Business, Society & Policy 200158

Week 1: THE B-S-P TRIANGLE

Content of this lecture:

• Why Business, Society & Policy

• Business is part of Society: B-S-G Relations as a System

• THE B-S-P TRIANGLE

• The complexities of business, society and government relationships

• Characteristics of the B-S-G triad: Business, Society and Government

This week we are beginning Module 1 where we introduce the B-S-P Triangle and the approach
used in this unit. We will analyse different issues in the relationship between business, society
and government in the context of contemporary capitalist society.

This week we will focus on the B-S-P TRIANGLE as the connections and links between Business,
Government and Society can be represented as a heterogeneous triangle with diverse
interrelated perspectives. It is important to understand the relationships between Business,
Society and Government and the complexities of business, society and government relationships.

Why Business, Society & Policy

The importance of studying the relationships between Business, Society and Government derives
from the fact that business is not an isolated phenomenon, but part of a more complex dynamic,
as is clear in the next quote: ‘Businesses do not operate in a social or political vacuum. In fact
most companies operate in a swirl of social, economic, technological, and political change that
produces both opportunities and threats’ (Post, Lawrence & Weber 2002:15). There is, however,
a widespread view that business should be considered central, because it is the most important
element in that complex dynamic. According to this view, any activities that are external to
business should be seen in terms of how they impact on business, not vice versa. The
environment in which business operates includes the different pressures and opportunities for
businesses in performing their activities. But the same attention has not been paid to the impact
of business activities on other sectors. As a result, the dominant view of the Business–Society–

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Government relationship is that business is at the centre, surrounded by a physical and social
environment, and controlled by government.

This business-centric view considers social reality only from a business point of view: there is an
assumption that governments, social groups and individuals make hard work for managers, and
that business managers need to solve problems created by regulations imposed by governments
and by the demands and pressures of communities. Indeed there is often an assumption that
governments and society are opposed to business.

In this unit we challenge that business-centric perspective, in order understand the complexities
of the interactions better, remembering that business both affects and is affected by government
and society. For example, if pollution from a chemicals factory is affecting a neighbourhood,
government is likely to impose environmental regulations, and local social groups may even
demand that the business close down because of its harmful activities. But in that case other
sectors of society are likely to be affected: employees may lose their jobs, for example. The
positions taken by the business sector in such cases may also vary from one business to another.
Some businesses may respond positively, and support the demands of environmentalists, but
others in these circumstances may attempt to avoid the costs of complying with government
regulations and the demands of groups in society.

Each of the three sectors — Business, Society and Government — is a complex phenomenon,
and we find both alliances and conflicts between the three in different situations. It is important to
keep in mind, when we consider links between these three sectors, that each is complex in itself,
with heterogeneous and diverse interests that may sometimes be in contradiction. Also,
distinctions between the sectors might not always be clear cut, because members of one sector
may also be members of one of the others. For example, business organisations and social
groups are made up of people (who may be employees) and who can be white- or blue-collar,
rich, poor, educated, uneducated, with or without power, male or female. They can be members
of small or large groups, with national and international affiliations. Out of these different interests,
values and points of view, coupled with differences on one issue, antagonisms emerge.
Controversies over environmental issues illustrate this.

From the perspective of this approach, it is important to challenge the business-centric view and
remember that Business is in fact part of Society. Business is a social actor amongst many others
(government; social groups; media, clubs, etc.). Business is an institution of society that affects
and is affected by governments and other social actors. Given the dynamic nature of the social
system, actions of any sector will affect the others. Each sector attempts to fulfil and further its

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own goals and interests, and in doing so generates complex and at times conflicting relationships
between sectors. The role of government towards business and civil society is an example of this.
The connections and links between Business, Government and Society can be represented as a
heterogeneous triangle with diverse interrelated perspectives — The B-S-P Triangle.

Each sector (B, S, and G) has different needs and forms of relating with the others. Each has
many levels and diverse links. Different levels of government (e.g. local council, state
government, etc.), from different political parties (e.g. Liberal, Labour, Greens) relate in various
ways to different business groups in the community. Society is also diverse, and businesses
therefore need to interact with different social classes and groups in different ways. There are
also different views in society about the relationship between business and governments.
However, the three spheres are constantly interacting with each other across this diversity.

The scenario is much more complex than many think. Firstly, interests and positions are diverse
inside each group. Secondly, there are multiple alliances (as against the simple view that
governments oppose business to support communities, or the equally simplistic view that
governments are only interested in supporting business). In many situations the three interact
with each other differently depending on the specific issue. Also important to emphasise is the
fact that the pressures and impacts are reciprocal. For instance, government policies regulate the
activities of each sector in an effort to reduce the negative impacts on society, but policies also

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regulate economic practices that adversely affect different sectors of business, and the national
economy as a whole.

