Business & Society
Ethics, Sustainability, and Stakeholder
Management
Eighth Edition
Archie B. Carroll
Ann K. Buchholtz
© 2012 South-Western, a part of Cengage Learning
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Chapter 1
The Business
and Society
Relationship
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Learning Outcomes
1. Characterize business, society, and their interrelationships.
2. Describe pluralism and identify its attributes, strengths,
3.
4.
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and weaknesses.
Clarify how our pluralistic society has become a specialinterest society.
Identify, discuss, and illustrate the factors leading up to
business criticism.
Single out the major criticisms of business and
characterize business’s general response.
Explain the major themes of the book: managerial
approach, ethics, sustainability and stakeholder
management.
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Chapter Outline
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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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Business and Society
Business
•
The collection of private,
commercially oriented organizations ranging in
size from sole proprietorships to corporate giants.
Society
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A community, a nation, or a broad group of people
with common traditions, values, institutions, and
collective activities and interests.
Business and society interrelate in a
macroenvironment as stakeholders.
•
A macroenvironment is the complete societal
context in which the organization resides.
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Conceptualizing the
Macroenvironment
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Segments of the Macroenvironment
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Pluralism
A diffusion of power among a society’s many groups.
 Involves decentralization and diversity of power
concentration.
Strengths
Prevents concentration of
power.
Maximizes freedom of
expression and action.
Weaknesses
Pursuit of self-interest.
Proliferates organizations
and groups with
overlapping goals.
Disperses individual
Forces conflicts to center
allegiances.
stage.
Creates diversified set of Promotes inefficiency.
loyalties.
Provides checks and
balances.
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Business and Stakeholder
Relationships
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Special Interest Groups
• Make life more complex for business and
government
• Can number in the tens of thousands in
some societies
• Pursue their own focused agendas
• Are active, intense, diverse and focused
• Can attract a significant following
• Often work at cross purposes, with no
unified goals
 A special-interest society is pluralism taken
to the extreme
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Social Environment, Business
Criticism and Corporate Response
Affluence
Education
Awareness
Factors in the Social Environment
Rising Expectations
Rights Movement
Victimization
Philosophy
Entitlement
Mentality
Business Criticism
Increased Concern for the
Societal Environment
A Changed Social Contract
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Factors in the Social Environment
• Affluence and education
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Create higher expectations of major
institutions.
Growing public awareness through
television, movies, and the Internet.
• Revolution of rising expectations
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Creates a social problem, a gap between
societal expectations for social conditions
and social realities.
Entitlement mentality
Rights movement
Victimization philosophy
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Society’s Expectations Versus
Business’ Actual Social Performance
Social Performance:
Expected and Actual
Society’s
Expectations
of Business
Performance
Social Problem
Business’s Actual
Social Performance
Social
Problem
1960s
2010s
Time
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Business Criticism: Use and Abuse
of Power
Business Power
• The ability or capacity to produce
an effect or to bring influence to bear on a
situation or people.
Iron Law of Responsibility
• In the long run, those who do not use
power in a manner society considers
responsible will tend to lose it.
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Levels and Spheres of Corporate
Power
Levels
Spheres
Macro
Level
Intermediate
Level
Micro
Level
Individual
Level
Economic
Social/Cultural
Individual
Technological
Environmental
Political
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Elements in the Social Contract
Laws or Regulations:
“Rules of the Game”
Business
Shared Understandings
of Each Other
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Society or
Societal
Stakeholder
Groups
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Focus of the Book
Managerial
Approach
Business
Ethics
Sustainability
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Stakeholder
Management
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Managerial Approach
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What changes are occurring or will occur in society’s
expectations of business that mandate business’s taking
the initiative with respect to particular societal or
ethical problems?
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Did business, in general, or our firm, in particular, have
a role in creating these problems?
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Can we reduce broad social problems to a size that can
be effectively addressed from a managerial point of
view?
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What are the specific problems, alternatives for solving
these problems, and implications for management’s
approach to dealing with social issues?
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How can we best plan and organize for responsiveness
to socially related business problems?
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Urgent versus Enduring Issues
Short-Term
• Issues or crises arise on the spur of the
moment and management must formulate
quick responses.
Long-Term
• Issues or problems are a long-term concern
and management must develop a
thoughtful organizational response.
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Business Ethics
Ethics
• Refers to issues of right, wrong,
fairness, and justice.
Business Ethics
• Focuses on ethical issues that arise
in the commercial realm.
 Ethics questions permeate business’s activities
as it attempts to interact with major
stakeholder groups.
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Sustainability
• Sustainable development meets the needs
of the present without compromising the
ability of future generations to meet their
own needs.
• Has become one of businesses’ most
pressing mandates.
• Includes the following criteria:
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Environmental
Economic
Social
 Concerns businesses’ abilities to survive
and thrive over the long term.
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Stakeholders
Stakeholders
• Individuals or groups with which business
interacts and who have a vested interest in
the firm.
 External stakeholders
 Internal stakeholders
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Organization and Flow of the Book
Part One: Business, Society, and Stakeholders
1.The Business and Society Relationship
2.Corporate Citizenship: Social Responsibility, Responsiveness and
Performance
3.The Stakeholder Approach to Business, Society, and Ethics
Part Two: Corporate Governance and Strategic Management
Issues
4.Corporate Governance: Foundational Issues
5.Strategic Management and Corporate Public Affairs
6.Issues and Crisis Management
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Organization and Flow of the Book
Part Three: Business Ethics and Management
7.Business Ethics Fundamentals
8.Personal and Organizational Ethics
9.Business Ethics and Technology
10.Ethical Issues in the Global Arena
Part Four: External Stakeholder Issues
11.Business, Government, and Regulation
12.Business 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
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Organization and Flow of the Book
Part Five: Internal Stakeholder Issues
17.Employee Stakeholders and Workplace Issues
18.Employee Stakeholders: Privacy, Safety, and Health
19.Employment Discrimination and Affirmative Action
Cases
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Key Terms
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Affluence
Business
Business ethics
Business power
Society
Economic environment
Education
Entitlement mentality
Ethics
Iron Law of
Responsibility
Macroenvironment
Managerial approach
Pluralism
Political environment
• Revolution of rising
expectations
• Rights movement
• Social contract
• Social environment
• Social problem
• Society
• Special-interest society
• Stakeholder
management
• Stakeholders
• Sustainability
• Technological
environment
• Victimization
philosophy
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