The Business and Society Relationship

Chapter

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Prepared by Deborah Baker Texas Christian University
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.
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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
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The Business and Society Relationship

 Business scandals  Business issues  Broad societal concerns

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Business and Society
The collection of private, commercially oriented organizations A broad group of people and other organizations, interest groups, a community, a nation.

Business

Society

Business and society interrelate in a macroenvironment as stakeholders.
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Society as the Macroenvironment

Social

Economic

Political

Technological

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Segments of the Macroenvironment
Segment Social Focus Demographics, lifestyles, social values Nature and direction of the economy in which business operates
Processes for passing of laws and election of officials. Interactions between firms, politics, and government Changes in technological advancements taking place in society
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Economic

Political

Technological

A Pluralistic Society
Strengths  Prevents concentration of power Weaknesses  Pursuit of self-interest  Proliferates organizations and groups with overlapping goals  Forces conflicts to center stage  Promotes inefficiency

 Maximizes freedom of expression and action

 Disperses individual allegiances  Creates diversified set of loyalties  Provides checks and balances 8

Business and Stakeholder Relationships

Figure 1-2

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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

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Social Environment, Business Criticism, and Corporate Response
Affluence Education Awareness

Factors in the Social Environment Rising Expectations Rights Movement Victimization Philosophy

Entitlement Mentality

Business Criticism

Increased Concern for the Societal Environment
Figure 1-3

A Changed Social Contract
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Factors in the Social Environment
     
Affluence and education Awareness through television and the Internet Revolution of rising expectations Entitlement mentality

Rights movement
Victimization philosophy

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Society’s Expectations Versus Business’s Actual Social Performance
Society’s Expectations of Business Performance

Social Performance: Expected and Actual

Social Problem

Social Problem

Business’s Actual Social Performance

1960s
Time
Figure 1-4

2000s
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Business Criticism: Use & Abuse of Power

Business Power

The ability or capacity to produce an effect or to bring influence

Iron Law of Responsibility

In the long run, those who do not use power in a manner society considers responsible will tend to lose it

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Levels and Spheres of Corporate Power
Levels Spheres Economic Social/Cultural Individual