WEEK 1 Attached.
Assess the external environment for the organization you researched in Wk 1.
Based on your assessment and the organizations strengths and weaknesses you identified in Wk 1, evaluate opportunities for that organization to add economic, social, and environmental value.
Recommendan opportunity that best capitalizes on the organizations valuable, rare, and hard-to-imitate resources; is least impacted by the organizations weaknesses; and will take best advantage of the external environment.
Createa Microsoft PowerPoint presentation to present your assessment, evaluation, and recommendation. Include the following sections in your presentation:
A cover slide(slide 1)
An agenda (slide 2)
A description of the organization(1 slide with speakers notes).(slide 3)
A summary of the strengths and weaknessesof the organization(2 slides (4&5) with speakers notes)
Key aspects of your assessment of the external environmentthat present opportunities for adding value, such as trends, unmet needs, unsolved problems, under-served consumer groups, etc.(2 slides (6&7) with speakers notes)
An evaluation of opportunities to add economicvalue(1 slide (8) with speakers notes)
An evaluation of opportunities to add socialvalue(1 (9) slide with speakers notes)
An evaluation of opportunities to add environmentalvalue(1 (10) slide with speakers notes).
A recommended opportunity to pursuefirst, with a rationale that shows how the opportunity capitalizes on the organizations valuable, rare, and hard-to-imitate resources; is not much impacted by the organizations weaknesses; and takes advantage of the external environment(1 slide (11), with speakers notes)
A conclusion (slide 12)
References (slide 13+)
Cite at least three peer-reviewed referencesfrom journal articlesto support your assignment and make sure your references have corresponding in-text citations.
Submityour assignment.
1
2
Corporate Entrepreneurship
Damascus Johnson
Corporate Entrepreneurship
Question 1
Procter & Gamble is an American internationalcompany that was established in 1837. William Procter and James Gamble are credited with establishing the company in Cincinnati, Ohio, in the United States. The business manufactures and sells hygiene and cosmetics items like Gillette razors, Pampers diapers, and Gain fabric softener. Businesses around the world recognize and embrace entrepreneurship for its capacity to spark productivity, ensure sustainability, and secure a competitive edge. The effective distribution of its commodities is one of the many capabilities that Procter and Gamble possesses as an entrepreneurial force. Through the use of distribution centers owned by the company as well as third-party distribution partners, the business makes certain that its goods are available in sufficient quantities on the market (Kuratko, 2017). Additionally, it has been successful in incorporating powerful consumer brands into its portfolio. For the vast majority of customers, the firm’s products, such as Pampers and Downy fabric conditioners, are now household names thanks to the effective branding that the company has implemented. As a result, the company has been able to maintain its lead over its rivals. To capitalize on this potential, the company has created new goods that fit current consumer needs. Another entrepreneurship strength of the organization is its deployment of global scale activities, which has resulted in high productivity and effectiveness significant to its global structure.
Question 2
Procter & Gamble has instituted policies to expand both corporate value creation and entrepreneurial endeavors. Being proactive is one of the company’s strategies. To identify this component, consider its dedication to acquiring cutting-edge technologies that aid in developing products in response to consumer needs and gaps in the market (Singh, 2016). The corporation has also begun to embrace innovation. Customers are happy because the company values their input and actively works to meet their demands, a goal they have reached through promoting creativity among employees. Using tried-and-true market research methods like customer surveys and focus groups, the company has been able to create innovative goods that are both profitable and popular. For a project to succeed, innovators need to be willing to work together and share their perspectives. Procter & Gamble has worked hard to become a more productive corporation by consistently turning out high-quality goods while keeping costs down. To lower selling prices, it is aiming to increase localisation in the supply chain. By bringing the production of goods and materials closer to where they are consumed, the corporation can save money on transportation costs. It gives the company an advantage over rivals in terms of introducing items that satisfy customer needs first.
Question 3
The production of value consists of satisfying consumers’ wants and needs while being competitive in the marketplace. Value is created mostly through commercial interaction. The management of a firm can better pinpoint growth prospects if they have an in-depth familiarity with the industries and markets in which it operates. Procter & Gamble must expand their internet presence in order to create more value for their customers and the company. The company might benefit from a global e-commerce platform, as opposed to the country-specific one it is using at the moment. Due to the internet platform’s global reach, the company’s products will be able to enter new markets, and as a result, global demand for their itemswill expand (Hegde, 2015). The strength of their online presence is directly proportional to their ability to compete in the international e-commerce market.
