Unit-1 Importance of Business Ethics

Development of Business Ethics

Business ethics refers to the moral principles that guide the operations of a company or
business. Common issues that fall under this umbrella include employer-employee relations,
discrimination, environmental issues, bribery, insider trading, and social responsibility. While
many laws exist to set basic ethical standards within the business community, it is largely
dependent upon the leadership within the business to develop a code of ethics.
While practicing strong ethics keeps business within the parameters of the law, it can
also serve to build goodwill and brand equity. That's because popular social issues often drive
business ethics. When different issues come to the forefront, organizations respond by bringing
their ethical tenets in line with new social norms.

Business Ethics in the '60s

The 1960s brought the first major wave of changes in business ethics. Cultural values
were shifting, with individualism and fierce dedication to social issues such as
environmentalism and world peace coming into vogue.While young workers in the 1960s were
idealistic and wanted to make the world a better place, employers found their work ethic,
compared to that of previous generations, was lacking.
Drug use was rampant, and the new focus on individualism caused many workers to
look upon their employers with disdain. Companies responded to the changing times by beefing
up human resources departments, establishing mission statements, and outlining codes of
conduct. In response to the changing desires of their employees, however, businesses also began
embracing social responsibility at a level not previously seen.
In fact, the 1960s saw businesses trumpet environmental friendliness for the first time
and companies also looked for new ways to give back to their communities.

Major Events in the '70s and '80s

During the 1970s and 1980s, two events shaped changes in business ethics: defense
contractor scandals that became highly publicized during the Vietnam War and a heightened
sense of tension between employers and employees.
In response, the government implemented stricter policies governing defense
contractors, and companies revamped contracts with employees to focus less on rigid
compliance and more on values. Popular management philosophy shifted from pure
authoritarianism towards more collaboration and working on equal footing.

The 1990s saw a rebirth of environmentalism, new heights in social responsibility

reaching, and graver legal ramifications for ethical missteps. Tobacco companies and junk food
manufacturers, for example, faced heightened scrutiny, along with several important lawsuits
over the public health ramifications of their products. Oil companies and chemical companies
had to contend with increasing public pressure to answer for environmental damage. Class
action lawsuits rapidly gained in popularity and, in response, businesses were forced to spend
more on legal departments.

The Online Realm in 2000+

 From the year 2000 forward, business ethics have expanded to the online realm. The big
ethical dilemmas of the 21st century have mostly centered on cybercrimes and privacy issues.
Crimes such as identity theft, almost unheard of 20 years before, are a threat to anyone doing
business online. As a result, businesses face social and legal pressure to take every measure
possible to protect sensitive customer information. The rise in popularity of data mining and
target marketing has forced businesses to walk a fine line between respecting consumer privacy
and using online activities to glean valuable marketing data.
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Unit-2 Stakeholder’s Relationship, Social Responsibility and Corporate Governance

What Is a Stakeholder?

A stakeholder is a party that has an interest in a company and can either affect or be
affected by the business. The primary stakeholders in a typical corporation are its investors,
employees, customers, and suppliers.
However, with the increasing attention on corporate social responsibility , the concept
has been extended to include communities, governments, and trade associations.
A shareholder can be a stakeholder. A shareholder, though, is someone who has invested
in a corporation through the purchase of stocks. A stakeholder has an interest in the corporation’s
overall performance, not stock performance.
Some stakeholders are less important to a business than others. The business would class
them as either; Primary stakeholders and Secondary stakeholders
Primary Stakeholders:
People or groups seen by the business to be vital to the organization's success or failure.
For a restaurant a supplier may be considered a primary stakeholder, as the entire reputation
depends upon the quality of the food from the supplier.
Secondary Stakeholders:
People or group who feel involved in the organization's success or failure, whether or not
the management agree. Example of secondary stakeholders: Local residents who may be affected
by traffic noise from deliveries or by pollution from smelly or smoky factory or firms.
Understanding Stakeholders
Stakeholders can be internal or external to an organization. Internal stakeholders are
people whose interest in a company comes through a direct relationship, such as employment,
ownership, or investment.
External stakeholders are those who do not directly work with a company but are
affected somehow by the actions and outcomes of the business. Suppliers, creditors, and public
groups are all considered external stakeholders.

