Ô



The Study of Business,
Government, and Society
This chapter:
a d troduces four basic models of the busi ess-gover me t-
society relatio ship.
a Defi es basic terms a d explai s the authors· approach to
the subject matter.

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 hat is the Business²Government²
Society Field?
a |


O broad term e compassi g a ra ge of
actio s a d i stitutio s.
a m
 O refers to structures a d processes i
society that authoritatively make a d apply policies
a d rules.
a w  O a etwork of huma relatio s that i cludes
three i teracti g eleme ts:
a ddeas
a d stitutio s
a Material thi gs

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 hy is the BGS Field Important to Managers?

a To succeed i meeti gs its objectives a busi ess must

be respo sive to x  its    a d its
    e viro me t.
a 0ecog izi g that a compa y operates ot o ly withi
markets but withi a
 is critical.
a î basic agreeme t or

 
 exists betwee
the busi ess i stitutio a d society.
a Ma agers must respect a d adhere to society·s
expectatio s.

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 Four Models of the BGS Relationship
The Market Capitalism Model

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 Four Models of the BGS Relationship
The Market Capitalism Model (continued)
a The market capitalism model depicts busi ess as
operati g withi a market e viro me t, respo di g
primarily to powerful eco omic forces.
a The market acts as a x  betwee busi ess a d
o market forces.
a istory a d ature of markets
a îdam Smith, 

  

a Ôapitalism
a Ma agerial capitalism

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 Four Models of the BGS Relationship
The Market Capitalism Model (continued)
a dmporta t assumptio s of the market capitalism model:
a Gover me t i terfere ce i eco omic life is slight (laissez-
faire).
a d dividuals ca ow private property a d freely risk
i vestme ts.
a Ôo sumers are i formed about products a d prices a d
make ratio al decisio s.
a Moral restrai t accompa ies the self-i terested behavior of
busi ess.
a Basic i stitutio s such as ba ki g a d laws exist to ease
commerce.
a There are ma y producers a d co sumers i competitive
markets.

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 Four Models of the BGS Relationship
The Market Capitalism Model (continued)
a Market capitalism model perspective
co clusio s about the BGS relatio ship:
a Gover me t regulatio should be limited.
a Markets discipli e private eco omic activity to
promote social welfare.
a The proper measure of corporate performa ce is
profit.
a The ethical duty of ma ageme t is to promote the
i terests of shareholders.

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 Four Models of the BGS Relationship
The Dominance Model

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 Four Models of the BGS Relationship
The Dominance Model (continued)
a [ropo e ts of the domi a ce model believe that
corporatio s a d a powerful elite co trol a system
that  

  at the 
 
.
a [opulist reform moveme t opposed the domi a ce
model.
a Marxism emerged i Europe about the same time.
a Most accurate i the 1800s, but is bei g resurrected
due to the fear of tra s atio al corporatio s i a
global co text.

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 Four Models of the BGS Relationship
The Countervailing Forces Model

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 Four Models of the BGS Relationship
The Countervailing Forces Model (continued)
a Ôou tervaili g forces model co clusio s:
a Busi ess is deeply i tegrated i to a ope society a d must
respo d to ma y forces, both eco omic a d o eco omic.
a Busi ess is a major i itiator of 
 i
 through its
i teractio with gover me t, its productio a d marketi g
activities, a d its use of ew tech ologies.
a Broad  x
  of busi ess depe ds o its


to multiple social, political, a d eco omic forces.
a BGS relatio ships co ti uously 

as cha ges take place
i the mai ideas, i stitutio s, a d processes of society.

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 Four Models of the BGS Relationship
The Stakeholder Model

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 Four Models of the BGS Relationship
The Stakeholder Model
a Stakeholders are those whom the corporatio
be efits or burde s by 
actio s a d those who
be efit or burde the firm with   actio s.
a [rimary stakeholders
a Seco dary stakeholders
a Debate about how to ide tify  or 
 is a
stakeholder.
a Stakeholder model is a ethical theory of
ma ageme t i which the 
of each


  must be  
 as a e d.

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 Four Models of the BGS Relationship
The Stakeholder Model (continued)
a Ôriticism of the stakeholder model:
a dt is ot a realistic assessme t of the power
relatio ships betwee the corporatio a d other
e tities.
a There is o si gle, clear, a d objective measure to
evaluate the combi ed ethical/eco omic performa ce
of a firm.
a îdvocacy for the stakeholder model:
a î corporatio that embraces stakeholders performs
better.
a dt is the ethical way to ma age because stakeholders
have moral rights that grow from the way powerful
corporatio s affect them.

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 Text Approach to the Subject Matter
a Ôomprehe sive scope
a d terdiscipli ary approach with a
ma ageme t focus
a Use of theory, descriptio , a d case studies
a Global perspective
a istorical perspective

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