The Business/Society Relationship

1
 Chapter One Objectives
• Characterize business, society, and their relationship to
each other
• Describe pluralism and identify its strengths and
weaknesses
• Clarify how our pluralistic society became a special-
interest society
• Identify and discuss factors leading up to the criticism of
business
• Identify the major criticisms of business and characterize
business' response
• Identify the major themes of this book: managerial
approach, ethics, and stakeholder management
2
 Chapter One Outline
• Business and Society • Business Criticism and
• Society as the Corporate Response
Macroenvironment • Focus of the Book
• Our Pluralistic Society • Structure of the Book
• Our Special-Interest • Summary
Society
 Introduction to Chapter One

The Business and Society Relationship

• Specific incidents versus broad societal concerns
– Firestone tires versus discrimination
• Questions arise as to the behavior of the firm
– Is the firm’s behavior ethical?
– Is the firm’s behavior socially responsible?
– What is the firm’s correct response?
– What is the role of the firm in society?
Business and Society Relationship
Business is the collection of private, profit-oriented
organizations.
Society is a broad group of people and other organizations,
interest groups, a community, a nation. Business and society
interrelate in a macroenvironment as stakeholders.

Community Government

Business
Owners Employees

Consumers
Society as the Macroenvironment
The macroenvironment is the total
societal context in which the firm
resides and is composed of four
segments:
•Social •Political

•Economic •Technological
 Society as the Macroenvironment
Four segments of the Macroenvironment
• Social environment focuses on demographics,
lifestyles and social values
• Economic environment focuses on the economy
• Political environment focuses on the legislative
process, election process and the interaction
between firms, politics and government
• Technological environment focuses on the
changes in technological advancement
 Pluralistic Society
Diffusion of Power
Strengths
Weaknesses
• Prevents concentration of
power • Pursuit of self-interest
• Maximizes freedom of • Proliferates organizations
expression and groups with
• Disperses individual overlapping goals
allegiances • Forces conflicts to center
• Creates diversified set of stage
loyalties • Promotes inefficiency
• Provides checks and
balances
 Business and Selected Stakeholder
Relationships
Environmental Groups
Local
State
General Public
Federal
Community Government
Unions
Corporate
Raiders Business Older
Employee
Private
Owners Employees
Women
Citizens
Consumers Minorities
Institutional Civil Liberties
Investors Activists

Consumer Activists Product Liability Threats

 Special-Interest Society
• Special interests make life more complex for business
• Special interest groups number in the tens of
thousands
• Special interest groups each pursue their own limited
agenda
• Special interest groups are more active, intense, diverse
and focused
• Special interest groups attract a significant following
increasing revenue and power
Social Environment, Criticism, and
Corporate Response
Affluence Education Awareness
Factors in the Social Environment
Rising Expectations Rights Movement

Entitlement Mentality Victimization Philosophy

Business Criticism

Increased Concern for A Changed Social

Societal Environment Contract
 Business Criticism
Factors in the Social Environment

• Affluence and education

• Awareness through television
• Revolution of rising expectations
• Entitlement mentality
• Rights movement
• Victimization philosophy
 Society’s Expectations versus
Actual Social PerformanceSociety’s
Expectations
of Business
Performance
Expected and Actual
Social Performance:

Social
Problem

Social Business’s
Problem Actual Social
Performance

1960s 1990s
Time
 Business Criticism
Power
• Use and abuse of power
– Business power refers to the ability or capacity to
produce an effect or to bring an influence to bear
on a situation or people
• Iron Law of Social Responsibility
– In the long run, those who do not use power in a
manner society considers responsible will tend to
lose it
 Business Criticism
Levels and Spheres of Corporate
Power
Levels Macro Intermediate Micro Level Individual
Spheres Level Level Level
Economic
Social/Cultural
Individual
Technological
Environmental
Political
 Business Criticism
Response
Elements In the Social Contract
Laws or Regulations:
“Rules of the Game”
Society or
Business Societal
Stakeholder
Two-Way Shared Groups
Understandings of Each
Other
Business and Society: Ethics and Stakeholder Management, 5E • Carroll & Buchholtz
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved
1-16
 Focus of Book
• Managerial approach
• Ethics theme
• Stakeholder management theme
 Chapter 1 • The Business/Society Relationship

Structure and Flow of Book

BUSINESS, SOCIETY, AND STAKEHOLDERS

1. The Business and Society Relationship

2. Corporate Citizenship: Social Responsibility, Responsiveness and
Part One Performance
3. The Stakeholder Approach to Business

STRATEGIC MANAGEMENT FOR CORPORATE

STAKEHOLDER PERFORMANCE

Part Two 4. Strategic Management and Corporate Affairs

5. Issues Management and Crisis Management

Business and Society: Ethics and Stakeholder Management, 5E • Carroll & Buchholtz
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved
1-18
 Chapter 1 • The Business/Society Relationship

Structure and Flow of Book

BUSINESS ETHICS AND MANAGEMENT
6. Business Ethics Fundamentals
7. Personal and Organizational Ethics
Part Three
8. Business Ethics and Technology
9. Ethical Issues in the Global Arena

EXTERNAL STAKEHOLDER ISSUES

10. Business, Government and Regulation
11. Business’s Influence on Government and Public Policy
12. Consumer Stakeholders: Information Issues and Responses
Part Four 13. Consumer Stakeholders: Product and Service Issues
14. The Natural Environment as Stakeholder
15. Business and Community Stakeholders

Business and Society: Ethics and Stakeholder Management, 5E • Carroll & Buchholtz
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved
1-19
 Chapter 1 • The Business/Society Relationship

Structure and Flow of Book

INTERNAL STAKEHOLDER ISSUES

16. Employee Stakeholders and Workplace Issues

17. Employee Stakeholder: Privacy, Safety, and Health
Part Five
18. Employment Discrimination and Affirmative Action
19. Owner Stakeholders and Corporate Governance

Cases

Business and Society: Ethics and Stakeholder Management, 5E • Carroll & Buchholtz
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved
1-20
 Selected Key Terms
• Affluence
• Business
• Business ethics
• Business power
• Economic environment
• Education
• Entitlement mentality
• Ethics
• Iron Law of Responsibility
• Macroenvironment
• Pluralism
• Political environment
• Revolution of rising
expectations
• Rights movement
• Social contract
• Social environment
• Social problem
• Society
• Special-interest society
• Stakeholders
• Technological environment