Corporate social responsibility

Business & Social Responsibility

Social responsibility is understood as the obligation of decision makers to take actions which protect and improve the welfare of society as a whole along with their own interests. Every decision that the businessman contemplates and every action that he takes have social implications.

Business is an economic activity to earn profit for the owner and social responsibility means serving community without any expectation.Business is expected to create wealth, create markets, generate employment, innovate and produce sufficient surplus to sustain its activities and improve its competitive ness. Society is expected to provide an environment in which business can develop Business depends on society for the required inputs like money, men and skills. Business also depends on the society for market where products may be sold to the buyers. Being so much dependent, business has definite responsibility towards society. Some of the factors, which have persuaded businessman to consider their responsibilities, are:

(¡) The pressure of the labor movement.

(¡¡) The development of moral values and social standards applicable to businessman.

(iii)The development of business education and contacts with the government and its problems

(iv) The increased complexity of the decision making processes in which many persons participate.

(V) The change in public opinion about the role of business in modem society.

A business unit must earn profit first in order to satisfy its economic responsibility. It must follow laws and fulfill legal responsibilities. After satisfying these responsibilities
the business can focus on discretionary responsibilities -purely voluntary actions that the society tends to value.

Characteristics of the Concept Social Responsibility’

The following might be the main characteristics of the concept of social responsibility toward business:

(1) Two-Fold System-On the one hand, where there are some responsibilities of the businessman toward various parties, side by side, on the other hand, there are also Some duties and responsibilities of various parts of society toward the businessmen, Thus it is a double-way traffic.

(2) Significance in the whole of Business Region This approach applies equally to both the industries an businesses of the public as well as the private sectors.

(3) Development of All the Business Related Parties. In this light, attention is paid toward to development of all the parties within the business sphere.

(4) Direction of Business for Social Benefit- As per the concept of social responsibility, the direction of business is taken up for the society. ie. in its interest on the whole.

Social responsibilities of a Business

It is well known that business is an economic performance. It is also true that business is an organ of society and as such it must fulfill its responsibilities to society. Some of these specific responsibilities are as under:

1. Business and the shareholders: It is the prime responsibility of business (if it is a company) to provide a fair return on capital to shareholders and provide them with regular, accurate and full information about the working of the enterprise.

2. Business and the workers: Business and its management must provide opportunities to the workers for better performance. The management must win the co-operation of the workers by creating the favorable atmosphere.Social Security, profit sharing, proper grievance settlement and employee welfare and some of the well recognized responsibilities of business to their employee.

3. Business and the Consumer: The business enter-prise is also responsible towards their customers to providing the goods and other services at the most reasonable prices.

It must guard against adulteration, poor quality, lack of service and misleading advertisements. The customers
should be protected against monopoly. Such protection can be provided only if business learns its social responsibilities.

4. Business and the Society: An enterprise should not produce goods which are harmful to the society and the environment It has the responsibility of maintaining proper relations with the community.

5. Business and the government: The business enterprise must respect the law and pay taxes regularly and honestly. It must behave as a good citizen and take care to avoid the activities which are prohibited by law.

Arguments in favour of Social Responsibility

There are many arguments in support of socially responsible behaviour of the business. Some of them are explained below:

(i) Expectation of public: Nowadays, public expectations from business have changed. Business exists only because it satisties the valuable needs of society. Therefore, if business wishes to remain viable in the long run, it must respond to society’s needs and give the society what it wants.

(ii) Unavoidance of Government Regulation: Government has powers to regulate business in the public interest.If the business is not aware about its responsibilities, govemment takes strict action. So the business should discharge its social obligation before the government takes strict action.

(ii) Moral responsibility: It is now accepted that social responsibility of a business is the morally correct position. Our modem industrial society faces many serious Social problems by large corporation and so the corporation has a moral responsibility to help in solving these problems,

(iv) Responsibility and power: Both goes together-Another argument of social responsibility is that the responsibility of business should be more related to its power. The businessman has enough amount of social power,

(v) They affect the economy and other social problems. Hence an equal amount of social responsibility is required to match their social power.

Arguments against Social Responsibilities

There are some arguments enumerated against the social responsibility of the business which are as follows:

(1) Profit Maximization: The first argument against the social responsibilities is that business has profit maximization as its main objectives. Since business operates in a world of hunger and poverty, the economic efficiency of business is a matter of top priority and should be the sole mission of business. In this situation, it is very difficult to be socially responsible.

(ii) Social Cost: Cost on social responsibility is considered to be a social cost and there is no immediate benefit of it to the business. So why spend money on objects, the benefits of which will be realized only in future?

(iii) No direct accountability: The business has no direct account-ability to the people so it is unwise to give responsibility for areas where they are not accountable because accountability should always go with responsibility

Conclusion: It is not enough for a business firm to be conscious of the need for discharge of its responsibilities towards different segments of the community Management of a business firm has to make conscious efforts to wards the establishment of proper relations with each of these segments. Basically, the public relations function of management is concerned with the establishment of sound and mutually fruitful relations with the different public which contribute towards the growth and prosperity of the business firm. In performing the public relation function, management of a firm has to develop and maintain a proper liaison with each of these, so as to earn their goodwill and Secure their cooperation in making the firm more effective realizing its objectives.

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