We are dealing with a complex system, and to understand what is happening in interfaces
between the various parts of the system we need to have the whole in mind. We can try to
understand the three sectors separately, but if we forget the reciprocal influences between them
we are at risk of overlooking relevant opportunities or potential problems. Equally important is to
avoid the blindness that can come from views that are purely confrontational. Instead, we need to
look constantly for potential forms of collaboration between the three sectors. It is often too easy
to see only the problems in the three-way B- S-G dynamic, and to lose sight of positive forms of
interaction. We need to highlight collaboration, and always include it as an option. For example,
environmental groups are sometimes seen as anti-business, but they have often collaborated
with Australian governments to protect the interests of business, e.g. the fishing industry in
Western Australia. Environmental groups have attempted to stop illegal fishing in Australian
waters. Excessive catches from illegal fishing jeopardise the viability of Australian businesses,
which are constrained by regulations controlling fishing to protect the environment. In this case,
environmental groups and the fishing industry share the same objective.
Within this complexity it is also important to point out that as well as the common relationship that
society has with business — society understood as clients, consumers, employees, investors,
etc., — there are also non-market interactions between business and society. Hence, ‘while
business decisions can have both positive and negative impacts on society, the actions of a
society also influence and affect whether a business firm will prosper or fail’ (Post, Lawrence &
Weber 2002:8). In this subject we represent the relationships between the three sectors as the B-
S-P Triangle, and we understand this triangle from a systems perspective. This means that all
three elements of the system are interdependent, so that the actions of any of them can affect the
others. This tendency for one sector to impact on the others is reciprocal.

The complexities of business, society and government relationships

Because each element of the triangle is inherently complex, and their interactions are also
complex, there is scope for multiple sources of conflicts and confrontations to emerge both within
and between the sectors. But collaborations can also be anticipated, as we noted earlier. Some
examples of this can be found in business/community partnerships, in business/government
alliances which have been established to solve social problems and, as we will see, in projects
supported by business, such as Company Foundations (e.g. Rio Tinto Indigenous Fund),
Corporate Social Responsibility programs, and alternative ethical business organisations (e.g.

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Fair Trade), all aiming to improve health or education, or alleviate poverty in disadvantaged
communities, locally or worldwide.
It is important to emphasise that when we use the terms ‘business’, or ‘society’ or ‘government’ as
part of the B-S-P Triangle this is a simplification, often for practical reasons. But we cannot ignore
their complexity if we really want to understand how they interact in specific cases. For example,
if we state that business and governments are allied, we need to specify which businesses, with
which government groups. In some cases we find that the alliances between business groups
and governments sometimes affect other business organisations. Thus, it is not uncommon that a
regulation may benefit one industry at the cost of another, as in the case of the Tasmanian timber
industry, where permission to operate in a specific location meant that their operations would
contaminate a river, affecting the fishing industry, local communities and the environment.
Characteristics of the B-S-G triad
We introduce here the basic characteristics of the three sectors across different scales and
scopes, to guide students as they analyse concrete cases of interactions between different
interests in society, and study the theoretical approaches included in the course. This explanation
is not exhaustive, and other aspects of their complexity will appear when analysing specific
situations. In the readings and case studies we will examine these and other aspects relevant for
each sector.
 Business
This is a broad term that encompasses a range of organisations and actions. The fundamental
purpose of business is to provide goods and services to society at a profit. But business is also a
major economic player, predominantly as a creator of employment. The term can cover different
elements, including manufacturing, finance, trade, service, communications and construction.
Under these, there are different kinds of business institutions, including individual entrepreneurs,
family-owned businesses and corporations. These can be differentiated in terms of scale (large or
small business enterprises) and scope (local, multinational or global).
In terms of their organisational forms, businesses are constituted by different kinds of members
who perform different roles: for example, investors, directors, managers at different levels,
employees and workers with diversified skills. Businesses also have different inter-organisational
structures at multiple levels, including business contracts, business alliances, and inter-corporate
businesses (conglomerates). They are also organised through agencies that represent their
interests: chambers of commerce, think-tanks, lobby groups or industry associations. These
organisational forms are useful in influencing and resisting government policies and regulations,
in sharing technological knowledge, or in forming socio-political networks such as what Carroll
and Fennema (2002) call the ‘transnational business community’.
 Society

