Concept of Social Responsibility
We all know that people engage in business to earn profit. However, profit making is not
the sole function of business. It performs a number of social functions, as it is a part of the
society. It takes care of those who are instrumental in securing its existence and survival
like- the owners, investors, employees, consumers and government in particular and the
society and community in general. So, every business must contribute in some way or the
other for their benefit. For example, every business must ensure a satisfactory rate of return
to investors, provide good salary, security and proper working condition to its employees,
make available quality products at reasonable price to its consumers, maintain the environment
properly etc.
However, while doing so two things need to be noted to view it as social responsibility of
business. First, any such activity is not charity. It means that if any business donates some
amount of money to any hospital or temple or school and college etc., it is not to be considered
as discharge of social responsibility because charity does not imply fulfilling responsibility.
Secondly, any such activity should not be such that it is good for somebody and bad for
others. Suppose a businessman makes a lot of money by smuggling or by cheating customers,
and then runs a hospital to treat poor patients at low prices his actions cannot be socially
justified. Social responsibility implies that a businessman should not do anything harmful to
the society in course of his business activities.
The obligation of any
business to protect and
serve public interest is
known as social responsibility
of business
Social Responsibilities of Business
39
Thus, the concept of social responsibility discourages businessmen from adopting unfair
means like black-marketing, hoarding, adulteration, tax evasion and cheating customers
etc. to earn profit. Instead, it encourages them to earn profit through judicious management
of the business, by providing better working and living conditions to its employees, providing
better products, after sales-service, etc. to its customers and simultaneously to control
pollution and conserve natural resources.
4.4 Why should business be socially responsible
Social responsibility is a voluntary effort on the part of business to take various steps to
satisfy the expectation of the different interest groups. As you have already learnt, the interest
groups may be owners, investors, employees, consumers, government and society or
community. But the question arises, why should the business come forward and be responsible
towards these interest groups. Let us consider the following points:
i. Public Image - The activities of business towards the welfare of the society earn goodwill
and reputation for the business. The earnings of business also depend upon the public
image of its activities. People prefer to buy products of a company that engages itself
in various social welfare programmes. Again, good public image also attracts honest
and competent employees to work with such employers.
ii. Government Regulation - To avoid government regulations businessmen should
discharge their duties voluntarily. For example, if any business firm pollutes the
environment it will naturally come under strict government regulation, which may
ultimately force the firm to close down its business. Instead, the business firm should
engage itself in maintaining a pollution free environment.
iii. Survival and Growth -Every business is a part of the society. So for its survival and
growth, support from the society is very much essential. Business utilizes the available
resources like power, water, land, roads, etc. of the society. So it should be the
responsibility of every business to spend a part of its profit for the welfare of the
society.
iv. Employee satisfaction - Besides getting good salary and working in a healthy atmosphere,
employees also expect other facilities like proper accommodation, transportation,
education and training. The employers should try to fulfill all the expectation of the
employees because employee satisfaction is directly related to productivity and it is
also required for the long-term prosperity of the organisation. For example, if business
spends money on training of the employees, it will have more efficient people to work
and thus, earn more profit.
v. Consumer Awareness - Now-a-days consumers have become very conscious about
their rights. They protest against the supply of inferior and harmful products by forming
different groups. This has made it obligatory for the business to protect the interest of
the consumers by providing quality products at the most competitive price.
Intext Questions 4.1
I. Fill in the blanks with appropriate words.
i) Every business operates within a _________.
Business Studies
40
ii) Social responsibility of business refers to all such duties and _______ of business
that are directed towards the welfare of society.
iii) Giving good return to the investors by providing ____ goods at high price to
consumers is not fulfilling social responsibility.
iv) To avoid government regulations business houses should discharge their duty
________.
v) The earnings of business depend upon the public _______ of its activities
II. Give the meaning of social responsibility of business in your own words.
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
4.5 Responsibility Towards Different Interest Groups
After getting some idea about the concept and importance of social responsibility of business
let us look into the various responsibilities that a business has towards different groups with
whom it interacts. The business generally interacts with owners, investors, employees,
suppliers, customers, competitors, government and society. They are called as interest groups
because by each and every activity of business, the interest of these groups is affected
directly or indirectly.