References
Hegde, D. (2015). Entrepreneurial Opportunities for E-Commerce in the Retail Sector in India. In
Symposium on Growth and Prospects of Msme Sector in Emerging Scenario, JANUARY(pp. 08-09).
Kuratko, D. F. (2017). Corporate entrepreneurship & innovation: Today’s leadership challenge.
The Wiley handbook of entrepreneurship, 293-311.
Singh, A. (2016).
The process of social value creation: A multiple-case study on social entrepreneurship in India. Springer.
SHOW MORE…
Homework
Assignment
1. Did Martha Stewart commit the crime of insider trading when she sold her ImClone shares on December 27, 2001?
2. Did the U.S. attorneys and the Securities and Exchange Commission use good judgment in in- dicting Martha
Stewart? Do you believe that her indictment was based on evidence of a serious crime, or do you believe that
prosecutors con- sciously or unconsciously had additional motives for pursuing the case?
3. Do you agree with the jury that she was guilty be- yond a reasonable doubt of the conspiracy and obstruction of
justice charges?
4. Was her punishment, including both imprison- ment and fines, appropriate? Were the punish- ments of Peter
Bacanovic and Douglas Faneuil appropriate? Business,
Government,
and Society
Thirteenth Edition
John F. Steiner
George A. Steiner
A Managerial Perspective
Text and Cases
B
usiness, G
overnm
ent, and S
ociety
13E
A
M
anagerial P
erspective T
ext and C
ases
Steiner
Steiner
The thirteenth edition continues a long effort to tell the story of how forces in business,
government, and society shape our world. In addition, an emphasis on management issues and
processes allows students to apply the principles they learn to real-world situations.
As always, a stream of events dictated the need for extensive revision. Accordingly, the authors
have updated the chapters to include new ideas, events, personalities, and publications, while
continuing the work of building insight into basic underlying principles, institutions, and forces.
Highlights of the Thirteenth Edition include:
An expanded discussion of white collar crime and criminal prosecution of both
managers and corporations in Chapter 7, Business Ethics.
A new section on the neural basis of ethical decisions in Chapter 8, Making Ethical
Decisions in Business.
An expanded discussion of lobbying ethics as well as a revised discussion of corpo-
rate money in elections and recent changes in election law in Chapter 9, Business in
Politics.
A new fifth wave, terrorism and financial crisis, has been added to the four histori-
cal waves of regulatory growth in Chapter 10, Regulating Business.
A new discussion of globalization, including the rise of the modern trading system
and coverage of various trade organizations, such as the IMF and World Bank, in
Chapter 12, Globalization, Trade, and Corruption.
New sections in Chapter 15, Consumerism, including Thoreaus rejection of
materialism, arguments defending consumerism, and a description of the consumer
protection activities of the Federal Trade Commission.
Added emphasis on the nature and significance of diversity management programs in
corporations in Chapter 17, Civil Rights, Women, and Diversity.
New coverage of the story of the Lehman Brothers bankruptcy and of the new
governance reforms in the wake of the recent financial crisis in Chapter 18,
Corporate Governance.
To learn more, visit this books Online Learning Center at
www.mhhe.com/steiner13e
9 7 8 0 0 7 8 1 1 2 6 7 6
9 0 0 0 0
www.mhhe.com
ISBN 978-0-07-811267-6
MHID 0-07-811267-2
E
A
N
M
D
D
A
L
IM
#1142568 5/3/11 C
Y
A
N
M
A
G
Y
E
L
O
B
L
K
Business,
Government,
and Society
A Managerial Perspective,
Text and Cases
Thirteenth Edition
John F. Steiner
Professor of Management,
Emeritus California State
University, Los Angeles
George A. Steiner
Harry and Elsa Kunin
Professor of Business and
Society and Professor of
Management, Emeritus, UCLA
ste12672_fm_i-xvi.indd Page i 5/2/11 9:51 PM user-f497ste12672_fm_i-xvi.indd Page i 5/2/11 9:51 PM user-f497 /Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202/Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202
BUSINESS, GOVERNMENT, AND SOCIETY:
A MANAGERIAL PERSPECTIVE, TEXT AND CASES
Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas,
New York, NY, 10020. Copyright 2012, 2009, 2006, 2003, 2000, 1997, 1994, 1991, 1988, 1985, 1980 by The McGraw-Hill
Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any
means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc.,
including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.
