company (UAC, PLC), Leventis Group of Companies, etc. is more than the work force of Federal, State and Local Governments put together. As major employers, business has helped a great dealing job creation and thus, improved the economic growth of the nation.
The Roles of Government Business
The role of government in business is not limited to general influence of economic and -fiscal policy and the use of overt and covert pressures to achieve its socio-economic and political goals.
Some of the governments roles in business include the following
1. Government Prescribes Rules of the game: Government prescribes rules of business behaviour governing important business relationships within which individuals are comparatively free to act in conformity with their self-interests.
Typical rules of the game are those concerning competitive behaviour, labour-management relations, the sale of securities, advertising, business incorporations etc. The regulations vary in the extent to which they restrain an individual businessman, but they serve to establish the “rules for playing the game.”
2. Government is a Major Purchaser of the Output of Business: According to Oyedijo (1998), “the government is a substantial and in some cases the largest consumer of the products and services of many companies”. Government purchases range from stationaries to vehicles and equipment, etc.
3. The government uses its contracting power to get business to do things the government wants: This is the case of “no compliance, no contract”. For example businesses that want government contracts must comply with the government regulations guiding the contracts by producing its tax clearance certificate before any contract could be awarded.
4. Government is a Major promoter and subsidiser of Business: Government engages in a complex and powerful network of programmes to aid business Promotion ranges from tariff protections to loans, guarantees of loans, maintenance of levels of economic activity, and direct subsidies, e.g., fertilizer to farmers.
5. Government is a financier of Business: There is no limit to the extent to which government at any level can guarantee loans. The government make loans to small businesses and provides incentives for larger businesses.
For example, government in believing that a dynamic and growing small business enterprises can contribute significantly to the implementation of wide ranging development objectives has pursued several policy measures each of which has become A major source of credit to small business enterprises. These include:
a. Issuing of monetary and credit guidelines by Central Bank of Nigeria (CBN)
b. The establishment of institutional credit granting organisations,
c. The setting up of special schemes in support of small business enterprises (SBES).
d. The introduction of Second-Tier Securities market to stock exchange as small business enterprises raise funds.
e. Introduction of National Directorate of Employment (NDE) to train and grant loans for trained small businessmen and women.
f. Establishment of financial institutions such as Peoples Bank, Nigerian Industrial Development Bank (NIDB), Nigerian Bank for Commerce and industry (NBCI), Nigerian Agriculture and Cooperative Bank (NACB), Cooperative Banks Community Banks and Finance. Houses, are encouraged by government to assist in financing business.
6. Government is the protector of various interests in society against business exploitation: These are many laws protecting the interests of investors, customers, employees and the competitors. of a business.
7. Government encourages investment tax relief granted businesses and reductions in tariff: Some of the state governments in their efforts to woo investors to the states offer free lands and other mouth watering incentives to investors.
Conclusion
As a result of forces pressing government to act in business life, including business itself, there exists today an intimate partnership relationship between government and business. This did not develop on the basis of any particular set of ideologies or distributions of power between the two; rather it has resulted from a pragmatic response to problems periodically confronting the society.
The partnership has been flexible in developing new patterns to meet problems. It has sought to allocate responsibility to business, and government according to the areas where each, respectively has the greatest comparative advantage, but it has not failed to grant authority to each to operate in the other’s historical province when circumstances seemed to warrant.
Government and business do display distinct characteristic. For example, businesses are still considered to be predominantly profit seeking economic institutions whose decisions are made on the basis of more or less authoritarian administrative rules.
However, government on the other hand, is predominantly a political institution where decisions are forged on the anvil of democratic polities. One remarkable feature of the partnership is not how much government actually interferes in and influences business, but how much business is free of government intervention.
Many of the activity in the private sector does, indeed, take place without direct governmental interference. Both governments and business seek to pursue certain broad goals society sees for them and each is given powers to achieve these goals.
However, in the process of pursuing these goals conflicts as well as complementary actions may arise. These conflicts and complementary actions have to be balanced in such a way that success would be achieved, and without either government or business overpowering each other.
Unbalance from whatever source and in the direction of either government or business, is likely to create more rather than less government influence in economic affairs. Too much powers in the hands of business, as compared with government, can lead to less concern about the production of social goods and services, less concern about the social costs of progress and increasing devotion to those selfish interests of business that maybe in conflict with general social interests.
Eventually, a popular reaction is likely to lead to greater government controls in the public interest. It is however possible that business domination of government can lead to authoritarian government which eventually dominates business.
On the other hand, too great and misguided government control of business can weaken the ability of businessmen to operate effectively in achieving the objectives society sets for business.
Too rapid expansion of government regulations for instance, can impair the ability of industry to achieve and maintain high levels of economic activity and to increase output per unit of input. If this happens, new pressures for further government action to remedy the situation can arise.
For this reason, it is necessary for power relationships between governments and business to be reasonably balanced. To maintain the balance each should concentrate on what it could be performed efficiently.
For instance, government is the superior institution to express common social goals, to establish policies over a wide range of activities- (foreign affairs and national security), and to tax for social purposes.
On the other hand, government has grave deficiencies as compared with other institutions in performing certain functions. Because of this deficiencies, it would be necessary to assign to governments and businesses the production of those goods, and services which clearly are their responsibility and which each can produce at lowest cost.