What is the proper relationship between business and society

The Relationship Between The Society and Entrepreneurship and the Likely Benefits

what is the proper relationship between business and society

Concept of business and society; Relationship between business and and wrong, fair and unfair, and morally correct—when they make business decisions. CHAPTER 1: THE RELATIONSHIP BETWEEN BUSINESS AND SOCIETY codes or principles that provide guidance for morally appropriate behavior in. Read this essay on Relationship Between Business and Society. is the activity which provides a good or service with a social and moral contract to society.

Corporations can be either state-owned or owned by individuals and may operate either for profit or for non-profit. A corporation is owned by its investors and shareholders, who elect a board of directors for policy orientation and hire managerial team and workers for execution of its vision and mission. A corporation can be either privately held by a small group of individuals, or publicly held, with publicly traded shares listed on a stock exchange.

Business, therefore, is an ongoing activity. For example, businesses recruit workers, buy supplies, and borrow money; they also sell products, and pay taxes. Business and society are highly interdependent.

Business activities impact upon other activities in society, and actions by various social actors continuously affect business.

Society defined Society, on the other hand, is a network of individuals, groups and organizations. Society, in its broadest sense, refers to human beings and to the social structures they collectively create.

In a more specific sense, the term is used to refer to segments of humankind, such as members of a particular community, nation, or interest group.

Forces Shaping Society and Business Relationship - MBA Teacher

As a set of organizations created by humans, business is clearly a part of society. Business, therefore, is inextricable linked to society. The dynamic environment of business One core argument is that the external environment of business is dynamic and ever changing. In the eyes of business owners during the 19th century and the first half of the 20th, their role was to produce goods and services and make as much money as possible for themselves and shareholders.

The public's duty was to buy the goods and services. It was not until the s that the traditional roles changed and "stakeholders," i. Today, that relationship continues to evolve toward a symbiotic partnership between business, government, and the broader society. Most business leaders now take it for granted that companies have obligations to communities and private-sector interests beyond simply providing jobs and delivering goods or services.

Laws regarding environmental and social issues, for the most part, are placing heightened demands on corporations to honor widely held social values, such as enforcing fairness in the workplace and controlling the degradation of natural resources. Moreover, at the dawn of the 21st century many in society expect businesses not only to comply with such regulations, but also to exceed the letter of the law, uphold high standards of ethics in all dealings, and invest a portion of their profits in socially constructive ventures or philanthropy—behaviors that some have termed "corporate citizenship.

The majority of manufacturers in the United States were located in the North. The war spurred those manufacturers to improve production techniques in order to provide the goods required by the Union armies. Once the war ended, entrepreneurs sought new ways to mass produce the goods that the country's growing population demanded.

Advances in mass production techniques facilitated by the war made possible an abundance of goods and services for the public. Need to operate in-plant machinery and to transport goods led to a reliance on petroleum products. Pierpont Morgan, and George Pullman, took advantage of the demands to provide the capital, transportation, oil, and other goods and services required to make the country grow and prosper.

what is the proper relationship between business and society

Few people gave any thought to what impact industry would have on the environment or society. All industrialists cared about was profits, and they had the federal government on their side, as well. The government did not want to involve itself in the affairs of business during the late s. It discouraged labor unions and in general gave business owners carte blanche in running their companies as they saw fit. After all, the public did not seem dissatisfied with the way businesses ran their affairs.

That began to change, however, in the late s. Several monopolies existed in the United States toward the end of the 19th century. Industrial combinations controlled such commodities as whisky, oil, transportation, sugar, lead, and beef. Individual states, particularly those in the South and West, passed antitrust laws to regulate monopoly activities.

what is the proper relationship between business and society

However, they could not impact industries that crossed state lines. Thus, there grew a demand from the public to enact federal legislation to control interstate commerce. The federal government was reluctant at first to involve itself in direct affairs of business.

Slowly, though, it acceded to public demands. For example, in the House and Senate passed the Interstate Commerce Act, which created the first regulatory commission in U. Three years later, the Sherman Antitrust Act of became law.

Forces Shaping Society and Business Relationship

It stated that "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal. Still, not all business leaders required government intervention to express social norms through their policies.

what is the proper relationship between business and society

A notable early 20th century example was Henry Ford, whose company established an elaborate code of living for its workers. The Ford ideology, for a time supported by a sort of social-work unit called the Ford Sociological Department, set out to instruct factory workers in proper and moral living. To advance the cause, the company distributed pamphlets advising workers not to live in overcrowded urban settings, but to seek clean and comfortable family housing.

The Ford literature even instructed employees on what the management considered were proper bathing habits. Ford was, in fact, intent on Americanizing his large immigrant work force. Beyond the negative stereotypes his policies assumed, however, they led also to more tangible drawbacks for workers who didn't fit the mold. Workers who didn't provide evidence of their wholesome living, mastery of English, and other valued traits were subject to lower pay or even dismissal.

