Sadick John (Coventry Dissertation)

THE POWER OF REGULATORY INERVENTION AND ENFORCEMENT IN BUSINESS PERFORMANCE A CASE STUDY OF EAST AFRICAN COMMUNITY (EAC)
By: John Sadick October 2012
The work contained within this document has been submitted by the student in partial fulfillment of the requirement of their course and award
The power of regulatory intervention and enforcement in business performance.
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THE POWER OF REGULATORY INTERVENYION AND ENFORCEMENT IN BUSINESS PERFORMANCE

A CASE OF EAST AFRICAN COMMUNITY (EAC)
Author : Student ID: Course Title: Module: Date:
John Sadick 4273444 MSC (Finance and Investment) M99EFA 31st October 2012
A Dissertation Submitted in Partial Fulfillment of the Requirements for the Degree of Masters of Science of Finance and Investment of Coventry University
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Certification I, the undersigned certify that I have read and hereby recommend for acceptance by Coventry University the dissertation entitled The power of regulatory intervention and enforcement in business performance: Coventry University. A Case study of East African Community in fulfillment of the requirements for the degree of Masters of Science in Finance and Investments (MSC.FI) of
................................................................................ Mr.Papias Njaala (Supervisor)
Date
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Declaration And Copyright I, John Sadick. declare that this dissertation is my own original work and that it has not been presented and will not be presented to any university for similar or any other degree award.
Signature Date..
Copyright This paper should not be reproduced by any means, in full or in part, except for short extract in a fair dealing, for research or private study, critical scholarly review or discourse with an acknowledgement. No part of this dissertation may be reproduced, stored in any retrieval system, or transmitted in any form or by any means without prior written permission of the author or CoventryUniversity.
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Acknowledgement I want to extend my warmest thanks to everyone who contributed and encouraged me in any way all the way through my academic journey during my university time. First of all I thank the All Might God for generously supporting me during studying. I would like to acknowledge the inspirational instructions and guidance from my lecturers and supervisor and our Coordinator Mr. Moses Mwizarubi who gave me all the valuable feedback and supported me during this time. He provided me with help, support and expert advice for successful completion of this work. Thank you so much I am also grateful to Mr Papias Njaala for his sagacious comments, guidance, cooperation, encouragement and valuable hours he devoted to help me. Your endless support has led me to realization of this dream. Also I stand to acknowledge the support and assistance granted to me by IAA staff, IAA students and my co-students there. They have been very generous in their support of my academic pursuits and many of my co-student has contributed ideas, feedback and advice especially Mr Lucky Yona and Noel Katongo. Also my Sincere heartfelt gratitude goes to my beloved parents Rev. John R. and Elwi S. for their endeavour to see me developing in my career and provide me with all I needed for my dream to come to fruition. Also my special thanks go to my sisters and brothers and all other friends for their support and understanding, their encouragement and faith in me has persuaded me to graduate with a Masters of Science in Finance and Investment.
The power of regulatory intervention and enforcement in business performance. Dedication
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I would like to dedicate the whole thesis, To my parents Mr & Mrs John Raphael who have provided me with the foundation skills in my academic career. To my brothers and sisters for the love, affection and support they have on every step of my life. Meantime I also want to express my deep appreciation toward s them whom I always learned on. There is no doubt in my mind that without their continued support and counsel I could not have completed this process.
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Acronyms PB CM CMP EABC EAC EACJ EACCTR EACCUR EU FIT IA IAA MSc F&I NEWL ORG PS RIE RNR SG TRA Business Performance Council of Ministers Common Market Protocol East African Business Council East African Community East African Court of Justice East African Community Committee on trade Remedies East African Community Custom Union Regulations European Union Firm Impact Test Investigating Authority Institute of Accountancy Arusha Masters of Science in Finance and Investment Northern Engineering Works Ltd Organization Partner State Regulatory Intervention and Enforcement Regional Network of Reformer Secretariat General Tanzania Revenue Authority
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Abstract The rapid speed of business development has placed greater demand on policy and regulations system and has opened up the opportunity of new rules and regulations and implementation pattern. The power of regulation interventions and enforcement in facilitating business performance enables stakeholders to adapt to global changes. This dissertation examines and addresses issues concerning the power of regulatory intervention and enforcement in facilitating business performance. A case study approach using interviews, personal observation and documentary reviews was conducted to examine and address issues concerning policy and regulations systems. The study population consisted of 25 respondents including students, academic staff, supporting staff and management staff who were interviewed. Data obtained from the above population was analyzed descriptively. The study revealed that insiders do not use effectively policies and regulations available at the organization. The findings further shows that EAC has a good policies and regulations system to support business performance in spite of the challenges and problems associated with the use of those regulations However, policy and regulations made by the government facilitates the easily recognition of business opportunities whenever noted. Currently it is noted that by training individuals also it helping to improve for knowing where and how to invest. Both long and short term courses will enable them to acquire more knowledge and experience concerning investment. Since the world of business tend to expand daily, the government who is responsible to set regularities and policy over investment opportunities should be smart enough to curtail underutilization and idleness of resources and enhance full utilization of the resources. The government must be competent in order to improve performance and make a good control so as to ensure the maximum utilization of resources. It is recommended that the government should be aware with any kind of profitability which could arise by increase opportunities of investments, however efficiency and effectiveness of its intervention and enforcement has to be improved so as to achieve its goals.
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Table of Contents
Certification ........................................................................................................................ iii Declaration And Copyright....................................................................................................... iv Acronyms............................................................................................................................ vii Table of Contents .................................................................................................................. ix List of Tables....................................................................................................................... xii List of Figures..................................................................................................................... xiii CHAPTER ONE ..................................................................................................................... 1 1.0 1.1 1.2 1.3 1.4 1.4.1 1.4.2 1.5 1.6 1.7 1.8 1.9 1.10 Introduction and background to the study....................................................................... 1 Background and Aims................................................................................................ 1 Rationale for the study ............................................................................................... 3 Statement of the problem ........................................................................................... 4 Research Objectives ................................................................................................. 4 General Objective.................................................................................................. 4 Specific Objectives ................................................................................................ 4 Research questions................................................................................................... 5 Scope of the study .................................................................................................... 5 Significant of the Study .............................................................................................. 5 Dissertation structure................................................................................................. 6 Conclusion .............................................................................................................. 7 Gap Analysis ........................................................................................................... 7
CHAPTER TWO..................................................................................................................... 9 2.0 Literature review ............................................................................................................ 9 2.1 2.1.1 2.1.2 2.1.3 2.1.4 2.1.5 2.1.6 2.1.7 2.1.8 Theoretical Literature Review ...................................................................................... 9 Introduction.......................................................................................................... 9 Regulatory Policy Making...................................................................................... 10 Regulatory Enforcement ....................................................................................... 16 Meaning of compliance......................................................................................... 18 Business ........................................................................................................... 18 Meaning of regulation........................................................................................... 18 Enforcement....................................................................................................... 19 Decision making.................................................................................................. 20 ix
The power of regulatory intervention and enforcement in business performance. 2.2 2.3 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.6.1 3.6.2 3.7 3.7.1 3.8 3.9 3.10 3.11 3.12 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11
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Empirical Review .................................................................................................... 20 Conceptual Framework ............................................................................................ 21 Research Methodology ............................................................................................ 23 Introduction............................................................................................................ 23 Research design..................................................................................................... 23 Research Techniques.............................................................................................. 25 Area of study ......................................................................................................... 25 Population and unit of enquiry ................................................................................... 25 Data collection methods ........................................................................................... 26 Primary data collection ......................................................................................... 26 Secondary data................................................................................................... 27 Sample size and sampling techniques......................................................................... 28 Sample size ....................................................................................................... 28 Questionnaires....................................................................................................... 29 Data Processing, Analysis and Presentation of the Findings ............................................ 29 Data Analysis......................................................................................................... 29 Validity and Reliability.............................................................................................. 30 Ethics considerations............................................................................................... 31 Presentation and discussion of findings....................................................................... 33 Introduction ........................................................................................................... 33 General Information about Respondents...................................................................... 33 Findings on direct and indirect regulatory and enforcements influences ............................. 41 Direct and Indirect Regulatory Influences on Business Performance ................................. 43 Purpose of the regulations ........................................................................................ 44 Regulatory compliance and policy effectiveness............................................................ 44 The three necessary conditions for compliance ............................................................. 45 Source and Interpretation of different sources of policy, laws and regulations ...................... 46 Application of the regulations..................................................................................... 47 Challenges facing Regulations Council in EAC.............................................................. 47 Summary .............................................................................................................. 48 x
CHAPTER THREE ............................................................................................................... 23
CHAPTER FOUR ................................................................................................................. 33
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CHAPTER FIVE ................................................................................................................... 50 5.0 5.1 5.1.1 5.2 5.3 5.4 5.5 5.6 Research Summary, Conclusion, Recommendations and Policy implications ...................... 50 Summary .............................................................................................................. 50 Summary of the findings ....................................................................................... 50 Conclusion ............................................................................................................ 51 Recommendations .................................................................................................. 52 Policy implications................................................................................................... 54 Limitation of the Study ............................................................................................. 55 Resolution of limitations ........................................................................................... 55 Critical evaluation of the study ................................................................................... 57 Introduction ........................................................................................................... 57 Project Management review ...................................................................................... 57 Success................................................................................................................ 57 Challenges of the study............................................................................................ 57 Time................................................................................................................. 58 Data collection.................................................................................................... 58 Availability of targeted group of people .................................................................... 58 Sample size ....................................................................................................... 58 Unstable power supply ......................................................................................... 59 Areas to be considered once the activity is repeated again. ............................................. 59
CHAPTER SIX ..................................................................................................................... 57 6.0 6.1 6.2 6.3 6.4 6.4.1 6.4.2 6.4.3 6.4.4 6.4.5 6.5
References ......................................................................................................................... 61 Appendices ......................................................................................................................... 66
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List of Tables Table 1; Response on imposed regulations ..................................................................... 33 Table 2; Response on regulations suitability .................................................................... 35 Table 3; Trainees in sample selected .............................................................................. 37 Table 4; Training periods................................................................................................ 37 Table 5; Response Rate ................................................................................................ 39 Table 6; Risk associated with policy and regulations......................................................... 40
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List of Figures Figure 1; Dissertation structure ......................................................................................... 6 Figure 2; Conceptual framework ..................................................................................... 21 Figure 3; Response on imposed regulations .................................................................... 34 Figure 4; Response on regulations suitability ................................................................... 35 Figure 5; Training periods .............................................................................................. 38 Figure 6; Actual and percentage ratios of response .......................................................... 39 Figure 7; Risk associated with policy and regulations........................................................ 40 Figure 8; Direct and indirect regulations........................................................................... 42
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CHAPTER ONE 1.0 1.1 Introduction and background to the study Background and Aims
For many people, the word regulation conjures up an image of detailed rules telling individuals and businesses what they can and cannot do. Yet instead of establishing specific prescriptions (or proscriptions) for behaviour, regulation can also set goals for the outcome of that behaviour. When a regulation sets performance goals, and allows individuals and firms to choose how to meet them, it is called a performance -based regulation. An important criterion for the success of regulatory reform is whether regulatory systems accomplish their policy objectives. Despite a massive increase in regulation and governme ntimposed formalities in most countries since the 1970s, results have too often been disappointing. This has prompted most governments to examine how they can achieve their policy and regulation objectives more cost effectively through better regulation and different mixes of policy tools. This expansion of national focus is reflected in the OECD approach to regulatory reform. In the 1990s the focus of regulatory reform at the OECD has turned from deregulation to regulatory quality management improving the efficiency, flexibility, simplicity, and effectiveness of individual regulations and non-regulatory instruments. Regulatory reform is now entering a third phase that is the management of regulation to improve the total impact of regulatory systems in achieving their social and economic goals. There is no generally accepted definition of regulation applicable to the very different regulatory systems in OECD countries. In the OECD work on regulatory reform, regulation refers to the diverse set of instruments by which governments establish requirements for enterprises and citizens. Regulations include laws, formal and informal orders, subordinate rules issued by all levels of government, and rules issued by nongovernmental or self-regulatory bodies to whom governments have delegated regulatory powers. Different types of regulation and defines regulatory. Regulation and its impact upon businesses are major topics of public debate. Some of business organizations are argued to suffer disproportionately from regulation because of higher fixed compliance costs and their lower resilience to external shocks due to limited resources, Chittenden et al (2002).
