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Business and
Society
Stakeholders, Ethics, Public Policy
Fifteenth Edition
Anne T. Lawrence
San José State University
James Weber
Duquesne University
BUSINESS AND SOCIETY: STAKEHOLDERS, ETHICS, PUBLIC POLICY, FIFTEENTH EDITION
Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2017 by McGraw-Hill
Education. All rights reserved. Printed in the United States of America. Previous editions © 2014 and 2011. No part
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other electronic storage or transmission, or broadcast for distance learning.
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Library of Congress Cataloging-in-Publication Data
Names: Lawrence, Anne T., author. | Weber, James (Business ethics professor),
author.
Title: Business and society : stakeholders, ethics, public policy / Anne T.
Lawrence, San Jose State University, James Weber, Duquesne University.
Description: Fifteenth edition. | New York, NY : McGraw-Hill Education, [2017]
Identifiers: LCCN 2015044071 | ISBN 9781259315411 (alk. paper)
Subjects: LCSH: Social responsibility of business.
Classification: LCC HD60 .F72 2017 | DDC 658.4/08–dc23 LC record available at http://lccn.loc.gov/2015044071
The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the
authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites.
All brand or product names are trademarks or registered trademarks of their respective companies. CPT five-digit codes, nomenclature, and other data
are © 2015 American Medical Association. All rights reserved. No fee schedules, basic unit, relative values, or related listings are included in the CPT.
The AMA assumes no liability for the data contained herein. CPT codes are based on CPT 2015. All references to ICD-10-CM codes, guidelines, or
related data are based on the International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) 2015. All references to CMS
HCPCS codes, guidelines, or related data are based on the Centers for Medicare and Medicaid Services (CMS), Healthcare Common Procedure Coding
System (HCPCS) Level II 2015. All names, situations, and anecdotes are fictitious. They do not represent any person, event, or medical record.
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About the Authors
Anne T. Lawrence San José State University
Anne T. Lawrence is a professor of management at San José State University. She holds
a Ph.D. from the University of California, Berkeley, and completed two years of postdoctoral study at Stanford University. Her articles, cases, and reviews have appeared in many
journals, including the Academy of Management Review, Administrative Science Quarterly, Case Research Journal, Journal of Management Education, California Management
Review, Business and Society Review, Research in Corporate Social Performance and Policy, and Journal of Corporate Citizenship. Her cases in business and society have been
reprinted in many textbooks and anthologies. She has served as guest editor of the Case
Research Journal for two special issues on business ethics and human rights, and social
and environmental entrepreneurship. She served as president of both the North American
Case Research Association (NACRA) and the Western Casewriters Association and is a
Fellow of NACRA, from which she received a Distinguished Contributor Award in 2014.
She received the Emerson Center Award for Outstanding Case in Business Ethics (2004)
and the Curtis E. Tate Award for Outstanding Case of the Year (1998, 2009, and 2015).
At San José State University, she was named Outstanding Professor of the Year in 2005.
In 2015, she received a Master Teacher in Ethics Award from The Wheatley Institution at
Brigham Young University.
James Weber Duquesne University
James Weber is a professor of management and business ethics at Duquesne University.
He also serves as the executive director of the Institute for Ethics in Business and coordinates the Masters of Science in Leadership and Business Ethics program at Duquesne.
He holds a Ph.D. from the University of Pittsburgh and has taught at the University of San
Francisco, University of Pittsburgh, and Marquette University. His areas of interest and
research include managerial and organizational values, cognitive moral reasoning, business ethics, ethics training and education, eastern religions’ ethics, and corporate social
audit and performance. His work has appeared in Organization Science, Human Relations,
Business & Society, Journal of Business Ethics, Academy of Management Perspectives,
and Business Ethics Quarterly. He received the SIM Sumner Marcus Award for lifetime
contribution to the Social Issues in Management division of the Academy of Management
in 2013 and the Best Reviewer Award from Business & Society in 2015. He was recognized
by the Social Issues in Management division with the Best Paper Award in 1989 and 1994
and received the Best Article Award from the International Association for Business and
Society (IABS) in 1998. He has served as division and program chair of the Social Issues
in Management division of the Academy of Management. He has also served as president
and program chair of the IABS.
iii
Preface
In a world economy that is becoming increasingly integrated and interdependent, the relationship 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—highlighted by the failure of major business firms and
unprecedented intervention in the economy by many governments—and its continuing
aftermath as societies have struggled to recover have focused a fresh spotlight on issues
of corporate responsibility and ethics. Around the world, people and governments are
demanding that executives do a better job of serving shareholders and the public. Once
again, policymakers are actively debating the proper scope of government 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 have 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, which have the potential to
enhance peoples’ health and quality of life. Technology has changed how we interact
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, censor free expression, or invade individuals’ privacy. 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 relationship, abandoning practices that once provided job security and guaranteed pensions
in favor of highly flexible but less secure forms of employment. The Great Recession
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 Bangladesh
Accord on Fire and Building Safety, which 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 the nations of the world have recently
adopted a groundbreaking agreement 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
iv
Preface v
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 and their nations are developing at an extraordinary rate.
Yet, the prosperity that accompanies economic growth is not shared equally. Access to
health care and education remain unevenly distributed among and within the world’s
nations, and inequalities of wealth and income have become greater than they have been
in many years. These trends have challenged businesses to consider the impact of their
compensation, recruitment, and professional development practices on the persistent—
and in some cases, growing—gap between the haves and the have-nots.
∙ The tragic epidemic of Ebola in West Africa, as well as the continuing pandemic of
AIDS in sub-Saharan Africa and the threat of a swine or avian flu outbreak 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.