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Types of Stakeholders

Stakeholders can come from a variety of connections to the organization or project. The most
common types of stakeholders include the following:
 Customers usually expect organizations to deliver products of value.
 Employees are often project stakeholders, who want to contribute to a project that is related
to their job.
 Owners supply an organization's equity and capital and are responsible for organizational
goals.
 Investors are shareholders, who invest in organizations in exchange for financial returns and
often receive regular financial reporting on the companies they invest in as well as voting
power in major decisions.
 Creditors, such as banks and bondholders, lend money to an organization to be paid back
with interest.
 Suppliers are vendors that supply materials and products to organizations and have an
interest in their business and the projects they pursue.
 Communities have an interest in businesses being healthy, safe and beneficial to local
economies. Businesses create jobs and business for local communities. Environment,
sustainability and governance (ESG) are increasingly important values for consumers and
investors.
 Governments collect taxes from companies and their employees.

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Social Responsibility and Ethics

Social responsibility is an ethical theory in which individuals are accountable for

fulfilling their civic duty, and the actions of an individual must benefit the whole of society. In
this way, there must be a balance between economic growth, the welfare of people, and the
environment. If this equilibrium is maintained, then social responsibility is accomplished.
The theory of social responsibility is built on a system of ethics, in which decisions and
actions must be ethically validated before proceeding. If the action or decision causes harm to
society or the environment, then it would be considered to be socially irresponsible.
Moral values that are inherent in society create a distinction between right and wrong. In
this way, social fairness is believed (by most) to be in the “right”, but more frequently than not
this “fairness” is absent. Every individual has a responsibility to act in manner that is beneficial
to society and not solely to the individual.

When Do Social Responsibility and Ethics Apply?

The theory of social responsibility and ethics applies in both individual and group
capacities. It should be incorporated into daily actions and decisions, particularly ones that will
have an effect on other persons and/or the environment
If social responsibility is maintained within a company, then the employees and the
environment are held equal to the company’s economics. Maintaining social responsibility
within a company ensures the integrity of society and the environment are protected.
Often, the ethical implications of a decision/action are overlooked for personal gain and the
benefits are usually material. This frequently manifests itself in companies that attempt to cheat
environmental regulations. When this happens, government interference is necessary.

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Social Responsibility and the Importance of Stakeholder Orientation
 Stakeholders’ Orientation
It is defined as ‘the aim to benefit all parties that are affected by the future success or
failure of an organization.’ People in an HPO find shareholder thinking too limited and
therefore make sure they maintain good and long-term relationships with all stakeholders,
creating win-win relationships. They understand the needs of key stakeholders by staying in
close contact with them, and they continuously align stakeholder needs with the organization’s
needs. They are generous to society by demonstrating significant financial commitment to local
economies and environments by regularly investing in these. They develop a good corporate
reputation by focusing on corporate social responsibility (CSR), making this a real living
activity.
Example: Stakeholder orientation describes a pattern of social responsibility values, decision
making or behavior where managers decide and act by including the interests of various groups
of stakeholders like customers, employees, etc.

How to foster a stakeholders’ orientation

You can do the following to foster a stakeholders’ orientation in your organization:
 Create an organization with a coherent identity and a common purpose.
 Develop a long-term perspective that justifies short-term financial sacrifices in order to achieve
that common purpose and to endure over time.
 Articulate a purpose broader than making money, thereby letting people think about new sources
for innovation.
 Create public-private partnerships, in which societal interests come together with business
interests.
 Give people room to express personal values in their everyday work.
 Apply co-creation with stakeholders, by inviting them to participate in the dialogue around new
products and services of the organization.

Importance of Stakeholder Orientation

To estimate the degree to which a firm understands and addresses stakeholder demands
three activities are observed:
 Generation of data about stakeholder groups
 Distribution of the information throughout the firm
 Organization’s responsiveness to this intelligence
Social Responsibility is an organization’s obligation to maximize its positive impact on
stakeholders and minimize its negative impact
Four levels of social responsibility:
 Economic
 Legal
 Ethical
 Philanthropic
From a social responsibility perspective, business ethics embodies standards, norms, and
expectations that reflect concerns of major stakeholders. Social responsibility is associated with:
 Increased profits
 Increased employee commitment
 Greater customer loyalty
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Corporate Governance and Stakeholders’ view

What is corporate governance?

