Business, government, and society are primary institutions in the world. Business refers to organizations that specialize in the supply of consumer goods or services or both for profit or non-profit purpose. The most common forms of business include sole proprietorship, partnership, and corporations. Government is the structure that rules a nation, state, or a locality by authoritatively making policies and rules to be followed by both business and society. Society, on the other hand, is a network of individuals, groups, and organizations composed of ideas, material things, and social institutions ("Business Government and Society," 2019). Likewise, society is comprised of various cultures, attitudes, religions, and lifestyles. The three entities exist in a mutual relationship where they interact and influence one another’s goals and objectives. Business, society, and governments operate in a mutual interdependence relationship. Each institution is structured to depend and to be depended on by the other two in equal measures, thus creating a balanced interconnection. In this paper will look at the long history of interdependence and interconnection among business, society, and governments, and the continued evolution in the same dynamic environment. Further, it will focus on the existing models which explain the relationship between business, governments, and society.
The interdependence existing among business, society, and government may be termed as a system which influences and is influenced by economics, culture, and politics. The role of business affects society and the government. It determines how much money people in a particular population gets and how they spend it. It also establishes the regulations put in place by the government to ensure harmonious co-existence among the three institutions. Society affects people’s professional values and interests. Society priorities also influence people’s opinions on specific government policies and reactions to political practices (Aakhus & Bzdak, 2012). Furthermore, government policies impacts on people’s livelihood, the standard of living, professional interests, and influence success or failures of business organizations. Hence, each institution among business, society, and governments, as part of the system has a significant role to play for the mutual interdependence to thrive.
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As part of system business, society and governments are connected by invisible frameworks of interrelated operations that take a considerable period to demonstrate their influences on each other fully. The association between stakeholders is what brings out the systems. If individuals apply systems thinking, they may be able to see the patterns of interrelationships, which may help them understand to use concepts of business and society (Denhardt, 2015). For effective management and leadership, developing the ability to make decisions with an understanding and consideration of the consequences of business’ decisions on stakeholders is crucial.
Business as a Positive Force
A business organization does not operate as an independent institution. It thrives within a community sharing resources, energy, water, people, and infrastructure with society and other organizations. There are interactive interdependence and connectivity between business and society which need to be well managed. Moreover, the business operates in a dynamic environment where it must tailor its activities to keep up with the pace of a thriving society. With these modifications in place, business no longer entirely concentrates on making a profit. The changes divert business attention towards meeting the needs of the broader group of shareholders. In conducting its activity, the business also tries to keep up with the expectations of the government. Therefore, business managers have the responsibility for embracing the broader set of stakeholders as well as new approaches of conducting its operations in the changing environment. In this perspective, there is a more comprehensive outlook by business managers on their operational influence to broader entities of society and government.
Thriving Society
The society has high expectations from both business and government. Access to goods, education, safety, food, security, fair treatment, and employment are all essential requirements for creating a thriving society. These society expectations are in line the environmental needs. The need for clean air, water, and land to support crops and animal growth helps the society to grow. When both environmental and people’s needs are not met, the general society suffers. Hence society depends on the government to enact favorable regulations and provide necessary conditions for protecting the community and environment in addition to fostering growth (Denhardt, 2015). Also, society depends on business in providing goods and services, employment, fair treatment, and engaging in environmentally friendly practices. In exchange for these amenities, the community offers employees and customers for the business. It also provides taxes, workers, and votes to the government.
Government Force
The type of governance and use of government resources has a significant impact on society. Policies on amenities such as infrastructure, employment, and health determine how society thrives within an environment. Too, governments enact policies and regulations to achieve their goals. These decisions usually have a direct impact on business and society. Therefore, in a bid to sustain a thriving society, the government is obliged to provide favorable conditions for business to grow and maintain competitiveness.
