Business & Society: Ethics,

Sustainability, and
Stakeholder Management,
11e
Chapter 1: The Business and
Society Relationship

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1
 Business and Society

• Business - the collection of private, commercially oriented organizations ranging in size

from one-family proprietorships to multinational corporations.
• Society - a community, nation, or broad grouping of people with common traditions,
values, institutions, and collective activities and interests.
• Macroenvironment - the total environment outside the firm, the comprehensive societal
context in which the organization resides.
• Society - is the macroenvironment in which businesses operate.

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2
 Discussion Activity 1.1.1

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?

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3
 Society as the Macroenvironment (1 of 2)

• Conceptualizing the Macroenvironment

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4
 Society as the Macroenvironment (2 of 2)

• Conceptualizing the Macroenvironment

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5
 Pluralistic Societies

• Prevents power from being concentrated in the hands of a few.

• Maximizes freedom of expression and action and strikes a balance between monism, on
the one hand, and anarchy on the other.
• Disperses the allegiance of individuals to groups.
• Minimizes the danger that a leader of any one organization will assume full control.
• Provides a built-in set of checks and balances, in that groups can exert power over one
another with no single organization (business or government) dominating and becoming
overly influential.

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6
Business and Stakeholder Relationships

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7
 Special Interest Society

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.

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8
Social Environment Factors, Business Criticism
and Corporate Response

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9
 Factors in the Social Environment

Affluence and Education

• Create higher expectations of major institutions.
• Growing public awareness through television, movies, the Internet, and social media.

Rising expectations
• Create a social problem, a gap between societal expectations for firm’s social
performance and social realities. This can lead to:
• Entitlement mentality
• Rights movement

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10
Society’s Expectations versus Business’s Actual
Social Performance

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11
A General Criticism of Business: Use and Abuse of
Power.
Business Power-
• The capability or ability to produce an effect, have impact, 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.

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12
 Discussion Activity 1.4.1

How will the COVID-19 pandemic alter business and society relationships? Identify and
discuss some of the major effects and impacts.

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13
 Levels of Business Power

Business power exists and may be manifested at several different levels. Four such levels
include:
• Macro level
• Intermediate level
• Micro level
• Individual level

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14
 Business’s Response: A Changing
Social Contract

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15
 Discussion Activity 1.4.2

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 pattern of rising expectations run its course? Or is
it still a reality among young people today?

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16
 Discussion Activity 1.4.3

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. Is business power excessive?

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17
 Discussion Activity 1.4.4

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.

Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18