Corporate governance is the system of rules, practices, and processes by which a
company is directed and controlled. Corporate governance essentially involves balancing the
interests of a company's many stakeholders, which can include shareholders, senior
management, customers, suppliers, lenders, the government, and the community. As such,
corporate governance encompasses practically every sphere of management, from action plans
and internal controls to performance measurement and corporate disclosure.

Why corporate governance?

It is necessary that we look into the importance of concept of corporate governance in
order to enhance proper understanding about its relevance. Some of these reasons are outlined
below:
i. Shareholders: These are the owners of the company who have entrusted the running
of its affairs to management hence the interest in ensuring this privilege is not abused but utilized
for the benefit of the organization.
ii. Investors: The practice of good corporate governance will attract investors as they
will evaluate the current level of financial integrity and uprightness the organization in order to
determine if their investments will be put to efficient use.
iii. Economies: Countries all over the world desire good corporate governance by
business organizations as this in turn leads to a boost in the economy of the nation in which the
business exists.
iv. Going concern: The practice of good corporate governance handles effectively the
issue of bankruptcy and other forms of crisis. This is as a result of checks and balances that help
curb any form of unethical behaviour.

Basic principles of corporate governance

The concept of corporate governance applies to corporate businesses all over the world
and there are certain principles that have become accepted as well as required to be followed:
I. Rights and Equitable Treatment of Shareholders:
This means the organization is bound to respect and uphold the fundamental rights of its
shareholders as well as give freedom for the expression of their rights. Also a clear and proper
interpretation should be given of their right ensuring their participation in the affairs of the
corporation.
II. Interest of Stakeholders:
This involves the organization clearly stating their legitimate stakeholders in their
policies and incorporating them in their operations. In recognition of their legal, moral, social etc
obligations which ought to be fulfilled.
III. Role and responsibility of the board of directors:
Board members should be persons with the required knowledge having vast experience in
handing challenges of management. The size of the board should be determined by the extent of
responsibilities and duties required.
IV. Integrity and ethical behaviour:
This entails being a responsible business enterprise. Guiding actions of directors and
executives by established code of conduct to ensure ethical and responsible decision making.
V. Disclosure and transparency:
The board and management are expected to clearly and truthfully inform shareholders
information about the organization. Procedures and mechanisms should be put in place to ensure
that the integrity of the organization is maintained. Some of these measures include engaging
independent auditors, board members to checkmate unethical behaviour or actions within the
organization.

Importance of Stakeholders in Corporate Governance

That is, the internal processes, practices, and rules used to control and manage an
organization. This includes the company strategy, planning, values, ethics, risk management,
compensation, and more.
But each stakeholder group has a distinct role to play, with different interests and
differing levels of impact and influence, which is important to keep in mind when managing your
stakeholders.

The role of stakeholders’ in corporate governance

The stakeholders though external to an organization cannot be ignored as insignificant
due to the various roles they play as well as their impact on the activities of the organization.
In agreement with this assertion, John and Sebet (1998) opined corporate governance as
dealing with the mechanisms by which stakeholders of a corporation exercise control over
corporate insiders and management to ensure that their interests are protected.
It is therefore important that organizations be acquainted with the rights of stakeholders
as established by law. The organization should also engage in active co-operation with its
stakeholders in creation of wealth, jobs and a financially sound enterprise. Having established
the importance of stakeholders to the corporation, it becomes necessary to portray the role they
play in ensuring corporate governance.
In 2009, Zollinger argued that stakeholders are characterized by their relationship with
the company as well as interest, needs and concerns that arise, thus becoming the focal point of
the engagement process with the organization. The author further posits that these roles include
but are by no means limited to the following:
1. Experts: knowledgeable experts in diverse fields of endeavour are useful in offering
strategic advice to the company’s board when invited.
2. Technical advisers: This refers to individuals who possess expertise in technological
and scientific developments can offer well informed advice on scientific and ethical panels on
the social and environmental risks associated with such developments especially in science-
related industries
3. Representatives of special interests: the review of company performance and or
reporting practices can be carried out by its employees, local communities etc as they meet as
stakeholders panel upon invitation.
4. Co-implementers: This situation arises when an external body for instance a Non-
Governmental Organization (NGO) partner with the company to jointly provide solution to an
issue or address a shared challenge.
 5. Co-monitors: This situation arises when the impacted communities having entered an
agreement with the company become jointly responsible for the monitoring of the company’s
sustainability projects.
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Implementing Stakeholders’ Perspective