Governments exist to make rules and regulations which ensure that business organizations exercise their powers in ways that benefit both government and society. Most business organizations are often profit-oriented. Many times some organizations tend to neglect societal responsibilities to maximize their profit. In controlling business practices, government regulations cater to both economic and social interests of the society. Such investments include public and environmental protection, ensuring quality goods and services, fairness in the distribution of services and products, and the general wellbeing of society (Doppelt, 2017). Financial regulations, for instance, control the prices of goods and services to avoid the exploitation of consumers. Additionally, various regulations can be distinguished. The government rules may define legal and illegal products and services under the Command and Control regulation. In environmental protection regulation, the government can illegalize the dumping of certain chemicals in water bodies. Also, the government can increase incentives for business to raise investments in society and government institutions.
History of Interdependence
The business institution is possibly the most dominant entity in the world today. As a set of companies created by individuals, business undoubtedly plays a significant role in the development of society. These organizations also depend on the government to set rules and regulations, which in turn governs the relationship between business and society. However, the role of business concerning government and society has evolved continuously since the 19th century. For example, in the 19th century and the first half of the 20th century, the role of business was to produce goods and services for the society to use while in return made maximum profits. The society role was to consume the products and services while governments oversaw the exchange of the services and goods between business and communities (Denhardt, 2015). The 1960s nevertheless saw a change in roles where stakeholders began to influence the relationship between society and trade directly. In the current era, the association has evolved into a collaborative partnership between business, society, and government.
Business managers now understand that their responsibility to communities and government’s interest goes beyond delivering goods and services, paying taxes, and providing employment opportunities. Policies concerning the environment and social problems have placed high demands on corporations to adhere to the set legalities and the widely held social norms (Denhardt, 2015). Such values and laws include preventing the degradation of natural resources and promoting fairness in the workplace. Besides, society and government expect business organizations not only to adhere to such regulations but also to exercise beyond the necessary rules and social values. Organizations have to observe high ethical standards and invest part of their profits within socially constructive ventures, including voluntary programs such as sponsorship of welfare plans, population control measures, and cultural growth.
Impact of Business on Society and Government
Business influence on society and in turn society impacts on business on equal measures. The effects may be strong or weak. For instance, an individual’s action to boycott using a particular product or service from a business organization may not have a significant effect on the organization’s share value. However, change in consumer preference may mean an end to the use of that product or service. For example, in 2002, McDonald’s experienced considerable losses in the US market when consumers reported adverse health effects from the store’s burger. The consumers shifted their preferences, and the leading food store’s management had to adhere to society demands (Aakhus & Bzdak, 2012). Business organizations hence pay close attention to societal preferences and trends.
Multiple concepts such as Business Ethics, Corporate Social Responsibility (CSR) and Corporate Philanthropy are often used interchangeably to define the relationships between business, society, and government even though each concept has a varying aim (Denhardt, 2015). Business ethics are values that define acceptable conduct in business organizations. The applicability of these conducts is influenced by different entities such as customers, competitors, government regulators, and interest groups. Typical business issues such as frauds in accounting, bribery, and defective products emerge as a result of a decline in business ethics. Corporate Social Responsibility (CSR) analyses the advanced social-economic roles of business in society ("Business Government and Society," 2019). It views the impact of business on society from a stakeholder’s perspective. CSR is a stakeholder’s view that majors on voluntary business commitments regarding both external and internal issues that are determined by individual organization’s acknowledgment of moral duties concerning the influence of its activities on society.
The society is represented in business activities by individuals and groups inform of stakeholders who influence organizations’ decisions, operations, and policies. The involvement of society in business operations is complex due to the interaction of various economic, cultural, and political factors generated by society’s institutions and ideas. Some of these factors are intended and desired, while others are unintended undesired. Society and business organization interact as stakeholders define the actions and practices of an organization. Employees, customers, creditors, and local communities are among those affected by business practices and operations. These practices influence the profitability and economic success of the business. The decisions made by business organizations impacts positively or negatively on society. Also, actions taken by the society affects the prosperity of business organizations. Also, businesses have to respond to the government’s needs (Schepers, 2010). Business influences the government mainly through public relations, interest groups, and political action committees. Business interest groups are active in presenting their ideas at the local, state, and the federal government level. At all levels of the government, there exist business stakeholders who support or oppose policies affecting trade and the role of government in business.
