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Lecture Business and society: Stakeholders, ethics, public policy: Chapter 1 - Anne Lawrence, James Weber

Chapter 1 - The corporation and its stakeholders. In this chapter, you will learn: Understanding the relationship between business and society, and the ways in which they are part of an interactive system; considering the purpose of the modern corporation; knowing what is a stakeholder and who a corporation’s market and nonmarket and internal and external stakeholders are;. | The Corporation and Its Stakeholders Chapter 1 Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Ch. 1: Key Learning Objectives Understanding the relationship between business and society, and the ways in which they are part of an interactive system Considering the purpose of the modern corporation Knowing what is a stakeholder and who a corporation’s market and nonmarket and internal and external stakeholders are Conducting a stakeholder analysis, and understanding the basis of stakeholder interests and power Recognizing the diverse ways in which modern corporations organize internally to interact with various stakeholders Analyzing the forces of change that continually reshape the business and society relationship 1- Introduction – The Business and Society Relationship Business: Any organization that is engaged in making a product or providing a service for a profit Society: Human beings and the social structures they collectively . | The Corporation and Its Stakeholders Chapter 1 Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Ch. 1: Key Learning Objectives Understanding the relationship between business and society, and the ways in which they are part of an interactive system Considering the purpose of the modern corporation Knowing what is a stakeholder and who a corporation’s market and nonmarket and internal and external stakeholders are Conducting a stakeholder analysis, and understanding the basis of stakeholder interests and power Recognizing the diverse ways in which modern corporations organize internally to interact with various stakeholders Analyzing the forces of change that continually reshape the business and society relationship 1- Introduction – The Business and Society Relationship Business: Any organization that is engaged in making a product or providing a service for a profit Society: Human beings and the social structures they collectively create Business and society are highly interdependent 1- Introduction – The Business and Society Relationship We borrow “General Systems Theory (GST)” from biology to explain this relationship; first introduced in 1940s Theory posits that organisms cannot be understood in isolation, even though they have clear boundaries; they can only be understood in relationship to their surroundings Adapted to management theory means that business firms are embedded in a broader social environment with which they constantly interact Business and society together form an interactive social system (shown graphically in the following slide) 1- Business and Society: An Interactive System Figure 1.1 1- Two critical questions: What is the purpose of the modern corporation? To whom, or what, should the firm be responsible? 1- Two contrasting views: “Ownership Theory of the Firm” (also called property or finance theory) The firm is seen as the property of its owners (shareholders) Argues the .