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Business, Government and Society A Managerial Perspective, Text and Cases
Twelfth Edition
John F. Steiner Professor of Management California State University, Los Angeles
George A. Steiner Harry and Elsa Kunin Professor of Business and Society and Professor of Management, Emeritus, UCLA
McGraw-Hill Irwin Boston Burr Ridge, IL Dubuque, IA New York San Francisco St. Louis Bangkok Bogota Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto
Table of Contents Seven Key Environments of Business 34
Preface x Chapter 1
The Study of Business, Government, and Society 1 Exxon Mobil Corporation 1
What Is the Business-Government-Society Field? 4 Why Is the BGS Field Important to Managers? Four Models of the BGS Relationship 8 The Market Capitalism Model 8 The Dominance Model 11 The Countervailing Forces Model The Stakeholder Model 15
14
Our Approach to the Subject Matter 18 Comprehensive Scope 18 Interdisciplinary Approach with a Management Focus 18 Use of Theory, Description, and Case Studies 18 Global Perspective 19 Historical Perspective 19
Chapter 2
The Dynamic Environment 20 Royal Dutch Shell PLC
20
Underlying Historical Forces Changing the Business Environment 22 The Industrial Revolution Inequality 23 Population Growth 25 Technology 28 Globalization 29 Nation-States 30 Dominant Ideologies 32 Great Leadership 33 Chance 33
22
The Economic Environment 34 The Technological Environment 36 The Cultural Environment 37 The Government Environment 39 The Legal Environment 40 The Natural Environment 41 The Internal Environment 41
Concluding Observations 43 Case Study: The American Fur Company 45
Chapter 3 Business Power 53 James B. Duke and the American Tobacco Company 53
The Nature of Business Power 56 What Is, Power? 56 Levels and Spheres of Corporate Power 57 The Story of the Railroads 59 Two Perspectives on Business Power 62 The Dominance Theory Pluralist Theory 68
63
Concluding Observations 72 Case Study: John D. Rockefeller and the Standard Oil Trust 72
Chapter 4
Critics of Business 80 Mary "Mother" Jones 80
Origins of Critical Attitudes toward Business 83 The Greeks and Romans 83 The Medieval World 85 The Modern World 85
The American Critique of Business 86 The Colonial Era 86 The Young Nation 87 1800-1865 88
vi Table of Contents
Populists and Progressives 90 Socialists 92 The Great Depression and World War II 96 The Collapse of Confidence 97 The New Progressives 99 Global Critics 102 Global Activism 104
Concluding Observations 107 Case Study: A Campaign against KFC Corporation 108
Chapter 5
Corporate Social Responsibility 117 Merck & Co., Inc. 117
The Evolving Idea of Corporate Social Responsibility 119 Social Responsibility in Classical Economic Theory 121 The Early Charitable Impulse 121 Social Responsibility in the Late Nineteenth and Early Twentieth Centuries 123 1950-The Present 125
Corporate Philanthropy
168
Patterns of Corporate Giving 169 Strategic Philanthropy 171 Cause-Rela ted Marketing 173 New Forms of Philanthropy 174
Concluding Observations 176 Case Study: Marc Kasky versus Nike Inc. 176
Chapter 7 Business Ethics 186 "Today's verdict is a triumph of our legal system..." 186
What Are Business Ethics? 189 Two Theories of Business Ethics 190 Major Sources of Ethical Values in Business 192 Religion 193 Philosophy 194 Cultural Experience 196 Law 198
Factors That Influence Managerial Ethics 203
Basic Elements of Social Responsibility 127 General Principles of Corporate Social Responsibility 129 Are Social and Financial Performance Related? 130 Corporate Social Responsibility in a Global Context 131 Global Corporate Social Responsibility 133 Assessing the Evolving Global CSR System 141 Concluding Observations 142 Case Study: The Jack Welch Era at General Electric 143
How Corporations Manage Ethics 209 Ethics Programs: A Strong Future 216 Concluding Observations 216 Case Study: The Trial of Martha Stewart 217