The general legislative trend in first half of the 20th century was toward curbing businesses' clout and strengthening labor, investor, and consumer rights. This period emphasized legal remedies and safeguards for individuals who had direct dealings with companies as employees, shareholders, and customers, whereas later developments would add to that list the local communities and the broader society.

The so-called Progressive Erafollowed by the New Deal, ushered in the precursors to modern regulations in such arenas as food and drug safety and antitrust enforcement.

The s and s also brought new labor laws that began to codify certain employee rights and employer responsibilities, including a minimum wage, as well as legislation that promoted the shareholder's right to reliable information. The second world war and shifting political tides during the s and s contributed to a slowdown in the U. Some new laws of this period, notably the Taft-Hartley Act ofactually dismantled certain pro-labor policies set forth by New Deal legislation.

The decade marked a new era in social awareness concerning virtually every aspect of life. People became more concerned with the environment, corporate profits, and a wide range of social issues. Educators implemented innovative courses defining the relationship between business and society and outlining business's social responsibilities. As a result, a new "contract" between business and society, based on the latest definition of public policy, fell into place.

Under the terms of the old "contract," the success or failure of a business was based on how much money it made and how many jobs it produced. People in the s developed a new awareness of the environment and the effects manufacturing had on air, water, etc. They realized for the first time that there sometimes existed an adverse relationship between economic growth and social progress. Critics of the "business at any cost" policy pointed to a number of problems that had been ignored or overlooked for years unsafe workplaces, urban decay, discrimination in the workforce, and the increasing use of toxic substances in the production process.

To combat these problems, activists pushed for a higher level of social awareness on the part of business and among the population in general. They advocated a reduction in the social cost of doing business.

what is the proper relationship between business and society

Their goal was not to negate the old contract. They recognized that businesses had to make profits in order to survive. What they promoted was simply the addition of new policies to the old contract. Their ideas created considerable debate over the concept of social responsibility. Doing so would give business a better image in the public's eye and benefit it in the long run.

More importantly, it would help business avoid government regulation and provide business opportunities. After all, the proponents said, business has useful resources that it could employ to solve or alleviate social problems. Opponents did not fully agree, they suggested that it was not business's responsibility to solve social problems, particularly from a free enterprise stand-point. In their viewpoint, honoring social responsibilities would put American businesses at a competitive disadvantage in the rapidly emerging international competitive arena and water down their responsibilities to shareholders.

Second, they argued, corporations are not moral agents. Third, they claimed the very definition of social responsibility was so vague no one could state exactly what business's role in it would be.

Finally, they stated that business simply did not have the skills or incentives to handle social problems. In effect, opponents said, business would be shooting itself in the foot if it assumed a role as a watchdog of societal problems.

Both sides presented viable arguments, and they did agree on one central issue: Nor did it consider the competitive arena in which businesses functioned. For example, if an individual firm implemented its own social responsibility program that resulted in extra costs and reduced shareholders' profits, the company would be adversely affecting its ability to compete.


Thus, individual companies were not willing to act unilaterally in meeting social responsibilities. As a result, business in general dragged its heels in formulating a united approach to social responsibility.

Consequently, it was inevitable that the government would step in to set guidelines. Sometimes they acted individually; at other times they combined forces.

As a result, business owners complained that government was driving them out of business and destroying the traditional capitalistic American economic system. Micro-financial institutions often provides the startup capital essential to support the startup.

what is the proper relationship between business and society

Entrepreneurs get to sharpen their skills courtesy of education — Sometimes just having a business idea is not enough. One often needs extra knowledge on how to actualize these ideas. The society has various educational institutions that provide lessons that help boost the entrepreneurial skills of a person. The society is responsible for establishing policies that govern the operation of entrepreneurs— A society cannot function without the presence of policies and laws that govern its operation.

The government being part of the society, is responsible for creation of policies that foster entrepreneurship. If the government policies are not favorable for the establishment of a business, then entrepreneurship would not prosper. Society provides mentorship for young entrepreneurs — Other established entrepreneurs are part of the society. These have provide a source of mentorship for the entrepreneurs. Those who are experienced and have successfully managed to establish their business ventures can provide guidance and support to the new and aspiring entrepreneurs.

Networking — Society provides a network platforms where young people exchange ideas about common problems and issues facing the society. This, also, helps them learn what others are doing elsewhere and to see in what way such projects can be implemented elsewhere. The society is responsible for the establishment of infrastructure used by entrepreneurs — The government being part of the society encourages entrepreneurship by the establishment of infrastructures such as roads, water and electricity.

Some of these infrastructure is crucial for the growth and survival of entrepreneurs. Negative Relationship Between Entrepreneurship and Society Environmental degradation — While entrepreneurship utilizes the local resources, overutilization of the resources can lead to environmental degradation. Also, some of the products that entrepreneurs provide pollute the environment.

A good example is the manufacture of plastic bags. Unemployment — When new and innovative products are brought into the market, it puts pressure on the existing markets and since the old products may not be able to compete with the new and innovative products, they end up closing shop.