Some ancillaries, including electronic and print components, may not be available to customers outside the United States.
This book is printed on acid-free paper.
1 2 3 4 5 6 7 8 9 0 DOC/DOC 1 0 9 8 7 6 5 4 3 2 1
ISBN 978-0-07-811267-6
MHID 0-07-811267-2
Vice president and editor-in-chief: Brent Gordon
Editorial director: Paul Ducham
Executive director of development: Ann Torbert
Managing development editor: Laura Hurst Spell
Editorial coordinator: Jonathan Thornton
Vice president and director of marketing: Robin J. Zwettler
Marketing director: Amee Mosley
Market development specialist: Jaime Halteman
Vice president of editing, design, and production: Sesha Bolisetty
Lead project manager: Christine A. Vaughan
Buyer II: Debra R. Sylvester
Design coordinator: Joanne Mennemeier
Senior photo research coordinator: Keri Johnson
Media project manager: Suresh Babu, Hurix Systems Pvt. Ltd.
Cover images: Ingram Publishing; Skip Nall/Getty Images; Royalty-Free/CORBIS; Hisham F. Ibrahim/Getty Images;
Getty Images/Digital Vision; U.S. Navy photo by Mass Communication Specialist 1st Class Demetrius Kennon
Typeface: 10/12 Palatino
Compositor: Aptara, Inc.
Printer: R. R. Donnelley
Library of Congress Cataloging-in-Publication Data
Steiner, John F.
Business, government, and society : a managerial perspective: text and
cases / John F. Steiner, George A. Steiner.13th ed.
p. cm.
Includes index.
ISBN-13: 978-0-07-811267-6 (alk. paper)
ISBN-10: 0-07-811267-2 (alk. paper)
1. IndustriesSocial aspectsUnited States. 2. Industrial policyUnited
States. 3. Social responsibility of businessUnited States. I. Steiner, George Albert,
1912- II. Title.
HD60.5.U5S8 2012
658.4dc22
2011007905
www.mhhe.com
ste12672_fm_i-xvi.indd Page ii 5/2/11 9:51 PM user-f497ste12672_fm_i-xvi.indd Page ii 5/2/11 9:51 PM user-f497 /Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202/Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202
We dedicate this book to the memory of
Jean Wood Steiner.
ste12672_fm_i-xvi.indd Page iii 5/2/11 9:51 PM user-f497ste12672_fm_i-xvi.indd Page iii 5/2/11 9:51 PM user-f497 /Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202/Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202
iv
Brief Table of Contents
Preface xi
PART ONE A Framework for Studying
Business, Government, and
Society
1 The Study of Business,
Government, and Society 1
2 The Dynamic Environment 22
3 Business Power 55
4 Critics of Business 83
PART TWO The Nature and
Management of Corporate
Responsibility
5 Corporate Social
Responsibility 121
6 Implementing Corporate Social
Responsibility 157
PART THREE Managing Ethics
7 Business Ethics 194
8 Making Ethical Decisions in
Business 238
PART FOUR Business and Government
9 Business in Politics 271
10 Regulating Business 316
PART FIVE Multinational Corporations
and Globalization
11 Multinational Corporations 352
12 Globalization, Trade, and
Corruption 395
PART SIX Corporations and the
Natural Environment
13 Industrial Pollution and
Environmental Regulation 436
14 Managing Environmental
Quality 476
PART SEVEN Consumerism
15 Consumerism 512
PART EIGHT Human Resources
16 The Changing Workplace 549
17 Civil Rights, Women, and
Diversity 585
PART NINE Corporate Governance
18 Corporate Governance 630
ste12672_fm_i-xvi.indd Page iv 5/2/11 9:51 PM user-f497ste12672_fm_i-xvi.indd Page iv 5/2/11 9:51 PM user-f497 /Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202/Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202
v
Table of Contents
Preface xi
PART ONE
A Framework for Studying Business,
Government, and Society
Chapter 1
The Study of Business, Government,
and Society 1
ExxonMobil Corporation 1
What Is the BusinessGovernmentSociety
Field? 4
Why Is the BGS Field Important to
Managers? 7
Four Models of the BGS Relationship 8
The Market Capitalism Model 9
The Dominance Model 12
The Countervailing Forces Model 15
The Stakeholder Model 16
Our Approach to the Subject Matter 20
