"In a world economy that is becoming increasingly integrated and interdependent, the rela- tionship between business and society is becoming ever more complex. The globalization of business, the emergence of civil society organizations in many nations, and new government regulations and international agreements have significantly altered the job of managers and the nature of strategic decision making within the firm.
At no time has business faced greater public scrutiny or more urgent demands to act in an ethical and socially responsible manner than at the present. Consider the following:
The global financial crisis and its continuing aftermath—highlighted by the failure of major business firms, unprecedented intervention in the economy by many govern- ments, and the fall from grace of numerous prominent executives—have focused a fresh spotlight on issues of corporate responsibility and ethics. Around the world, people and governments are demanding that managers do a better job of serving shareholders and the public. Once again, policymakers are actively debating the proper scope of govern- ment oversight in such wide-ranging arenas as health care, financial services, and manufacturing. Management educators are placing renewed emphasis on issues of business leadership and accountability.
A host of new technologies has become part of the everyday lives of billions of the world’s people. Advances in the basic sciences are stimulating extraordinary changes in agriculture, telecommunications, and pharmaceuticals. Businesses can now grow medi- cine in plants, embed nanochips in tennis rackets, and communicate with customers overseas over the Internet and wireless networks. Technology has changed how we in- teract with others, bringing people closer together through social networking, instant messaging, and photo and video sharing. These innovations hold great promise. But they also raise serious ethical issues, such as those associated with genetically modified foods, stem cell research, or use of the Internet to exploit or defraud others or to censor free expression. Businesses must learn to harness new technologies, while avoiding public controversy and remaining sensitive to the concerns of their many stakeholders. Businesses in the United States and other nations are transforming the employment re- lationship, abandoning practices that once provided job security and guaranteed pensions in favor of highly flexible but less secure forms of employment. The recession that began in the latter part of the first decade of the 21st century caused job losses across broad sectors of the economy in the United States and many other nations. Many jobs, including those in the service sector, are being outsourced to the emerging economies of China, India, and other nations. As jobs shift abroad, transnational corporations are challenged to address their obligations to workers in far-flung locations with very different cultures and to respond to initiatives, like the United Nations’ Global Compact, that call for voluntary commitment to enlightened labor standards and human rights.
Ecological and environmental problems have forced businesses and governments to take action. An emerging consensus about the risks of climate change, for example, is leading many companies to adopt new practices, and once again the nations of the world have experimented with public policies designed to limit the emissions of greenhouse gases. Many businesses have cut air pollution, curbed solid waste, and designed products and buildings to be more energy-efficient. A better understanding of how human activities affect natural resources is producing a growing understanding that economic growth must be achieved in balance with environmental protection if development is to be sustainable.
Many regions of the world are developing at an extraordinary rate. Yet, the prosperity that accompanies economic growth is not shared equally. Personal income, health care, and educational opportunity are unevenly distributed among and within the world’s na- tions. The tragic pandemic of AIDS in sub-Saharan Africa and the threat of a swine or avian flu epidemic have compelled drug makers to rethink their pricing policies and raised troubling questions about the commitment of world trade organizations to patent protection. Many businesses must consider the delicate balance between their intellectual property rights and the urgent demands of public health, particularly in the developing world.
In many nations, legislators have questioned business’s influence on politics. Business has a legitimate role to play in the public policy process, but it has on occasion shaded over into undue influence and even corruption. In the United States, recent court decisions have changed the rules of the game governing how corporations and individuals can contribute to and influence political parties and public officials. Technology offers candidates and political parties new ways to reach out and inform potential voters. Businesses the world over are challenged to determine their legitimate scope of influence and how to voice their interests most effectively in the public policy process."