Business Government Society

The Great Fish Market, Jan Brueghel the Elder, 1603

Business Government Society
Business broad term encompassing a range of economic actions
and institutions.
Government refers to structures and processes in society that
authoritatively make and apply policies and rules.
Society a network of human relations that includes three
interacting elements:
Ideas
Institutions
Material things
MODELS OF GOVERNMENT
BUSINESS - SOCIETY
1 - The Market Capitalism Model
1 - The Market Capitalism Model
The market capitalism model depicts business as operating within a
market environment, responding primarily to powerful economic
forces.
The market acts as a buffer between business and nonmarket
forces.
History and nature of markets
Adam Smith, The Wealth of Nations
Capitalism
Managerial capitalism
1 - The Market Capitalism Model
Important assumptions of the market capitalism model:
Government interference in economic life is slight (laissez-faire).
Individuals can own private property and freely risk investments.
Consumers are informed about products and prices and make
rational decisions.
Moral restraint accompanies the self-interested behavior of
business.
Basic institutions such as banking and laws exist to ease commerce.
There are many producers and consumers in competitive markets.
1 - The Market Capitalism Model
Market capitalism model perspective conclusions
about the BGS relationship:
Government regulation should be limited.
Markets discipline private economic activity to promote
social welfare.
The proper measure of corporate performance is profit.
The ethical duty of management is to promote the
interests of shareholders.
2 - The Dominance Model
 2 - The Dominance Model
Proponents of the dominance model believe that corporations and a
powerful elite control a system that enriches a few at the expense
of many.
Populist reform movement opposed the dominance model.
Marxism emerged in Europe about the same time.
Most accurate in the 1800s, but is being resurrected due to the fear
of transnational corporations in a global context.
3 - The Countervailing Forces
Model
 3 - The Countervailing Forces
Model
Countervailing forces model conclusions:
Business is deeply integrated into an open society and must
respond to many forces, both economic and noneconomic.
Business is a major initiator of change in society through its
interaction with government, its production and marketing activities,
and its use of new technologies.
Broad public support of business depends on its adjustment to
multiple social, political, and economic forces.
BGS relationships continuously evolve as changes take place in
the main ideas, institutions, and processes of society.
4 - The Stakeholder Model
 4 - The Stakeholder Model
Stakeholders are those whom the corporation benefits or burdens by
its actions and those who benefit or burden the firm with their
actions.
Primary stakeholders
Secondary stakeholders
Debate about how to identify who or what is a stakeholder.
Stakeholder model is an ethical theory of management in which the
welfare of each stakeholder must be considered as an end.
 4 - The Stakeholder Model
Criticism of the stakeholder model:
It is not a realistic assessment of the power relationships between the
corporation and other entities.
There is no single, clear, and objective measure to evaluate the combined
ethical/economic performance of a firm.
Advocacy for the stakeholder model:
A corporation that embraces stakeholders performs better.
It is the ethical way to manage because stakeholders have moral rights that
grow from the way powerful corporations affect them.
IMPLICATIONS FOR
BUSINESS
 Roles of Government and
Business
What should be the respective roles of business and
government in our socioeconomic system?

Given all of the tasks that must be accomplished to make

our society work, which of these tasks should be handled
by the government and which should be handled by
business?

How much autonomy are we willing to allow business?

 Types of Games
Value Net Games
Competition and cooperation between business

Public Interest Games

Coalitions of businesses and industry associations against nonbusiness
organizations such as unions, environmental organizations etc

Government acts as rule maker, referee and player in both types.

Types of Games
Strategies in Value Net Games
Strategies in Public Interest
Games