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Society is also a very broad term. Society is one of the vaguest and most general of terms, and
can denote anything from humankind in general to a relatively small organised group of people. In
fact, the term can be understood as a label that includes all the elements we include in the
triangle. And remember that we have claimed that business IS society. But it is important to
restrict how the term is used in the context of this Unit. ‘Society’ for our purposes refers to
individuals and groups who organise themselves to constitute specific social groups, which often
identify themselves in specific situations as not representing the interests of business (even if
they are also business people). It is important however to keep in mind that this is only a working
definition, and we cannot ignore the fact that the dynamics of society as a whole are more
complex.
Society is constituted by individuals who associate for a specific aim, forming communities that
share interests, values, territories, etc. All societies are based on some kind of social network
which relies on some form of communication. The links in such social networks may include three
interacting elements:
• Material things: these are instruments of production, technologies, land, natural resources or the
built environment. Material things help to shape and, at same time, are products of ideas and
institutions.
• Ideas: they represent values and ideologies that reflect the characteristics of society at a given
time. For example, ideas in a capitalist mode of production are different from ideas in hunter-
gatherer societies. In the first case, more importance is given to competition, while in the latter
collaboration is emphasised.
• Institutions: these are formal patterns of relations to achieve goals (e.g. corporations,
governments, universities, unions or legal systems). Following are some institutions of society
that are relevant for our understanding of the B-S-P Triangle:
The workplace: this is the interface between business and one of the primary
stakeholders (interested parties) or members of society, the employees. The workplace is
an intense domain of interaction between business, government and society. It
constitutes an important social space, since most of our lives happen within it.
Government regulates workplace relations to protect employees and workers. Employers
(business) must abide by these rules (e.g. anti-discrimination laws). Employers
(business) and government play key roles in establishing conditions in the workplace, but
employees (society) also have a crucial role in the way they interact with colleagues and
management.
Trade unions: these mostly represent the interests of workers and employees. It is a
social institution specifically formed to ensure that the actions of organisations do not
affect the rights of employees or workers. It can pressure governments to make
regulations to manage the relationships between business and society (in the workplace).

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 Social movements: these can be diverse, and can range from a well-defined group of
people who organise themselves for a specific goal (environmental, consumer groups,
civil rights, etc.) to groups that are more fluid and undefined, more focused on specific
issues (e.g. neighbourhoods). Some social movements have a local focus, while others
are mobilised by problems in more remote places, bringing together people from different
nations (e.g. anti-globalisation groups).
Community/resident groups: Community and resident groups may mobilise to address
specific issues directly affecting them. Communities can be small or large, but the term is
commonly used to refer to the immediate social environment around businesses: the
people who live around the place where the business operates. A community can be
directly affected by business operations (e.g. steel companies producing lead dust which
is found in the houses around the plant). The community might include employees who
live in the vicinity and their families.
 Government
This is the administrative apparatus of the State. Sometimes the words ‘Government’ and ‘State’
are used interchangeably, but there is an important distinction. ‘State’ refers to the overall territory
and its social system, including its form of rule. It is often referred to as the Nation-state. The
State is administered by the institutions of government. The term also refers to the structures and
processes in society that has the authority to make and carry out policies and rules. It
encompasses a wide range of institutions at many levels, from local to international.

The relevance of government in the B-S-P Triangle is its role in creating policies and regulations
which fix the conditions under which business and society operate and interact. It is important to
note the differences between institutions and levels of government, since the relationships which
create a complex dynamic between the three sectors are often very specific. So be ready to find
multiple alliances as well as conflicts of interests. Government in Australia includes different
constituencies: local councils, State and Federal (Commonwealth) governments and institutions
as well as the public sector, comprising the Executive, the Judiciary and the Legislature,
operating through constitutions and conventions by political parties and other groups.

In capitalist societies, governments have a tense relationship with business and society, trying to
manage what has been called the government’s dilemma. On the one hand, government must
foster economic growth by providing conditions for business to develop and prosper. On the other
hand, governments must protect society from the impact of business activities (e.g. protection
from harmful products).

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Modern government has a dual role. Its institutions and procedures partly reflect economic forces
at work and partly strive to control these forces in order to protect society. Much of government’s
role in the domain of business is to encourage competition and arbitrate the interests of different
business groups. In Australia, the government’s role in promoting and controlling competition is
represented by the Australian Competition and Consumer Commission (ACCC), which
investigates monopolistic and collusive practices. Protection of business from global competition
is achieved through trade agreements, subsidies, and endorsement of international regulations.
However, there is also a concern to balance the power of business against the countervailing
interests of society, represented by the increasing pressures of civil society (e.g. consumers or
environmentalists). In this struggle, government is constantly facing the problem of a ‘legitimation
crisis’, shown through erosion of trust and support (and votes). For a government to remain in
office, it needs to balance these competing interests, while maintaining its legitimacy. Although
these institutions are specific to Australia, other countries have similar ones. All nation states now
operate under the conditions of a global market, within the framework of Neo-liberal ideologies.

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