An organization that develops effective corporate governance and understands the

importance of business ethics and social responsibility in achieving success should develop some
processes for managing these important concerns. Although there are many different approaches,
these steps have been found effective to utilize the stakeholder framework in managing
responsibility and business ethics.

Step 1: Assessing the corporate culture

Step 2: Identifying stakeholder groups
Step 3: Identifying stakeholder issues
Step 4: Assessing organizational commitment to social responsibility
Step 5: Identifying resources and determining urgency
Step 6: Gaining stakeholder feedback

Firstly, use this information to create a profit model to manage the inevitable trade-
offs among your stakeholder groups. You may not be able to afford all the things you would
like to do, but the profit model becomes the means for managing competing interests and the
returns provided to each stakeholder group — the output being your financial returns (which are
central to the value proposition to shareholders).

Secondly, identify your company’s stakeholder groups. Typically they are customers,
employees, partners, shareholders, suppliers and society. In the case of the first five, describe
who you are specifically targeting — who ideally you would like to work with. With society,
clarify how you define it.

Thirdly, you need to determine a set of key performance indicators. These should
track how effectively your business is creating value for each stakeholder group and how well
you’re capturing value in return. This will enable you to develop a stakeholder scorecard that
provides a 360° view of performance.

Defining the value created for and from each stakeholder group adds perspective,
ensuring that you look at your business from all angles and by focusing on value creation for all
your different stakeholders.

Fourthly, create a value proposition for each stakeholder group. This should be
specific to the sub-group you are targeting and will detail how you will create value for that
group. Typically there are three dimensions of value — financial (price, volume, margin, ROI,
etc.); functional (increasing stakeholder’s productivity, providing choice or flexibility, being
easy and convenient to do business with, and delivering speedy service) and emotional
(providing security to generate trust and stimulating a feel-good factor). All of these can be
offered in some form to each group.
This value creation for each stakeholder group needs to be balanced by what the business
will gain in return — the value it will extract from the relationship.

Fifthly, compare the capabilities you need with those that you already have to
highlight any gaps. You’ll have to fill those gaps in through organizational re-design, training,
process development, systems implementation and cultural change.
Track the costs and benefits associated with each value proposition, including the investment
necessary to complete the initiatives required to fill the capability gaps you’ve identified.
, you will be a creating a business that is more sustainable — in all senses of the word.

Lastly, determine what you are seeking from each stakeholder group, both
financially and operationally (e.g. in terms of loyalty, referrals, prioritization, etc.).
Knowing what value you want to offer, and what you hope to get in return, will allow you to
identify what stakeholder-facing capabilities you need in order to execute.

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Stakeholder Group Examples of Ethical Issues

Customers Product safety/healthfulness

Advertising/marketing honestly
Packaging fairly/accurately
Labeling accurately/completely
Pricing fairly relative to quality
Protecting consumer privacy
Employees Fair compensation practices
Fair day’s work and pay; living wage
Compliance with employment laws
Avoidance of employment discrimination
Safe working conditions
Avoiding employee theft/embezzlement
Protecting employees’ privacy
Dealing with distracted employees
Community/Environment Environmental protection/sustainability
Adherence to legal mandates
Good corporate citizenship
Philanthropy/Supporting Causes
Adapting to foreign cultures Avoidance of
bribery

Shareholders Protecting shareholders’ interests

Fair compensation for executives
Quality boards of directors
Protection of company assets
 Fair returns on investments
Communicating accurately
Transparency