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Creating better regulation is a key policy objective of the EAC government and has been one of the seven key strategic themes running through business policy. In 2005, the EAC government launched the better regulation action plan to reform the regulatory framework, and created the better regulation executive to drive forward the agenda. The action plan was strongly influenced by the Hampton report (2005) aimed at improving inspection and enforcement procedures and the Better regulation task force report, regulation Less is more reducing burdens, Improving Outcomes, which proposed measurement of administrative burdens imposed by regulation and setting targets for their reduction. Reducing and simplifying regulation is not, however, an end in itself but a means to enhancing national economic performance and living standards for the EAC population. The acid test of regulation, therefore, is whether it contributes to these broader policy objectives by producing the relevant outputs and outcomes at the firm level. The research analysis is designed to capture the various factors that interact with regulation to shape the business performance outcomes actually experienced in practice. Because it moves beyond seeing business outcomes as a direct and simple consequence of regulation, it has the potential to offer new points for intervention that will allow businesse s to cope more positively with whatever regulatory environment they operate in and thereby achieve enhanced performance. Such an approach is fundamentally complementary to one which seeks to reduce and simplify regulation; indeed it has the potential to significantly enhance the effectiveness the better regulation programme. Research in this area, necessarily, rests on the approach taken to explaining how regulation influences business performance. Rather than starting with a set of quantitative research techniques for collecting data on regulation and performance and making statistical inferences, and simply presuming their appropriateness, we do something different. We begin by inquiring into the nature of the object under investigation and then design a methodological tool box that is appropriate for dealing with it. The research guided by a realistic methodology, started by probing a little deeper into the nature on the relationship between regulations and business performance. Zingales (2003) said that many countries having many projects, corporations and companies faced decision making
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difficulties because of many factors including inefficiency and ineffectiveness of policy and regulations in management. If there are no appropriate standard regulations and policies including that from the government, their performance may be poor. This regulations and enforcements are in the form of code of conduct to ensure business development. Ronald (1999) argues that the advent of the system and the inherent issues of mass output results in investment phenomena being transformed into an intricate system to manage and control the company hence the need to institute appropriate policies and regulation. Bergman and Nicolaievsky (2007) examine managerial decision mak ing and control as the primary use of policy and regulations during the industrial revolution and find that poor regulation and policy are the source of poor performance. Ronald state that, most organizations demand an effective application of regulations set by the investment institutions and government so as to minimize the occurrence of fraud and errors as well as to maximize awareness to existing operations. The implementation of a new regulations and enforcement brings development and smooth running of operational activities in the organization in great extent. This is useful to bring awareness of activities carried out by the management such as to utilize fully resources so as to attain the maximum profit margin and reasonable performance. Regulatory intervention and enforcement can significantly enhance the efficiency of the operations of back offices so as to attain intended goals made by investors, Dustan (2006). However, there have been problems reported in application of those regulations in inv estment activities. This study will analyse both effectiveness and factors that hinder the application of regulatory intervention and enforcement in investment opportunities. 1.2 Rationale for the study
The study promotes market competition and mitigates the adverse effects of business activity on individual and organizations. However it benefit a range of stakeholders including corporate and financial institutions, interest groups employees, customers and the general public since set of regulations and enforcement are well imposed.
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The study gives an individual a conceptual framework on how the implications of regulations and enforcement influence business performance as well as economic growth. It gives awareness in making decision. However it helps job seekers who want to know more about the company for which they are interested in working conduct business research. They need to learn as much as possible about the employer to whom they submit the resume. Also investors need information to ensure the safety of their investment. This research basically examines the impacts good implication of regulations and enforcement toward business performance. 1.3 Statement of the problem
To make regulatory intervention and enforcement more advantageous to the investors and organization as a whole there is a need to find the possible solution to problems hindering the effectiveness of those regulations and enforcement systems in the organization. This research will basically examine the impact of regulations and enforcement in relation to business performance. 1.4 Research Objectives
The following are the research objectives which the researcher based on.
1.4.1
General Objective
The main objective of this study is to examine the impact of regulatory intervention and enforcement towards business performance in fastening the development activities. 1.4.2 Specific Objectives Apart from the general objective stated above, there are also specific objective of the study, those are; i. Identify the problems hindering the effective application of regulatory intervention and enforcement in business. ii. iii. To point out the risk areas in the application of regulations and enforcement. Examine the positive and negative impacts of regulation interventions in the business performance. iv. The above mentioned objectives enhance the understanding to all the users of this research
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1.5 i.
Research questions What are the problems hindering the effective application of set of regulations and enforcement in business?
This study deals with the following research questions:
ii. iii.
What are the risk areas in the application of regulatory intervention and enforcement? What are the positive and negative impacts of regulatory intervention and enforcement in the business performance?
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Scope of the study
The research is restricted to the power of regulatory intervention and enforcement toward business performance. However it is more focused to the impacts of policy and regulations in relation to business performance where by case study was EAC. Therefore the purpose of the study is to investigate the impact of government regulation on business performance outcomes. The received wisdom arising from previous studies often assumes a rather narrow view of regulation focussing on the burdens, costs and constraints that regulation imposes on business. But this report presents an alternative but fundamentally complementary view, constructed from a broader understanding of the diverse ways regulation contributes to business performance outcomes. 1.7 i. Significant of the Study The study findings provide the knowledge and understandings of the power of regulatory intervention and enforcement in business opportunities. ii. It reveals the problem in the application of regulations and policies and the means to overcome them. iii. It will act as a reference point for other business organization all over the world that encounter the same challenges in business performance as far as policies and regulations is concerned. iv. It provides the knowledge on how the management can improve its efficiency on the application of standard regulations and enforcements.
The following are the significance of the study:
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The findings of this study will be significant to other researchers, as it will pave away for further study on regulations and enforcements and other variables such as risk and politica instability toward business performance.
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The study also test the competence of researcher as a condition of partial fulfillment of the requirement for the award of Masters of Science in finance offered by Coventry University in collaboration with Institute of Accountancy Arusha.
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Dissertation structure
Figure 1; Dissertation structure
CHAPTER ONE (Introduction and back ground) CHAPTER TWO (Theoretical and empirical literature review)
CHAPTER THREE (Research Methodology) CHAPTER FOUR (Presentation and discussion of findings)
CHAPTER FIVE (Summary, Conclusion and Recommendation) CHAPTER SIX (Critical evaluation of the study) REFERENCES
APPENDICES
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Figure 1; portray the whole structure of researcher work, the structure was made in chronological order as it was depicted in the researchers mind with the help of other who are well competent research writing. The explanation of the figure is:Chapter 1: Introduction. The chapter features Introduction to the research problem, statement of the problem, justification of the study, scope of the study and significance of the study. Chapter 2: Literature Review. This chapter review on regulatory intervention and enforcement in relation to business performance, both theoretical and empirical evidences are provided. Conceptual framework is also shown on this chapter. Chapter 3: Research Methodology. This chapter gives the overall view of the research methods used to analyse the research problem. Chapter 4: Presentation and Discussion of Findings. In this chapter, the presentations of findings from interview, documentary review and questionnaires are discussed and results is interpreted. Chapter 5: Summary, Conclusion, Recommendations and policy implications. Provides a summary of findings and conclusion of the study and it gives recommendations to ensure productivity of regulations and policies. Chapter 6: Critical evaluation. This chapter presents a critical evaluation of project performance. The appropriateness of methods employed in this study is reviewed and the lessons learned are explored. 1.9 Conclusion
This chapter has discussed the introduction, historical background of the study and little in organization in which the research is conducted,, the statement of the problem, objectives of the study, research questions, and scope of the study, the significance of the study, the structure of the dissertation and lastly the summary of the chapter. The chapter that follows reviews literature relevant to the study together with conceptual frame work of the study. 1.10 Gap Analysis
In the pasts researches it is noted that the researchers focused in business performance with regulatory intervention and enforcement perspective, but they did not indicate weaknesses
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and problems which hinder the application of those regulations and policies in the business organization. therefore the researcher will aim at filling the existing gap of the uncovered areas by the previous researcher whereby most of the reviewed studies had not recommend exactly what should be done to ensure those regulations imposed are exactly suitable and profitable for business performance. Therefore the researcher undertook the study so as to show power of regulatory intervention and enforcement for better business performance. Also the research never been conducted in the organisation.
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CHAPTER TWO 2.0 Literature review This chapter gives the theoretical and empirical background laid down by different authors with respect of regulatory intervention and enforcement information generated from investment opportunities in decision making process. It presents reviews of literature related to the study. This study aimed to conduct literature reviews on various models of regulations and policies to ensure better performance in the business organization. Due to rapid technology and globalizations, business activities are growing very fast and are the most hope and promising market in the world economy. The findings of the study show that, policy and regulation models and frameworks depend on the size of an org anization. 2.1 2.1.1 Theoretical Literature Review Introduction
Regulation is nearly as old as law itself. Like law in general, regulation consists of rules backed up with consequences, but it is law specifically aimed at preventing misconduct by businesses and other organizations, and enforced primarily by specialized government agencies. Although governments have regulated economic activity since ancient times, the regulatory state grew enormously in most economically advanced democracies in the twentieth century, spurred by rapid technological and economic change and political demands for protection against monopolistic power and the risks of industrial activity. Over the past 50 years, regulatory agencies and the rules they promulgate have become pro minent components of contemporary legal systems, often eclipsing legislative and judicial rules in their economic and social effects. In most countries, regulatory inspectors now constitute a vast white-collar police force, enforcing regulations that addre ss risks from nearly every facet of economic activity, including rules on workplace safety, financial security, air and water pollution, fire and accident prevention, earthquake protection, health and elder care delivery, food and drug quality, and proper maintenance of airplanes, elevators, school buses and railroad tracks. Appropriately, sociologic scholars have increasingly turned their attention to regulatory processes in an attempt to discern how regulations actually operate and what impact they have on business and society. The study of regulation by sociologists, political scientists, economists, and others has tended to focus on four main areas. First, social scientists have sought to understand and explain the process by which regulations are created, scrutinizing the political and institutional variables affecting policymaking decisions
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within regulatory agencies. Second, researchers have studied the behaviour of government inspectors and the processes of regulatory enforcement. Third, social scientists have studied the effects of regulations and their enforcement on business behaviour both the positive and negative, intended and unintended responses. Finally, researchers have theorized about and, increasingly, have empirically analysed new models of regulation, such as market-based, performance based, and management-based regulation. The essays in this volume have been selected to showcase the key issues addressed within the scholarly literature in each of these four areas, as well as to convey the research methods they have employed and the findings and generalizations they have produced. In this Introduction, we highlight the major themes and findings from the broader research literature represented by the work reprinted in this volume. 2.1.2 Regulatory Policy Making
Even as it has become widely accepted that it is socially beneficial to allow private businesses to make their own economic decisions in light of competitive and customer pressures, it is also widely accepted that certain types of business behaviour can be detrimental to society. Government intervention is needed when high transaction costs prevent markets from adhering to the underlying assumptions of perfect competition (Coase, 1960; Zerbe and McCurdy, 1999). Society needs regulation specifically to correct for failures of the private marketplace, such as the accumulation of market power in the form of monopolies, the lack of information needed by market actors to make fully informed decisions, and the frequent negative side effects or externalities of business activity (Stokey and Zeckhauser, 1980; Breyer, 1982; Sunstein, 1990; Viscusi 2000). Although the standard theory of market failure provides a well-accepted normative justification for regulation, it only goes so far in providing a positive or empirical account of how and why regulations get made. Social scientists have shown that policy making and implementation generally fails to follow a rational order that accords with how we might think policy should be made and implemented (Lindblom, 1959; Kingdon, 1984; Pressman and Wildavsky, 1984). The same can be said of regulatory policymaking. Despite the occasional exception (Levine and Forrence, 1990), for at least the last half-century scholars have argued that regulatory policymaking often departs from the normative logic of market failure and instead reflects the push and pull of interest group politics (Wilson, 1980, 1989). Perhaps the clearest example of this kind of departure arises
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when regulatory authorities have been captured by the industries they are supposed to regulate, serving business interests rather than the overall interests of society (Huntington, 1952; Bernstein, 1955; Lowi, 1969). Some scholars have argued that regulatory programs respond to organized business interests by using the coercive power of government to impose barriers to entry on low-cost or foreign competitors (Stigler, 1971; Peltzman 1976). Examples of regulatory regimes that serve as barriers to entry, or otherwise advance the interests of regulated industry, include professional licensing, certain ratemaking regulatory regimes, and regulations that privilege existing firms over newer ones (Kolko, 1965; Ackerman and Hassler, 1981; Abbott, 1988; Stavins, 2006). Furthermore, governments do not automatically enact new regulations in response to public problems, such as oil spills, industrial accidents, or financial scandals. A problem may be a necessary condition for the enactment of new regulation, but its existence is by no means sufficient to explain the adoption of new rules. When the benefits of new regulations are spread out over thousands or millions of individuals, affected individuals face challenges in organizing to advance their interests. Since the costs of new regulatory programs are usually concentrated on a relatively small number of business enterprises that can bring political pressure to bear to thwart or modify regulatory proposals, industrys interests are likely to be better reflected in regulatory policy at the margin than are the greater aggregate interests of diffuse and unorganized social beneficiaries of regulation (Wilson, 1980). Not all regulatory developments, though, can be explained as advancing the interests of regulated industry. The movement to deregulate major industries in the 1970s and 1980s clearly draws regulatory capture into question, for this never would have occurred if legacy firms possessed an iron grip on the policy process and used regulation to restrict entry to competitors. Similarly, the great expanse of consumer protection, environmental, worker safety and civil rights regulation enacted in the latter part of the twentieth century belies any simplistic belie f in unwavering industry power. Much regulation today imposes extensive costs on industry, often precisely to deliver broad and diffuse benefits to individuals across society (Vogel, 1989). In the last half century, policy entrepreneurs have prodded governments around the world to enact scores of regulatory laws that do not appear to be primarily driven by industry s rent seeking behaviour. Even if rent-seeking remains an important aspect of regulatory politics, the degree to which the rent-seekers succeed clearly varies. The explosive growth of regulation
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has been the product of intensifying political demands for regulation together with governmental responsiveness to those demands. On the demand side, powerful political movements, such as the labour, environmental, and civil rights movements, have certainly been instrumental in the growth of regulation. In addition, better-educated and more affluent publics have simply become increasingly intolerant of risks and injustices that less affluent publics tend more readily to accept (Friedman, 1985; Inglehart, 1997). On the responsiveness side, the increasing competitivene ss of electoral democracy may result in a more ready supply of policy proposals from political candidates and parties eager to satisfy voters desire for greater protection from harm, mistre atment and economic insecurity. Even competition across regulatory jurisdictions, which might be expected to lead jurisdictions consistently to race to the bottom in terms of regulatory stringency, has been found sometimes to prompt nations with less stringent regulations to emulate the laws of nations with tougher regulations. The ease of exchanging information in an increasingly global economy, as well as the trend towards greater integration of the worlds economic and financial systems, also contributes to tendencies towards diffusion and convergence of regulatory policies (Shapiro, 1993; Lazer, 2005). The ascendancy of the regulatory state over the past half-century has led social scientists to investigate how governments make regulatory policy. In doing so, they have explored both political and institutional factors that affect the decisions of regulatory officials. For example, in advanced economies like that of the United States, responsibility for regulatory policy making often rests with the bureaucracy, within which unelected officials in hundreds of regulatory agencies make key decisions affecting business and society. The delegation of authority to the bureaucracy creates a well-known principal-agent problem because agencies may generate policies that differ from the preferences of the elected o fficials that established them. As a legal matter, of course, bureaucratic agencies do make regulatory policy under the authority of legislation, which has sometimes been said to serve as a transmission belt connecting bureaucracies to the legislature (Stewart, 1975). Ho wever, as an empirical matter, the concept of a legislative transmission belt does not adequately explain agency policymaking. Regulatory agencies do still retain considerable discretion and autonomy if for no other reason than that statutory language is itself often vague and gives agencies a considerable degree of discretion (Lowi, 1969).