The new Fifteenth Edition of Business and Society addresses this complex agenda of
issues and their impact on business and its stakeholders. It is designed to be the required
textbook in an undergraduate or graduate course in Business and Society; Business, Government, and Society; Social Issues in Management; or the Environment of Business. It
may also be used, in whole or in part, in courses in Business Ethics and Public Affairs
Management. This new edition of the text is also appropriate for an undergraduate sociology course that focuses on the role of business in society or on contemporary issues in
business.
The core argument of Business and Society is that corporations serve a broad public
purpose: to create value for society. All companies must make a profit for their owners.
Indeed, if they did not, they would not long survive. However, corporations create many
other kinds of value as well. They are responsible for professional development for their
employees, innovative new products for their customers, and generosity to their communities. They must partner with a wide range of individuals and groups in society to advance
collaborative goals. In our view, corporations have multiple obligations, and all stakeholders’ interests must be taken into account.
A Tradition of Excellence
Since the 1960s, when Professors Keith Davis and Robert Blomstrom wrote the first edition of this book, Business and Society has maintained a position of leadership by discussing central issues of corporate social performance in a form that students and faculty have
found engaging and stimulating. The leadership of the two founding authors, and later of
vi Preface
Professors William C. Frederick and James E. Post, helped Business and Society to achieve
a consistently high standard of quality and market acceptance. Thanks to these authors’
remarkable eye for the emerging issues that shape the organizational, social, and public
policy environments in which students will soon live and work, the book has added value
to the business education of many thousands of students.
Business and Society has continued through several successive author teams to be the
market leader in its field. The current authors bring a broad background of business and
society research, teaching, consulting, and case development to the ongoing evolution of
the text. The new Fifteenth Edition of Business and Society builds on its legacy of market
leadership by reexamining such central issues as the role of business in society, the nature
of corporate responsibility and global citizenship, business ethics practices, and the complex roles of government and business in a global community.
For Instructors
For instructors, this textbook offers a complete set of supplements.
Continually evolving, McGraw-Hill Connect® has been redesigned to provide the only
true adaptive learning experience delivered within a simple and easy-to-navigate environment, placing students at the very center.
∙ Performance Analytics—Now available for both instructors and students, easy-todecipher data illuminates course performance. Students always know how they are
doing in class, while instructors can view student and section performance at-a-glance.
∙ Personalized Learning—Squeezing the most out of study time, the adaptive engine
within Connect creates a highly personalized learning path for each student by identifying areas of weakness and providing learning resources to assist in the moment of need.
This seamless integration of reading, practice, and assessment ensures that the focus is
on the most important content for that individual.
Instructor Library
The Connect Management Instructor Library is a repository for additional resources to
improve student engagement in and out of class. The instructor can select and use any
asset that enhances his or her lecture. The Connect Instructor Library includes an extensive instructor’s resource manual—fully revised for this edition—with lecture outlines,
discussion case questions and answers, tips from experienced instructors, and extensive
case teaching notes. A computerized test bank and power point slides for every chapter are
also provided.
Manager’s Hot Seat
Now instructors can put students in the hot seat with access to an interactive program.
Students watch real managers apply their years of experience when confronting unscripted
issues. As the scenario unfolds, questions about how the manager is handling the situation
pop up, forcing the student to make decisions along with the manager. At the end of the
scenario, students watch a postinterview with the manager and view how their responses
matched up to the manager’s decisions. The Manager’s Hot Seat videos are now available
as assignments in Connect.
Preface vii
Create
With McGraw-Hill Create, www.mcgrawhillcreate.com, the instructor can easily rearrange chapters, combine material from other content sources, and quickly upload selfdeveloped content such as a course syllabus or teaching notes. Content may be drawn
from any of the thousands of leading McGraw-Hill textbooks and arranged to fit a particular class or teaching approach. Create even allows an instructor to personalize the book’s
appearance by selecting the cover and adding the instructor’s name, school, and course
information and to select a print or eBook format.
For Students
Business and Society has long been popular with students because of its lively writing,
up-to-date examples, and clear explanations of theory. This textbook has benefited greatly
from feedback over the years from thousands of students who have used the material in the
authors’ own classrooms. Its strengths are in many ways a testimony to the students who
have used earlier generations of Business and Society.
The new Fifteenth Edition of the text is designed to be as student-friendly as always.
Each chapter opens with a list of key learning objectives to help focus student reading and
study. Numerous figures, exhibits, and real-world business examples (set as blocks of colored type) illustrate and elaborate the main points. A glossary at the end of the book provides definitions for bold-faced and other important terms. Internet references and a full
section-by-section bibliography guide students who wish to do further research on topics
of their choice, and subject and name indexes help students locate items in the book.
LearnSmart®
The Fifteenth Edition of Business and Society is available with LearnSmart, the most
widely used adaptive learning resource, which is proven to improve grades. (To find out
more about LearnSmart, go to McGraw-Hill Connect® connect.mheducation.com.) By
helping students focus on the most important information they need to learn, LearnSmart
personalizes the learning experience so they can study as efficiently as possible.
SmartBook®
An extension of LearnSmart, SmartBook is an adaptive eBook that helps students focus
their study time more effectively. As students read, SmartBook assesses comprehension
and dynamically highlights where they need to study more.
New for the Fifteenth Edition
Over the years, the issues addressed by Business and Society have changed as the environment of business itself has been transformed. This Fifteenth Edition is no exception,
as readers will discover. Some issues have become less compelling and others have taken
their place on the business agenda, while others endure through the years.
The Fifteenth Edition has been thoroughly revised and updated to reflect the latest theoretical work in the field and the latest statistical data, as well as recent events. Among the
new additions are:
∙ An all-new chapter for this edition on business and its suppliers, incorporating the latest
thinking about social, ethical, and environmental responsibility in global supply chains.
viii Preface
∙ New discus …
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