Social Responsibility of Business

 

Social Responsibilities of Business:

A large number of significant changes have taken place in social, political, economic and other aspects of modern culture. These changes make it appropriate to re-examine the role of modern business. It is common today to hear speeches or read articles calling for more social consciousness on the part of the business organizations.

The demand for greater social awareness from the business organizations is a move and an important part of the society’s attempt to make them more responsive to the need of mankind. It is heartening to note that society’s changing values and needs are being due importance by the leading business houses of the world.

This is obvious from the fact that the business houses are carrying on research and development activities and producing goods and services to provide greater satisfaction to the economic and social development of their nation.

Since long there has been a controversy whether business should assume social responsibilities, or it has no such obligations to fulfil. It would be worthwhile to analyze the arguments offered both in favour o f and against assumption of social responsibilities by business. First of all we shall begin with the analysis of arguments in favor.

 

Areas of Social Responsibilities :

Social responsibilities of management can be studied under two headings: (i) Internal social responsibilities, and (ii) External social responsibilities.


 (i) Internal : Internal social responsibilities are concerned with assuring due process, justice, equity and morality in employee selection, training, promotion, and hiring or they may relate to such things as increasing employee productivity, or improving employee physical environment. It includes the following :

(a) Shareholders or Owners:

Though there is a separation of ownership and management functions in case of joint stock companies, shareholders are entitled to appoint directors and seek regular, accurate and full financial information about the company. They expect a high rate of dividend on the money invested by them and also the maximization of the value of their investment in the company. It is the duty of management to see that the company is stable and enterprising so that it may provide those who commit their capital to it with such a fair and adequate reward for the risk taken as will permit the company to attract the necessary supply of capital from the market. Management has also to keep the owners of the business well informed about the progress and the financial position of the business.

(b) Workers:

It is the basic responsibility of the business to produce wealth. It is also its responsibility to provide opportunities for meaningful work. In doing so managers are not to be considered as being in a different class from the workers. A manager is a worker and all  who work in a company should give their best services and share in the resulting benefit.

It is the responsibility of the management to win the co-operation of the workers by creating the conditions in which workers are enable to put forward their best efforts in the common task as free men. This means recognition of the workers right to a fair wages, to participate in decisions affecting their working life, to membership of a trade union, to collective bargaining and to strike. The worker should be helped by education and other means to throw away his ignorance. Management should give workers opportunity to develop their capabilities through training, education and the enjoyment of freedom to the greatest possible extent.

 

(i) External : External social responsibilities refer to such actions as stimulating minority entrepreneurship, improving the balance of .payments, or training and hiring hardcore unemployed.

(a) Consumers :

Consumer’s satisfaction is the ultimate aim of all economic activity. This involves more than the offer of products at the lowest possible price. Adulteration of goods, poor quality, failure to give fair measure, lack of services and courtesy to the customer, misleading or dishonest advertising, are all examples of a violation by business enterprise of its obligations towards the consumers of its products.

(b) Suppliers :

Management should deal with the suppliers judiciously. It should try for fair terms and conditions regarding prices, quality, and delivery of goods and payment of prices. Their dealings with the suppliers should be based on integrity and courtesy in the absence of which the suppliers will not supply them the goods on credit. In short, management must create healthy relations with the suppliers.

(c) Society :

Peter Drucker pointed out that the business should be so managed as to make the public good the private good of the enterprise. Management must be guided by the socioeconomic objectives of the society. It should not indulge into any practices which is not fair from social point of view. Society expects that the management uses the factors of production effectively and efficiently for the satisfaction of needs of the society. If the management fulfills these expectations, its goodwill and reputation will increase.

Good management can also contribute to the advancement of local amenities where the enterprise functions. It can develop the surrounding area for the well-being of workers and other people. Management has certainly got great responsibility to keep the healthy environment/conditions where the production is being carried on. It should take preventive measures against water and air pollution and should contribute to the community development activities. If the management fails to discharge its responsibility, the Government will interfere to prevent the enterprise from spoiling the condition of living by virtue of the powers given to it under various statutes.

(d) Government :

Every business enterprise is governed by various laws in regard to various matters concerning the management of business. It is the duty of the management of every enterprise to manage its affairs according to the laws affecting it. Management’s policies should be laid down taking into consideration the provisions of various legislation and the guidelines issued by the Government. Management should follow fair trade practices. It should pay taxes any other Government dues honestly, fully and promptly. It should not encourage corruption, black marketing and other social evils. It should continuously work to contribute to the socio-economic goals of the nation. It should conserve national resources.

 

 

 

 

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