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Some of scholars have focused much attention on efforts by the electoral branches of government in the United States to influence, if not control, bureaucratic behaviour. Two major schools of thought have developed, one that emphasizes presidential dominance, the other congressional dominance. Presidents can seek to control agency policymaking by appointing the heads of the agencies and approving the submission of age ncy budgets to Congress. Congress can call hearings and conduct investigations, but still more significantly the legislature can use appropriations to reward or punish agencies. Over the years, researchers in the United States have found evidence that both presidents and Congress do influence the work of regulatory agencies, although most of studies focus on agencies adjudication or enforcement decisions rather than on decisions about making new policies (Spence, 1997). However some of essays turn attention to what has become known as the procedural control of agency policy making. Some theorists theorize that Congress designs administrative procedures pre-emptively in an attempt to solve the principal-agent problem. Although the field of administrative law has long acknowledged the importance of regulatory procedures, social scientists have more recently adopted a new institutionalism orientation according to which they view policymaking and organizational structures as important variables in explaining policy outcomes. Some of theorists contribution has been to show how the transparency required by congressionally imposed procedures helps political principals in the legislature keep tabs on regulatory agencies. They argue that the requirements for public comment mandated by the Administrative Procedure Act of 1946 help ensure on-going participation by the same interest group coalition that supported Congresss legislative delegation to the agency in the first place. In this way, administrative procedure al lows the coalition in the legislature to rely on interest groups as monitors and proxies, thereby overcoming the legislatures informational disadvantage and helping to stack the deck in administrative proceedings in favour of the preferences of the winning legislative coalition (McCubbins, Noll and Weingast 1989). The path charted by McCubbins, Nolls and Weingast has been influential, with other scholars seeking to model the effects of administrative procedure on regulatory decision making. Efforts to test empirically the procedural control thesis have found some support in that procedural requirements for specified types of policy analysis may tilt the policy balance towards the values advanced by the analysis (Potoski and Woods, 2001). However, researchers have so far found relatively little support for the prediction that procedures stack the deck in favour of the beneficiaries of new regulation. For
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example, in a study of the implementation of legislation designed to increase Medicare reimbursement fees for primary care physicians, it is found that the health care financing administration was more responsive in its rule-making to comments submitted by medical specialists than to those submitted by primary care doctors, the legislatures intended beneficiaries. Even if rule-making procedures for public participation do not always stack the deck, this does not mean that these or other procedures make no difference whatsoever. An abundant research literature, both from the domain of administrative law and new institutionalism, continues to examine the importance of regulatory procedure and oversight mechanisms (Morgan, 1999; Kerwin, 2003). Increasingly, scholars have attempted to scrutinize empirically the effects of administrative procedures, asking whether specific procedures improve the regulatory process in the manner intended by institutional designers. The emerging literature that evaluates administrative procedures include studies of mandates for economic analysis of new rules, opportunities for judicial oversight, and experiments with consensus-based decision-making such as negotiated rule-making. Of course, regulatory procedures may also sometimes have unintended or undesirable effects. Procedures that provide for oversight, for example, may contribute to an unwanted ossification of the regulatory process. Whether oversight is performed by the courts or by a centralized review body such as the Office of Management and Budget, it adds another procedural layer and may prompt regulatory officials to act defensively, taking more time to build a case that will withstand the review process. Facing additional burdens imposed by review procedures, some agencies have allegedly retreated from rule-making altogether or found alternative ways accomplishing regulatory goals without developing new rules (Hamilton and Schroeder, 1994). The researcher set out to test the extent to which regulatory procedures impede regulators from adopting regulations. To determine whether procedural stringency affects either substantive stringency or the frequency of regulatory change, Hamilton examined a carefully matched set of eight state systems of day care regulation, a regulatory domain largely unaffected by federal control. Exploiting the natural experiment made possible by a comparison of states with intricate rule-making procedures with otherwise similar states that have more streamlined procedures, Hamilton found no systematic difference in the pace or stringency of regulation across the two groups. What he did find, though, was that the key
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factor affecting regulatory policy was the overall political climate within the state, such as whether the legislature or governorship was controlled by democrats versus republicans. Studying regulatory outcomes cross-nationally, other social scientists have similarly considered the extent to which policy structures or styles affect regulatory policy outcomes, especially compared with the effect of political factors, such as interests, ideologies and party control. National governments vary considerably in the way they incorporate affected interests into policy decision-making. As Robert A. (2001) and others have observed, the United States exhibits a more pluralistic policy structure than found in other countries, with competing interest groups vying for influence in an open and adversarial process. In contrast with American pluralism, corporatist policymaking in European countries, especially in Scandinavia, has often taken the form of formal and structured collaboration between peak industry associations, labour and government. Do these differences in policy structures lead to differences in regulatory outcomes? This question has been most widely studied in the context of environmental regulation. It is found that nations that have employed such corporatist regulatory structures tended to achieve larger relative environmental improvements in the 1980s and 1990s, based on an index of several indicators. Scruggs failed to observe any explanatory power from electoral variables or political party control. In contrast, a subsequent analysis of a similar group of countries by Neumayer (2003) found the opposite: namely that corporatist structures do not explain variation in air pollution levels across countries, but that lower pollution levels are associated with the strength of green and left-libertarian political parties. Whatever effect corporatist policy structures have on environmental and other types of regulatory policy, these policy structures themselves can change over time. Some have suggested that the corporatist structures in Scandinavia and the Netherlands, for example, have begun to become more c onflict-ridden and pluralistic. Furthermore, policies and policy outcomes themselves can change, even if basic differenc es in policy structures remain. It is argued that the substantive differences between European and American environmental regulation have started to disappear over the past 15 years, as European regulatory policy has grown increasingly precautionary in its approach to risk. A subsequent analysis of a random sample of risks by Robert confirms a slight degree of movement towards greater precaution in Europe; however, Robert also show that the treatment of risk is highly diverse in both jurisdictions with the US still more precautionary than Europe in its policies about some risks, but with Europe more precautionary for others.
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2.1.3
Regulatory Enforcement
The ultimate impact of any regulatory policy depends not only on how that policy has been drafted and designed, but also on how enforcement officials take actions to implement those policies at the street level Lipsky (1980). The style and strategy of regulatory enforcement has attracted considerable attention from social scientists seeking to explain the behaviour of regulatory enforcement personnel. Two contrasting models shape discussion of the enforcement or implementation of regulation. One model treats regulatory enforcement mainly as a legal process and, according to it; regulations are viewed as authoritative legal norms whose violation demands punishment. The other model treats enforcement more as a social process, one aimed at stimulating cooperative government business problem-solving and which calls for remedial responses to violations. In countries throughout the world, some advocacy groups and politicians insist that governments should zealously pursue a legalistic approach, while business groups and many regulatory officials insist that a more cooperative approach is more desirable and effective overall. The legalistic model reflects the historical weight of criminal law in shaping societys response to deviant behaviour, even though the task of enforcing regulatory statutes is usually given to specialized administrative agencies rather than to traditional criminal law enforcement bodies. That is because regulatory programs are designed primarily to prevent rather than to punish harm, and prevention often demands specialized technical knowledge. Also, unlike most criminal laws, regulations tend not to seek to prohibit all harmful outcomes (say, pollution or worker risks) but only harm that rises above levels that are demonstrably and unacceptably high. In other words, regulations do not usually seek to eliminate all sources of pollution or all dangers in a workplace, but only unreasonable pollution or hazards. Determining exactly which behaviours are likely to result in unreasonable hazards, or precisely what should be done to prevent them, can require case -by-case administrative judgments based on particular technical factors. Philip Selznick (1969, pp. 1416) once wrote that the primary purpose of administration is not to determine the legal coordinates of a situation in light of pre-established legal rules, but rather to get the work of society done , to refashion human or other resources so that a particular outcome will be achieved. Effective regulatory enforcement, in this perspective, requires dialogue between regulators and officials in each regulatory facility. It requires whatever blends of rules and exhortation,
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threat and education, toughness and compromise will best induce particular regulated enterprises to cooperate. Even offering rewards may be effective at securing compliance. According to this view, in order to induce change in businesses behaviour, regulatory officials must be granted considerable discretion in implementing general regulatory standards. On the other hand, some regulatory violations such as intentional fraud, lying to law enforcement and other governmental officials, and reckless disregard for the health and safety of others are clearly criminal in nature. There are also always a considerable number of regulated entities, or harried sub-unit supervisors, who are inclined to cut corners on compliance to save time and money. Thus, in the hands of gullible, overly busy, or politically influenced regulatory officials, a regulatory agency too wedded to a cooperative enforcement style can d egenerate into dangerous laxity or unfairness, or can overlook the root causes of regulatory problems in their zeal to mediate disputes in a way that satisfies all the affected parties. Regulatory advocacy groups and many enforcement officials therefore argue that, in order to deter opportunism or heedlessness on the part of regulated businesses, regulatory field o ffices should have little discretion to use their own, potentially corruptible judgment. Effective regulation, on this view, requires specific legal rules, strictly enforced. Both legalistic and cooperative enforcement styles are reflected in actual regulatory practice. Regulatory practices are arrayed between the poles of legalistic enforcement and discretionary judgement, between inspectors who are quick to use the threat of legal sanctions and those who are more inclined to emphasize education and persuasion. Much sociological research on regulatory enforcement seeks to understand the causes and consequences of this variation between these two major enforcement styles, as well as to understand how these styles may interact with, or even complement, each o ther. Although some agencies continue to approach enforcement legalistically, sociological research finds that criminal prosecution of regulatory violations is relatively infrequent. Many regulatory violations involve failure to file timely and fully accurate reports, or failure to take certain precautionary measures, and hence, unlike most traditional crimes, do not result in any immediate, tangible harm to others. Moreover, due to the complexity of regulatory rule systems, many violations stem not from wilful disregard or reckless behaviour, but from ignorance of a particular requirement or from disregard of company compliance policy by
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lower-level employees Vandenbergh (2003). In both kinds of case, plus others in which violations do not lead to significant harms, prosecutors and judges are often reluctant to subject a businessperson or firm to the moral obloquy and harsh sanctions of the criminal law. Moreover, in practical terms, criminal prosecution, with its high burden of proof, can tie up agency officials in extended, labour-intensive investigations and court hearings, while risking a legal defeat. 2.1.4 Meaning of compliance
The term compliance describes the ability to act according to an order, set of rules or request. In the context of financial services businesses compliance operates at two levels. Level 1: Compliance with the external rules that are imposed upon an organization as a whole Level 2: Compliance with internal system of control that are imposed to achieve compliance with the externally imposed rules. 2.1.5 Business
Stephenson (2007) says that, Business is the regular production or purchase and sale of goods undertaken with an objective of earning profit and acquiring wealth through the satisfaction of human wants. Dicksee (2004) provide a legal framework for business, He says business refers to a form of activity conducted with an objective of earning profits for the benefit of those on whose behalf the activity is conducted. Henry (1999) defines business as human activity directed towards producing or acquiring wealth through buying and selling of goods. But it is important to believe that the wealth of business will rapidly increase depending on the application of all regulations and code of conduct imposed by the management and sometime by government 2.1.6 Meaning of regulation
The term regulation generally refers to a set of binding rules issued by a private or public body with the necessary authority to supervise compliance with them and apply sanctions in response to violation of them. As the economic power of private sector business has grown over the past century, so too has the number of policies and enforcements regulating business activity. In broad terms, these regulations typically serve one of two objectives; to promote market competition and control
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the market power of large firms over customers and smaller firms, or to mitigate the adverse effects of business activity on individuals or other organisations. Regulations on business can benefit a range of stake holders, including corporate and financial institutions, interests group, employees, customers, and the general public. Of course, such regulations impose cost as well as benefits. These cost including capital and other compliance costs as well as an increase risk of litigation or of civil or of civil or criminal penalties. Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation (by Parliament or elected legislative body) on the one hand and judge-made law on the other. Regulation can take many forms legal restrictions promulgated by a government authority, self-regulation by an industry such as through a trade association, social; regulations (e.g norms), co-regulation, or market regulation. One can consider regulation as actions of conduct imposing sanctions, such as a fine, to the extent permitted by the law of the land. This action of administrative law, or implementing regulatory law, may be contrasted with statutory or case law. Regulation mandated by a state attempts to produce outcomes which might not otherwise occur, produce or prevent outcomes in different places to what might otherwise occur, or produce or prevent outcomes in different timescales than would otherwise occur. In this way, regulations can be seen as implementation artifacts of policy statements. Common examples of regulation include controls on market entries, prices, wages, development approvals, pollution effects, employment for certain people in certain industries, standards of production for certain goods, the military forces and services. The economics of imposing or removing regulations relating to markets is analyzed in regulatory economics. 2.1.7 Enforcement
Enforcement refers to applications of regulations imposed by management and government, or it is a carrying out of an executive or judicial order. Most of regulations and policy enforcement is conducted by some type of enforcement agency such as TRA (Tanzania Revenue Authority), East African Business Council (EABC), financial institutions such as banks etc. societal business in regulations enforcement through such organizations can be massive both in terms of resources invested in the business activity and in the number of people professionally engaged to perform those functions.
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Regulations enforcement agencies tend to be limited to operating within a specified jurisdiction. In some cases, jurisdiction may overlap between organizations; for examples, in the United States, each state has its own statewide regulation enforcement arms, but the federal Bureau of investigation is able to act against certain types of crimes occurring in any state. Various specialized segments of society may have their internal regulations enforcements arrangements. For example military organizations may have military police. 2.1.8 Decision making Dicksee (2004) said that the local regulatory system is too often a burden, it can be difficult to engage and influence decision making and business complains of inconsistency and unpredictability. And we heard that the whole regulatory landscape is overly complex. There is a suspicion, particularly among businesses, that public sector creep has led to a proliferation of enforcement bodies, leading to overlap, significant additional cost and lack of transparency. Stephenson (2007) explains that when a potential or actual breach of legislation or standards is identified, a well-defined decision making process should be in place and followed. Once a problem is identified, a clear and well-defined, due process should be followed. Due process describes the checks and balances that a supervisory authority should have in place to ensure that supervised entities are treated fairly, consistently and transparently. Due process should be considered at each stage in the process when deciding on the appropriate supervisory action to be taken. Process should be structured to ensure that supervisors exercise their powers in an objective and professional manner. 2.2 Empirical Review
According to Gigerenzer (2000) in decision making, information visualization argues much of his research out of economics and cognitive psychology has focused on the gap between the correct answer to a decision making problem and the one given by subjects for problems arise from regulatory interventions and enforcement in business . in his research has highlighted the problem of visualization of business growth and denote that in the past years much of the investment development information was being analysed using the graphs and tables representations of numeric data for decision making in the organization. Hence they produce better result for the process of decision making in any business entity. But due to the implications of regulatory intervention and enforcement induced by management and government, business growth has now become more advanced.
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However, Ronald recommends that the management should employ experts to formulate policies and standard regulations so as to ensure efficiency and effectiveness which will result to achievements of intended goals in the business entity. 2.3 Conceptual Framework
The conceptual framework shows a new approach to exploring the influence of regulation and enforcements on business performance explicitly drawing on a realist perspective (Figure 1). We address two main questions: i. How does regulation causally influence business performance outcomes, and why do they vary between businesses? ii. What conditions support/hinder the exercise of these causal mechanisms, thereby shaping the outcome realized in practice?
Independent Variable
Dependent Variable
Regulatory Framework
Business Performance Outcome
Control Variables Eg. Risk, Political.
Figure 2; Conceptual framework The approach goes beyond studies focusing on business owners perceptions of regulation as a burden on business and compliance cost studies that present a static picture of re gulation as a cost or constraint. Instead, the researcher proposes a model explaining the dynamic
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impact of regulation and enforcement toward business performance. The model specifically allows for variation in business management adaptations to regulation due to differences in their capacities and motivations, and to differences in performance outcomes due to the influence of the wider contexts within which businesses operate. This opens up space for policy to intervene to enhance business management capacities to discover and interpret regulation and to adapt to it in a manner likely to improve business performance. Start-up and business development programmes could incorporate learning about regulation and how to adapt to it. This might also help overcome the undoubted hostility of some business owners who perceive regulation as totally unrelated to conducting business activities.
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CHAPTER THREE 3.0 Research Methodology
