The Business and Society Relationship

Chapter 1
Prepared by Deborah Baker
Texas Christian University

1
Business and Society: Ethics and Stakeholder Management, 7e • Carroll & Buchholtz
Copyright ©2009 by South-Western, a division of Cengage Learning.  All rights reserved
 Chapter 1 Learning Outcomes
1. Characterize business, society, and their
interrelationships.
2. Describe pluralism and identify its attributes,
strengths, and weaknesses.
3. Clarify how our pluralistic society has become a
special-interest society.
4. Identify, discuss, and illustrate the factors leading up
to business criticism.
5. Single out the major criticisms of business and
characterize business’s general response.
6. Categorize the major themes of the book: managerial
approach, ethics, and stakeholder management.

2
 Chapter 1 Outline

 Business and Society

 Society as the Macroenvironment
 A Pluralistic Society
 A Special-Interest Society
 Business Criticism and Corporate Response
 Focus of the Book
 Structure of the Book
 Summary
 Key Terms
 Discussion Questions

3
 Business and Society

The collection of private,

Business commercially oriented organizations

A broad group of people and other

Society organizations, interest groups,
a community, a nation.

Business and society interrelate in a

macroenvironment as stakeholders.

4
 Segments of the Macroenvironment
Segment Focus

Social Demographics, lifestyles, social values

Nature and direction of the economy in

Economic
which business operates
Processes for passing of laws and election
Political of officials. Interactions between firms,
politics, and government
Changes in technological advancements
Technological
taking place in society
5
 A Pluralistic Society

Strengths Weaknesses

 Prevents concentration of  Pursuit of self-interest

power  Proliferates organizations
 Maximizes freedom of and groups with overlapping
goals
expression and action
 Forces conflicts to center
 Disperses individual stage
allegiances
 Promotes inefficiency
 Creates diversified set of
loyalties
 Provides checks and
balances
6
Pluralistic Society

7
 Business and Stakeholder Relationships

Figure 1-2 8
 Special-Interest Society

Special Interests groups…

 make life more complex for business and government

 number in the tens of thousands
 pursue their own focused agenda
 are more active, intense, diverse and focused
 attract a significant following
 often work at cross purposes, with no unified set of goals

9
 Social Environment, Business
Criticism, and Corporate Response

Affluence Education Awareness

Factors
Factorsin
inthe
theSocial
SocialEnvironment
Environment

Rising Expectations Rights Movement

Entitlement Victimization
Mentality Philosophy

Business
BusinessCriticism
Criticism

Increased
IncreasedConcern
Concernfor
forthe
the AAChanged
ChangedSocial
SocialContract
Contract
Societal
SocietalEnvironment
Environment
Figure 1-3 10
 Factors in the Social Environment

 Affluence and education

 Awareness through television and the Internet
 Revolution of rising expectations
 Entitlement mentality
 Rights movement
 Victimization philosophy

11
 Society’s Expectations Versus
Business’s Actual Social Performance
Are we wrong to have rising expectations? Society’s
Name a few problems experienced at any Expectations
of Business
One time.
Performance
Expected and Actual
Social Performance:

Social Problem

Social Business’s Actual

Problem Social Performance

1960s 2000s
Time
Figure 1-4 12
 Business Criticism: Use & Abuse of Power

Business The ability or capacity to produce

Power an effect or to bring influence

In the long run, those who do not use

Iron Law of
power in a manner society considers
Responsibility responsible will tend to lose it

13
 Levels and Spheres of Corporate Power

Levels Macro Intermediate Micro Individual

Level Level Level Level
Spheres
Economic

Social/Cultural

Individual

Technological

Environmental

Political

Figure 1-5 14
 Elements in the Social Contract

Laws or Regulations:
“Rules of the Game

Business Society or
Societal
Stakeholder
Groups
Two-Way Shared
Understandings of
Each Other

Figure 1-6 15
 Focus of the Book

Managerial
Managerial
Approach
Approach

Business
Business Stakeholder
Stakeholder
Ethics
Ethics Management
Management

16
 Urgent vs. Enduring Issues

1. Short-Term:
Issues or crises arise on the spur of the
moment and management must formulate
quick responses.

2. Long-Term:
Issues or problems are a long-term concern
and management must develop a
thoughtful organizational response.

