BUSS1000: Future of Business

Lecture 2: Role of Business in

Society
Presented by
Dr. Steven Hitchcock
Associate Lecturer
Office Hours: 3pm-4pm Monday-Thursday
steven.hitchcock@sydney.edu.au

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 What are we doing today?

What are we doing today?

– Academic Honesty
– Defining some key terms
– Stakeholders
– Vision, mission, and values.
– Role of business in society
– Profit Maxmisation
– CSR
– CSV
– SE
– Introducing the Case Study
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Academic Integrity
It’s important to all of us.

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 Academic honesty

Why is it important?

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 Consider a pilot’s qualifications…
How would you feel if you were
a passenger on this plane and
you knew:
• The pilot cheated to get
through his exams.

• His credentials were from a

university with low standards.

• His work was of poor quality.

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 Dishonesty affects academics and students alike

It impacts on:

• our reputation

• our confidence in each

other’s work

• our belief in a fair and

honest world.

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 What is academic dishonesty?
Any time where you have deliberately gained an unfair academic advantage.
It includes:
• submitting work for assessment that that is the same, or substantially the same, as a
previously submitted work (‘recycling’)
• fabricating data or sources
• submitting unreferenced work that is not your own (plagiarism)
• engaging another person to complete or contribute to an assessment, or submitting
work that has been completed by another person
• communicating, by any means, with another candidate during an examination, or
copying from another student during an exam
• bringing forbidden material such as textbooks, notes, calculators, smart phones or
computers into an examination.

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 We use Turnitin software to detect plagiarism

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 Academic honesty

Follow the 3 golden rules

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 1. Reference all the content and ideas you source
For example…
“As variables affecting supply
and demand change, so will
the equilibrium price.” (Bovee
& Thill, 2015, p.76)

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 2. Acknowledge quotes and display them correctly
There are rules about including quotes in your paper.
Short quotation example – Long quotation example –
typically less than 30 words: typically those longer than 40 words
• use quotation marks • indented from both margins.
• Include the author’s surname, • no quotation marks
year of publication, the page • still reference the quote in the text.
number.
Many questions have been In differentiating between different types of
raised about issues concerning business, Cronje et al. (2003, p.4) note that:
“skills and skill development” the most important characteristic of the business
(Fenwick and Hall, 2006, p. world in the developed countries of the West
571). and Asia is the freedom of individuals to
establish any business of their own choice and
to produce, within limits, any product or service
the market requires.
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 3. Make sure you paraphrase correctly

Paraphrasing is showing your understanding of information and ideas from a source by

rephrasing these in your own words and for your own purpose.

For example, how would you paraphrase this?

“Utilitarianism begins with the conviction that we should decide what to do by
considering the consequences of our actions. Utilitarianism tells us that we should act in
ways that produce better overall consequences than the alternatives we are considering
(Hartman, 2008, p. 67)”.

Possible paraphrase…
Utilitarianism is based on the consequences of our actions and demands that we choose
a course of action that produces the best overall outcome amongst a set of options
(Hartman, 2008, p.67).
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 Where to find help with academic referencing
• Library-led sessions in H70 Basement 2, B2040 ‘Careers and Student Experience
Lounge’ . Library Website – https://library.sydney.edu.au
• Chat live or book an appointment from the library website.

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 Education in Academic Honesty
– The University of Sydney is deeply committed to educational excellence and a culture of
academic integrity.
– It is opposed to and will not tolerate academic dishonesty or plagiarism and will treat all
allegations of dishonesty seriously.

Academic Honesty Education Module (AHEM)

– All commencing students are required to complete the AHEM
– Must be completed by end of week 4
– Instructions for accessing the AHEM are here: https://sydney.edu.au/students/academic-
integrity.html

Learning Centre workshops on how to avoid plagiarism

– Extra workshops have been scheduled in Weeks 2 to 4
– Register as soon as possible because places are limited to 25 students per workshop
– To register, go here: http://sydney.edu.au/stuserv/learning_centre/QSP.shtml
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Defining some key terms

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 A caveat on definitions!

– These definitions come from the Cambridge Business Dictionary (2017).

– There are much more complex definitions out there.

– You might find different classes use different definitions, especially as you
move through your studies

– But these are good, serviceable definitions to get us started.