This chapter discusses the methodological framework that was used to conduct the study on analysis of regulatory intervention and enforcement in relation to business performance at East African Community. It discusses the research design and data collection instruments that were used in the study; it shows the area where the study was carried and sampling techniques. The chapter also depicts the relative strengths and weaknesses of the methods and instruments chosen by the researcher. Furthermore, the chapter covers the data analysis procedures that were used after the collection of data and the summary. 3.1 Introduction.
The research analyses the impact of regularities, policy and enforcements imposed by the management and government in relation to business performance. However the study has been conducted in East African Community focusing on the standards of regulation, policy and enforcements imposed by the management and governments of five countries in accord and highlight suitable code of conduct that can enhance business performance. In this chapter researcher presented the Methodologies and procedures which used in data collection for this research. It comprises research design, sampling procedures, data collection methods and sources of data which include questionnaire, documentary review, and interview and researcher observation. 3.2 Research design
The purpose of the study was to investigate the impact of policy and regulations in relation to business performance outcomes. The received wisdom arising from previous studies often assumes a rather narrow view of regulation focusing on the burdens, costs and constraints that regulation imposes on business entity. This report presents an alternative but fundamentally complementary view, constructed from a broader understanding of the diverse ways regulation contributes to business performance outcomes. The approach was specifically designed to capture the complexity and interrelated nature of the factors that underpin differences in business performance. And within this to explain why and how businesses tend to experience different performance outcomes despite a common regulatory environment.
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The findings suggest that although regulation clearly does impose costs and affect businesses performance, the performance outcomes experienced in practice are not simply a function of the regulation involved. Rather they also reflect both the capacities and motivations of particular businesses and the wider contexts they operate. The research findings can add to the established better regulation agenda. In particular, they provide a basis for the development of new forms of business support that could enable the better regulation programme to more completely achieve its core aims of improving business performance. The research can also be used to further develop the firm impact test on the effects of new regulation. According to Kothari (1990) a research design is the conceptual structure within which a research is conducted; it constitutes a blueprint for the collections, measurement and analysis of data. Therefore the parts of research design which have been used in this report are:i. The sampling design: This deals with the method used to select items to be observed for the study. ii. The observational design: This design relates the conditions under which the observation was to be made. iii. The statistical design: This concern with the question of how many items were to be observed and how the information and data gathered were to be analyzed. iv. Operational design: This deals with the techniques by which the procedures specified in the sampling, statistical and observational design was carried out. v. The provision of a room for detailed research as it was dealing with only a single organization. This enabled a researcher to use effectively a different methods and technique for a good research work. vi. Case study as an enquiry used multiple source of information such as interview, document review and observation. Thus the comparison of information collected from
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those methods give more critical findings about impact of regulations in relation to business performance. vii. Since academic requirement was one of the significant of this study in consideration of many facts case study became more appropriate design for this research. viii. The accessibility to the area of the study and relevant information was possible through the use of case study. The case study design has been used because of the benefits it has over survey in terms of time resources and flexibility. Furthermore the case study allows one to have an in-depth on subjects. The research design holds the procedure of studying and collecting information within a particular organization. 3.3 Research Techniques
The research used both qualitative and quantitative research techniques to increase the validity and reliability of collected data from various sources. Qualitative research used words in collecting and analyzing data so as to set the situation in experiences of theories methods of schools while Quantitative research applied optimistic methodology and principles, it uses numerical methods in business. 3.4 Area of study
The research conducted at the East African Community (EAC) in Arusha Region. The main areas of concentration of this research are accounting, finance and administration department. The researcher decided to conduct research at EAC because it is the headquarters of all eastern countries and all data concerning regulatory intervention and enforcement of partner state toward business performance could be obtained. 3.5 Population and unit of enquiry
The EAC organization has been the unit of the study where by senior Accountant, Financial Manager; business development Staff and co-workers gave a great assistance in data collection. The criteria used to come up with participants who participated in the study were:
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i. ii.
Capability of the group to provide valuable information on the analysis of policies and regulations in relation to business performance. The ability of the researcher to have access to the selected group of EACs management team, low level employees and final beneficiaries, which was achieved by informing them before they approve to participate in the study.
3.6
Data collection methods
Combination of methods used for data collection; with this combination more comprehensive and clear information collected through comparison of information from various methods. Following are the major data collection methods that were employed. 3.6.1 Primary data collection
Primary data is information gathered directly from respondents which involves creating new data collected from existing sources. Primary data were collected through Questioners, personal interview and personal observations. Each of these data collection method is clarified below. It was conducted by using the following methods. 3.6.1.1 Interview Personal interview method requires interviewer asking questio ns generally in a face-to-face contact to the other person or persons, and the method of collecting information through personal interviews is usually carried out in a structured way calling the interviews structured interviews which involve the use of a set of predetermined questions, and of highly standardized techniques of recording Kothari (2004). The researcher was directly interacting with EAC staff basically on the accounting field , managerial departments. Both structured and unstructured interview were used, taking into account issues of time, nature of the job and position of the client, the interviews guided by interview checklist whereby question was prepared in advance. 3.6.1.2 Observation Observation system is a procedure by which an observer records what is occurring in some situation or setting. Observation can be categorized mainly into participant and non-participant observation. In participant observation, the researcher is directly involved in the collection of data through observation, while in the non-participant observation, the researcher does not directly participate in the data collection.
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The main advantage of this instrument is that subjective bias is eliminated, if observation is done accurately, and the information obtained rerates to what is currently happening (Kothari 2004), then observation can be useful in discovering whether people do what they say they do, or behave in the way they claim to behave. Not only that, but also this method is independent of the subjects willingness to participate and highlights behaviours and actions that people may not think to report because they seem unimportant Aina (2002). Therefore researcher used this because not all information can be gathered through other methods. Some information needs silence study. Yet it is accurate way of watching and noting phenomenon as they occur in nature with regards to the causes and mutual relations in day to-day activities to know factors contributing to mismanagement and deteriorations of regulations. So researcher used observation to gather some information which in one way or another mighty be difficult to collected using other methods e.g. Asses level of work efficiency in respect to activities concerning the deterioration of policies and regulations. 3.6.1.3 Questionnaires A questionnaire is the schedule of questions in which the respondents fill in the answers. A series of questions was prepared and distributed to different employees who were selected as a sample to answer. The questions were both open and closed question. The following were advantages of using questionnaire. i. There was low cost even when the universe was large and is widely spread geographically. ii. It has been free from the bias of the interviewer; answers were in respondents own words. iii. Respondents had adequate time to give well their thought and answers. iv. Respondents, who were not easily approachable, could also be reached conveniently. v. Large samples could be made and thus the results could be more dependable. 3.6.2 Secondary data These are those data that have been collected by others. These included official reports, documents, magazines, newsletters, periodicals, textbooks and the like.
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3.6.2.1 Documentary review The researcher also examined the documents of EAC as way of collecting data. In this method, EAC books and auditors report were inspected; Annual financial reports and various published and non-published material of EAC were reviewed. The researcher used this method in order to get in-depth information on analysis of business performance in relation to policy and regulatory intervention. It was also used to enhance the validity and value of the study by filling in the gaps that could have been left by other data collection methods. However, weaknesses such as authenticity of the examined documents, and judgment of the value of document contents were handled carefully by the researcher in order to ensure the right information for the study was obtained. 3.7 Sample size and sampling techniques
The researcher used proportional stratified random sampling technique to ensure a balance of at least respondents from each department. In this method the researcher divided the population into strata (groups) according to the number of specific group of population to be included in the sample. Then from each stratum a sample is randomly drawn proportionally. By proportional it means that you take the same percentage. However, different strata used are; managers, employees and co-workers. The researcher used convenient and purposive judgement sampling in order to obtain appropriate information whereby through convenient sampling, the researcher was able to select sample as soon as possible with a focus of research questions and objectives of the study. While through judgemental sampling, a researcher was able to select cases that used to answer research questions (Saunders 2003). 3.7.1 Sample size All units of the operation including one director, three heads of departments, and eleven heads of divisions has been custodian of information which is pertinent to this study. However, sample size was considered depending on the research objective of this study so as to focus on the specific material in which the researcher has been able to demonstrate proficiency on the broader chapter objectives.
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3.8
Questionnaires
The core set of 10 regulation questions were set where by the whole sample were distributed. In summary, these questions were designed to encompass the various aspects of how regulation may impact on the business organization as perceived by the business owner. There were two guiding principles for these 10 core questions. First, a major task has been to inquire into the enabling and motivating influences generated by regulation as well as the constraining influences that have typically been the focus of study. Second , the researcher introduced an additional layer of inquiry which revolved around three notions, the extent to which regulations may be considered as fair, the way regulations affect changes in business behavior and finally, the direct impact on business performance. The structure of the questionnaires designed in order to give proper details so as to enhance the conduct of the research. Second, key descriptive sample statistics are presented. Third, we focus on the relationships between regulation, knowle dge of regulation, innovation and business growth. The approach adopted is one which uses disproportionate random sampling within size and sector stratifications in order to allow adequate representation of less numerous but potentially more interesting enterprises. 3.9 Data Processing, Analysis and Presentation of the Findings the use of percentages, tabulation, graphs and bar charts when
The data processed and analyzed through both qualitative and quantitative methods, which involved possible. Quantitative method applied through descriptive method narrating the findings. 3.10 Data Analysis
The findings are presented according to the specific objectives of the study and address the following aspects; various momentous of regulations, policies and enforcements, the link between business performance (BP) and adoption of RIE, the roles RIE to stakeholders and an appropriate model to fit the need of business organizations like EAC. It is noted scientists interpret data based on their background knowledge and experience. Therefore researcher of this study processed data which was collected and make analysis so as to clearly highlight the applications together with weaknesses and problems arise from regulatory intervention and enforcement in business environment. Therefore the collection and systematic recording of information was done as well as working to uncover pattern and
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trends in data set and finally gave explanations. Therefore, the researcher of this study processed and analyzed data by using pie charts, descriptio ns and tables to ensure output is useful that it can be suitable for promotion of business development and performance. During data analysis the researcher looked through the data and kept comparing the data of previous years and that of current years and use different bases for analysis. Also he tried out different hunches about what the data means, make an educated guess and then see if is supported by the data. The presentation of data was interpreted with clear message, efficient and with the desired impact in simple sentence with illustrations such as pie charts tables and bar graphs to ensure proper result is met. However the procedures that was used to process, analyise and present data are; deciding which approach to use, analyse qualitative data and quantitative, measuring data, summarize and present data. 3.11 Validity and Reliability
Validity and reliability of the collected data were checked in order to ensure that findings depict the reality and the desired outcome (Sounders et al, 2007). The validity and reliability has been highly considered in this research through the use of different methods of data collections like questionnaires, Interview, participant observation as a primary data and documentary, annual financial reports depicting output as well as business performance. Also secondary data has been used. The combination of these methods enables any research to be meticulous, broad and precise. During the study, the researcher has made reasonable efforts to ensure validity by ensuring that data were collected in a valid way, reliable and accurate. For instance, Pre-test as an opportunity to identify questionnaire items that could be misunderstood by the participants or do not obtain the needed information has been conducted through review by administrative staff and other people having capacity and idea of formulating questionnaires. Emphasis has also put on pilot study. According to Aina (2002), state that; if possible the pilot study should be done to a group similar to the one that will form the population of your study. This study used the pilot study before formulation of the population group of my study. However all gathering instruments should be piloted to test how long it takes to complete them, to check that all questions and instructions are clear and to enable one remove any item which does not yield usable data.
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3.12
Ethics considerations
At the beginning of this research at EAC and NEWL the researcher noted at the outset of any application for research ethics approval that the part of the research for which ethical approval is sought must not take place until such approval is given. The following are the summary of ethics considered when writing dissertation. i. Confidentiality: the researcher reassured participants that information they prov ide will not be disclosed to others other than within the context of the research, or at a minimum will be made anonymous. ii. Deception: The researcher avoided deception in informing participants about the research. iii. Debriefing: Also the researcher provided participant with additional information to support them after taking part in the research and provide true information if deception was necessary originally. iv. Withdrawal from investigation: However, the researcher informed participants of their right to withdrawal from the research at any stage including during or at the end of their involvement or subsequently. These latter circumstances require that participants are informed of the investigator name and contact details. v. Informed consent: The researcher informed participants of the aims and procedure of the research and obtained their agreement to take part on the basis of this information. Fully informed consent implies knowledge of everything that might reasonably be expected to influence a participants decision to volunteer and show ideally be obtained via signatures of all participants. Minimally this included a statement that participant is voluntary, what participation involves and the potential risk and confirmation that any queries have been answered. The purpose of the study is to investigate the impact of government and management regulations on business performance outcomes. The received wisdom arising from previous studies often assumes a rather narrow view of regulation focussing on the burdens, costs and constraints that regulation imposes on business. This report presents an alternative but
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fundamentally complementary view, constructed from a broader understanding of the diverse ways regulation contributes to business performance outcomes. The approach was specifically designed to capture the complexity and inter-related nature of the factors that underpin differences in business performance. And within this to explain why and how businesses tend to experience different performance outcomes des pite a common regulatory environment. The results confirm that regulation is enabling and motivating for small business owners as well as constraining. Although the costs and constraints associated with regulation were at the forefront of business owners minds, the data also suggest that many business owners were aware that regulation offers opportunities to develop more efficient ways of working and/or of increasing income.
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CHAPTER FOUR 4.0 4.1 Presentation and discussion of findings Introduction
This chapter presents the critical analysis of data collected from the field. The data was based on the questionnaires, interviews and documentary review which were derived from the study objectives .The findings were presented and analyzed using tables, figures and percentages. The main objective of this study is to analyse the impact of regulatory intervention and enforcement in facilitating business performance. To attain this, the following areas were discussed: i. ii. iii. Identify the problems hindering the effective application of regulatory intervention and enforcement in business. To point out the risk areas in the application of regulations and enforcement. Examine the positive and negative impacts of regulation interventions in the business performance. 4.2 General Information about Respondents
The demographic characteristics of respondents are characterized by age, sex, gender, positions held and others. Are there any standard regulations and policies imposed in your esteemed business?
Actual respondent 21 0 Percentage (%) 100 0
Yes No
Table 1; Response on imposed regulations
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Figure 3; Response on imposed regulations
Since the EAC institutions need a unified regulatory reform strategy that presents a regional view of regulatory reform and its interaction with national regulatory practices, there had been no anyone who has been found not to be aware with at least some of regulation and policies. It is found that the strategy include mechanism for monitoring the impact of better regulation to demonstrate tangible benefits and an efficient way to do this is to use the existing regional network of reformers (RNR) to create an EAC group on better regulation to draft, with the secretariat, a report that proposes an action plan with deadlines, comprising an overall approach to improving regulatory practices in line with regional integration. A similar repost done for the European Union (EU) by the Mandelkern group of national experts in 2001 was a turning point in the creation of better regulation strategies at regional and national levels. The new EAC group on better regulations could continue as an advisory body to the EAC institutions to monitor, promote, and support regulatory refo rms.
Are they helpful for good performance of business?
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Yes No Not Sure
Actual respondent 14 3 7
Percentage (%) 58.33333333 12.5 29.16666667
Table 2; Response on regulations suitability

