Perceived impact of different types of European Community regulations on performance of business firms in the Netherlands

The problem. Both economic and social welfare are important for the creation of national welfare, a state of societal well-being. Historically capitalism has been validated as an effective economic system for the creation of economic welfare. Capitalism, although economically effective, has also demonstrated a tendency to damage social welfare. This can occur by abusive business behavior. In order to minimize business abuses, governments have historically intervened in the economic process. An excess of government regulation, however, will stifle effective business performance.;The purpose of this study was to provide empirical data on the impact of government regulatory intervention on business performance and thereby contribute to the efforts of finding an optimal degree of regulatory intervention for the creation of national welfare.;Method. A descriptive study was conducted to examine the impact of five European Community rules on the performance of Dutch firms in the Electrotechnical and Electronic, Furniture, and Basic Chemical Product industries. Rules were classified in three categories (strategic, competitive, operating) based on criteria established in the study and analyzed by type.;Data were collected on: (a) the contribution of business activities to the firm's profitability, (b) the impact of selected EC rules on the effectiveness of various business activities, and (c) industry changes experienced by managers during 1990 and 1991.;Results. Nine hypotheses were tested and validated at the.05 level of significance using Pearson's correlation, t-tests, and analysis of variance. Based on the finite number of EC rules used in the study the findings were as follows: (1) EC rules classified as strategic rules of the game (ROG) had a significantly higher impact on the effectiveness of strategic business activities, than on the effectiveness of the operating and competitive activities. (2) EC rules classified as competitive ROG had a significantly higher impact on the effectiveness of competitive and strategic business activities, than on the effectiveness of the operating business activities. (3) EC rule "European Economic Interest Grouping" showed a significant positive correlation between its weighted impact on performance and environmental turbulence. (4) EC rules classified as strategic ROG showed significant positive correlations between the weighted impact on the firm's strategic and overall performance and business scope.