Chapter 6
Principles of Ethical Conduct 228
Implementing Corporate Social Responsibility 153 The Bill & Melinda Gates Foundation 153 Managing the Responsive Corporation 156 Leadership and Business Models 157 A Model of CSR Implementation 158 CSR Review 159 CSR Strategy 162 Implementation of CSR Strategy 163 Reporting and Verification 165
Making Ethical Decisions in Business 226 Realtors in the Wilderness 226 The Categorical Imperative 228 The Conventionalist Ethic 229 The Disclosure Rule 230 The Doctrine of the Mean 230 The Ends-Means Ethic 231 The Golden Rule 232 The Intuition Ethic 232 The Might-Equals-Right Ethic 233 The Organization Ethic 233 The Principle of Equal Freedom 234 The Proportionality Ethic 235
l
'
Table of Contents vii
Reasons for Government Regulation of Business 300
The Rights Ethic 235 The Theory of Justice 236 The Utilitarian Ethic 237
Reasoning with Principles 239 Character Development 240 Practical Suggestions for Making Ethical Decisions 241 Concluding Observations 243 Case Studies: Short Incidents for Ethical Reasoning 243 Columbia/HCA 247
The Abramoff Scandals 256
The Open Structure of American Government 260 A History of Political Dominance by Business 262
Wave 1: The Young Nation 302 Wave 2: Confronting Railroads and Trusts 303 Wave 3: The New Deal 304 Wave 4: Administering the Social Revolution 305 War Blips 306
How Regulations Are Made 306
The Costs and Benefits of Regulation 314 The Regulatory Burden 315 Benefits of Regulations 317
Regulation in Other Nations 318 Regulating the Global Economy 320 Concluding Observations 320 Case Study: The FDA and Tobacco Regulation 321
Laying the Groundwork 262 Ascendance, Corruption, and Reform 263 Business Falls Back under the New Deal 265 Postwar Politics and Winds of Change 266
The Rise of Antagonistic Groups 267 Diffusion of Power in Government 268 The Universe of Organized Business Interests 269 Lobbying 271
~"^
Chapter 11
Multinational Corporations 330 The Coca-Cola Company 330
Lobbying Methods 273 Regulation of Lobbyists 275
The Multinational Corporation 332 A Look at Multinational Corporations 334 How Transnational Is a Corporation? 336 Breaking the Bonds of Country: Weatherford International 337
The Corporate Role in Elections 276 Efforts to Limit Corporate Influence 276 The Federal Election Campaign Act 277 Political Action Committees 279 How PACs Work 280 Soft Money and Issue Advertising 280 Reform Legislation in 2002 281
Foreign Direct Investment 339 FDI in Less Developed Countries 340 The Alien Tort Claims Act 342 Drummond Company on Trial 344
Tension over Corporate Political Expression 285 Concluding Observations 287 Case Study: Westar Goes to Washington 288
International Codes of Conduct 345 Corporate Codes 347 Wal-Mart and Mattel 348 Industry Codes 350 Other Codes 351
Chapter 10
297
Annals of Regulation: The FCC Fines CBS
301
Waves of Growth 301
Regulatory Statutes 306 Rulemaking 308 Presidential Oversight 311 Congressional Oversight 312 Challenges in the Courts 313
Chapter 9 Business in Politics 256
Regulating Business
Flaws in the Market 300 Social and Political Reasons for Regulation
297
The United Nations Global Compact 353 Concluding Observations 357 Case Study: Union Carbide Corporation and Bhopal 358
viii Table of Contents
Chapter 12 Globalization
Pollution 406
369
McDonald's Corporation 369
What Is Globalization? 371 Major Forces in Expanding Globalization 372 Benefits of Globalization 372 Flaws and Problems in Globalization 374 Critics of Globalization 375
Expanding Trade Agreements 376 The European Union (EU) 377 The North American Free Trade Agreement (NAFTA) 379 Other Trade Agreements 382
Globalization and the Erosion of State Sovereignty 382 Nation-State Sovereignty Has Been Eroded 382 Nation-State Sovereignty Has Not Been Seriously Eroded 383 In Sum 383
