The word institution here, as you mentioned, is broader than the term business, but I think you're overthinking this one! The word "institution" certainly applies to businesses, as they are institutions. You can even find evidence for this within the stimulus itself, as the Iron Law of Responsibility is said to specifically apply to "human institutions" by the author, who then discusses how this applies to businesses specifically. So, it still weakens the argument for the reasons addressed by the the other instructors.
I hope this helps!