The information in the table 2 is also presented in the figure 4 below.
Figure 4; Response on regulations suitability In the figure 4 some of respondents gave their opinion to admit the usefulness of policies and regulation in relation to business performance, 58% agreed regulations and enforcements are of very vital in facilitating business performance, 13% admit those regulations not to be useful and 29% admitted not to be sure whether regulations are important or not. But since the main objective of the study is to analyse the regulatory and enforcement in relation to business performance, the researcher found that regulations is of very vital in any business environment for better performance. For instance in the EAC partner states impact on the tariff especially that of fixed and mobile invoice as well as data enhance EABC advocacy efforts towards improvements and competitiveness of enterprises in the region, and it is enhancing the EAC intra flow of trade and investment by the elimination of factors
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contributing towards the high production costs in the region such as high vo ice telephone and data charges.
EABC specifically helps to:-
i. Analyse the regulatory regimes on the business sectors in the EAC partner States ii. Establish how the regulatory regime impacts the business sector in terms of cost to the final consumer iii. Make recommendations on the regulatory reforms that can be made to make the business sector to it affordable and competitive.
Regulations help to:-
i. Develop a monitoring and evaluation framework and plan for the entire EABC programs in reference to its 2011-2015 strategic plan. ii. Develop monitoring and evaluation tools for measuring the success of projects / programs in the short and long term iii. Train EABC staff on the use of the developed tools. iv. Contact EABC membership in the region and use those tools to assess EABC 2012 work plan performances. v. Share best practice in program monitoring and results evaluation. Also it was found that the following are undertaken to ensure efficiency and effectiveness in business activities as far as the regulatory intervention and enforcement is concern. i. Articulate the principles behind the EABC. ii. Reorganization of the institutional framework. iii. Build capacities for better regulations. iv. Communicate with the public. v. Monitor and enforce EAC rules. It is found the signing of the EAC, Common Market Protocol (CMP) and its annexes on 20 November 2009 by the EAC Heads of State were momentous. Now that it has been ratified, the CMP will set the stage for substantial economic restructuring and market differentiation in the region that should, over the medium term, increase economic opportunities and income for the 120 million citizens of the five partner States of Tanzania, Kenya, Uganda, Rwanda and
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Burundi. It is widely agreed that the sustainability of EAC integration depends on the production of concrete benefits visible to citizens. Findings on the insiders whos well trained enough to use the imposed regulations.
Actual respondent Well trained Not trained Not well trained 17 5 2
Percentage (%) 70.83333333 20.83333333 8.333333333
Table 3; Trainees in sample selected In the sample selected only 17 participants admitted to be well trained in accordance to the policy and regulations imposed by EABC, and 5 participants are not trained completely and only 2 admitted not to be trained well. In table 3 shows time spent for training.
More than 3 months 0
1 Week 14
1Mounth
2 Month 5
3 Month 2
Table 4; Training periods