Business
Investors
Employees
Government
Competitors Society
Customers
Suppliers
Responsibility of Business Towards Different Interest Groups.
i. Responsibility towards owners
Owners are the persons who own the business. They contribute capital and bear the business
risks. The primary responsibilities of business towards its owners are to:
a. Run the business efficiently.
Owners
Social Responsibilities of Business
41
b. Proper utilisation of capital and other resources.
c. Growth and appreciation of capital.
d. Regular and fair return on capital invested.
ii. Responsibility towards investors
Investors are those who provide finance by way of investment in debentures, bonds, deposits
etc. Banks, financial institutions, and investing public are all included in this category. The
responsibilities of business towards its investors are :
a. Ensuring safety of their investment,
b. Regular payment of interest,
c. Timely repayment of principal amount.
iii. Responsibility towards employees
Business needs employees or workers to work for it. These employees put their best effort
for the benefit of the business. So it is the prime responsibility of every business to take care
of the interest of their employees. If the employees are satisfied and efficient, then the only
business can be successful. The responsibilities of business towards its employees include:
a. Timely and regular payment of wages and salaries.
b. Proper working conditions and welfare amenities.
d. Opportunity for better career prospects.
e. Job security as well as social security like facilities of provident fund, group
insurance, pension, retirement benefits, etc.
f. Better living conditions like housing, transport, canteen, crèches etc.
g. Timely training and development.
iv. Responsibility towards suppliers
Suppliers are businessmen who supply raw materials and other items required by
manufacturers and traders. Certain suppliers, called distributors, supply finished products
to the consumers. The responsibilities of business towards these suppliers are:
a. Giving regular orders for purchase of goods.
b. Dealing on fair terms and conditions.
c. Availing reasonable credit period.
d. Timely payment of dues.
v. Responsibility towards customers
No business can survive without the support of customers. As a part of the responsibility of
business towards them the business should provide the following facilities:
a. Products and services must be able to take care of the needs of the customers.
b. Products and services must be qualitative
c. There must be regularity in supply of goods and services
Business Studies
42
d. Price of the goods and services should be reasonable and affordable.
e. All the advantages and disadvantages of the product as well as procedure to use
the products must be informed do the customers.
f. There must be proper after-sales service.
g. Grievances of the consumers, if any, must be settled quickly.
h. Unfair means like under weighing the product, adulteration, etc. must be avoided.
vi. Responsibility towards competitors
Competitors are the other businessmen or organizations involved in a similar type of business.
Existence of competition helps the business in becoming more dynamic and innovative so as
to make itself better than its competitors. It also sometimes encourages the business to
indulge in negative activities like resorting to unfair trade practices. The responsibilities of
business towards its competitors are
i. not to offer exceptionally high sales commission to distributers, agents etc.
ii. not to offer to customers heavy discounts and /or free products in every sale.
iii. not to defame competitors through false or ambiguous advertisements.
vii. Responsibility towards government
Business activities are governed by the rules and regulations framed by the government. The
various responsibilities of business towards government are:
a. Setting up units as per guidelines of government
b. Payment of fees, duties and taxes regularly as well as honestly.
c. Not to indulge in monopolistic and restrictive trade practices.
d. Conforming to pollution control norms set up by government.
h. Not to indulge in corruption through bribing and other unlawful activities.
viii. Responsibility towards society
A society consists of individuals, groups, organizations, families etc. They all are the members
of the society. They interact with each other and are also dependent on each other in almost
all activities. There exists a relationship among them, which may be direct or indirect. Business,
being a part of the society, also maintains its relationship with all other members of the
society. Thus, it has certain responsibilities towards society, which may be as follows:
a. to help the weaker and backward sections of the society
b. to preserve and promote social and cultural values
c. to generate employment
d. to protect the environment
e. to conserve natural resources and wildlife
f. to promote sports and culture
g. to provide assistance in the field of developmental research on education, medical
science, technology etc.
We all know that people engage in business to earn profit. However, profit making is not
the sole function of business. It performs a number of social functions, as it is a part of the
society. It takes care of those who are instrumental in securing its existence and survival
like- the owners, investors, employees, consumers and government in particular and the
society and community in general. So, every business must contribute in some way or the
other for their benefit. For example, every business must ensure a satisfactory rate of return
to investors, provide good salary, security and proper working condition to its employees,
make available quality products at reasonable price to its consumers, maintain the environment
properly etc.