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Pluralist Society and CSR

A Pluralistic Society
Societies as macro-environments are typically pluralistic. Pluralistic societies make for
business and society relationships that are complex and dynamic. Pluralism refers to a diffusion of power
among society’s many groups and organizations. A long-standing definition of a pluralistic society is
helpful: “A pluralistic society is one in which there is wide decentralization and diversity of power
concentration.”
The key terms in this definition are decentralization and diversity. In other words, power
is decentralized—dispersed among many groups and people. Power is not held in the hands of any single
institution (e.g., business, government, labor, military) or a small number of groups. Pluralistic societies
are found all over the world now, and some of the virtues of a pluralistic society are summarized as
under:

A pluralistic society …
• Prevents power from being concentrated in the hands of a few
• Maximizes freedom of expression and action and strikes a balance between monism (social organization
into one institution), on the one hand, and anarchy (social organization into an infinite number of
persons), on the other
• Is one in which the allegiance of individuals to groups is dispersed
• Creates a widely diversified set of loyalties to many organizations and minimizes the danger that a
leader of any one organization will be left uncontrolled
• Provides a built-in set of checks and balances, in that groups can exert power over one another with no
single organization (business or government) dominating and becoming overly influential
Pluralism Has Strengths and Weaknesses
All social systems have strengths and weaknesses. A pluralistic society prevents power from
being concentrated in the hands of a few. It also maximizes freedom of expression and action. Pluralism
provides for a built-in set of checks and balances so that no single group dominates. However, a weakness
of a pluralistic system is that it creates an environment in which diverse institutions pursue their own self-
interests with the result that there is no unified direction to bring together individual pursuits. Another
weakness is that groups and institutions proliferate to the extent that their goals start to overlap, thus
causing confusion as to which organizations best serve which functions. Pluralism forces conflict, or
differences in opinions, onto center stage because of its emphasis on autonomous groups, each pursuing
its own objectives. In light of these concerns, a pluralistic system does not appear to be very efficient
though it does provide a greater balance of power among groups in society.

Multiple Publics, Systems, and Stakeholders

Knowing that society is composed of so many different semiautonomous and
autonomous groups might cause one to question whether we can realistically speak of society in a
definitive sense that has any generally agreed-upon meaning. Nevertheless, we do speak in such terms,
knowing that, unless we specify a particular societal subgroup or subsystem, we are referring to the total
collectivity of all those persons, groups, and institutions that constitute society. Thus, references to
business and society relationships may refer either to particular segments or subgroups of society
(consumers, women, minorities, environmentalists, millennials, senior citizens) or to business and some
system in our society (politics, law, custom, religion, economics). These groups of people or systems also
may be referred to in an institutional form (business and the courts, business and labor unions, business
and the church, business and the Federal Trade Commission, and so on).
Stakeholders are those groups or individuals with whom an organization interacts or
has interdependencies. It also should be noted that each of the stakeholder groups may be further
subdivided into more specific stakeholder subgroups, each of them posing special challenges for business.
If sheer numbers of relationships and interactions are an indicator of complexity, it is easily seen that
business’s current relationships with different segments of society constitute a truly complex
macroenvironment. Today, managers must deal with these interfaces on a daily basis and the study of
business and/in society is designed to improve that understanding.

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Business Criticism and Corporate Response

It is inevitable in a pluralistic, special-interest society that the major institutions that

comprise that society, such as business and government, will come under considerable scrutiny
and criticism, as these institutions represent the major interests of that society. Our purpose here
is not so much to focus on the negative as it is to illustrate how the process of business criticism
has shaped the evolution of the business and society relationship today. Were it not for the fact
that individuals and groups have been critical of business, we would not be dealing with this
subject in a book or a course. This is because few changes would occur in the business and
Society relationship over time.

We already know how certain factors that have arisen in the social environment have
created an atmosphere in which business criticism has taken place and flourished. In this chapter,
we describe the response on the part of business as an increased concern for the social
environment and a changed societal contract (relationship) between business and society. Each
of these factors merits special consideration.

Factors in the social environment

Over the decades, many factors in the social environment have created a
climate in which criticism of business has taken place and flourished. Some of these factors
occur relatively independently, but some are interrelated. In other words, they occur and grow
hand in hand.