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 What do we mean by…

– Organisation: “a group of people who work together in an organized way

for a shared purpose”

– Company: “an organization that sells goods or services in order to make

money”

– Corporation: “a large company or group of companies that is controlled

together as a single organization”

– Business: “a particular company that buys and sells goods and services”

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Stakeholders

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 What is a stakeholder?

– Stakeholder: an organization or “a person such as an employee, customer,

or citizen who is involved with an organization, society, etc. and therefore
has responsibilities towards it and an interest in its success.”

– Important: Stakeholders and stockholders are different

– Stockholder: “a person who owns shares in a company and therefore gets

part of the company's profits and the right to vote on how the company is
controlled.”

– So all stockholders are stakeholders, but not all stakeholders are

stockholders.
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 Identifying stakeholders is complex.

– Who counts as a stakeholder?

– Are there multiple layers of stakeholders?(e.g. within an organization can
individuals also be stakeholders)
– How finely sliced/segmented should stakeholders be?
– Are representatives of stakeholders really stakeholders?
– Are stakeholders’ stakeholders also my stakeholders?
– Are competitors stakeholders?
– Who am I competing with?

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 Some potential stakeholders include…

– owners (e.g. investors, shareholders, agents, analysts, and ratings agencies)

– customers (e.g. direct customers, indirect customers, and advocates)
– employees (e.g. current employees, potential employees, retirees,
representatives, and dependents)
– industry (e.g. suppliers, competitors, industry associations, industry opinion
leaders, and media)

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 Some potential stakeholders include…

– community (e.g. residents near company facilities, chambers of commerce,

resident associations, schools, community organisations, and special interest
groups)
– environment (e.g. nature, nonhuman species, future generations, scientists,
ecologists, spiritual communities, advocates, and NGOs)
– government (e.g. public authorities, and local policymakers; regulators; and
opinion leaders)
– civil society organisations (e.g. NGOs, faith-based organisations, and labor
unions)

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 Quick Poll

Are competitors stakeholders? Answer below!

https://www.strawpoll.me/15229471

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 Are competitors stakeholders?

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Vision, mission, and values

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 Mission, vision, and values

– Explaining why an organisation exists

– An understanding of what the leaders want the organisation to become
– Describes an inspiring new reality
– Often serve to aid in decision making
– Provides context for all decisions within the organisation
– Guiding the development of strategy and organization

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 So what’s the difference?

– Mission Statement: “a short written description of the aims of

a business, charity, government department, or public organization”

– Vision Statement: “a statement of what a company or

an organization would like to achieve in the future”

– Values: “the principles that help you to decide what is right and wrong, and
how to act in various situations:”

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 Why do these matter?

– Organisational culture: “the types of attitudes and agreed ways of

working shared by the employees of a company or organization”

– Organisational culture will be something that will appear often throughout

your studies

– Arguably, most importantly they help us define what the organisation tries to
do.

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Role of business in society

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 A little bit of philosophy

– Many people have very different ideas about what the purpose of business
should be.
– This is a very philosophical discussion, and often a very personal one.
– These perspectives often have a lot to do with
– What we believe is important
– How we believe the world works
– How we believe the world should work
– This is a very complex discussion but to keep it approachable, we are going
to talk about four perspectives in this class.

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 What are the four perspectives ?

– Profit Maximisation
– Corporate Social Responsibility
– Creating Shared Value
– Social Entrepreneurship

– These four perspectives describe different orientations towards society.

– For us in BUSS1000, these four perspectives represent a spectrum of
attitudes towards the question, “What is the role of business in society?”

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 Profit Maximisation (PM)

– According to Friedman (1970) “There is one and only one social

responsibility of business–to use it resources and engage in activities
designed to increase its profits so long as it stays within the rules of the
game, which is to say, engages in open and free competition without
deception or fraud.”
– Example of PM: Offshoring Production

– This view is very much embedded in what we call Classical Economics.

– While this may not be the most popular perspective today, it is still very
prevalent.
– This perspective was prominent for millennia.

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 So what changed?