The Dynamic Environment
The external environment in which business, society, and governments interact is ever-changing. These institutions do not interact in a vacuum but operate in a series of dynamic social, ethical, global, political, and technological forces that powerfully shapes the interconnection among the three institutions. There is changing societal expectations everywhere around the world in business operation. The social hope of business has and continues to change over the years. People expect business organizations to play a more advanced role in societal issues and promote the development of economic status through employment and the provision of valuable goods and services. On the other hand, the business expects society to keep up with the changing aspects in business to increase their mutual interdependence. The society provides quality labor, land, and other resources required for the expanding business. The developing issues in society regularly need action by business to balance its social, legal, and economic responsibilities. Due to increased societal expectations on business, many organizations collaborate with society in exploring opportunities for the development of both institutions by supporting those at the bottom of the pyramid.
Ethical principles are essential in business interaction with other institutions. The government draws regulations, which are guidelines about right and wrong for all institutions to abide. The society also has social norms which guide how different institutions relate. Business interconnects with both government and society through abiding by the set rules and also adhering to societal norms. Ethical principles that direct business operations continue to evolve, especially due to the emergence of fair employment practices and human rights protection (Carrol & Buchholtz, 2014). These institutions have been formed within society to protect its people from unfair government and business practices. The business also has formulated ethical standards for employees and other stakeholders to ensure that society conforms to business regulation.
Globalization has created an advance form of interconnection among society, business, and governments. The business has moved its operations from the local to the international market. Today some of the products consumed in the US come from China, Mexico, and Germany. In this essence, global companies interact with local society under the existing system of governance. The financial crisis in Google today can affect economies around the world. To ensure that interconnection between business and governments is maintained in the expanding global market, governments have come with international regulations, which controls business activities in the worldwide market (Carrol & Buchholtz, 2014). Society, on the other hand, has followed suit in expanding its issues globally, such as the fight for gender equality, and the race to find the cure for HIV/AIDs.
Due to rapid growth in business, governments have evolved their regulations to protect domestic companies from the global organization and to prevent society exploitation by the business. Various policies have been enacted to regulate how a business conducts its activities around the world. These regulations are, however, not static, they become tighter and loosen at some point. Because of this dynamic in government regulations, the business has increased its participation in government activities at the federal, state, and local level (Carrol & Buchholtz, 2014). Business organizations have come up with different strategies to influence elected leaders and government regulators. This has enabled the business to participate in the formation of rules and regulations.
All interaction among business, society, and government takes place within a limited natural ecosystem. Many of the natural resources within human environments such as oil, coal, and gas are nonrenewable. In the past business used to extract the resources without much regulation. However, due to rapid change in climatic conditions globally, business, society, and governments have come together to regulate the use of nonrenewable resources due to multiple problems resulting from their uncontrolled extraction such as global warming and greenhouse effects.
Technological innovation is one of the most powerful forces affecting the relationship between society, business, and government. The technology has harnessed human knowledge to create machines, software, and processes that address problems facing modern society. In the recent past, technology has proliferated in the field of business. The society produces personnel who invent new skills to perform an activity in the world through the use of the internet and social networking. However, the pace at which the internet is growing has resulted in multiple problems for society business and government. Such issues include cybercrimes, invasion of business and government privacy and intellectual property issues. The three institutions join effort together to come up with means and strategies to curb the illegal use of the internet by society and some business. Governments, for instance, have enacted several rules that govern how society and business interact with the internet.
Business, Government, and Society (BGS) relationship
BGS is a conceptual framework for business managers to acknowledge the existence of other institutions that affect business operations. For a business to achieve its goals and objectives, it must be responsible for both economic and non-economic environment. Though it is always essential for a company to swiftly respond to market changes, it is also critical, especially for large organizations to consider the value of non-market forces in its environment. In a case involving the Standard Oil in the US, the Supreme Court in 1911 decided to favor of public opinion and government regulations ("Business Government and Society," 2019). The company was compelled to adhere to social values that allowed the entrance of other organizations in the market. Therefore, recognizing that business operates both within markets, and social framework is critical. If a business activity violates social or political values, individual organizations risk punishment, and restrictions. To ensure that interdependence among business, government, and society is maintained, there are necessary agreements set in the BGS relationship. These agreements establish the responsibilities that a company must fulfill to secure the support of both society and government as it exploits resources within its environment.
