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Regulatory Entrepreneurship, Fair Competition, and Obeying the Law

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  • Robert C. Hughes

    (University of Pennsylvania)

Abstract

Some sharing economy firms have adopted a strategy of “regulatory entrepreneurship,” openly violating regulations with the aim of rendering them dead letters. This article argues that in a democracy, regulatory entrepreneurship is a presumptively unethical business strategy. In all but the most corrupt political environments, businesses that seek to change their regulatory environment should do so through the democratic political process, and they should do so without using illegal business practices to build a political constituency. To show this, the article defends a qualified moral obligation for businesspeople to obey the law even in societies that fall short of ideal democracy and that are rife with economic injustice. Owners and managers of successful businesses have strong moral reasons to obey laws concerning resource allocation. Such laws include not only property law, but also tax laws, environmental regulations, and other laws that regulate businesses in competitive markets. The moral reasons to obey such laws apply even to laws that business leaders think unfair or inefficient, provided that the laws in question have reasonable, good faith defenders.

Suggested Citation

  • Robert C. Hughes, 2022. "Regulatory Entrepreneurship, Fair Competition, and Obeying the Law," Journal of Business Ethics, Springer, vol. 181(1), pages 249-261, November.
    • Handle: RePEc:kap:jbuset:v:181:y:2022:i:1:d:10.1007_s10551-021-04932-y
    DOI: 10.1007/s10551-021-04932-y
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    References listed on IDEAS

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    1. Franco, Sofia F. & Santos, Carlos Daniel, 2021. "The impact of Airbnb on residential property values and rents: Evidence from Portugal," Regional Science and Urban Economics, Elsevier, vol. 88(C).
    2. Carson Young, 2019. "Putting the Law in Its Place: Business Ethics and the Assumption that Illegal Implies Unethical," Journal of Business Ethics, Springer, vol. 160(1), pages 35-51, November.
    3. Hansrudi Lenz, 2020. "Aggressive Tax Avoidance by Managers of Multinational Companies as a Violation of Their Moral Duty to Obey the Law: A Kantian Rationale," Journal of Business Ethics, Springer, vol. 165(4), pages 681-697, September.
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