Comprehensive Scope 20
Interdisciplinary Approach with a Management
Focus 20
Use of Theory, Description, and Case Studies 20
Global Perspective 21
Historical Perspective 21
Chapter 2
The Dynamic Environment 22
Royal Dutch Shell PLC 22
Deep Historical Forces at Work 24
The Industrial Revolution 25
Inequality 25
Population Growth 28
Technology 30
Globalization 32
Nation-States 33
Dominant Ideologies 34
Great Leadership 35
Chance 35
Six External Environments of Business 36
The Economic Environment 36
The Technological Environment 38
The Cultural Environment 39
The Government Environment 41
The Legal Environment 42
The Natural Environment 43
The Internal Environment 44
Concluding Observations 45
Case Study: The American Fur Company 47
Chapter 3
Business Power 55
James B. Duke and The American Tobacco
Company 55
The Nature of Business Power 58
What Is Power? 58
Levels and Spheres of Corporate Power 59
The Story of the Railroads 61
Two Perspectives on Business Power 64
The Dominance Theory 65
Pluralist Theory 71
Concluding Observations 75
Case Study: John D. Rockefeller and the
Standard Oil Trust 75
Chapter 4
Critics of Business 83
Mary Mother Jones 83
Origins of Critical Attitudes Toward
Business 86
The Greeks and Romans 86
The Medieval World 88
The Modern World 88
ste12672_fm_i-xvi.indd Page v 5/4/11 11:07 AM user-f501ste12672_fm_i-xvi.indd Page v 5/4/11 11:07 AM user-f501 204/MHBR234/ste12672_disk1of1/0078112672/ste12672_pagefiles204/MHBR234/ste12672_disk1of1/0078112672/ste12672_pagefiles
vi Table of Contents
The American Critique of Business 89
The Colonial Era 89
The Young Nation 90
18001865 91
Populists and Progressives 93
Socialists 95
The Great Depression and World
War II 99
The Collapse of Confidence 100
The New Progressives 102
Global Critics 103
The Story of Liberalism 104
The Rise of Neoliberalism 105
Agenda of the Global Justice
Movement 106
Global Activism 108
Concluding Observations 110
Case Study: A Campaign against KFC
Corporation 112
PART TWO
The Nature and Management of
Corporate Responsibility
Chapter 5
Corporate Social Responsibility 121
Merck & Co., Inc. 121
The Evolving Idea of Corporate Social
Responsibility 123
Social Responsibility in Classical Economic
Theory 125
The Early Charitable Impulse 125
Social Responsibility in the Late Nineteenth and
Early Twentieth Centuries 127
1950 to the Present 129
Basic Elements of Social Responsibility 131
General Principles 133
Are Social and Financial Performance
Related? 134
Corporate Social Responsibility in a Global
Context 135
The Problem of Cross-Border Corporate
Power 136
The Rise of New Global Values 137
Global Corporate Responsibility 138
Development of Norms and Principles 138
Codes of Conduct 140
Reporting and Verification Standards 142
Certification and Labeling Schemes 142
Management Standards 143
Social Investment and Lending 144
Government Actions 144
Civil Society Vigilance 145
Assessing the Evolving Global CSR
System 146
Concluding Observations 146
Case Study: Jack Welch at General
Electric 147
Chapter 6
Implementing Corporate Social
Responsibility 157
The Bill & Melinda Gates Foundation 157
Managing the Responsive Corporation 160
Leadership and Business Models 160
A Model of CSR Implementation 162
CSR Review 163
CSR Strategy 167
Implementation of CSR Strategy 168
Reporting and Verification 171
How Effectively Is CSR Implemented? 174
Corporate Philanthropy 175
Patterns of Corporate Giving 175
Strategic Philanthropy 177
Cause Marketing 179
New Forms of Philanthropy 181
Concluding Observations 183
Case Study: Marc Kasky versus
Nike 183
PART THREE
Managing Ethics
Chapter 7
Business Ethics 194
Bernard Ebbers 194
What Are Business Ethics? 197
Two Theories of Business Ethics 198
ste12672_fm_i-xvi.indd Page vi 5/11/11 3:23 PM user-f494ste12672_fm_i-xvi.indd Page vi 5/11/11 3:23 PM user-f494 /208/MHBR238/mcc21034_disk1of1/0071221034/mcc21034_pagefiles/208/MHBR238/mcc21034_disk1of1/0071221034/mcc21034_pagefiles
