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Points of discussion

Discuss about the Theories of Public Organization Process.

The author Cecil Pigou first developed public interest theory and the regulation was supplied with respect to the public demand for the rectification of inefficient market practices. The concept of public interest and regulation theory are complex terms and cannot be defined in simple words. The main problem in defining the term public interest originates from the factor that various facets are there related to public interest. One of the key factors related to the public interest is the political factor. It has been determined that regulators make decisions regarding public interest to fulfil their self-interest rather than fulfilling the broader interest of public. The term self interest is generally connected with the requirement of strengthening their political support and gain which can be attained through achieving resources from interest group whose interest are influenced by the regulator’s decisions. Public interest theory explains that the regulation demands for benefit and protection from the public at large extend. The theory presumes that the markets are delicate and are expected to operate ineffectively, if not corrected. Regulators are expected to do good to the society rather than any individual interest. However, the regulators are not efficient and private players to forbid the entrance of competitors in the market manipulate them.

The concept of public interest was a classical form of diplomat democracy and the government’s responsibility related to the theory is considered as an important part. Base on the mindset of a particular person, it can be treated as practical or non-practical. Initially the positive theory or the economic theory was introduced in the year 1971. However, it was expanded through regulation theory on a later date. As the interest theory is considered as a positive theory, it supposes that the politicians maximises the utility (Sanday 2014). Though the term usefulness was not explained in a clear view anywhere, it can be assumed as attain political power. To achieve this factors, the regulators are required to form votes, wealth and resources from the people who avail the favour from the regulators or politicians. Thus, the regulators use the money and wealth of these people and pocket the money for future use. These favours may be in various forms like price fixing, money subvention and restriction on new entrance (Harker, Mahar and Wilkes 2016).

Public interest theory generally differs with the public choice theory in the way that the theory is more sceptical about the government motives and behaviour and considers the market as socially inefficient (Ehrenberg and Smith 2016). Assessment of regulations is mainly evaluated with regard to the people who were evolved in regulation and execution of their own target. Public choice theory are based on the politicians behaviour who are actively involved in forming regulation. Politicians are more likely to execute only those strategies, which will lead them towards fulfilling their target and will ensure their re-election (Frederickson et al. 2015).

Regulation strategies

Self-regulation: Normally it is enforced with regard to the organization or professional committees. These associations form rules and regulations to impose against the members of the organization. These rules were really seemed hard to maintain for the accounting professional. Therefore, they developed the accounting standards followed by the generally accepted principles of accounting to fight against the accounting practices controlled by the government. However, few peoples are there who are not influenced by the efficacy of self-regulation as they think that the powers of imposing the regulations against their own members are not acceptable (Vohs and Baumeister 2016). Moreover, there are questions about transparency, acceptability, openness and accountability about the procedure. In addition, the regulations and rules formed by self-regulators are not easy to be proven to have been disregarded as the rules are self-serving. Criticism of these types has been raised against various accounting principles and standards. For example, inventory valuation has been questioned in various levels as it needs supposition about the flow of inventory, which directed to various techniques for managing the inventory (Smith and Larimer 2016).

Regulation based on incentives: Although it is very usual to think that taxes are charged as a measure of penalty for discouraging few activities, it may be utilized in a positive manner. For example, Australian companies were allowed tax incentives with a condition of purchasing plant, equipment items or spending towards training of apprentices or expenditure for developing and research of any product that are used in local market or globally. The advantages of a strategy like this are that the enforcement of regulation become easier, however, at the same time it is not easy to predict the efficacies of the incentive plan (Bebbington, Unerman and O'Dwyer 2014).

Control and command: Under this strategy, the regulators are very clear about the acceptable and not acceptable activities. Severe penalties are imposed strictly on the activities, which are not acceptable. For example, strict penalties are imposed on the business, which does not comply with the regulations related to safety (Dunleavy 2014). Key issues with the strategies of regulations are:

  • It is very difficult to determine the suitable standard
  • The strategy generally leads to over strict, inelastic and abundance of regulations
  • As the regulators and regulated society has a close connection, it leads to detaining the regulations. For example, in the initial development stage of Australian Accounting Standards Review Board the same situation took place.
  • Issues related to enforcement of regulations also exist

In a situation like this, the standards must be balanced for the anti-competitive and potential behaviour that is, persisting on uniform standard.

Disclosure regulation: Promoters for the regulation disclosure are not convinced about the regulation theory. Normally it refers to the need of the details about the item such as production of the item; environment-friendly compatibility of the product and the specification of the product. Although the requirement of financial data is not the usual connotation, the critics may also demand for the information related to finance (Hopper 2013).

Issues with regulation strategies

Interest group theories: This theory is the broader part of public interest theory. Regulation is linked between various groups and the promoters differ the two theories based on the factor that they have strong faith that the regulations are formed for self-interest rather than implementing for public interest (Culhane 2013). On the contrary, the corporatists stressed on the extent to which, the successful assembly agrees to enter in partnership under the regulatory regime of excluding the non-participating associations.

Economic theory: This strategy complies with the choice theory that strains on the limit to which the behaviour of the government is analysed and the regulation that are initiated for maximising their own welfare. Evaluation leads to the competitive preference of the individual and target of their individual goals. Subsequently, the personal interests are served rather than the public interest. Economic and political theories are coincide with the public choice theory. It depends on the neo-classical assumption for rational choices to determine the characteristics of the politicians (Keynes 2016). Normative and positive theories for regulation must be considered as complementary and should not be considered as mutually exclusive. However, it does not include the definition of regulation framework.

