The Firms and Society

Presented by:
Eko Suwardi, M.Sc. Ph.D
Universitas Gadjah Mada
A Visiting Associate Professor at
Jonkoping International Business School
Sweden

Source: BUSINESS AND SOCIETY, Corporate Strategy, Public Policy, Ethics, 7th ed
A range of levels at which to conceptualize
business, government, social relations

Economy/ Politics/
Business Government

Society/
Culture

Broad Conceptual Level

 Governments:

Industry in general;
Industry sectors
national,foreign,
state, local

Stakeholders

Intermediate Level
 Specific
Corporation Government
X Agencies and actors

Primary and
Secondary
stakeholders

Micro (Issues Management) Level

 Relations between a business firm
and its primary stakeholders
EMPLOYES
WHOLESALERS; (Unions) STOCKHOLDERS

RETAILERS Distribute Sell labor

product
Invest
capital
BUSINESS
Compete FIRMS
(Owners;
COMPETITORS managers) CREDITORS
Sell labor

Buy Sell
product
materials

CUSTOMERS SUPPLIERS
Relations between a business
firm and its secondary stakeholders

LOCAL
CUMMUNITES
FEDERAL,
THE STATE, AND LOCAL
GENERAL PUBLIC Positive, Jobs, GOVERNMENTS
Environment
negative
opinion
Regulation,
taxes
BUSINESS FOREIGN
Advice,
FIRMS
research
(Owners;
GOVERNMENTS
BUSINESS
SUPPORT managers) Friendly, And Customers
GROUPS hostile

Image, Social
publicity
demands

SOCIAL
MEDIA Local and
ACTIVIST
international GROUPS
 Doing a Sustainable Business
(Savitz, Andrew, W., 2006, Triple Bottom Line: how today’s best-run companies are achieving
economic, social and environmental success- and how you can too)

“a sustainable corporation is one that

creates profit for stockholders while
protecting the environment and improving
the lives of those with whom it interacts”
“ Sustainability …the art of doing business
in an interdependent world”
 Triple Bottom Line
(Savitz, Andrew, W., 2006, Triple Bottom Line: how today’s best-run companies are achieving
economic, social and environmental success- and how you can too)

Economics Environment Social

Sales, profit, ROI Air quality Labor practice
Tax paid Water quality Community
Impact
Monetary flow Energy usage Human right

Job created Waste produced Product

responsibility
 Among Eleven Roles of the Firm
(Woot, Phillip de,1982) Toward a societal strategy for the firm: a discussion)

Role Economic Social Political

Profit Maximiser Profit dominates Regarded as an Avoids
(1) impediment to involvement
profit
Defender of free The business of Reacts against Stands up for free
enterprise (3) business is social component enterprises
business
Socially Prime emphasis Interactively Positively involved
progressive (6) on profit engaged in formulation of
industrial policy
Global actor (7) Prime emphasis Interactively Assumes a
on profit engaged responsibility to
foster balance
between national
and inter’l policy
Global Marketing and Green Issues
(Amine, Lyne S, 2003, An Integrated micro-macrolevel discussion of global green issues:
”It is’t easy being green”)

• Impacts of Business Activities on

Environment
• Threaths to Sustainable development
• Those impact are viewed from individual
and business perspectives
• It is not easy being green
• It is the responsibilities of individual,
consumers and managers.
 Some Concerns
(Zimer et al (1994) In Amine, Lyne S, 2003, An Integrated micro-macrolevel discussion
of global green issues: ”It is’t easy being green”)

• Waste
• Wildlife, the Biosphere
• Population, health
• Energy awereness
• Environmental technology
Every party: Being Green is a complex
(Amine and Arnold (1999), In Amine, Lyne S, 2003, An Integrated micro-macrolevel
discussion of global green issues: ”It is’t easy being green”)

It is not simply 4 Rs:

• Redisign,
• reduce,
• reuse and
• recycle
 Internet Survey of Some 25000 peoples in
175 countries
(www.cnn.com), In Amine, Lyne S, 2003, An Integrated micro-macrolevel discussion of
global green issues: ”It is’t easy being green”)

• 71 % respondent are disatisfied with the

state of environment
• 67% said that its getting worse
• 75% expressed the belief that the
government should bear main
responsibility
 Integrarting the Macro-Microlevel
(Kilbourne and Beckman, 1998, p.513), In Amine, Lyne S, 2003, An Integrated micro-
macrolevel discussion of global green issues: ”It is’t easy being green”)