Table of Contents vii
Major Sources of Ethical Values in
Business 200
Religion 201
Philosophy 202
Cultural Experience 204
Law 206
Factors That Influence Managerial
Ethics 212
Leadership 212
Strategies and Policies 214
Corporate Culture 215
Individual Characteristics 218
How Corporations Manage
Ethics 220
Ethics and Compliance Programs: An
Assessment 227
Concluding Observations 228
Case Study: The Trial of Martha
Stewart 229
Chapter 8
Making Ethical Decisions in
Business 238
David Geffen 238
Principles of Ethical Conduct 241
The Categorical Imperative 241
The Conventionalist Ethic 242
The Disclosure Rule 243
The Doctrine of the Mean 244
The EndsMeans Ethic 244
The Golden Rule 245
The Intuition Ethic 246
The Might-Equals-Right Ethic 246
The Organization Ethic 247
The Principle of Equal Freedom 248
The Proportionality Ethic 248
The Rights Ethic 249
The Theory of Justice 249
The Utilitarian Ethic 251
Reasoning with Principles 251
Character Development 253
The Neural Basis of Ethical
Decisions 253
Probing Ethical Decisions 254
Emotions and Intuition 256
Practical Suggestions for Making Ethical
Decisions 257
Concluding Observations 259
Case Studies: Short Incidents for Ethical
Reasoning 260
Tangled Webs 264
PART FOUR
Business and Government
Chapter 9
Business in Politics 271
Paul Magliocchetti and Associates 271
The Open Structure of American
Government 275
A History of Political Dominance by
Business 277
Laying the Groundwork 277
Ascendance, Corruption, and Reform 278
Business Falls Back under the New Deal 280
Postwar Politics and Winds of Change 281
The Rise of Antagonistic Groups 282
Diffusion of Power in Government 283
The Universe of Organized Business
Interests 284
Lobbying 287
Lobbying Methods 288
Power and Limits 290
Regulation of Lobbyists 291
The Corporate Role in Elections 293
Efforts to Limit Corporate Influence 294
The Federal Election Campaign Act 295
Political Action Committees 296
Soft Money and Issue Advertising 298
Reform Legislation in 2002 299
How Business Dollars Enter
Elections 301
Concluding Observations 303
Case Study: Citizens United v. Federal
Election Commission 304
Chapter 10
Regulating Business 316
The Federal Aviation Administration 316
ste12672_fm_i-xvi.indd Page vii 5/2/11 9:51 PM user-f497ste12672_fm_i-xvi.indd Page vii 5/2/11 9:51 PM user-f497 /Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202/Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202
viii Table of Contents
The United Nations Global Compact 375
Criticism of the Global Compact 378
The Alien Tort Claims Act 379
The Drummond Company on Trial 381
Concluding Observations 383
Case Study: Union Carbide Corporation and
Bhopal 384
Chapter 12
Globalization, Trade, and
Corruption 395
McDonald’s Corporation 395
Globalization 397
Ascent and Inertia 400
Trade 402
The Rise and Fall of Trade 402
A New Postwar Order 404
Success and Evolution 404
The World Trade Organization 406
Regional Trade Agreements 409
Free Trade versus Protectionism 411
Why Free Trade? 411
Why Protectionism? 412
The Politics of Protectionism 413
Free Trade Responses to Protectionism 415
U.S. Deviation from Free Trade Policy 416
Tariff Barriers in Other Countries 416
Corruption 417
A Spectrum of Corruption 418
The Fight Against Corruption 420
The Foreign Corrupt Practices Act 422
Corporate Actions to Fight Corruption 425
Concluding Observations 426
Case Study: David and Goliath at the
WTO 427
PART SIX
Corporations and the Natural
Environment
Chapter 13
Industrial Pollution and
Environmental Regulation 436
The Majestic Hudson River 436
Why Government Regulates Business 319
Flaws in the Market 319
Social and Political Reasons for Regulation 320
Waves of Growth 320
Wave 1: The Young Nation 321
Wave 2: Confronting Railroads and Trusts 322
Wave 3: The New Deal 323
Wave 4: Administering the Social
Revolution 324
Wave 5: Terrorism and Financial Crisis 325
War Blips 327
