Professional Documents
Culture Documents
This session attempts to: Explain the underlying dynamics of the power of business to change society. Discuss the limits of the power of business to change society.
past eras, dominant companies in ascending industries changed societies by altering all three of their primary elements:
Ideas Institutions
Material things
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What is Power?
Power the force or strength to act or compel another entity to act. Business power the force behind an act by a company, industry, or sector. Social contract society giving corporations the authority to take necessary actions and permits a profit. Legitimacy the rightful use of power.
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Corporate actions have an impact on society at two levels, and on each level they create change.
Surface level
Deep level
On both the surface and deep levels, business power is exercised in spheres corresponding to the seven business environments set forth in Chapter 2.
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Economic power is the ability of the corporation to influence events, activities, and people by virtue of control over resources, particularly property. Technological power is the ability to influence the direction, rate, characteristics, and consequences of physical innovations as they develop. Political power is the ability to influence governments. Legal power is the ability to shape the laws of society.
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Cultural power is the ability to influence cultural values, habits, and institutions such as family. Environmental power is the impact of a company on nature. Power over individuals is exercised over: Employees Managers Stockholders Consumers Citizens
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capital to continue expansion. Railroads sold bonds and offered stocks to raise capital, creating the investment banking industry. Later, the financial and speculative mechanisms inspired by railroad construction were in place when other industries needed more capital to grow.
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towns and brought in outsiders. For the convenience of the railroads, a General Time Convention met in 1882 and standardized the time of day. Towns reoriented themselves around their train stations.
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division structures, and cost accounting. Contributed to the Indian wars. Imported labor whose descendents remain.
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There is considerable disagreement about whether business power is adequately checked and balanced for the public good.
Dominance theory the basis of the
dominance model of the business-governmentsociety relationship discussed in Chapter 1. Pluralist theory the basis for the countervailing forces model in Chapter 1.
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Business abuses the power its size and wealth confer in many ways. Corporate asset concentration creates monopoly or oligopoly in markets that reduces competition and harms consumers. The idea that concentration of economic power results in abuse arose in response to the awesome economic growth of the nineteenth century.
Dominance theory The view that business is the most powerful institution in society, because of its control of wealth. This power is held to be inadequately checked and, therefore, excessive.
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Power elite A small group of individuals in control of the economy, government and the military.
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No entity or interest has overriding power, and each may check and balance others Infused with democratic values American society encompasses a large population spread over a wide geography and engaged in diverse occupations The Constitution encourages pluralism
Pluralist theory
A society with multiple groups and institutions through which power is diffused.
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Concluding Observations
In a recent poll, 77 percent of Americans felt that too much power is concentrated in the hands of a few large companies. If corporate power remains generally accountable to democratic controls, society will accord it legitimacy. If rule by law and a just economy exist, corporate power will broadly and ultimately be directed toward public welfare.
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