Chapter 1
The Business and Society Relationship
LEARNING OUTCOMES
After studying this chapter, you should be able to:
1. Describe and explain business and society as foundational concepts. Describe how society
3. Define a special-interest society and describe how it evolves.
4. Identify, discuss, and illustrate the factors leading up to business criticism and corporate
response. What is the general criticism of business? How may the balance of power and
responsibility be resolved? What is the changing social contract?
TEACHING SUGGESTIONS
INTRODUCTION – This chapter introduces some important basic concepts in the business and
society discussion, including pluralism, special-interest societies, business criticism, corporate
power, corporate social responsibility to stakeholders, and sustainability.
KEY TALKING POINTS – The instructor is likely to find that students have given little or no
thought to the role that business plays in our society. Most undergraduates (most people for that
matter) have never really considered the influence of business in their lives, and so fall victim to
the “is/ought” fallacy. They assume that just because something “is” a certain way, then it
“ought” to be that way. Thus, they assume that because business is the dominant social
institution in our society, it should be. One of the main challenges that the instructor faces in this
chapter is simply getting students to reflect on the power that business holds in our society. Most
don’t realize the influence that corporations hold over them because they have never given the
PEDAGOGICAL DEVICES – In this chapter, instructors may utilize a combination of:
Cases:
1-Wal-Mart- The Main Street Merchant of Doom
2-The Body Shop (A) – Pursuing Social and Environmental Change
3-The Body Shop (B) – Reputation is Tarnished
19-Should Directors Shine Light on Dark Money?
23-McDonald’s Coffee Spill
24-The Betaseron Decision (A)
25-The Hudson River Cleanup and GE
26-Cloud Computing – Earth’s Friend or Foe
27-New Belgium Brewing, Defining a Business on Sustainability
Ethics in Practice Cases:
Working for My Cup or the House?
Is Business Power Too Great?
Spotlight on Sustainability:
Sustainability—What Does It Mean?
LECTURE OUTLINE
I. BUSINESS AND SOCIETY
A. Business: Defined
B. Society: Defined
II. SOCIETY AS THE MACROENVIRONMENT
III. A PLURALISTIC SOCIETY
A. Pluralism Has Strengths and Weaknesses
B. Multiple Publics, Systems, and Stakeholders
1. Affluence and Education
2. Awareness through Television, Movies, the Internet, and Social Media
a. 24/7 News and Investigative Programs
3. Revolution of Rising Expectations
4. Entitlement Mentality
5. Rights Movement
6. Victimization Philosophy
B. A General Criticism of Business: Use and Abuse of Power
1. Levels of Power
2. Spheres of Power
VI. FOCUS OF THE BOOK
A. Managerial Approach
1. Urgent versus Enduring Issues
B. Business Ethics Theme
C. Sustainability Theme
D. Stakeholder Management Theme
SUGGESTED ANSWERS TO DISCUSSION QUESTIONS
Students should recognize that their answers to these discussion questions should be well
reasoned and supported with evidence. Although some answers will be more correct than others,
students should be aware that simplistic answers to complex questions, problems, or issues such
as these will never be “good” answers.
1. Question: In discussion of business and society, why is there a tendency to focus on large-
sized rather than small- or medium-sized firms? Have the corporate ethics scandals of the
past decade affected small- and medium-sized firms? If so, in what ways have these firms
been affected?
Answer: We tend to focus on large firms when discussing business and society for a
number of reasons. Large firms are more visible, their products and services are more
Ch 1, Instructor’s Manual, Business & Society, Carroll 10e
medium-sized firms. On the one hand, the scandals may have caused a general increase in
the level of distrust of business. This had a chilling effect on stock prices and made it
2. Question: What is the one greatest strength of a pluralistic society? What is the one
greatest weakness? Do these characteristics work for or against business?
Answer: The textbook lists several strengths (prevents power from being concentrated,
maximizes freedom of expression, allegiance of individuals to groups is dispersed, creates
a diversified set of loyalties to many organizations, and provides a set of checks and
balances) and weaknesses (no unified direction to align individual pursuits, proliferating
groups have overlapping goals, and promotes conflicts among groups). Students could
3. Question: Identify and explain the major factors in the social environment that create an
atmosphere in which business criticism takes place and prospers. Provide examples. How
are the factors related to one another? Has the revolution of rising expectations run its
course? Or is it still a reality among young people today?
Answer: Many factors contribute to an atmosphere conducive to criticism of business.
Affluence, or the level of wealth, allows people the luxury of being critical of social
institutions (as Amartya Sen and John Kenneth Galbraith have both noted, people in
poverty are primarily concerned with finding enough to eat, not the cause or cure for social
ills). In addition, affluence often leads to rising expectations. People generally expect
4. Question: Give an example of each of the four levels of power discussed in this chapter.
Also, give an example of each of the spheres of business power.
Answer: Dr. Epstein identified four levels of corporate power—macro, intermediate,
micro, and individual. The macro level encompasses the entire corporate system. This can
be seen in business’s ability to effectively lobby Congress to pass laws that enhance
corporations’ ability to operate profitably, the fact that nearly half of the largest economies
in the world are corporate, not national, or in the profound effects that business has on
individuals’ lives. The intermediate level of power resides within particular groups of
Spheres of power include economic, political, social/cultural, technological,
environmental, and power over the individual. The fact that corporations control billions
of dollars in assets and sales shows their economic power. Nearly half of the largest
economies in the world are corporations, not nations. Corporate lobbying efforts, political
action committees (PACs), and direct influence on elected officials (e.g., former Vice
President Cheney’s “secret” energy policy meetings with corporate leaders) all show the
political power enjoyed by corporations. Virtually all new technology is manufactured and
distributed by corporations, and much of it is invented in corporate R&D labs—such as
5. Question: Explain in your own words the Iron Law of Responsibility and the social
contract. Give an example of a shared understanding between you as a consumer or an
employee and a firm with which you do business or for which you work.
Answer: The iron law of responsibility basically says that there is a balance required
between power and responsibility to others. The more power an organization has, the more
Ch 1, Instructor’s Manual, Business & Society, Carroll 10e
institutions that states the rights and duties of each party. As consumers, we have a right to
expect that the products we buy will work properly and not subject us to unreasonable
risks. This right extends to financial services products. Abusive practices with credit cards
and other predatory practices showed that this social contract was being violated on a
GROUP ACTIVITY
This group activity focuses on business criticism and the corporate response. Divide students
into groups of four to five students. Distribute the latest edition of national, regional and local
newspapers among different groups in the class. Have the group identify the number of articles
that criticize business or an employer-related decision. Have the group identify the number of
articles that paint business in a favorable light. Ask students to pick a negative article and a
positive article for a more in depth analysis. Students should consider the following questions
for each article:
Is the business practice or decision accurately portrayed?
Once students have had an opportunity to discuss the review questions in their group, ask each
group to report the number of negative versus positive articles and to summarize their answers to
the review questions for the class. Look for trends or discrepancies to discuss with the class as a
whole. For example, ask students to consider whether they believe business is treated differently
by national, regional and local papers based on the responses of each group. Further, ask
INDIVIDUAL ASSIGNMENT
Distribute the following instructions to each student:
Select a company and research recent news items that have been released regarding the
company. In a written response, note whether the articles were positive or negative for the
company. Describe how the company’s actions may impact an individual’s perception of
business in the United States. Identify responsibilities that the company has to various