How Regulations Are Made 327
Regulatory Statutes 327
Rulemaking 329
Presidential Oversight 332
Congressional Oversight 334
Challenges in the Courts 335
Costs and Benefits of Regulation 337
The Regulatory Burden 337
Benefits of Regulations 339
Regulation in Other Nations 340
Concluding Observations 342
Case Study: Good and Evil on the
Rails 342
PART FIVE
Multinational Corporations and
Globalization
Chapter 11
Multinational Corporations 352
The Coca-Cola Company 352
The Multinational Corporation 354
A Statistical Perspective 356
How Transnational Is a Corporation? 358
Breaking the Bonds of Country: Weatherford
International 359
Foreign Direct Investment 362
FDI in Developing Economies 364
International Codes of Conduct 367
The OECD Guidelines for Multinational
Enterprises 369
How the OECD Guidelines Work 369
Vedanta Resources 371
ste12672_fm_i-xvi.indd Page viii 5/11/11 3:24 PM user-f494ste12672_fm_i-xvi.indd Page viii 5/11/11 3:24 PM user-f494 /208/MHBR238/mcc21034_disk1of1/0071221034/mcc21034_pagefiles/208/MHBR238/mcc21034_disk1of1/0071221034/mcc21034_pagefiles
Table of Contents ix
Consumerism 515
Consumerism as an Ideology 515
Consumerism Rises in America 516
Consumerism in Perspective 518
The Global Rise of Consumerism 522
In Defense of Consumerism 523
Consumerism as a Protective Movement 524
The Consumers Protective Shield 525
The Food and Drug Administration (FDA) 526
The Federal Trade Commission (FTC) 527
The Consumer Product Safety Commission
(CPSC) 529
The National Highway Traffic Safety Administration
(NHTSA) 530
Consumer Protection by Other Agencies 532
Product Liability 534
Negligence 534
Warranty 535
Strict Liability 536
Costs and Benefits of the Tort System 537
Concluding Observations 538
Case Study: Alcohol Advertising 538
PART EIGHT
Human Resources
Chapter 16
The Changing Workplace 549
Ford Motor Company 549
External Forces Shaping the Workplace 552
Demographic Change 553
Technological Change 555
Structural Change 556
Competitive Pressures 558
Reorganization of Work 560
Government Intervention 562
Development of Labor Regulation in the United
States 562
Work and Worker Protection in Japan and
Europe 569
Japan 569
Europe 570
Labor Regulation in Perspective 572
Concluding Observations 572
Case Study: A Tale of Two Raids 575
Pollution 438
Human Health 439
The Biosphere 440
Industrial Activity and Sustainability 442
Ideas Shape Attitudes Toward the
Environment 444
New Ideas Challenge the Old 445
Environmental Regulation in the
United States 447
The Environmental Protection Agency 447
Principal Areas of Environmental Policy 448
Air 448
Water 458
Land 459
Concluding Observations 463
Case Study: A World Melting Away 464
Chapter 14
Managing Environmental
Quality 476
The Commerce Railyards 476
Regulating Environmental Risk 479
Analyzing Human Health Risks 479
Risk Assessment 480
Risk Management 486
CostBenefit Analysis 487
Advantages 488
Criticisms 489
Control Options 491
Command-and-Control Regulation 491
Market Incentive Regulation 492
Voluntary Regulation 498
Managing Environmental Quality 499
Environmental Management Systems 500
A Range of Actions 501
Concluding Observations 503
Case Study: Harvesting Risk 503
PART SEVEN
Consumerism
Chapter 15
Consumerism 512
Harvey W. Wiley 512
ste12672_fm_i-xvi.indd Page ix 5/11/11 3:24 PM user-f494ste12672_fm_i-xvi.indd Page ix 5/11/11 3:24 PM user-f494 /208/MHBR238/mcc21034_disk1of1/0071221034/mcc21034_pagefiles/208/MHBR238/mcc21034_disk1of1/0071221034/mcc21034_pagefiles
x Table of Contents
PART NINE
Corporate Governance
Chapter 18
Corporate Governance 630
Mark Hurd 630
What Is Corporate Governance? 633
The Corporate Charter 634
Power in Corporate Governance: Theory and
Reality 636
Stockholders 636
Shareholder Resolutions 638
Assessing Shareholder Influence 639
Federal Regulation of Governance 639
Enron Corp. 640
Other Failures of Governance 644
The Sarbanes-Oxley Act 645
Lehman Brothers 646