Institutional theories: This term emerges from a broad variation of disciplines with a broad range of social and political predictions. However, no theory believes in automatic regulation of theories. One feature of institutional theory is the socio-legal literature theory. Institutional theories with context of political science have focussed on the political institutions, structures, and procedures. Various theorists are there who do not believe on this theory and raise a conflict among the public interest and private interest. Moreover, they concentrate on the interrelationship among the private and public interests and ever-changing characteristics of these relations (Denhardt and Catlaw 2014).

It is very crucial to have clear idea about the various strategies of regulation. In the past years, the discussions about regulation always stressed on the public and private interest with regard to the standards of accounting. However, the regulation concept is far wider than the  set standard and its effect on the organisation of profession, their operating system and expectation from them. Moreover, the effect of dominant ideologies and power that play an important role are also considered. The appropriate choice for forming the regulation strategies will evade the arguments over the requirement of regulation (Anderson 2014). 

The biggest oil spill in the US history taken place in the Mexico gulf that is known as the BP oil spil or Mexico oil spill or Mexico oil spill. It took place due to an explosion in the deep water platform, which is 50 miles away of River Mississippi (Sammarco et al. 2013).

Theories under the umbrella of public interest

Various lawsuits have been filed against the explosion and the numbers are still increasing. Lawsuits had been filed in state as well as federal courts. People faced economic harms from the spill of oil and demanded for compensation through applying in claim facility of Gulf coast. There are two expected claims against the case that are: long-term settlement and emergency payments. People who claimed for emergency payments were also able to file additional suits for additional losses. However, if the claimant filed for long-term settlement, they cannot file any further suit against BP (Burggren et al. 2015). Some lawsuits are mentioned below that were filed by the claimants:

  • Injuries/deaths from the explosion
  • General object on legal issues and lawsuits
  • Livelihood
  • Health of residents
  • Health of the workers appointed for clean up
  • Health of the residents
  • Consolidated proceedings

Various lawsuits forced the company to pay a significant compensation to resolve the problem. If the company wants to maintain their good image and create positive feelings in the minds of the injured or the sufferer, it will be a good decision to fulfil their demand through paying the amount. Moreover, it will create feelings in the mind of the people that the company is socially responsible and that view will assist the company in gaining the faith of the people and carrying out their business in future. The only limitation about this decision is that with consideration to the company’s current situation, it will be costly and can lead the company in uncomfortable position (Michel et al. 2013).

BP and other involved organizations did not perform their duties in responsible manner and just escaped their duties stating the case as an accident. This statement leads a unsatisfactory feelings among the people. However, the company can regain their position through the following:

  • Responding appropriately to eradicate the adverse effect of spill on the environment for the tourists as well as the company itself
  • Treating the injured people through providing all the necessary facilities and offering them for future prospects

Conclusion:

From the above, it is concluded that, BP offered support for various organizations and conducted various programmes, they also supported various initiatives for education, training and donated huge amount to NGOs. However, if the company wants to be accounted for the clean-up processes, they must promise for full recovery. The time extent for which the area will be affected due to the after-effects of the oil spill, the company will be responsible to solve the issues.  BP took long time to execute the pan to get success and it caused unaccountable wastage of time that proved to be harmful for the gulf coast.

The points that could be analysed from the case are that BP simply ignored their role for crisis management and they could not prepare their shareholders for the disaster before the accident and even after the happening of the accident. To overcome any big disaster, the company must communicate with their key shareholders to generate strong trust and credibility. However, the company also lacked in this prospect;

References:

Anderson, J.E., 2014. Public policymaking. Cengage Learning.

Bebbington, J., Unerman, J. and O'Dwyer, B., 2014. Sustainability accounting and accountability. Routledge.

Burggren, W., Dubansky, B., Roberts, A. and Alloy, M., 2015. Deepwater horizon oil spill as a case study for interdisciplinary cooperation within developmental biology, environmental sciences and physiology. World Journal of Engineering and Technology, 3(04), p.7.

Culhane, P.J., 2013. Public lands politics: Interest group influence on the Forest Service and the Bureau of Land Management. Routledge.

Denhardt, R.B. and Catlaw, T.J., 2014. Theories of public organization. Cengage learning.

Dunleavy, P., 2014. Democracy, bureaucracy and public choice: economic approaches in political science. Routledge.

Ehrenberg, R.G. and Smith, R.S., 2016. Modern labor economics: Theory and public policy. Routledge.

Frederickson, H.G., Smith, K.B., Larimer, C.W. and Licari, M., 2015. The public administration theory primer. Westview Press.

Harker, R., Mahar, C. and Wilkes, C. eds., 2016. An introduction to the work of Pierre Bourdieu: The practice of theory. Springer.

Hopper, T., 2013. Making accounting degrees fit for a university. Critical Perspectives on Accounting, 24(2), pp.127-135.

Keynes, J.M., 2016. General theory of employment, interest and money. Atlantic Publishers & Dist.

Michel, J., Owens, E.H., Zengel, S., Graham, A., Nixon, Z., Allard, T., Holton, W., Reimer, P.D., Lamarche, A., White, M. and Rutherford, N., 2013. Extent and degree of shoreline oiling: Deepwater Horizon oil spill, Gulf of Mexico, USA. PloS one, 8(6), p.e65087.

Sammarco, P.W., Kolian, S.R., Warby, R.A., Bouldin, J.L., Subra, W.A. and Porter, S.A., 2013. Distribution and concentrations of petroleum hydrocarbons associated with the BP/Deepwater Horizon Oil Spill, Gulf of Mexico. Marine pollution bulletin, 73(1), pp.129-143.

Sanday, P.R. ed., 2014. Anthropology and the public interest: Fieldwork and theory. Academic Press.

Smith, K.B. and Larimer, C.W., 2016. The public policy theory primer. Westview Press.

Vohs, K.D. and Baumeister, R.F., 2016. Handbook of self-regulation: Research, theory, and applications. Guilford Publications.

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