Impact of Organizations on Society & Community

Instructor: Natalie Boyd

Natalie is a teacher and holds an MA in English Education and is in progress on her PhD in psychology.

Organizations can have a significant impact on the communities and societies within which they operate. In this lesson, we'll look at the types of impact organizations can have, focusing on social stratification and public policy.

Organizational Impact

Soraya lives in a small town. She loves her town, but for many years, there haven't been very many jobs and there hasn't been a lot of money in the town. On the other hand, the town has lots of affordable housing and a healthy, pollution-free environment.

Recently, a big, high-tech corporation has decided to move its headquarters to Soraya's town. Some people are very excited; this will mean new jobs and a boost in the local economy. Others are worried that relocation of the company to their town will mean the end of affordable housing and possibly impact the town's environment.

The people in Soraya's town are thinking about organizational impact, or the effect an organization has on society. Depending on the size and influence of the organization, it can impact a small segment of society, like Soraya's small town, a medium-sized chunk of society, like the entire state, or even the entire country or entire world.

Every organization has an impact on society, no matter how big or small it is. Some effects are intentional, such as a company that offers scholarships to students from the community. Others can be unintentional, such as the presence of a company causing the rents in an area to increase. Likewise, the impact an organization has on its community can be positive or negative.

To help Soraya understand the impact the new corporation might have on her town, let's look at two issues in organizational impact: social stratification and policy influence.

Social Stratification

Some of the people in Soraya's town are worried that the new high-tech firm moving in will mean that rents in the area will rise. That could mean that people would have a harder time finding a place to live.

This issue is one of social stratification, which is the way society classifies people into strata or categories. Social stratification most often refers to socioeconomic status. One example of a social stratification issue is that people with less money generally have fewer opportunities.

Organizations can have a negative impact on social stratification. For example, if the high-tech firm causes rents and property values to increase a lot, then middle or lower class families may be priced out of Soraya's town. That could mean that people who work in support jobs, such as the janitor, executive assistant or even the recent college graduate in an entry level job, could have a burdensome commute. In some areas of the country, it's not unusual for people to have to travel three hours or more to get to work because they can't afford to live in the area around their company, thanks to the impact of the organization on social stratification.

However, organizations can also have a positive impact on the economic stratification of a town like Soraya's. For one thing, the company moving in could mean more jobs. That could lead to more people in the town being able to move from poverty to the middle class.

Organizations can also intentionally set up programs to promote positive organizational impact with regard to social stratification. For example, a company that sets up a scholarship program for local students or invests in the local public school district could open opportunities up for the community. Building affordable housing in the area or re-investing in other community programs are also examples of intentional impact programs that an organization could promote.

Policy Influence

As we've seen, an organization can have a large economic impact on a community. But it's not just through the way they directly interact with the members of the community that an organization can have an impact.

Public policy includes laws and statutes that define social contracts at the national, state, and local level. Public policy can have an impact on organizations. For example, environmental regulations can make it difficult or expensive for certain organizations to function.

But large organizations can also have an impact on the way that public policy is shaped. For example, if an organization finds environmental regulations too difficult or expensive to carry out, they could lobby or put pressure on politicians to loosen the regulations. This, in turn, could have a very negative impact on the community's environment.

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