– There had been increasing dissatisfaction, or rather critiques, throughout the

20th century about the role that businesses play in society
– No single event that made people concerned.
– Human’s impact on the world however was increasingly entering public
consciousness.
– Global warming in mid 20th century
– Ozone depletion observed in 1970s
– Exxon Valdez Oil Spill in 1989
– Organisation’s impact directly on the lives of individuals
– Great Smog of 1952
– Bhopal Disasters in 1984
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Corporate Social Responsibility
(CSR)

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 Corporate Social Responsibility (CSR)

– Increasing societal pressure for organizations to think beyond their bottom

line.
– There were many ways that this was discussed however a good definition
appeared at the turn of the century
– “CSR as actions that appear to further some social good, beyond the
interests of the firm and that which is required by law” (McWilliams &
Siegel, 2001, p 117)
– Often we talk about “giving back” as an example
– Donations
– Sponsorships
– Funding community projects

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 Examples of CSR: Fairtrade Purchasing

– Cadbury Australia and New Zealand

– Cocoa Life and Fairtrade Australia and New Zealand

(About Cadbury, 2017)

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 Example of CSR: Philanthropy

– Warren Buffet
– Pledged 99% of his fortune via philanthropic causes. (Schifrin, 2013)

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 Critiques of CSR

– What counts?
– Longevity of change?
– How much counts?
– Who decides?

For organisations specifically

– Ethics and legality of spending shareholders’ money on ventures unrelated
to organization’s profitability and performance.
– i.e. where does CSR turn into poor financial management?

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Creating Shared Value (CSV)

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 Creating Shared Value

– “The purpose of the corporation must be redefined as creating shared

value, not just profit per se. This will drive the next wave of innovation and
productivity growth in the global economy. It will also reshape capitalism
and its relationship to society.” (Porter & Kramer, 2011, p 2)
– To be considered CSV, it must benefit the organization and another
stakeholder.
– Three key ways of engaging in CSV
– Driving mutually beneficial change
– Reconceiving products and markets
– Local cluster development

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 Example of CSV: Transforming procurement

– GE
– Ecomagination program

(Ecomagination, 2017)

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 Critiques of CSV

– It ‘trashes CSR’ and uses a straw man argument - It really isn’t that different
in the eyes of many scholars.
– Ignores tensions
– Moving beyond tradeoffs
– Win-Win
– Greenwashing
– Naivety around compliance
– Assumes people will comply with law and ethical standards?
– Who decides?
– Doesn’t address systematic problems within capitalism
– (Crane, Palazzo, Spence, & Matten, 2014)
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Social Entrepreneurship (SE)

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 What is Social Entrepreneurship?

- SE is a type of entrepreneurship that is distinguished by three key factors

– Sociality: dominant social mission - addressing social problems - reduced

externalities, market voids, gender empowerment, equal supply chains
– Innovation: creative destruction, resourcefulness, changing institutions,
reconfiguring needs, wants, demands
– Market orientation: performance, impact measurement, stakeholder not just
shareholder strong values, market failure (private/public/social),
– (Dees, 2001; Austin el al., 2006)

– We are going to come back to this in Week 12

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 So what is a social enterprise?

– “[Social enterprises] are established to respond to unmet social needs

through business-like and innovative means.” (Wang, 2009, p 1– 2)

– Can be profit or non-profit

– More sustainable earned income strategies
– Use of business as a vehicle and a way of thinking

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 Example of SE: Honey Care Africa
– Honey Care Africa – honeycareafrica.com
– NGO provides beehives through loan finance and trains rural farmers
– farmers sell to private enterprise selling fair trade in EU market
– proceeds return to NGO to pay off hives and buy new one to scale program
– pioneering SE and fair trade before it was popularised

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 Critiques of Social Entrepreneurship

– Who’s unmet social needs?

– How can existing organisations engage in social entrepreneurship?
– Can all enterprises that deliver social service be considered social
entrepreneurship?
– Is SE found in the process or the output?
– Does it matter?
– What counts?
– Who decides?