The data shown in the table is also presented in the figure 5;
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Figure 5; Training periods In the sample selected by the researcher only 19 insiders of the organizations agreed are we ll trained in accordance to the policy and regulations imposed so as to ensure good output as it was intended, however 5 insiders agreed not to be well trained. Response Rate 45 respondents were chosen on the basis that they could provide data that was relevant to the research problem. Table 5 below provides details of respondents from the targeted population and their respective data collection instruments during the data collection exercise.
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Respondent Management staffs at EAC Institute staffs Management staffs at NEWL MSc F&I Students Total
Data collection method used Interview Interview Interview Interview
Expected Respondent(s) 17 4 12 15 48
Actual Respondent(s) 11 2 10 15 38
Percentage Response rate 64.70% 50% 83.30% 100% 79.16
Table 5; Response Rate Of 38 interviewed respondents as shown in the table 5, 11(64.7%) was the management staff at EAC, 2(50%) was the Institute staff, 10(83.3%) was the management at NEWL and 15(100%) was the MSc F&I student at Coventry University. The same details are portrayed in the
graph 6
Figure 6; Actual and percentage ratios of response
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Findings on the risk associated with regulatory intervention and enforcement from the high risk to low risk.
High Misinterpretation of regulations Misuse of policy and regulations Neglecting regulation imposed. Not aware with regulations 70% 0% Moderate 25% 5% Low None
Table 6; Risk associated with policy and regulations