• Consumers / individual
• Corporation
• International Business Environment
• Context of global green issues:
environmental protection and sustainable
development.
Integrating Macro-Micro level Model
Self Actualization needs
Maslow’s Esteem Needs
Safety needs
Hierarchy Physiological needs
Of Needs

Global Business Domestic

Company
Environment Environment
Decisions
Global Business
Environment Uncontrollable(uncontrollable)
(controllable)
Uncontrollable

Cateora’s
Environmental
Analysis Model
 It isn’t Easy Being Green
• When firms do something with being green,
public may perceives differently or even
conversely
• When firms have done the best for being green,
however it may be still considered less
• Producing green product may put the firms in a
niche market ( more expensive price of product)
• External environmental factor may force green
firms to not being consistent with individual value
• Compromise or trade-off may be taken in reality.
 Existing Conditions
• Existing approach to the marketing /
environment still focus on managerial issues,
rather than challenging the underlying premises
of the Dominant Social Paradigm (DSP).
• Protest on Seattle Summit, WTO, WB, IMF and
APEC Meeting and G8 (Business Week 2001
p.8) challenge the prevailing capitalist system
that allow managers to continue on their
established pathway to profit without questioning
their business goals and the consequences.
 The Need for New Paradigm
• Being green is not enough, rather fundamental
rethinking consumption goal and capitalist and
shareholders
• Need a radical new vision, how society will be
organized: interface among consumers,
management, global market environment and
green concerns
• Consumption cannot increase infinitely in a finite
world.
• Change business philosophy to sustainable
business and better quality of live (QOL).
 The Need for New Paradigm
• Some individual CEOs begin to mitigate
some negative results of their own
company’s results
• The Center for a New American Dream is
dedicated to reduce and shift US.
consumption and built strong families and
communities.
• Regeneration and nutrition
 Regeneration and nutrition
McDonough and Braungart’s (2002) in Amine, Lyne S, 2003, An Integrated micro-
macrolevel discussion of global green issues: ”It is’t easy being green”

• Carcinogens are designed out of the

process
• Put safe ingredient that can become
biological nutrient
• Potentially harmful substances “technical
nutrient” to be disassembled, or
• Reused so it doesn’t enter the ecosystem.
Integrating Macro-Microlevel Model
Self Actualization needs
Maslow’s Esteem Needs
Safety needs
Hierarchy Physiological needs
Of Needs

Global Business Domestic

Company
Environment Environment
Decisions
Global Business
Environment Uncontrollable(uncontrollable)
(controllable)
Uncontrollable

Cateora’s
Environmental
Analysis Model
 The Combination between
Maslow’s and Cateora’s Model
• Center marketing decisions are
controllable
• Domestic legal, marketing, competition
and economy
• Global business environment: economic,
sociocultural, political-legal, technological
and competitive environment
 The Combination between Maslow’s
and Cateora’ Model
• Many Concentric circles representing
marketing decisions are controllable with
different environment
• This encourage managers to understand
complex international business and its
environmental factors
• Green concerns is influenced by manager
and policy makers at both national and
global levels.
 The Combination between
Maslow’s and Cateora’s Model
• Managers and institutional actions in a
specific external environment may trigger
individual green global.
• Further, government may legislate
pollution restriction drives corporate and
institution to act that affect individual
consumers quality of life (QOL).
 The Combination between
Maslow’s and Cateora’s Model
• These process dynamically and has multiplier
effects in each level or step.
• Mutual enriching system produce different
effects at different levels with each interaction,
somewhat like spiral.
• This combination model may able to show how
complex global green is and the difficulty of
adequate and effective business solutions in the
context of existing dominance social paradigm
(DSP) and current attitude toward globalization.
 How do the factors interact one to
another
• Genetically Modified (GM) food “Franken food”
continuing disagreement agreement between
US firms and EU and African consumers
• Application of new science and technology such
as bovine growth hormone (BGH) in dairy cattle,
antibiotic in chickens and irradiation in milk and
meat fears about unintended health
consequences among consumers worldwide.
• The GM food aid to developing countries may
also increase dependency of the counties to
import GM food, rather than plant domestic seed
 How do the factors interact one to
another
• In year 2001, agricultural ministers from 12
EU countries responded to European
consumers’ fear about safety food by
calling for creation of an action plan for the
development of organic farming and food
This is known as Copenhagen Declaration
• It is a new opportunity for food producers
in EU and important source of competitive
advantage.