Small Retailer and Service Company Accuracy in Evaluating the Legality of Specified Practices

This study examined the degree to which small retail and service company managers were familiar with important federal laws. Further, it assessed differences between these two types of firms in managerial cognizance of the regulations. The findings revealed reasonable knowledge of the federal restrictions, accompanied by some important inaccuracies. Generally, small retail managers were found to be more knowledgeable than small service company managers. The study discussed here examined the extent to which small retail and service company store managers are informed about a number of consequential federal laws. The discussion considers the seriousness of this topic and focuses upon various small retailer and service company practices that are particularly vulnerable to mandate. Finally, it sets forth an empirical assessment of the knowledge small retail and service companies have about federal laws. Small retail and service company cognizance of federal legislation is a field which deserves analysis. In essence, the law is one of the major means by which managers learn about and internalize socially responsible forms of behavior (Frederick 1998). There is a possibility that managers can overestimate the extent of their understanding of the law and erroneously conclude that they can judge which activities are legal and which are not. These managers are needlessly exposing themselves to possible prosecution, lawsuits, and other legal actions (Heinzerling 1998). Federal regulations affect many of the strategies and tactics that firms might pursue. There are constraints on such activities as hiring and firing employees, collusion with competitors, working with suppliers, personal selling, advertising, sales promotion, pricing, and sexual harassment, to name only some (Government Executive 1998; Robinson et al. 1998). Further, regulations imposed by one agency to overcome a particular problem sometimes run counter to the regulations imposed by another agency (Dutton 1998). Changes in the regulations over time may compel managers to continuously monitor new laws. For example, the U.S. Department of Labor's Occupational Safety and Health Administration has recently been attempting to impose ergonomic standards on the workplace as a means of decreasing work hazards such as musculoskeletal disorders (Morgan 1999). Other areas that have witnessed recent alterations in regulations include internet communications (Schulman 1998), income taxes (Patterson 1998), S corporations (Saunders 1999), "make or buy" decisions (Levore 1998), personnel policies for disabled persons (Zugelder and Maurer 1998), green marketing (Brown and Karagozoglu 1998), franchising (Emerson 1998), and bankruptcy (Skeel 1998). Managers of small retailers and service companies often carry a more substantial burden than those who work for large enterprises. Local, state, and regional managers in the employ of larger companies are not responsible for numerous activities regulated by the federal government, many of which are centered at the division or corporate level (such as procurement and advertising). Managers in smaller firms have a broader range of responsibilities and hence may have to be acquainted with a larger variety of regulations. Further, large retail and service company managers frequently have recourse to specialized attorneys retained by the firm. This arrangement is less frequently encountered in smaller operations. Hypotheses This study investigated the degree to which a sample of small retail and service company managers could accurately differentiate between legal and illegal practices. It also examined whether the perceptions of legality of small retail managers differed from the perceptions of small service firm managers. A sample of store managers received a questionnaire containing a listing of business practices and were requested to examine the listing and to indicate the degree to which they believed each practice was legal or illegal. …