The Business and Society Relationship

Chapter 1
Prepared by Deborah Baker
Texas Christian University

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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,

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.

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Society as the Macroenvironment

Social Economic

Political Technological

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 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
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 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
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 Business and Stakeholder Relationships

Figure 1-2 9
 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

Entitlement Victimization
Mentality Philosophy

Business Criticism

Increased Concern for the

A Changed Social Contract
Societal Environment
Figure 1-3 11
 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
Expected and Actual
Social Performance:

Social Problem

Social Business’s Actual

Problem Social Performance

1960s 2000s
Time
Figure 1-4 13
 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

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 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 15
 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 16
 Focus of the Book

Managerial
Approach

Business Stakeholder
Ethics Management

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 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.

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 Business Ethics

Refers to issues of right, wrong,

Ethics fairness, and justice.

Business Focuses on ethical issues that arise

Ethics in the commercial realm.

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 Stakeholders

Individuals or groups with which

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

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 Organization and Flow of Book
Business, Society, and Stakeholders
1. The Business and Society Relationship
PART
2. Corporate Citizenship: Social Responsibility, Responsiveness and
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Performance
3. The Stakeholder Approach to Business, Society, and Ethics

Corporate Governance and Strategic Management Issues

4. Corporate Governance: Foundational Issues
PART
5. Strategic management and Corporate Public Affairs
TWO
6. Issues and Crisis Management

Figure 1-7 21
 Organization and Flow of Book
Business Ethics and Management
7. Business Ethics Fundamentals
PART
8. Personal and Organizational Ethics
THREE
9. Business Ethics and Technology
10. Ethical Issues in the Global Arena

External Stakeholder Issues

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

Figure 1-7 22
 Organization and Flow of Book
Internal Stakeholder Issues
17. Employee Stakeholders and Workplace Issues
PART
18. Employee Stakeholder: Privacy, Safety, and Health
FIVE
19. Employment Discrimination and Affirmative Action

CASES

Figure 1-7 23

 Business
 Society
 Macroenvironment
 Social environment
 Economic environment
 Technological environment
 Pluralism
 Special-interest society
 Affluence
 Education
 Revolution of rising
expectations
Selected Key Terms
 Social problem
 Entitlement mentality
 Rights movement
 Victimization philosophy
 Business power
 Iron Law of Responsibility
 Social contract
 Business ethics
 Stakeholder management
 Ethics
 Stakeholders
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