Social responsibility of Business

Social responsibility of Business- Meaning, Argument in favour and against

Meaning and Definition of Social Responsibility

The concept of social responsibility is based on the principle of social justice. According to this principle, the business should not only take care of owners interest but also of the other members or sections of society viz. consumers, employees, suppliers, government and the society or world at large. According to Kontz and O’Donhell. “Social responsibility is the personal obligation of every one as the acts in his own interest to assure that the rights and legitimate interests of others are not infringed (violated).”

As per International Seminar on topic Social Responsibility of Business held in 1965 in New Delhi. “Social responsibility of business is responsibility towards customers, workers, shareholders and the community.

On analysing the above definitions we realize that social responsibility of business means responsibility of business towards various sections of society.

Thus, social responsibilities of business mean the obligation of businessmen towards the society.

H.R. Brown has defined social responsibility as “Obligation of business to pursue those policies, to make those decisions or to follow those lines of action which are desirable in terms of the objectives and values of our society.”

Arguments in Favour of Social responsibilities

Advocates of social responsibility give the following arguments :

  1. It is in the self-interest of business :

    Advocates of social responsibility of business argue that business should fulfill the demands and aspirations of various groups of society, viz., shareholders, consumers, employees, Government, etc. If the society appreciates and is satisfied with the services of the business enterprise, the business will also be able to achieve its objectives of profit maximization. Hence, the business should strive for profit through service’.

  2. It is necessary so as to avoid Government regulation :

    It is a corollary of the above point; if the businessmen fail to respond to social needs and expectations voluntarily, the Government may intervene and enact suitable legislations to force businessmen to assume social responsibility.

  3. It should respond to social demands :

    Business is an economic institution and it functions in society. It should respond to the needs and the aspirations of the society, otherwise it will be compelled by law to cater to the needs of the society or it will be compelled to close down.

  4. It improves the public image of the company :

    If a company assumes social responsibility the public image of the company improves.

  5. Socio-cultural norms of society force the business to assume social responsibility:

    There is a growing feeling that socio-cultural norms of society must regulate business enterprise and ensure that they fulfill their obligations towards the society. No business enterprise should be allowed to function at the cost of the society.

  6. Government policies favour social responsibility :

    Modern Government have come to realize that businessmen should engage themselves in socially responsible activities. Such a feeling has its roots in many recent changes that have emerged around us, viz., general awareness among consumers, shareholders and workers welfare legislations etc.

  7. Business has got requisite resources :

    It is heartening to note that today’s large scale business enterprises have ample resources in terms of money and managerial skills. As such they can easily solve diverse and complicated social problems.

Arguments Against assuming Social Responsibilities

Major arguments against the business assuming social responsibilities are as under:

  1. It is against the principle of profit maximization :

    Main object of business in profit maximization.

  2. It will increase cost of production :

    Assumption of social responsibility will increase cost of production. Business unit will try to pass on the burden to the consumers by charging higher prices. If business assures social responsibility, cost of providing social service will reduce its profit which will be against the principle of profit maximization.

  3. Business lacks social skills :

    Businessmen do not posses necessary social skills to solve complex social problems. Solving social problems is of highly specialized nature. It requires commitment foresight and patience.

  4. It will reduce productivity and efficiency:

    Increased burden of assuming social responsibility will reduce productivity efficiency as the limited resources of the organization will be used to fulfill social responsibility towards various groups such as consumers, suppliers and employees.

  5. It will increase controlling power of business :

    Assumption of social responsibility will further increases the power of big business houses. It will help the business houses to acquire various institutions of the country i.e., control on educational, religious, economic, political, institutions.

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