Legal Environment of Business, Research Paper Example


Due to the many changes occurring in the field of business, employment and labor law have also reflected these changes in several companies, especially those with domestic and international growth potential (SKS, 2013). In particular, the analysis of the legal changes on an expanding business with interests in international markets will be discussed and analyzed herein, along with research pertaining to whether such changes are positive or negative influences.

Employment and labor law have continued to be a major influence in the world of business. It often liaises between employees, employers and unions. The main changes relate to the employment standards, including legislative, regulatory and judicial changes. Interestingly, the rights of many workers have increased due to the changes in the employment and labor laws, which cover wages, health and safety, as well as employee-employer contract agreements.

For companies expanding their domestic market into international markets, it is important to note that such changes differ from country to country. As each country’s government oversees the implementation of a different set of employment and labor laws, it also implies that these differences influence the way in which business is conducted. For example, most Asian businesses operate in an environment where employees have longer working hours, average wages are significantly lower, and unions have limited influence – in comparison to the American environment. Private firms are more likely to succeed in the private practice and implementation of employment and labor law, however, in comparison to public firms (Silverstein and Hohler, 2010).

Operating in an unrestrictive international legal environment has both its advantages and disadvantages. Firstly, it can be a positive influence if the company seeks to reward its employees on a higher level than in its domestic market. As such, the company will be able to increase its worker base more rapidly in this case; as this can take the form of monetary and non-monetary compensation.

Secondly, health and safety is often prioritized in Asian countries as of paramount importance, especially in environments which are fast-paced and operate in emerging markets. This can be invested into by companies seeking to expand into such markets. Thirdly, the employees in international markets often do not feel the need to request pay rises or promotions, if they are satisfied with their work progress and status. This shows that more money can be saved and reinvested back into the growing business.

However, there are a few negative aspects of the differences between legal environments, in relation to employment and labor law implementation in international markets. Bribes and non-facilitating payments are a major problem in Asian markets, and are quite commonplace exchanges in business transactions. Nevertheless, the same rule of ethics and standards of moral conduct abided by in American or domestic markets should not change when investing into an international market for the simple reason that they are in breach of employment and labor laws.

Expanding the business using Asian business partnerships, however, are in accordance with employment and labor laws, and should be utilized when entering into such international markets. Furthermore, using such business models helps spur innovation (Tennis and Schwab, 2012). This is an area that will be discussed further below. Such cultural factors need to be understood before investing or expanding into international markets.

In a changing legal environment, it is critical to note the cultural preferences when dealing with the opening of a new international branch. These changes also impact the employment and labor law influences, and vice versa. For instance, it is expected that employees work longer hours in Asian markets, as aforementioned.

However, those who work regular hours and leave and arrive on time are seen as disloyal employees. As such, if employers engage in regular practices, in terms of hours at the office, other employees will not see the workplace as a favorable working environment. This could even lead to legal complaints from customers, clients and employees who witness such business practices first-hand.

It is also important to distinguish between cultural practices inside and outside of the workplace. It is quite easy to confuse the two when operating out of an international location; but it is crucial to know the difference. The employer-employee relationship should generally stay within the confines of the workplace, and any gifts or offers outside of the company location, especially after hours, should not be entertained.

This also allows the employment and labor law implementation to pertain to the employer-employee relationship well. Such impacts on the cultural relationship with the influence of the employment and labor laws should be noted when entering a foreign country (Gregory, 2012).

Financially speaking, regulation has changed due to many changes in the business world, particularly as a result of the economic situation in the United States. As a result, other countries have also been impacted and have found that employment and labor laws will have to reflect these recent changes. Research shows that a paradigm shift has occurred in relation to the recent global financial crisis (Beardsley, Enriquez, and Nuttall, 2009). As such, the relationship between the employer-employee has taken its toll, as more legislation has led to distancing between the two. It is no longer relevant that the employee can be correct, but rather that the employer is restored to his position of power and influence over the employee.

Therefore, the employment and labor law influence is generally a positive influence when expanding the business from a domestic to international presence; however, there are certain cultural and international factors that need to be taken into account when operating there. These differences do not necessarily hinder the hierarchy that is an inherent influence in Asian markets, but rather can be avoided by using American or Western principles, in the traditional sense.

By doing so, companies are better positioned to thrive in a different market than the home country, especially in relation to other international firms. In addition, the general norms of ethics and moral standards should not change, even though the environment, in terms of its legal aspects, does.


In summary, the changes due to the financial and economic times have had its impacts on the business market. Nevertheless, the legal environment is still undergoing its changes, especially in relation to the employment and labor laws, both domestically and internationally. Though generally a positive influence, there are still cultural and inherent differences when operating in a foreign country. However, it can be seen that the major changes in relation to wages, health and safety, and employer-employee contracts can be utilized to the advantage of firms who reinvest back into the company on a domestic and international scale.


Beardsley, S. C., Enriquez, L., and Nuttall, R. (2009). Managing Regulation in a New Era. The McKinsey Quarterly, 1(2), 90-97.

Gregory, N. (2012). The Impact of Cultural Factors on Learning Style Preferences: a Global Comparison between Japan, Australia and Belgium. Asian Review of Accounting, 19(3), 243-265.

SKS 7000. (2013). Executive Concepts in Business Strategy. New York: Pearson.

Silverstein, D. and Hohler, D. (2010). A Rule-of-Law Metric for Quantifying and Assessing the Changing Legal Environment of Business. American Business Law Journal, 47(4), 795-853.

Tennis, R. S. and Schwab, A. (2012). Business Model Innovation and Antitrust Law, Yale Journal on Regu­lation, 29(2), 307–51.