Government Regulations for Small Firms - Essay Example

Government Regulations for Small Firms The goal of this paper is to make an assessment of the role government regulations play for the small firms. In the modern business world this question is very relevant and worth- discussing. In this paper, the main question to answer is whether government regulations of small firms are “much ado about nothing” or serve an effective instrument of managing small firms’ activities. Very often small business is positioned as small fish in the ocean, where only strong sharks can survive due to strict conditions, rapidly changing environment and high competition. On the other hand, in the modern globalized world being an owner of a small business warrants the need to have a strong position to withstand the challenges and hardships in case business owners’ rights are not protected. Government protection is cited as one of the major prerequisites for achieving success and profitability in small business (Walker & Brown, 2004). Simultaneously, small firms are obliged to comply with the \ laws and rules developed by governments to assist economies and citizens (The Impact of Regulation, 2006). Unfortunately, even with the presence of sophisticated small business policies, the interests of small firms tend to be neglected; this is particularly the case of economies in transition (Frye & Shleifer, 1997). However, to understand whether or not government regulations benefit small businesses, the concept of regulation has to be understood. Regulation plays a crucial role within the market. Very often this role is diminished. There is a need to promote regulation in order to advance relations within the market and develop the market economy in general. Regulation should not be positioned as a restriction imposed on the performance of the small firms. On the contrary, regulations have the potential to positively affect small business performance. More often than not, firms claim government regulations to be an important impediment to small business growth (Tozzi, 2011). However, most of these claims are too general to be valid. Only 36 percent of small firm owners have been successful in identifying the factor that impedes their development, whereas the rest tend to blame governments just because they impose their rules on games on businesses (Tozzi, 2011). There is an interesting counter-balance between the universal values of the society/economy and the specific interests of the small firms. Should law support and reflect different operating or performance conditions of small firms? For example, salary regulation is perceived in a different manner by the UK firms (Urwin et al., 2008). Some of them accept it readily and in an open manner. Others argue against it. Nowadays after the equal pay act enactment in 1970, women’s work is paid less in any case (Urwin et al., 2008). However, regulation touches different tools and instruments and concerns different aspects, such as social, legal or economic control. With regards to regulation it should be noted that it is directed on safe workplace guarantee, working conditions improvement, safety of jobs, products and environment. Concerning the heterogeneity of small firms, it is clear that the benefits of government regulations are perceived in a different manner as well. The way influence is exerted on and the way regulation is reflected as a means ruling the society’s behaviour should be considered from the perspective of the modern globalized context (Kaufman, 1997). In other words, government regulations should take into account interests of the small firms and at the same time enable these companies to represent social, legal and economic control (Kaufman, 1997). The important factor is to focus on the expansion and a constant growth of small business. Otherwise they will increase their entrepreneurial income and there will be no growth or promotion. Very often small firms are much concerned about the reduction of control. In case there is an option to decrease the levels of regulation, it is possible for the small businesses to correct their activities, which are beyond the government control. Objectively, it is relevant if the government underlines the important role of small business firms. Government regulations are represented from the wider perspective. Therefore, all markets represent different regulations and avoid being restricted by “right or wrong actions”. Regulation is an integrative part of the government environment of the country we are living in. It requires high costs to develop a new business and in case a new reform of taxation is imposed on the small firms, it does not mean at all that the economy of that country is constrained. There are many challenges for the UK firms and it is clear that regulation should be directed not on the restriction of the small firms’ operation, but on the advancement of operation of the small firms (Urwin et al., 2008). Therefore, there is no need to consider government regulations in black or white color. It is much better to focus on the integrative and a constant nature of government regulations. There is no doubt that the government exerts disproportional influence on small businesses. Very often it is argued by the owners of small business, that in the organizations with 20 employees, there are higher unit costs than for businesses, where 500 employees are operating. The nature of regulatory impact differs to the greatest extent and it is better to make this influence equal with respect to the nature, operating performance and the nature of the small firms. Conclusion Regulatory burden can be regulatory tool facilitating the process of small firm’s performance. Moreover, small businesses are focused on the development of their own benefits, but it is more relevant to focus on the options of expansion than options of enrichment. We have a chance to change the vision about the government regulation on small firms, because an integrative nature of regulation is present in any sphere of human activity. Otherwise our doings will look like movement of molecules. Regulation is a vector for human activities. It can be said that regulations of small businesses is an option to redirect enrichment strategies into expansion strategies of small firms that are very important in the modern globalized context. References Anonymous 2006, The Impact of Regulation on Small Business Performance: Understanding and Capturing the Direct and Indirect Effects of Regulation, DTI/BRE Conference on the Evaluation of Regulation. Frye, T & Shleifer, A 1997, ‘The invisible hand and the grabbing hand’, The American Economic Review, vol.87, no.2, pp.354-358. Kaufman, BE 1997, Government regulation of the employment relationship, Cornell University Press. Tozzi, J 2011, ‘Regulatory thicket: Barrier to small business, or political bogeyman?’, Business Week, [online], http://www.businessweek.com/smallbiz/running_small_business/archives/2011/11/regulatory_thicket_barrier_to_small_business_or_political_bogeyman.html Urwin, P, Karuk, V, Buscha, F & Siara, B 2008, Small businesses in the UK: New perspectives on evidence and policy, University of Westminster. Walker, E & Brown, A 2004, ‘What success factors are important to small business owners?’, International Small Business Journal, vol.22, pp.577-594. Read More