Risk Associated with policy and regulation interventions
Figure 7; Risk associated with policy and regulations The figure 7 gives illustration on the risk associated with imposition of policy and regulations in relation to business performance. It indicates the risk that prevailing highly is from those
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who intentionally neglecting policies and regulations imposed for better performance of the business which is 70%, and 25% of risk associated with regulations is from those who misunderstand or not aware with business regulations and enforcements, and 5% of risk is associated with misuse of regulations imposed, however there is no any human being who is not aware with at least some of regulations. 4.3 Findings on direct and indirect regulatory and enforcements influences
From the point of view of EAC organization, direct and indirect regulatory influences can be distinguished, although in practice, they operate together. Direct influences relate to business organizations adaptations to regulation that mandates or prohibits action by them, for example in the EAC either by constraining them to comply or by enabling and motivating them to adapt business practices and products in order to maintain or improve business performance. Most business organizations research focuses on these direct influences, particularly the constraining ones. Indirect influences refer to changes in business owners behaviour arising from adaptations to regulation by other stakeholders whose behaviour causally affects the focal business owner, either through market relations (with competitors, customers, employees, suppliers and some infrastructure providers), or non-market relations (with infrastructure providers and regulatory authorities). For example, where suppliers increase pay rates and product prices and this causes various business firm to adapt their business practices and products, then regulation is a causal influence on that focal business. Indirect influences will be experienced most commonly by business owners as changes in the cost or availability of wanted resources, or in product sales. Given the inter-dependent nature of firms relations with other stakeholders, indirect regulatory influences on business performance are potentially very complex and farreaching, whether business owners are aware of them or not.
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MARKET SYSTEM including regulatory framework
Suppliers
Competitors
BUSINESS ORG.
Customer s
Infrastructurepro viders
Employees
direct effects
Indirect effects
Figure 8; Direct and indirect regulations In EAC business management, like other people, are more likely to report dire ct, rather than indirect, regulatory influences because they are more knowledgeable about their own behaviour and motivations than they are of others. This does not, however, mean that indirect influences are less important. Indeed, regulation might exert a greater indirect influence on business performance than directly. Direct and indirect enabling regulatory influences operate simultaneously, causally contributing to business performance outcomes. The red arrows in Figure 4.5 indicate direct regulato ry influences on business owners and other stakeholders, the brown arrows indicate indirect influences on a business owner operating via market and non-market relations with other stakeholders.
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4.4
Direct and Indirect Regulatory Influences on Business Performance
Here the researcher findings whereon the necessary role of agency in mediating the influence of regulation on business performance. It is found that policies and regulatory intervention only influences business performance through the exercise of human agency, that is, through business owners and other stakeholders adapting their behaviour to the regulatory framework; agency mediates the impact of regulation on business performance. If business owners and other stakeholders do not change their behaviour as a consequence of regulatory change, its effect is nil. Business owners and other stakeholders vary in their capacities to discover, interpret and adapt to regulation and pursue different strategic priorities. Regulation does not, therefore, have uniform effects on business performance. The capacity of business owners to discover and interpret regulation depends not only on how well it is communicated to business owners, both the message and the media used but also on firms capacities to comprehend the meaning of regulation. Intermediaries such as business advisers, consultants, insurers, trade bodies and friends and family as well as regulatory inspectors play a crucial role in shaping business management understandings of regulation and their responses to it. The managers always have some discretion regarding how to adapt to regulation from noncompliance, through minimum compliance and incremental change to far reaching reform of business practices and products. Adaptation need not entail detailed knowledge of regulation; indeed, regulation can exert an indirect influence on a focal business without any knowledge of regulation at all. Non-compliance due to ignorance or wilful evasion risks legal penalties (e.g. fines, business closure, and imprisonment) and economic sanctions (e.g. threat to commercial reputation) but some business owners may feel more constrained to avoid compliance than others, for example, those operating in highly competitive markets. Adaptation depends, therefore, in part, on the wider context. Findings on internal and external conditions that mediate the impact of regulatory intervention in relation to business performance. For simplicity, the researcher found that internal and external conditions of action can be distinguished. Internal conditions refer to the resources, capabilities and motivations of
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agents internal to the enterprise owners, managers and employees to discover, interpret and adapt to regulatory intervention. The management might, for instance, be unaware of particular regulations or interpret regulatory obligations incorrectly. Some might choose to create a dedicated regulation handling post in order to improve their ability to deal with regulation. Therefore managers might decide to implement major innovations as a response to regulatory change, others will adapt minimally, while others will choose not to comply at all. Discovering, interpreting and adapting to regulation all require resources to develop the required capabilities because firms possess different resources, such capacities are therefore necessarily variable. External conditions refer to the actions of stakeholders beyond the enterprise, including product, labour and capital market agents. Markets distribute resources and rationales fo r action for instance, to acquire inputs cheap, to sell products dear, and to adapt business practices and products in order to cut costs and/or increase trading revenue. Whether particular regulations produce specific performance outcomes for particular firms depends, in part, therefore on the actions of other stakeholders as well as their own efforts. What is a constraint for one business owner is anothers enablement because they are in competition for resources and markets. If other stakeholders adap t better or more quickly to regulation, then the focal business may experience a decline in performance. 4.5 Purpose of the regulations
Generally the purpose of regulations is to ensure business performance is promoted by implementing the provision of the protocols and to ensure that the uniformity among partner state in the application policy imposed and that to be extent possible, the process is transparent, accountable, fair, predictable and consistent with the provision of the protocol. 4.6 Regulatory compliance and policy effectiveness
Regulatory compliance in this report refers to obedience by a target population with regulations. Why do people obey any rule? Several conditions are needed. The first condition is that the target group has to be aware of the rule and understand it. For example, lack of clarity in a rule may bring about unintentional non-compliance. Second, the target group has to be willing to comply. Economic incentives can motivate compliance. A strong enforcement programme can discourage noncompliant behaviour. The third condition is that the target group is able to comply. For some regulations, implementation of the policy should include
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activities such as the provision of necessary information and other technical support. If any one of these conditions is not met, non-compliance occurs. In order to ensure regulatory compliance, policymakers should direct their quality control activities not only to the drafting and publishing of a rule, but also to ensuring that the three conditions are met. Compliance with a rule is not always the full test for determining the effectiveness of regulation in achieving its goals. Full compliance with a rule may not accomplish the desired outcome. For example, full compliance may be so costly that it causes more damage than it remedies e.g. if the costs of compliance are so great that they drive legitimate enterprises out of business. Full compliance may be possible but not adequate to achieve the desired objective e.g. if the rule mandates a particular technology that does not accomplish the intended goal. The underlying problem to be solved was not understood well enough to identify the right solution. In evaluating the outcomes of regulation the policymaker should consider that regulatory compliance is important, but is not the only factor that determines policy effectiveness. The substantive achievement of regulatory objectives also depends on sound problem identification, full diagnosis of the factors and institutional incentives underlying the problem, the choice of policy instruments, and implementation. Analysis of both rule compliance and other factors that determine the policy effectiveness can help pinpoint the ways in which regulatory design can be improved. 4.7 The three necessary conditions for compliance Reasons for non-compliance can be found at three different levels: i. The degree to which the target group knows of and comprehends the rules. ii. The degree to which the target group is willing to comply either because of economic incentives, positive attitudes arising from a sense of good citizenship, acceptance of policy goals, or pressure from enforcement activities. iii. The degree to which the target group is able to comply with the rules. At each of those three levels governments should employ a mix of activities to ensure that its policy will take effect: i. Communication with the target group to inform it about its rights and duties and to explain the rules.
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ii. The use of many kinds of policy instruments (taxes, prohibitions and subsidies for example) to influence the behaviour of the target group, backed up with a variety of enforcement activities (such as inspections and sanctions). iii. Adequate implementation to make the policy workable in practice, which means that governments have to ensure that the necessary information is provided to the target group and other technical facilities or mechanisms are taken. At each of the three levels, failures can make regulations and policy ineffective. 4.8 Source and Interpretation of different sources of policy, laws and regulations
The regulations in EAC may be cited as the East African Community Customs Union Regulations (EACCUR). In these regulations, unless the context otherwise i. Committee means the East African Community Committee on Trade Remedies (EACCTR) was established under Article 24 of the Protocol ii. Council means the Council of Ministers (CM) established under Article 9 of the treaty iii. Court means the East African Court of Justice EACJ established under Article 9 of the treaty iv. Customs Law of the Community CLC means the custom law of the community established under article 39 of the protocol. v. Dumping in the relation to goods means the situations where the export price of goods imported or intended to be imported into the community is less that the normal value of like goods in the market of a country of origin as determined in accordance with the provision of these regulations and dumped product has the corresponding meaning. vi. Injury unless otherwise specified under the regulations means material injury to a domestic industry, threat of material injury to a domestic industry or material retardation of the establishment of that industry. vii. Investigating authority IA means the authority charged with the responsibility of conducting anti-dumping investigations in a PS on behalf of the committee for purpose of the regulations.
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viii. Levy means the definitive of final legal assessment or collection of a duty or tax. ix. Like product means a product which is identical, or alike in all respect to the product under consideration, or in the absence of that product another product which although not alike in all respects, has characteristics closely resembling those of the product under consideration. x. Margin of dumping means the difference between the export price and the normal value of a product. xi. Protocol means the protocol on the establishment of the EACCU. xii. Secretary General (SG) means the secretary general of the community appointed under article 67 of the treaty. xiii. Transitional Period means the transitional period provided for the article 11 of the protocol xiv. Treaty means the treaty for the establishment of the EAC. xv. TWO agreements, the purpose of these regulations means the agreement on the implementation of article VI of the general agreement on tariffs and trade 1994. 4.9 Application of the regulations. national legislation of a PS upon coming into force of the protocol. ii. Also the regulations have to be applied in conjunction with the existing national legislation of each PS for the conduct of anti-dumping investigations and reviews in each PS. iii. Where an investigation is initiated by a PS against another PS, during the transitional period these regulations shall apply. iv. Where an investigation is initiated by a PS against a foreign country, the provision of the WTO agreement shall apply. 4.10 Challenges facing Regulations Council in EAC. As shown on literature review, in order to have better control of regulations imposed to stakeholders of the organisation, the Government of EAC initiated and has implemented a number of segments for monitoring.
i. It was found that the regulations shall apply to investigations or reviews initiated under
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These segments, to a great extent, intended at ensuring policies and regulations available to Partner States (PS) and improving the management and applications of those regulations. Relatively efforts have been directed at improving procedures settled for improvement of those regulations as a result of improvement in business operations despite of efforts done by EAC government. The findings from official data observed in EAC shows that there is a gap between actual performance and estimates, the researcher noted some of the reason is inability to apply regulations imposed, however this has been shown by respondents that were due to; misunderstand, illiteracy and deterioration of policies and regulations set by the EAC government and its management. At this juncture the research question and its objective in challenges facing regulations as a result of hindrance in business performance have been attained. 4.11 Summary The analytical framework presented in Figure 4.5 enables us to identify and stylise the different types of regulatory influence (enabling, motivating, constraining) that causally contribute to business performance outcomes. It has come to the knowledge of the writer of this research that regulation only produces its effects through the agency of business owners and other actors with whom they causally interact that is actual and prospective competitors, customers, employees, suppliers, infrastructure providers, regulatory authoritie s. We stress the variety of business owner responses to regulation founded on their variable resources, capabilities and motivations to adapt. The researcher presents a detailed analysis of business performance in EAC to examine these regulatory influences and the conditions that support or hinder their causal impact on particular business performance outcomes. As another alternative to conventional regulation, governments have sometimes required enterprises simply to report or publicize the risks associated with their products or processes, thus providing government, consumers and communities with information relevant to firms social performance. Information disclosure has long been the major thrust of regulatory systems governing securities markets and other aspects of corporate finance. Such disclosure strategies are also found increasingly in a variety of areas of social regulation. The outcome consistent with the view that business firms can be concerned about compliance with their social licence as well as with specific regulatory requirements.
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Although much research has been supportive of flexibility-enhancing regulatory innovations like information disclosure, performance standards, market-based incentives and management based regulation, the research literature also points to some of the potential limitations of these approaches. As with any approach to law and policy, the newer approaches to regulation can be implemented ineffectually, failing to achieve regulatory goals or even creating unintended side-effects. It provides a noteworthy example of some of the potential problems that can arise when governments give more discretion to regulated firms though the implication for approaches to regulation seems clear. Also sometime approaches temper the rigidity that can accompany conventional regulatory strategies, they present particular needs for effective monitoring and enforcement since they are being used, inherently, in contexts where firms private interests do not comport completely with the ov erall demands society places on business.
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CHAPTER FIVE 5.0 Research Summary, Conclusion, Recommendations and Policy implications This chapter presents findings and analysis of the study on the use policy and regulations in facilitating business performance at the East African partner states ie Tanzania, Uganda, Rwanda, Kenya and Burundi. The main objective of this study was to examine and address issues concerning the use of regulations in facilitating effective business performance so as to attain intended output. 5.1 Summary The main objective of this study was to analyze the quesequences and challenges that affect regulations and enforcements in relation to business performance. Throughout this dissertation report, a number of issues were addressed as related to the analysis of regulatory intervention and enforcement in relation to business performance. Specifically the purpose of this dissertation was to establish. i. Uses of regulatory intervention and enforcement. ii. The regulations resources in business entity used to ensure business performance. iii. The link between business performance and regulations in the organization. iv. The roles of regulations and enforcements stakeholders. v. The appropriate model of regulations and enforcements be developed and updated to fit the need of stakeholders in the organization. To achieve the objectives of the study, data was collected using three data collection instruments: The interviews which were conducted with the insiders at EAC and the supporting staffs, students of MSc F&I, some of staff of Institute of Accountancy Arusha (IAA). Other data collection instruments used included participant observation and a review of documentary sources. 5.1.1 Summary of the findings
The researchers approach to explaining how regulatory intervention and enforcement influences business performance has been presented. The approach was specifically designed to capture the complexity and inter-related nature of the factors that underpin
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differences in business performance. And within this to explain why and how businesses tend to experience different performance outcomes despite a common regulatory environment. We use both qualitative and quantitative data to demonstrate how and in what contexts policy and regulation impacts upon the performance of businesses. The analysis of the interviews with the two business organization lead us to conclude that regulation generates multiple influences which can be enabling and motivating as well as constraining. These influences, operating simultaneously, shape the activities of business owners and other stakeholders whose actions underpin business performance outcomes. These influences operate whether or not owner-managers (and other stakeholders) are explicitly aware of them. The impact of regulation on business performance is not simply a reflection of the properties of regulation (for example, the scope of obligations or their complexity), important though these are. The performance outcomes experienced in practice also depend on how business owners and other stakeholders respond to it. Agents adaptations to regulation and thus the business performance outcomes that result depend on firms internal resources and capabilities, and on the external context in which they operate; particularly product, labo ur and capital market conditions. The main objective of this study was to analyze the impact of regulatory intervention and enforcement towards business development in fastening development activities. Throughout this dissertation report, a number of issues were addressed as related to the analysis of regulatory intervention and enforcement in relation to business performance. Specifically, the following were the findings: 5.2 Conclusion The researcher is acknowledged that generally the form of regulation is likely to matter as much as if not more than its stringency in influencing competitiveness of the business, however there are many theoretical contributions to that advance the case for market based instruments (eg taxes) as being more efficient than command and control regulations (eg pollution ceilings, technology standards). But very few studies have provided empirical evidence on this proposition- in part because of the difficulties of measuring the form of regulations. Moreover, some of the studies do no t confirm the greater efficiency on market
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based mechanism although that may be in part because the regulations in question have been moderate to cater for the vested interest of incumbent firms. Though there is strand in the recent literature that suggest more from a theoretical than an empirical standpoint that even genuine market based mechanism may not necessarily generate productivity as well as the business outcomes where the organization involved are locked into old technological trajectories. This has been termed as path dependency and it is argued in some part of the literature will only be addressed if regulation based on business ethics and market mechanism is incorporated in a wider package of measures designed to bring about general improvements in resource use. We now have significant conceptual and empirical depth to the construct of regulation as viewed in the context of businesses organization. This is an important conclusion for many reasons not least of which is the opportunity it provide s in moving on to the next stage of the analysis which is to investigate the nature of the relationship between regulatory intervention and business performance. The researcher also collected data on business attributes and growth performance. And the descriptive analysis used to provide the outcome reflecting the complexity of the relationship with many significant direct and indirect connections between the individual regulation and performance indicators. The researcher is confident that this way of viewing regulation has both conceptual meaning and even statistical robustness. We now have significant conceptual and empirical depth to the significance of regulation. 5.3 Recommendations Since business managers vary in their capacity to discover, interpret and adapt to regulation, they also vary in the business objectives they seek to achieve and these will also shape how they adapt to regulation. Those with greater resources; that is finance, equipment, management capability, workforce knowledge and skills are better placed to deal positively with regulation. Where businesses lack the resources to develop new practices and products, their capacity to adapt to regulation is constrained. Businesses also vary in the business objectives they seek to achieve and these also shape how they adapt to regulation.
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Whether regulation enables and motivates business managers to change practices and products, as opposed to simply absorbing any additional costs that arise, also depends on the wider conditions within which business owners operate. For instance, where business owners perceive product or process innovation as essential to maintaining competitiveness, regulatory change will likely motivate, whether acknowledged explicitly or not, the search for new products and processes. The researcher comes out with the results that confirm that regulation is enabling and motivating for business owners as well as constraining. Therefore it should be stressed that this is a potential. It does not mean that business owners do, in fact, act upon this enablement. However business managers must have the resources, and be motivated, to exploit them. Causal powers exist independently of events and experiences. This has important implications for the future development of business support and the regulatory environment which has been discussed in chapter four. Although the costs and constraints associated with regulation were at the forefront of business managers minds, the analysis also suggest that many business managers were aware that regulation offers opportunities to develop more efficient ways of working and/or of increasing income. Almost a three quarter of the sample claimed their business organization was able to deal with new regulations and sizeable minorities reported impacts on the firms that provide benefits. Second, a key correlate of many of the core regulation variables is manager knowledge. Those managers reporting being well-informed about the range of regulations affecting their businesses tended to adapt more dynamically and to experience the best business performances. This suggests that knowledge of regulation coupled with the internal capacity to respond positively can and does enable business owners to adapt business practices and products to overcome some of the constraining influences of regulation. However, managers of fast growth enterprises such as EAC were significantly more likely to report that the introduction of new regulations had encouraged them to take action to ensure their businesses remain competitive and to claim that they were able to adapt more quickly. It is found that fast turnover growth firms (but not fast employment growth firms) were more likely to report regulation as beneficial. This is further evidence that it is not simply the
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regulations themselves that cause business performance outcomes but, rather, it is how businesses adapt to new regulations that is the major influence on performance. As with other aspects of the business environment such as increased input prices, changing technologies and patterns of consumer demand it is those goods and service providers best able to adapt quickly and effectively to the changing landscape that are most likely to prosper. The challenge for the Better Regulation agenda is to seek to develop ways in which growing businesses can be more able to cope with the regulatory environment. 5.4 Policy implications. This research has provided an in-depth analysis of the nature of the relationship between regulations and business performance and this understanding allows us to set out some policy implications. At the outset we must be clear that the analysis does not allow us to say anything about how many regulations nor what they should be. Neither do these findings detract in any way from the established better regulation agenda. Rather, our findings suggest the possibility of complementary policy measures which have the potential to enhance the performance of at least some businesses over and above that stemming directly from the establishment of better regulation. In particular, we develop two inter-related policy. The first concerns the realm of business support and builds on our findings that knowledge and capacity are important dimensions of how regulatory intervention and enforcements impacts upon business performance. We argue that there needs to be a greater emphasis upon familiarizing business owners with the regulatory environment and a need to build internal capacity to deal with regulations. An extension of this argument would be that as the regulatory environment is simplified the outcome for business may well be less than optimum without support to enable them to adapt effectively. The second policy area relates to Impact Assessments and, more specifically, the Firms Impact Test (FIT). Policymakers must recognize there will not be a single business effect but many different ones and that part of the reason why the effects of regulation may vary relates to the internal capacity to cope with them. The obvious implication here is that regulatory exemptions need to be based on aspects of this capacity rather than on the more easily accessible areas such as size. Size on its own is not always a good indicator of the capacity of a business to cope effectively with the introduction of new regulations.
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If there is to be a greater emphasis on familiarization and capacity within the business support framework to help businesses cope better with the regulatory environment then the associated range of costs need to be built into the ex-ante impact assessment of the evolving regulatory environment. In brief, there is a need to acknowledge the costs of building capacity within businesses entity. Indirect regulatory influences are a major source of dynamism amongst any business organization, though perhaps largely unacknowledged, in the competitive market system. In developing Impact Assessments, more emphasis should be placed on indirect influences on business performance. Recognizing that regulations that constrain business owners by placing obligations upon them might also enable and motivate them and other businesses to adapt products and processes in order to reduce costs and/or increase trading revenues is important. 5.5 Limitation of the Study The research work encountered the following limitations in the course of data collection, analysis and presentation. These are i. Time constraint: the study has been limited to only three months, and this was not enough to collect all data required for the study. ii. Some documents which are necessary for the research were considered confidential; hence employees did not give necessary information required for the research. iii. Incomplete return of questionnaire: The returned questionnaire was not be 100% complete, some of respondents were too busy with their work and others provided wrong information. This incomplete return of questionnaires has affected the result of the research in one form or another. 5.6 Resolution of limitations However the researcher highlights the following solution which used to overcome the above limitation of the study. i. During the study period, the researcher utilized the time given so as to collect data required at a reasonable level
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ii. The researcher established integrity and sincerity with the insiders of the organization so as to obtain the necessary information from employees. iii. The researcher had to follow up all questions which will be submitted to the respondent so as to get information required.
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CHAPTER SIX 6.0 6.1 Critical evaluation of the study Introduction
The chapter gives analysis of general environment experienced during research writing. The discussion will base on the success and challenges the researcher encountered during the research project. However, the chapter introduces the project management technique used to overcome those downsides experienced. Lastly the chapter will portray the way forward to improve this project if it will be required to repeat it again. 6.2 Project Management review The task of formulating idea, planning and writing this dissertation has been a challenging and rewarding experience. At the beginning the idea was to test the power of regulatory intervention and enforcement in relation to business performance. The objective was to examine the impact of regulatory intervention and enforcement towards business performance in fastening development activities. However the use of project management technique during the research period was very important as it helped to reduce confusion as already a researcher had challenges overcoming tool on hand. 6.3 Success Data collection for this dissertation started on the August 14 th, 2012 at EAC and was expected to last for two weeks, and being completed on August 28 th 2012. However, as a researcher was able to collect data for the entire period as it was planned in both internatio nal organization and local organization which are EAC and NEWL. The work of collecting data was succeed for almost 80% though it was somehow hard to face some of staff and to intervene their work, but the procedure for data collection went well as it was p lanned and successfully the dissertation has been written as a final stage of MSs F&I course. it was not easy to issue questionnaire and arrange for interview within the planned time as shown by Gantt chart (see appendix). The well delivered data primary and secondary one helped a researcher to analyse critically and succeeded to answer all the research questions. 6.4 Challenges of the study During data collection, the researcher experienced challenges such as extreme bureaucracy, negative attitudes from some targeted groups and, difficulty in meeting senior management
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officials due to their busy schedules. Despite these challenges, sufficient data was collected which portrays a true picture of the use of regulations system in facilitating effective business performance in EAC partner state.In particular there were several constraints a researcher experienced during dissertation writing, the following were encountered. 6.4.1 Time Time given for writing is search proposal, data collection and dissertation writing was ve ry limit. Therefore the researcher couldnt go beyond to what could be attained in respect of time given. Therefore, in this juncture the researcher was steering clear of on any matter which could arise due to very short time given. It was very intricate to write proposal and thesis report within a period of two months. Even though the report has already submitted, it kept a researcher in a hard time ever experienced before, because there was no time to rest in day time and night. I suggest that time for research should be extended at least to six months including proposal writing. Moreover there is a need to increase number of individuals for pilot survey to check the validity of data collection instruments. 6.4.2 Data collection Collection of data was somewhat cumbersome as some of participants were not cooperative either by not give any response on questionnaires distributed and others delayed to respond, therefore the information needed was not deployed on time as a result of late dissertation writing. Therefore the researcher had to understand the nature of data to be collected, the researcher prepared an introduction letter apart from asking them to participate in this research, the respondent were guaranteed the on confidentiality of the data given that all information given was for research purposes and not otherwise. 6.4.3 Availability of targeted group of people In some extent it was a tough work to reach some of targeted group of people as some of them are in the high rank in the organization, so to meet them was not easy. Sometime they used to give unfulfilled appointment and others refused completely to accept the request to be among respondents of the dissertation written. 6.4.4 Sample size
The process of determine sample size and selecting was not easy since the p opulations in which the research had to be conducted was too large, and it involved different categories of
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people, that is those of high level in organizations for instances directors and managers, those of middle level for instances accountants, Lawyers, Masters student, Lecturers, and those of low level for instances dock workers, guardians. All those were involved in the sample selected during data collection. However some of those who were selected did not give feedback on the questionnaire distributed to them. 6.4.5 Unstable power supply Unstable power supplies have been a serious problem during dissertation writing. The Institute need to look for alternative power backup like solar power apart from generator operating at the Institute and to shorten reduce the problem of power cut offs problems. 6.5 Areas to be considered once the activity is repeated again. Since the researcher encounters a lot of obstacles throughout the period of data collections and writing this dissertation, he suggest once this activity will have to be repeated, the following will have to be considered. i. Sample size used should be increased to have enough number of representatives, so that the conclusion drawn is free from biasness. ii. The data used in this report is a time series data and panel data, using regression or econometrical mode approach will be suitable to justify the conclusion drawn from this research. iii. This work conducted only at EAC as a case study, but a reasonable number of case studies should be increased to more than one business organization, this will help to identify strength and weakness hindering the effective performance during business operation. iv. The researcher suggest that although regulation clearly does impose costs and affect businesses performance, the performance outcomes experienced in practice are not simply a function of the regulation involved. Rather they also reflect both the capacities and motivations of particular businesses and the wider contexts they operate. Therefore the research findings will have to add to the established better regulation agenda. In particular, they provide a basis for the development of new forms of business support that will enable the better regulation programme to more
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completely achieve its core aims of improving business performance. The research will also be used to further develop the firm impact test on the effects of new regulation.
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APPENDICES
Questionnaires Dear Respondent, Mr. JOHN, Sadick is conducting an academic research on THE POWER OF REGULATORY INTERVENTION AND ENFORCEMENT IN BUSINESS PERFORMANCE. This is research questionnaires; please note that information reported herein would not be published or shared with any individual or institutions. Only aggregated date and summaries will be used.
I wish to thank you in advance for your cooperation.
Yours Sincerely
John Sadick
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Are there any standard regulations and policies imposed in your esteemed business?
YES NO
If yes, Please highlight at least three of them. ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ Are they helpful for good performance of business?
YES NO
If yes, Please briefly explain how? ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ Please provide suggestion on how you ensure efficiency and effectiveness in business activities as far as the regulatory intervention and enforcement is concern? _______________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ Are you well trained enough to apply the imposed regulations?
YES NO
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If yes, for how long you have attended the training?