The Dodd-Frank Act 650
Boards of Directors 651
Duties of Directors 652
Board Composition 652
Board Dynamics 653
Executive Compensation 655
Components of Executive Compensation 655
Problems with CEO Compensation 659
Concluding Observations 663
Case Study: High Noon at Hewlett-
Packard 664
Chapter 17
Civil Rights, Women, and
Diversity 585
The Employment Non-Discrimination Act 585
A Short History of Workplace Civil
Rights 587
The Colonial Era 588
Civil War and Reconstruction 589
Other Groups Face Employment
Discrimination 590
The Civil Rights Cases 591
Plessy v. Ferguson 592
Long Years of Discrimination 593
The Civil Rights Act of 1964 594
Disparate Treatment and Disparate Impact 595
The Griggs Case 596
Affirmative Action 597
Executive Order 11246 598
The Supreme Court Changes Title VII 599
The Affirmative Action Debate 601
Women at Work 602
Gender Attitudes at Work 604
Subtle Discrimination 605
Sexual Harassment 607
Occupational Segregation 610
Compensation 612
Diversity 614
Elements of Diversity Programs 616
Concluding Observations 618
Case Study: Adarand v. Pea 619
ste12672_fm_i-xvi.indd Page x 5/2/11 9:51 PM user-f497ste12672_fm_i-xvi.indd Page x 5/2/11 9:51 PM user-f497 /Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202/Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202
xi
Preface
This 13th edition continues a long effort to tell the story of how forces in business,
government, and society shape our world. As always, a stream of events dictated
the need for extensive revision. In particular, a major financial crisis and a new
presidential administration altered parts of the subject matter in important ways.
Accordingly, we have updated the chapters to include new ideas, events, person-
alities, and publications.
While current events move rapidly over the surface of our world, its underly-
ing dynamics are largely undisturbed. As with every revision, we adapt to the
flow of events, but we also continue the work of building insight into basic prin-
ciples, institutions, and forces. So, while new events will doubtless erode the cur-
rency of the discussions, we believe that certain insights about the relationships
between business, government, and society should endure.
In what follows, we summarize new elements in this edition.
THE CHAPTERS
Key revisions and additions in the chapters include these.
Chapter 4, Critics of Business, has a new discussion of the rise of free market
ideas that came to be called the Chicago School and their interaction with, first,
Keynesian thinkers and, later, progressive thinkers.
Chapter 7, Business Ethics, contains an expanded discussion of white-collar
crime and criminal prosecution of both managers and corporations, including
the growing use of deferred- and nonprosecution agreements. The chapter also
has a new discussion of inner psychological processes interact that generate
unethical behavior.
Chapter 8, Making Ethical Decisions in Business, adds a new section on the neu-
ral basis of ethical decisions. Studies of the brain using magnetic resonance imaging
suggest that ethical decisions are fast, unconscious, and automatic processes. Their
findings illuminate how individuals do (and should) make ethical decisions.
Chapter 9, Business in Politics, includes an expanded discussion of lobbying
ethics, including a more thorough discussion of the nature of bribery and inci-
dents to illustrate its boundaries. The section on corporate money in elections
isrevised to explain changes in election law following the Citizens United v.
Federal Election Commission decision. The chapter case study is now the story of
Citizens United .
Chapter 10, Regulating Business, adds a new fifth wave, terrorism and fi-
nancial crisis, to the four historical waves of regulatory growth. This new
wave covers the federal governments aggressive expansion of regulation and
changes in regulatory philosophy in the Barack Obama administration.