Models of Business, Government and Society (BGS) relationship
The interactions among business, society, and government are infinite. Thus different models have been used to describe these relationships. Each model provides a different view of interconnection among the three institutions. They present the link in both descriptive and prescriptive ways ("Business Government and Society," 2019). The four primary models of BGS relationships include the market capitalism model, the dominance model, the countervailing forces model, and the stakeholder model.
The Market Capitalism Model
This model portrays the business as an entity operating within a market environment that responds basically to strong economic forces. In this market, business is protected from the direct impact of social and political forces. Market capitalism model draws from the works of a Scottish philosopher, Adam Smith’s “commercial society” (capitalism) (1723-1790). Smith notes that the urge to trade for mutual benefits is within human instinct. He also notes that the increasing division of labor in society contributed to the business. As the business grew, the market controlled forces of demand and supply, making commodities better and cheaper for society. By 1900s Smith’s theory had evolved into managerial capitalism where business managers worked for society through shareholders. This model holds assumptions that there is minimal interference by the government in the economy. This assumption argues that government intervention in the market is undesirable. When governments intervene in the process, it reduces the extent to which business benefits society. However, when the market is free, the forces of demands and supply channels business services and goods to the society ("Business Government and Society," 2019). The government role in this market is to control social issues that may hinder free interaction between business and society. Additionally, in the market capitalism model, the market is free for any interested individual to enter. Any new business that ventures into the market makes a profit and creates competition. Competition in the market provides valuable products and services to society.
The Dominance Model
This model presents the perceptions of business critics. The model argues that business and government controls society. In this model, power and wealth are held within a small group while society has no control, thus experience challenges. Business and government take advantage of society, which makes it necessary to change the system.
The Countervailing Forces Model
This model portrays BGS relationship as a smooth interaction among business, government, and society. The three institutions coexist equally without dominance by any entity. The countervailing forces control the exchange of powers and influences among the three institutions to create a balance ("Business Government and Society," 2019). From this model, it can be argued that; business is usually integrated into both society and government environments, and BGS relationship continuously evolves with the changes in government, business, and society.
The Stakeholder Model
In this model, the corporation acts as the central entity holding multiple relationships with individuals, groups, and stakeholders. Stakeholders are essential to business, and the business entity has an ethical responsibility and social duties on them ("Business Government and Society," 2019). Stakeholders in business are in two categories, primary and secondary stakeholders.
Therefore, interconnection among business, society, and government is controlled by forces of culture economics and politics. For each institution to survive and perform its activities within a particular environment, the other two players must be involved. In their common interactions business provide goods and services while the society provides a market for those goods and services, the government, in turn, acts to regulate the ways through which goods and services are channeled to the society. It also protects the environment from exploitation by the other players. In the end, each institution plays a significant role in the existence of the others. The models of BGS relationship provide a framework through which business government interacts under different conditions.
Conclusion
In conclusion, there is a clear interconnection among businesses, society, and government, which forms an almost mutual interdependence. Among the three, the government is the greatest player as it facilitates both society and businesses to ensure their survival and continuity. If we bring to the picture a free world without government, the consumer and businesses will have a hard time coexisting as there will be too many exploitations, substandard commodities, and there will no regulation which results into many lawlessness. As a consequence it creates a beneficial environment when there is a balance between business, society, and governments; however, it is not easy to strike an absolute balance between this institutions; thus government exerts more power on the other institutions.
References
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Business Government and Society. (2019). Retrieved 1 August 2019, from http://chacopjbgs.blogspot.com/
Carroll, A. B., & Buchholtz, A. K. (2014). Business and society: Ethics, sustainability, and stakeholder management. Nelson Education.
Denhardt, J. V. (2015). The Dance of Leadership: The Art of Leading in Business, Government, and Society: The Art of Leading in Business, Government, and Society. Routledge.
Doppelt, B. (2017). Leading change toward sustainability: A change-management guide for business, government, and civil society. Routledge.
Schepers, S. (2010). Business-government relations: beyond lobbying. Corporate Governance: The international journal of business in society, 10(4), 475-483.
