Introduction to Relationship Between Business and Society

In April 1995, CBS aired a documentary on the soccer ball industry in Sialkot, Pakistan. The documentary showed that the soccer ball industry in Sialkot, which manufactured 60% of the world’s total supply of soccer balls (Husslbee, 2000) for global sports companies, employed child labor. This CBS documentary, subsequently, received considerable attention in the United States and the global media. The result of this attention was the launching of a major international campaign against the companies in Sialkot that employed children and the big international names in sports goods and apparel that did business with these manufacturers.

Nike was one of the main targets of this international campaign. Nike’s initial response to these accusations added fuel to the fire, as Nike gave different versions regarding its awareness of the problem and steps taken by it to resolve the issue (Boje & Khan, 2013). In fact, in an interview with Michael Moore for his documentary The Big One, Phil Knight (Nike CEO) came out as unconcerned and callous when he commented that 14-year-olds working in factories that make Nike products, including soccer balls, did not bother him. As a result, activist and consumer pressure mounted on Nike. Eventually, Nike became part of a global initiative to remove child labor from this industry. Nike also took steps to create labor standards for its vendors and insisted that its vendors become part of the global initiative, and it took upon itself to monitor its suppliers who agreed to remove child labor in the soccer ball industry (Nadvi, 2008).

This brief description of the soccer ball controversy raises some crucial questions:

• As a U.S. company, is Nike responsible to the U.S. public?
• If Nike is accountable to the U.S. public, then as a U.S. company, what should be the limits of this responsibility?
• Is Nike responsible for its vendors, who may or may not treat their employees fairly or hire child labor? Is this not the responsibility of the government of that particular country?
• Can Nike make a difference in the working conditions of workers in those countries?
• Should Nike be concerned with child labor and other labor issues in the factories of its suppliers?
• Should we in the U.S. public be concerned about these and other ethical issues in the United States and in other countries?
• If we do think that the U.S. public should be concerned about these matters, then do we have, as individuals or as a society, the tools to make any difference? If so, then what are those tools?

The answers to all of the above questions lie in the realm of this course that looks at the role and place of business in society. The argument that this course makes is that business in the 21st century is one of the most powerful and dominant segments of society. Societies in different countries, especially in developed nations, have realized this, and they are debating the role of business in society to ensure that business performs its functions with the least negative impact on society. In essence, businesses today need to have a "license to operate" (Post et al., 2002) from society and, therefore, businesses need to be more cognizant of societal demands and concerns. However, society is composed of many entities, and organizations cannot and should not be expected to cure all ills in society. Hence, it is necessary for managers to have two capabilities: how to recognize stakeholders and how to interact with them. Stakeholder management aims to provide necessary tools to perform these functions. 

Learning Objectives

After completing this lesson, you will be able to do the following:

• Define "business" and "society."
• Define and appraise a pluralist society and the purpose it serves.
• Evaluate why businesses are criticized and construct the process of how organizations react to societal pressures.
• Define what the stakeholder approach to business is and explain why it is needed in the 21st century.

Lesson Readings and Activities

By the end of this lesson, make sure you have completed the readings and activities found in the Lesson 1 Course Schedule.