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Chapter One

The Relationship Between Business and Society

Prepared by Dr. Peter Constantinou, York University

Canadian Business and Canadian Business and Society: Society:

Ethics, Responsibilities & Ethics, Responsibilities & SustainabilitySustainability

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Chapter Outline

LO 1.1 Complexity of Business & Society: Objectives

LO 1.2 Integrity in Business: Key Terminology

LO 1.3 Three Approaches to Ethical Thinking

LO 1.4 Canadian Business System: Key Terminology

LO 1.5 Corporations: The Main Economic Institutions

LO 1.6 The People Who Run Canadian Business

LO 1.7 Factors Influencing Attitudes Toward Business

LO 1.8 The Consent of Society

LO 1.9 Academic Integrity

LO 1.10 Integration of Business and Society

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Complexity of Business & Society: Objectives Increase awareness of the Canadian

business system Identify business’s response to its role in

society Learn how business corporations have

responded to environmental challenges Focus on the perspective of the manager or

owner of a corporation

LO 1.1

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Integrity in Business: Key Terminology

Ethics of business? Stakeholder? Corporate social responsibility (CSR)? Corporate sustainability? Triple bottom line (economic, ethical, and

environmental)? Corporate citizenship?

LO 1.2

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Three Approaches to Ethical Thinking

Deontological or rule-based theories Teleological or consequential theories Virtue ethics

LO 1.3

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Canadian Business System: Key Terminology Economic system Capitalism Free enterprise system Laissez-faire capitalism Responsible enterprise system Stakeholder capitalism Clean capitalism

LO 1.4

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Corporations: The Main Economic Institutions

The Canadian business system comprises business enterprises varying from sole or single proprietorships to partnerships and incorporated entities.

Doctrine of Incorporation: Freedom of association: The association of

individuals coming together for some purpose is fundamental to forming a corporation.

When a business incorporates, a separate legal entity is created.

LO 1.5

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The People Who Run Canadian Business Owners

Direct ownership (e.g., shareholders); or Indirect ownership (e.g., mutual fund holders)

Boards of Directors Elected by shareholders Must fulfill legal and fiduciary obligations

Managers Top Managers are hired by boards of directors Oversee operations of corporation

LO 1.6

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Factors Influencing Attitudes Toward Business Standard of living Decentralized decision making Allocation of resources Self-interest Inequities in society

LO 1.7

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Factors Influencing Attitudes Toward Business Business cycle Business wrongdoing Globalization Unemployment Innovation The Media Government

LO 1.7

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The Consent of Society

Legitimacy: belief in the rightness of an institution, in this case the appropriateness of our business system to supply the goods and services wanted by Canadian society.

Social licence: is the privilege of operating in society with minimal formalized restrictions based on maintaining public trust by doing what is acceptable to stakeholders in the business and society relationship.

LO 1.8

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Academic Integrity

What percent of students cheat? 53 percent of students admit to cheating in written

assignments (Maclean’s, 2007) 56 percent of business students admit to cheating

(Maclean’s, 2007) Will the lack of academic integrity have an

influence on business integrity?

LO 1.9

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Integration of Business and Society Must be a shared value in which both

business and society benefit Goal is to reduce friction between society and

business and to increase the benefits for both Integration is the focus of the textbook/course

LO 1.10

Chapter Summary

To understand the relationship between business and society, it is necessary to be knowledgeable of the business systems.

Businesses need to be responsive to society’s expectations of its social and economic responsibilities.

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