Affluence and Education:

Two factors that have developed side by side are affluence and education. As
a society becomes more prosperous and better educated, higher expectations for its major
institutions, such as business, naturally follow. Affluence refers to the level of wealth, disposable
income, and standard of living in society. Measures of the U.S. standard of living indicate that it
has been rising for decades, but leveling off during the past five years or so. A recent study found
that the rate at which an entire generation’s lot in life improves relative to previous generations
has slightly declined. Despite these effects, overall affluence remains elevated, but this could
change. This movement toward affluence is found in many of the world's developed countries
and is also occurring in developing countries as global capitalism spreads. The current economic
recession raises valid questions about the future of affluence, however.
Along with a higher standard of living has been a growth in the average formal
education of the populace. The U.S. Census Bureau reported that between 1970 and 2000, when
the last census data were published, the number of American adults who were high school
graduates grew from 55% to 83%, and the number who were college graduates increased from
11% to24%. The 2010 census data, when available, may change these figures. As citizens
continue to grow in number, their expectations of life generally rise. The combination of
affluence and education has formed the foundation for a society in which some criticism of
major institutions, such as business, naturally arises.

Awareness through Television, Movies, and the Internet:

Closely related to formal educationist the broad and growing level of public
awareness in our society. Although newspapers and magazines are read by a declining fraction of
our population, more powerful media-television and movies- are accessed by virtually our entire
society. Through television, the citizenry gets a profusion of information that contributes to a
climate of business criticism. In recent years, more and more movies have bashed both the
capitalist system and businesses. In addition, the Internet and mobile phone explosion has raised
awareness in our country and around the world. Through e-mails, texting, blogs, and tweets, the
average citizen is incredibly aware of what is occurring in the world.
The prevalence and power of TV touch all socioeconomic classes. Several statistics
document the extent to which our society is dependent on TV for information. According to data
compiled by the ACNielsen Company, the average daily time spent viewing television per
household in1950 was four and a half hours. Nielsen reports that this number has now risen to
over eight hours. A typical day for an American household now divides into three nearly equal
parts: eight hours of sleep, eight hours of TV, and eight hours of work or school. Although the
household average now exceeds eight hours, the average person watches over four hours per day.
These figures are the highest in over 50 years. In the United States today, over 98% of homes
have color TVs, and the vast majority of Americans have two or more televisions. In developed
countries around the world, these statistics are becoming more common. Television is indeed a
pervasive and powerful medium in society.

24/7 News and investigative news programs:

There are at least three ways in which information that leads to criticism of businesses
appears on television. First, there are traditional news channels, such as the ubiquitous 24-hour
cable news channels, the evening news on the top networks, and investigative news programs. It
is debatable whether or not the major news programs treat businesses fairly. However, in one
major study conducted by Corporate Reputation Watch, senior executives identified media
criticism, along with unethical behavior, as the biggest threats to a company's reputation.
Reflecting on the lessons learned from high-profile cases of corporate wrongdoing, half of the
executives surveyed thought unethical behavior and media criticism were the biggest threats to
their corporate reputations. Coverage of Wall Street's complicity in the recent recession has been
particularly damaging because it has called into question society's basic trust in corporate
executives. The business has to deal not only with the problems of 24/7 news coverage but also
with several investigative news programs, such as 60 Minutes, 20/20, Dateline NBC, and PBS's
Frontline, that seem to delight in exposés of corporate wrongdoing or questionable practices.
While straight news programs make some effort to be objective, investigative shows are tougher
on business. They tend to favor stories that expose the dark side of enterprises or their
executives. These shows are enormously popular and influential, and many companies squirm
when their reporters show up on their premises complete with camera crews.

Prime-time television programs:

The second way in which criticisms of business appear onTV is through prime-time
programs. Television's depiction of businesspeople brings to mind the scheming oilman J.R.
Ewing of Dallas, whose backstabbing shenanigans dominated primetime for years (1978-1991)
before it was taken off the air. More recently, the popular TV reality shows The Apprentice,
featuring billionaire businessman Donald Trump, depicted aspiring business executives in often
questionable roles. More often than not, the businessperson has been portrayed across the
nation's television screens as smirking, scheming, cheating, and conniving bad guys. A recent
report released by the Business and Media Institute reported a study of the top 12 prime-time
dramas in which 77% of the plots involving business were negative toward businesspeople. In
this study, business characters committed almost as many serious felonies as drug dealers, child
molesters, and serial killers combined. On one show, Law and Order, half of the felons were
businesspeople. Some other TV shows where this negative portrayal has been evident include
CSI, Mad Men, Damages, and Criminal Minds. Any redeeming social values that businesses and
businesspeople may have rarely show up on television. Rather, businesspeople are often cast as
evil and greedy social parasites whose efforts to get more for themselves are justly condemned
and usually thwarted. There are many reasons why this portrayal has occurred. Some would
argue that business is accurately depicted. Others say that television writers are dissatisfied with
the direction our nation has taken and believe they have a significant role in reforming American
society.