1 Week 1Mounth 2 Month 3 Month More months than 3
How can you analyse the risk associated with regulatory intervention and enforcement from the high risk to low risk?
High Misinterpretation of regulations Misuse of policy and regulations Neglecting regulation imposed.
Moderate
Low
None
Have your profit levels increased or decreased as a result of regulations? And have your profit levels increased or decreased? Which specific regulations have led to this increase or decrease in your profit levels? To what extent would you agree that government regulations in the EAC provide new market opportunities for your business? Note: Please answer briefly but precisely.
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Can you give me an example of one of these opportunities and tell me which particular regulation provided this opportunity? To what extent would you agree that regulation increases the level of customer confidence in your business and its products and services? Note: Please answer briefly but precisely. And to what extent would you agree that regulations encourage businesses to enter the markets you operate in or discourage businesses from entering the markets you operate in? Note: Please answer briefly but precisely. To what extent would you agree that regulations have encouraged your business to recruit or discouraged your business from recruiting additional employees? Note: Please answer briefly but precisely.
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THE POWER OF REGULATORY INERVENTION AND ENFORCEMENT IN BUSINESS PERFORMANCE A CASE STUDY OF EAST AFRICAN COMMUNITY (EAC)

By: John Sadick October 2012

The power of regulatory intervention and enforcement in business performance.

THE POWER OF REGULATORY INTERVENYION AND ENFORCEMENT IN BUSINESS PERFORMANCE

Author : Student ID: Course Title: Module: Date:

The power of regulatory intervention and enforcement in business performance.

................................................................................ Mr.Papias Njaala (Supervisor)

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance. Dedication

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

CHAPTER THREE ............................................................................................................... 23

CHAPTER FOUR ................................................................................................................. 33

The power of regulatory intervention and enforcement in business performance.

References ......................................................................................................................... 61 Appendices ......................................................................................................................... 66

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

This study deals with the following research questions:

Scope of the study

The following are the significance of the study:

The power of regulatory intervention and enforcement in business performance.

Figure 1; Dissertation structure

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

Business Performance Outcome

Control Variables Eg. Risk, Political.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

CHAPTER THREE 3.0 Research Methodology

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

Data collection methods

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

The power of regulatory intervention and enforcement in business performance.

CHAPTER FOUR 4.0 4.1 Presentation and discussion of findings Introduction

Table 1; Response on imposed regulations

The power of regulatory intervention and enforcement in business performance.

Figure 3; Response on imposed regulations

The power of regulatory intervention and enforcement in business performance.

Yes No Not Sure

Percentage (%) 58.33333333 12.5 29.16666667