1.4.3 Legal systems
A country's legal system is heavily influenced by the political system so managers of international business must acquaint themselves with key aspects of the legal system. Areas which demand attention by managers include:
- property rights , which concern the legal rights to use a resource and any income which may be derived from that resource
- intellectual property , a concept which subsumes patents, copyright and trademarks
Countries vary in the degree to which property rights are enforced. These rights may be at risk from private action (for example, theft, piracy, blackmail) by private individuals or groups and public action : that is, the violation of property rights by politicians and government bureaucrats through devices such as excessive taxation, permits and licences, and expropriation.
Like property generally, intellectual property is also at risk from theft and piracy. The 'pirating' of computer software and CD-ROMs is a very good example of the theft of intellectual property.
In addition to concerns with intellectual property and other property rights, businesses moving into foreign countries must become familiar with product safety and product liability laws which specify product safety standards and the extent to which manufacturers are held responsible when their products cause injury, death or material damage, as well as contract law which specifies the rights and obligations of the parties to a business contract and which will expose both literal and cultural differences between countries.
Finally, in the politico-legal context managers should be aware of ethical issues including the morality of doing business with a totalitarian regime, the marketing of unhealthy products in developing countries and the practice of giving bribes, to name but a few. The following reading from your textbook explores the legal issues in international business further whilst the article by James (2002) concentrates more on intellectual property rights.
In your text
Hill 2005, Chapter 2, pp. 49-57.
Reading 1.6
James, D. 2002, 'Patently pending', Business Review Weekly ,
5-11 September, pp. 64-67.
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