17
 Business Ethics

Refers to issues of right, wrong,

Ethics fairness, and justice.

Business Focuses on ethical issues that arise

Ethics in the commercial realm.

18
 Stakeholders

Individuals or groups with which

business interacts who have a
vested interest in the firm.
Stakeholders   External stakeholders
Internal stakeholders

19
 Organization and Flow of Book
Business, Society, and Stakeholders
1.
1. The
TheBusiness
Businessand
andSociety
SocietyRelationship
Relationship
PART
2.
2. Corporate
CorporateCitizenship:
Citizenship:Social
SocialResponsibility,
Responsibility,Responsiveness
Responsivenessand
and
ONE
Performance
Performance
3.
3. The
TheStakeholder
StakeholderApproach
ApproachtotoBusiness,
Business,Society,
Society,and
andEthics
Ethics

Corporate Governance and Strategic Management Issues

4.
4. Corporate
CorporateGovernance:
Governance: Foundational
FoundationalIssues
Issues
PART
5.
5. Strategic
Strategicmanagement
managementand
andCorporate
CorporatePublic
PublicAffairs
Affairs
TWO
6.
6. Issues
Issuesand
andCrisis
CrisisManagement
Management

Figure 1-7 20
 Organization and Flow of Book
Business Ethics and Management
7.
7. Business
BusinessEthics
EthicsFundamentals
Fundamentals
PART
8.
8. Personal
Personaland
andOrganizational
OrganizationalEthics
Ethics
THREE
9.
9. Business
BusinessEthics
Ethicsand
andTechnology
Technology
10.
10. Ethical
EthicalIssues
Issuesininthe
theGlobal
GlobalArena
Arena

External Stakeholder Issues

PART 11.
11. Business,
Business,Government
GovernmentandandRegulation
Regulation
FOUR 12.
12. Business’s
Business’sInfluence
Influenceon
onGovernment
GovernmentandandPublic
PublicPolicy
Policy
13.
13. Consumer
ConsumerStakeholders:
Stakeholders:Information
InformationIssues
Issuesand
andResponses
Responses
14.
14. Consumer
ConsumerStakeholders:
Stakeholders: Product
Productand
andService
ServiceIssues
Issues
15.
15. The
TheNatural
NaturalEnvironment
EnvironmentasasStakeholder
Stakeholder
16.
16. Business
Businessand
andCommunity
CommunityStakeholders
Stakeholders

Figure 1-7 21
 Organization and Flow of Book
Internal Stakeholder Issues
17.
17. Employee
EmployeeStakeholders
Stakeholdersand
andWorkplace
WorkplaceIssues
Issues
PART
18.
18. Employee
EmployeeStakeholder:
Stakeholder: Privacy,
Privacy,Safety,
Safety,and
andHealth
Health
FIVE
19.
19. Employment
EmploymentDiscrimination
Discriminationand
andAffirmative
AffirmativeAction
Action

Assignment
Assignmentfor
forChapter
Chapter2:
2:
CASES
See
Seeififthe
thecompany
companyyou youwork
workforforPresent
Presentor
orpast
pasthas
hasaaCSR
CSR
policy.
policy.IfIfso
sowhat
whatisisit?
it? Bring
Bringititto
toclass.
class.
Be
Beprepared
preparedtototake
takeaaside.
side.
We
Wewill
willhave
haveaadebate
debateFOR FORor orAGAINST
AGAINSTCSR.
CSR.
Be
BeReady
Readytotochoose
chooseyouryourside..
side..

Figure 1-7 22