Chapter 11, Multinational Corporations, has a new discussion of the Organisa-
tion for Economic Co-Operation and Developments Guidelines for Multinational
ste12672_fm_i-xvi.indd Page xi 5/2/11 9:51 PM user-f497ste12672_fm_i-xvi.indd Page xi 5/2/11 9:51 PM user-f497 /Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202/Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202
xii Preface
Enterprises. It tells a story about how the guidelines were applied to a mining
company that sought to develop a sacred tribal land in India.
Chapter 12, Globalization, Trade, and Corruption, introduces a new discus-
sion of globalization. The section on trade now explains the rise of the modern
trading system, including discussions of Bretton Woods, the International Mon-
etary Fund, the World Bank, the General Agreement on Tariffs and Trade, and
the World Trade Organization. The section on international corruption is re-
vised to accommodate recent, more vigorous anti-bribery enforcement. It now
relates more incidents and stories about bribery.
Chapter 15, Consumerism, has several new sections including a discussion of
Henry David Thoreau and his principled rejection of materialism, a presenta-
tion of arguments defending consumerism, and a description of the consumer
protection activities of the Federal Trade Commission.
Chapter 17, Civil Rights, Women, and Diversity, contains added emphasis on
the nature and significance of diversity management programs in corporations.
Chapter 18, Corporate Governance, now tells the story of the Lehman Broth-
ers bankruptcy that resulted from, among other factors, the lack of oversight by
a poorly structured board of directors. It explains new governance reforms in
the wake of the recent financial crisis.
CHAPTER-OPENING STORIES
As in past editions, we begin each chapter with a true story about a company, a bi-
ographical figure, or a government action. Five new stories appear in this edition.
David Geffen is the story of a brash young man willing to compromise the
truth to make his fortune. His career invites a timeless discussion of whether
actions are always right and wrong in themselves, or whether their conse-
quences should be considered.
Paul Magliocchetti and Associates is the story of a bright young man who went
to Washington, D.C., worked for a member of Congress, and set up a lobbying
firm. He specialized in getting earmarks for corporations. His story reveals the
hidden influence that characterizes politics in the nations capital.
The Federal Aviation Administration focuses on how this agency issues a
license before each launch of a space vehicle by a private company. The story
tells how the FAA goes about assessing risks to the public with each launch.
The agencys actions are a small window into the work of a massive regulatory
presence.
The Majestic Hudson River reveals the details of the huge project to remove
polychlorinated biphenyls from this waterway. More than half a century ago
General Electric released the chemicals. Now it will pay as much as $2 billion to
clean them out even as it protests that they do less harm if left undisturbed.
Mark Hurd is about a former Hewlett-Packard CEO accused of sexual ha-
rassment. The board investigated, but found no violation of the companys sex-
ual harassment policy. Still, when questioned by directors he had shaded the
ste12672_fm_i-xvi.indd Page xii 5/2/11 9:51 PM user-f497ste12672_fm_i-xvi.indd Page xii 5/2/11 9:51 PM user-f497 /Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202/Volumes/DATA-DISK/Tempwork/2011/April 2011/29:04:11/MHDQ283:Hirt:202
Preface xiii
truth about his friendship with a woman. The board lost confidence in his in-
tegrity. He was forced to resign.
THE CASE STUDIES
Every chapter, except Chapter 1, ends with a case study. The cases illustrate one or
more central themes in the chapter. Five new cases appear in this edition.
Tangled Webs is a story of temptation and transgression. A man and a woman
meet on a Web site for adulterers and begin a fated game of insider trading. The
case invites discussion of the business model used by the Web site and of the
psychology of lying and ethical transgression.
Citizens United v. FEC is the story of the Supreme Court decision that allowed
corporations to contribute independently to federal political candidates. In a
close five-to-four decision the Courts more conservative justices decided that
parts of Americas election law violated the First Amendments guarantee of
free speech.
Good and Evil on the Rails invites debate about the benefits and costs of
regulation. After a train crash in California killed 24 passengers, Congress
passed a law mandating $13.3 billion of computerized controls to make trains
safer. Unfortunately, the benefits, including the value of statistical lives saved,
were less than $1 billion. Is the money well spent?
A World Melting Away is the story of the polar bear endangered by warming
of its habitat. What kind of measures can p