Erosion of Cultures 384 Free Trade versus Protectionism 385 Why Free Trade? 386 Pressures for Protectionism 386 The Politics of Protectionism 387 Free Trade Responses to Protectionism 387 U.S. Deviation from Free Trade Policy 388 Tariff Barriers in Other Countries 388 Classical Free Trade Theory versus Reality 389
Corruption 390 What Is Corruption? 390 Costs and Consequences of Corruption 391 Business Anticorruption Practices and Procedures 392 The Foreign Corrupt Practices Act 393 Corporate Policies on Corruption Prevention 394
Concluding Observations 395 Case Study: David and Goliath at the WTO 395
Chapter 13 Industrial Pollution and Environmental Policy 405 The Indian Health Service Solves a Mystery 405
Human Health 407 The Biosphere 408
Industrial Activity and Sustainability 409 Ideas Shape Attitudes toward the Environment 412 New Ideas Challenge the Old
413
Environmental Regulation in the United States 414 The Environmental Protection Agency
415
Principal Areas of Environmental Policy 415 Air 415 Water 425 Land 426
Concluding Observations 430 Case Study: Owls, Loggers, and Old-Growth Forests 430
Chapter 14 Managing Environmental Quality The Commerce Railyards
440
Regulating Environmental Risk 443 Analyzing Human Health Risks 444 Risk Assessment 444 Risk Management 450
Managing Environmental Quality 461 Environmental Management Systems A Range of Actions 462
Concluding Observations 463 Case Study: Harvesting Risk 465
Chapter 15
Consumerism 473 Harvey W. Wiley 473
Consumerism 477 Consumerism as an Ideology 477 Consumerism Rises in America 478 Consumerism in Perspective 479
461
440
Table of Contents
The Global Rise of Consumerism 483 Consumerism as a Protective Movement
ix
The Civil Rights Cases 546 Plessy v. Ferguson 547
484
The Consumer's Protective Shield 485
Long Years of Discrimination
The Consumer Product Safety Commission (CPSC) 486 The National Highway Traffic Safety Administration (NHTSA) 487 The Food and Drug Administration (FDA) 487 Consumer Protection by Other Agencies 490
Product Liability Law 490
548
The Civil Rights Act of 1964 549 Disparate Treatment and Disparate Impact The Griggs Case 551
550
Affirmative Action 552 Executive Order 11246 552
The Supreme Court Changes Title VII 553 The Affirmative Action Debate 556
Women at Work 559
Negligence 491 Warranty 492 Strict Liability 493 Perspectives on Product Liability 494 The Costs and Benefits of Lawsuits 494 A Look at Two Lawsuits 496
Gender Attitudes at Work 560 Subtle Discrimination 561 Harassment 563 Occupational Segregation 566 Compensation 567
Concluding Observations 497 Case Study: Alcohol Advertising 497
Corporate Efforts to Promote Diversity 569 Concluding Observations 573 Case Study: Adarand v. Pena 573
Chapter 16
The Changing Workplace
507
Chapter 18
Ford Motor Company 507
Corporate Governance 584
External Forces Shaping the Workplace 510
Backdating with Dr. McGuire
Demographic Change 510 Technological Change 512 Structural Change 513 Competitive Pressures 516 Reorganization of Work 517
Government Intervention 519 Development of Labor Regulation in the United States 519 Work and Worker Protection in Japan and Europe 525 Labor Regulation in Perspective 528
Concluding Observations 531 Case Study: Workplace Drug Testing 531
The Failure of Corporate Governance at Enron 591 Other Corporate Governance Scandals 595 The Sarbanes-Oxley Act 595
Boards of Directors 597 Duties of Directors 598 Compensation of Outside Board Members 599 Suggestions for Improving Board Performance 599
Civil Rights in the Workplace 540 The Employment Non-Discrimination Act of 2007 540 A Short History of.Workplace Civil Rights 542 The Colonial Era 543 Civil War and Reconstruction 543 Other Groups Face Employment Discrimination
584
What is Corporate Governance? 588 The Corporate Charter 589 Federal Regulation of Governance 591
545
Components of Executive Compensation Criticisms of CEO Compensation 606 In Defense of CEO Pay 609 Suggested Compensation Reforms 610
Concluding Observations 611 Case Study: High Noon at HewlettPackard 611
