The Business/Society Relationship

Introduction
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 firms behavior ethical? Is the firms behavior socially responsible? What is the firms 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 Business Owners

Government

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 Prevents concentration of power Maximizes freedom of expression Disperses individual allegiances Creates diversified set of loyalties Provides checks and balances Weaknesses Pursuit of self-interest Proliferates organizations and groups with overlapping goals Forces conflicts to center stage Promotes inefficiency

Business and Selected Stakeholder Relationships

Environmental Groups General Public Federal Local State

Community
Corporate Raiders Private Citizens

Government
Unions

Business Owners Consumers Employees

Older Employee Women Minorities Civil Liberties Activists

Institutional Investors 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 Rights Movement Victimization Philosophy

Factors in the Social Environment

Rising Expectations Entitlement Mentality

Business Criticism

Increased Concern for Societal Environment

A Changed Social Contract

Business Criticism
Factors in the Social Environment
Affluence and education Awareness through television Revolution of rising expectations Entitlement mentality Rights movement Victimization philosophy

Societys Expectations versus Actual Social PerformanceSocietys

Social Performance: Expected and Actual Expectations of Business Performance

Social Problem Social Problem

Businesss Actual Social Performance

1960s Time

1990s

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
Spheres

Level

Level

Micro Level Individual Level

Economic Social/Cultural Individual Technological Environmental Political

Business Criticism Response

Elements In the Social Contract
Laws or Regulations: Rules of the Game

Business
Two-Way Shared 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

Society or Societal Stakeholder Groups

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