Commercials:
A third way in which television contributes to business criticism is through
commercials. This may be the business's fault. To the extent that a business does not honestly
and fairly portray its products and services on TV, it undermines its credibility. Commercials
area two-edged sword. On the one hand, they may sell more products and services in the short
run. On the other hand, they could damage the business's long-term credibility if they promote
products and services deceptively. According to Real Vision, an initiative to raise awareness
about television's impact on society, TV today promotes excessive commercialism as well as
sedentary lifestyles. In three specific TV settings, news coverage, prime-time programming, and
commercials a strained environment is fostered by this awareness factor made available through
the power and pervasiveness of television.

Movies:
Movies are also a significant source of business criticism. Hollywood seems to see
corporations as powerful, profit-seeking enterprises that have no redeeming values. The Oscar-
winning movie Avatar, along with Up in the Air, portrays corporations as greedy, cruel, and
destructive. Michael Moore's documentary, Capitalism: A Love Story, slams the free enterprise
system as corrupt and doomed. Other recent movies that stigmatize the business system include
The Informant, The International, Syriana, and Duplicity. In these movies, corporate life is
depicted as amoral, at least amoral, and possibly deadly. In 2010, the sequel to Wall Street was
released Wall Street: Money Never Sleeps-with Michael Douglas playing again the evil Gordon
Gekko. Gekko is released from 14 years in prison just in time to witness the financial system's
collapse and revisit his old ways. Hollywood writers seem to love advancing greed as an
appropriate portrayal of business, and they put out of their way to perpetuate this image of the
corporate community.

We should make it clear that the media are not to blame for business problems. If it
were not forth fact that the behavior of some businesses is questionable, the media would not be
able to create such an environment. The media make the public more aware of questionable
practices. It should be seen as only one key factor that contributes to the environment in which
business now finds itself.

Revolution of Rising Expectations:

In addition to affluence, formal education, and awareness through television and
the Internet, other societal trends have fostered the climate in which business criticism has
occurred. Growing out of these factors has been a revolution based on expectations held by
many. This is defined as a belief or an attitude that each succeeding generation ought to have a
standard of living higher than that of its predecessor. A recent Pew Charitable Trust study has
revealed that, according to census data, today this is more of a dream than a reality. The median
income for men has declined slightly over the past 20 years, but household incomes remain high
due to the number of women now working full-time. And, of course, the recent economic
recession has moderated these rising expectations.
If rising expectations do continue, people's hopes for major institutions, such as
business, should be elevated too. Building on this line of thinking, it could be argued that
business criticism is evident today because society's rising expectations of a business's social
performance have outpaced a business's ability to meet these growing expectations. To the extent
that this has occurred over the past 25 years, business finds itself with a larger social problem.
A social problem has been described as a gap between society's expectations of societal
conditions and current economic realities. From the viewpoint of a business firm, the social
problem is experienced as the gap grows between society's expectations of the firm's social
performance and its actual social performance. Rising expectations typically outpace the
responsiveness of institutions such as the government, resulting in a constant predicament in that
it is subject to criticism. We already illustrated the larger social problem that business faces
today. An example of it is the gap between what society expects from businesses and the actual
social performance they provide.
Although the general trend of rising expectations may continue, the revolution slows
down at times when the economy is not as robust. Although their future is uncertain due to the
effects of the recession, job situations, health, and family lives have improved historically. The
persistence of social problems such as crime, poverty, homelessness, unemployment, AIDS,
environmental pollution, alcohol and drug abuse, and, now, terrorism and potential pandemics
such as bird flu are always there to moderate rising expectations.

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