Identify the three common components of modern legal systems and explain their relevance to managers.
Answer: Unquestionably, legal systems differ from country to country, primarily because of differences in tradition, precedent, usage, custom, or religious precepts. Even so, the purpose of every legal system is to establish a comprehensive legal network to regulate social activities.
As such, modern legal systems share three components to achieve this goal, specifically:
1. A system of constitutional law designed to guarantee an open and just political order
2. A system of criminal law designed to safeguard the social order
3. A system of civil and commercial laws designed to ensure fairness and efficiency in business transactions.
Aspects of all three components bear on the decisions made by managers and foreign investors. Certainly, differences in each will adjust how managers see the legal system in a particular country. When the legal system is functioning well, no matter how it blends these three components, it ensures that a society can pursue economic and social development and, when disagreements arise, resolve them without collapsing into anarchy.