Milton Friedman infamous contention that “the business of business is business” may be music to the ears of organization and business managers. Consequently, contentious and debatable discourses surround the role of business in the society and responsibilities stemming from it. It is arguable that business represents the most dominant institution globally. It is defined as the any organization engaged in trading goods, services, or both to consumers for profit. However, the sole role of business as a profit generator has been contradicted through recognition of business and institution that is influenced by and influences other systems in the society (Center for Corporate Citizenship, Boston College, 2017). In light of this understanding, the paper examines the evolving relationship between business and society through a number of discourses, partly informed by the changing societal expectations globally.
Social Responsibility
Societies’ expectations of businesses have undergone a paradigm shift with the increase in recognition that businesses are not exempt from assuming more responsibilities, paying close attention to social issues, or acting as good citizens. Social responsibility is a discourse that dominates modern business environments. It is founded on the basis that business have for long profited through exploitation of the societies in which they operate. A socially responsible business is that which balances its profit making activities with activities that benefit the society in which it operates, by developing positive relationship. Emphasis on the society and environment within which a business operates is critical in influencing effective performance, and is increasingly being used as a yardstick for measurement of the same.
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When applied to business, social responsibility refers to corporate social responsibility (CSR). It implies that individuals and business must act in the best interests of their society and environment. Businesses have integrated different aspects of sustainability in their strategies to remain significant in the competitive environment. The approach is informed by consumer demands for businesses to be more accountable, transparent, communicative, and adopt a more hands on approach in their practices. According to Carroll and Shabana (2010), there is a significant number of underlying arguments and rationales in support of the case for businesses to advance their CSR cause. For instance, a survey conducted in 2014 by Nielsen established that more than half (55%) of online consumers worldwide were willing to pay premium prices for products and services from socially and environmentally responsible companies. Chaudhri (2011) posited that constructions, practices, and communications about social responsibility may vary or conflict, but they all point to the recognition of the role of organizations as social actors and their perception of the role of other institutions within the context of operation.
Government Regulation
Businesses face the increasingly daunting task of balancing their legal, social, and economic responsibilities, while attempting to meet expectations of different stakeholders. In most settings, the government plays the role of oversight in ensuring that businesses adhere to the required code of conduct and practice in regards to their relationship with the society. However, contentious and debatable issues have developed in relation to government regulation of businesses. According to Prosser (2010), proponents of the government regulation perceive it “as a public good, a tool for controlling profit-hungry capitalists and governance of social and ecological risks” (p. 3). The assertion is justifiable given that some business practices are extreme in exploiting societies in which they operate.
Under such circumstances, state and federal enforcement is necessary to put a leash on culpable organizations. On the contrary, critics of government regulation argue that it interferes with the concept of free market economy by denying consumers the freedom to choose. While the two factions have concerns that can be substantiated, it is important that businesses be regulated from practices that harm the society. For instance, advertising and marketing laws exist to protect consumers and ensure honesty among companies about their products and services. Similarly, laws and regulations on privacy and labor and employment are there to protect employees from potential exploitation; and laws on environment, safety, and health protect the environment and people from harmful activities companies (Holt, 2017). The laws are meant to protect consumers and hence have a direct impact on how businesses conduct their activities, justifying the relationship between business and the society.
Technology
Businesses and society enjoy close proximity never witnessed in years prior to the 21st century, thanks to technology. While disruptions from technology have their substantial share of negative impacts, most have been positive and affected businesses and society alike. “Innovate or perish” is a phrase traded in boardrooms of organizations in reference to adoption of technology in all spheres of business operations including supply chain management, manufacturing, marketing and advertising, sales and delivery, and transactions among others. Technology epitomizes the interrelationship shared by businesses and the society. A shift in one institution always corresponds to or causes a shift in the other. For instance, Aral, Dellarocas, and Godes (2013) posited that social media has had the most profound impacts on business because of the fundamental transformation in the way people communicate, consume, create, and collaborate. People are increasingly spending substantial amounts of time online and businesses have been forced to respond by shifting their presence to these platforms.
Technology presents the opportunity to level the playing field as small firms can now implement technology to develop competitive advantage as they are able to reach large consumer bases that were a preserve of the mega firms. The implication is that consumers now have a variety of options to choose from, unlike before when they were forced to do with products and services from large monopolistic firms. The advancements in computing and communication can be heralded as nothing but extraordinary human achievements. The business world has undergone paradigm shifts in business models, commerce, and market structure. For instance, “firms can outsource their manufacturing to other nations and rely on telecommunications to keep marketing, R&D, and distribution teams in close contact with the manufacturing groups” (Liu, R., Feils, & Scholnick, 2011, p. 559). The benefits have also extended to the society as technology has transformed the manner in which people interact with businesses. Consumers are now able to shop online for their preferred brands at the comfort of their homes or offices, because technology has allowed businesses to shift from traditional brick and mortar stores to online stores. The efficiency obtained through the use of technology, besides reducing costs for business and society alike, allows the two to be in tandem with trends and developments so as to remain relevant in the fast paced changing business environment.
References
Aral, S., Dellarocas, C., & Godes, D. (2013). Introduction to the special issue—social media and business transformation: a framework for research. Information Systems Research , 24 (1), 3-13.
Carroll, A. B., & Shabana, K. M. (2010). The business case for corporate social responsibility: A review of concepts, research and practice. International journal of management reviews , 12 (1), 85-105.
Center for Corporate Citizenship – Boston College. (2017). Business and society. Carrol School of Management. Retrieved 15/05/2017 from: http://ccc.bc.edu/index.cfm?pageId=2100.
Chaudhri, V. (2011). Examining the relationship between business and society: Constructions, practices, and communication of corporate social responsibility (CSR) among organizations in India. (Doctoral Dissertations - AAI3475409, Purdue University).
Holt, M. (2017). Five Areas of government regulation of business. Chron. Retrieved 15/05/2017 from: http://smallbusiness.chron.com/five-areas-government-regulation-business-701.html.
Liu, R., Feils, D. J., & Scholnick, B. (2011). Why are different services outsourced to different countries?. Journal of International Business Studies , 42 (4), 558-571.
Prosser, T. (2010). The regulatory enterprise: Government, regulation, and legitimacy . OUP Oxford.
