BGS - The BGS Models

BGS Field

The study of interactions among business, government, and society and how these interactions affect managers.

Business

Profit-making activity that provides products and services to satisfy human needs.

Government

Structures and processes that make and enforce policies and rules in society.

Society

A network of human relationships composed of ideas, institutions, and material things.

Ideas

Intangible objects of thought such as values and ideologies.

Values

Enduring beliefs about what is right, wrong, good, or desirable.

Ideology

A bundle of values that creates a particular worldview.

Institution

A formal pattern of relationships that links people together to accomplish a goal.

Material Things

Physical objects such as land, natural resources, buildings, and infrastructure.

Three Elements of Society

Ideas, institutions, and material things.

Purpose of Business

To make a profit by providing products and services that satisfy human needs.

Social Contract

The unwritten agreement between business and society that allows businesses to operate as long as they meet society's expectations.

Why the Social Contract Matters

Businesses that ignore societal expectations risk regulation, lawsuits, public backlash, and loss of legitimacy.

Market Economy

An economy in which markets play a major role in directing production and exchange.

Capitalism

An economic ideology based on private ownership, profit motive, competition, and limited government intervention.

Adam Smith

Thinker who argued that self-interest operating through markets can benefit society.

Invisible Hand

Adam Smith's idea that individuals pursuing self-interest unintentionally promote society's welfare.

Laissez-Faire

The belief that government should interfere as little as possible in markets.

Managerial Capitalism

A form of capitalism where large corporations are managed by professional managers rather than owners.

Market Capitalism Model

A model that sees business as primarily responding to market forces and focusing on profit maximization.

Market Capitalism Model: View of Government

Government intervention should be limited because markets work best when left alone.

Market Capitalism Model: Main Goal

Maximize profits and shareholder wealth.

Dominance Model

A model that argues business and government elites dominate society and control major decisions.

Populism

A movement in which ordinary people seek to take power away from elites whom they believe act against public interests.

Marxism

The belief that capitalists exploit workers and that economic power should be distributed more equally.

Countervailing Forces Model

A model in which business, government, the public, and environmental forces all influence one another and no group permanently dominates.

Main Idea of Countervailing Forces Model

Power shifts among groups depending on the issue and circumstances.

Stakeholder

Any person or group that affects or is affected by a corporation's actions.

Primary Stakeholders

Stakeholders with direct and significant relationships with a corporation, such as shareholders, customers, employees, governments, and communities.

Secondary Stakeholders

Stakeholders with less direct relationships, such as media, activist groups, and educational institutions.

Stakeholder Model

A model that argues corporations should consider the interests of all stakeholders, not just shareholders.

Difference Between Market Capitalism and Stakeholder Model

Market capitalism prioritizes shareholders; stakeholder theory prioritizes all stakeholders.

ExxonMobil Case Study

Demonstrates how businesses are influenced by economic, political, and social forces and cannot operate independently from government and society.