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For quick reference

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 For quick reference
PM
 Value: profit maximisation
 Free-enterprise, private property
system
 Bottom-line focussed.
 Employee is responsible to owners,
business responsible to
stakehodlers
 Must operate within the rules of the
game, including all levels of law
 Organisation’s have an moral and
ethical responsibility to maximise
profit
 Social responsibility is an ethical
issue owned by the people, not
organisations.
 Example: Offshoring production
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CSR
 Value: doing good
 Citizenship, philanthropy,
sustainability
 Discretionary or in response to
external pressure
 Separate from profit maximisation
 Agenda is determined by external
reporting and personal preferences
 Impact limited by corporate
footprint and CSR budget
 Example: Fair trade purchasing.
CSV SE
 Vlaue: economic and societal  Value: social change and innovation
benefits relative to cost
 Joint company and community  Sustainable blended value creation
value creation
 Integral to mission
 Integral to competing
 Integral to profit maximisation
 Integral to impact maximisation
 Agenda is company specific and
internally generated  Agenda responds to complex social
problems
 Realigns the entire company budget
 Example: Transforming  Whole of budget
procurement to increase quality and
yield.
 Example: Microfinance in remote and
rural areas
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 PM CSR CSV SE
Relevance and emphasis of social programs to organisation

unrelated to mission
Not relevant mission centric
mission related

not apparent external integrated embedded

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Case Study

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 Case study discussion

– [To be discussed in lecture]

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Key points from today

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 What should I do now?

– Remember that we are here to help you succeed.

– Familiarize yourself with Canvas
– Read through the Unit of Study Outline
– Reading list
– Enter due dates on calendars
– Questions?
– Always go to your tutor first – but they point you to
– Discussion Board Q&A
– or
– Steven.Hitchcock@Sydney.edu.au

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End Slide

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 References

– Organisation (2017). In Cambridge Business Dictionary. Retrieved 09 March 2017 from http://dictionary.cambridge.org/dictionary/english/organization
– Company (2017). In Cambridge Business Dictionary. Retrieved 09 March 2017 from http://dictionary.cambridge.org/dictionary/english/company
– Corporation (2017). In Cambridge Business Dictionary. Retrieved 09 March 2017 from http://dictionary.cambridge.org/dictionary/english/corporation
– Friedman, M. (1970, September). The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine.
– Business (2017). In Cambridge Business Dictionary. Retrieved 09 March 2017 from http://dictionary.cambridge.org/dictionary/english/business
– Stakeholder (2017). In Cambridge Business Dictionary. Retrieved 09 March 2017 from http://dictionary.cambridge.org/dictionary/english/stakeholder
– Mission Statement (2017). In Cambridge Business Dictionary. Retrieved 09 March 2017 from http://dictionary.cambridge.org/dictionary/english/mission-statement
– Vision Statement (2017). In Cambridge Business Dictionary. Retrieved 09 March 2017 from http://dictionary.cambridge.org/dictionary/english/vision-statement
– Values (2017). In Cambridge Business Dictionary. Retrieved 09 March 2017 from http://dictionary.cambridge.org/dictionary/english/values
– Organisational culture (2017). In Cambridge Business Dictionary. Retrieved 09 March 2017 from http://dictionary.cambridge.org/dictionary/english/organizational-
culture?q=organisational+culture
– OECD Eurostat Entrepreneurship Indicators Program (2009). Measuring Entreprenuerhsip. Retrieved 10 March 2017, from http://www.insme.org/files/3862
– Porter, M. E., & Kramer, M. (2011) Creating shared value: Redefining capitalism and the role of the corporation in society. Harvard Business Review, 89(1/2)
http://ereserve.library.sydney.edu.au.ezproxy1.library.usyd.edu.au/fisher/Po rterCreating2011.pdf
– En.wikipedia.org. (2017). Warren Buffett. [online] Retrieved 09 March 2017 from https://en.wikipedia.org/wiki/Warren_Buffett#Wealth_and_philanthropy
– Schifrin, M. (2013). Two Book Chapters That Changed Warren. Forbes.com. Retrieved 09 March 2017 from https://www.forbes.com/sites/schifrin/2013/06/05/two-book-chapters-
that-changed-warren-buffetts-life/#3769025069d3
– Ecomagination. (2017). Ge.com. Retrieved 9 March 2017, from https://www.ge.com/about-us/ecomagination
– About Cadbury (2017). Sustainable Cocoa . Cadbury.com.au. Retrieved 10 March 2017, from https://www.cadbury.com.au/About-Cadbury/Sustainable-Cocoa.aspx
– Wang, W. J. (2009). Accountability in Social Enterprises: An Analytical Framework. The University of Pittsburgh's Johnson Institute for Responsible Leadership Working Papers.
– Alter, S. K. (2006). Social enterprise models and their mission and money relationships. Social entrepreneurship: New models of sustainable social change, 205-232.

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