However, while doing so two things need to be noted to view it as social responsibility of
business. First, any such activity is not charity. It means that if any business donates some
amount of money to any hospital or temple or school and college etc., it is not to be considered
as discharge of social responsibility because charity does not imply fulfilling responsibility.
Secondly, any such activity should not be such that it is good for somebody and bad for
others. Suppose a businessman makes a lot of money by smuggling or by cheating customers,
and then runs a hospital to treat poor patients at low prices his actions cannot be socially
justified. Social responsibility implies that a businessman should not do anything harmful to
the society in course of his business activities.
The obligation of any
business to protect and
serve public interest is
known as social responsibility
of business
Social Responsibilities of Business
39
Thus, the concept of social responsibility discourages businessmen from adopting unfair
means like black-marketing, hoarding, adulteration, tax evasion and cheating customers
etc. to earn profit. Instead, it encourages them to earn profit through judicious management
of the business, by providing better working and living conditions to its employees, providing
better products, after sales-service, etc. to its customers and simultaneously to control
pollution and conserve natural resources.
4.4 Why should business be socially responsible
Social responsibility is a voluntary effort on the part of business to take various steps to
satisfy the expectation of the different interest groups. As you have already learnt, the interest
groups may be owners, investors, employees, consumers, government and society or
community. But the question arises, why should the business come forward and be responsible
towards these interest groups. Let us consider the following points:
i. Public Image - The activities of business towards the welfare of the society earn goodwill
and reputation for the business. The earnings of business also depend upon the public
image of its activities. People prefer to buy products of a company that engages itself
in various social welfare programmes. Again, good public image also attracts honest
and competent employees to work with such employers.
ii. Government Regulation - To avoid government regulations businessmen should
discharge their duties voluntarily. For example, if any business firm pollutes the
environment it will naturally come under strict government regulation, which may
ultimately force the firm to close down its business. Instead, the business firm should
engage itself in maintaining a pollution free environment.
iii. Survival and Growth -Every business is a part of the society. So for its survival and
growth, support from the society is very much essential. Business utilizes the available
resources like power, water, land, roads, etc. of the society. So it should be the
responsibility of every business to spend a part of its profit for the welfare of the
society.
iv. Employee satisfaction - Besides getting good salary and working in a healthy atmosphere,
employees also expect other facilities like proper accommodation, transportation,
education and training. The employers should try to fulfill all the expectation of the
employees because employee satisfaction is directly related to productivity and it is
also required for the long-term prosperity of the organisation. For example, if business
spends money on training of the employees, it will have more efficient people to work
and thus, earn more profit.
v. Consumer Awareness - Now-a-days consumers have become very conscious about
their rights. They protest against the supply of inferior and harmful products by forming
different groups. This has made it obligatory for the business to protect the interest of
the consumers by providing quality products at the most competitive price.
Intext Questions 4.1
I. Fill in the blanks with appropriate words.
i) Every business operates within a _________.
Business Studies
40
ii) Social responsibility of business refers to all such duties and _______ of business
that are directed towards the welfare of society.
iii) Giving good return to the investors by providing ____ goods at high price to
consumers is not fulfilling social responsibility.
iv) To avoid government regulations business houses should discharge their duty
________.
v) The earnings of business depend upon the public _______ of its activities
II. Give the meaning of social responsibility of business in your own words.
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
4.5 Responsibility Towards Different Interest Groups
After getting some idea about the concept and importance of social responsibility of business
let us look into the various responsibilities that a business has towards different groups with
whom it interacts. The business generally interacts with owners, investors, employees,
suppliers, customers, competitors, government and society. They are called as interest groups
because by each and every activity of business, the interest of these groups is affected
directly or indirectly.
Business
Investors
Employees
Government
Competitors Society
Customers
Suppliers
Responsibility of Business Towards Different Interest Groups.
i. Responsibility towards owners
Owners are the persons who own the business. They contribute capital and bear the business
risks. The primary responsibilities of business towards its owners are to:
a. Run the business efficiently.
Owners
Social Responsibilities of Business
41
b. Proper utilisation of capital and other resources.
c. Growth and appreciation of capital.
d. Regular and fair return on capital invested.
ii. Responsibility towards investors
Investors are those who provide finance by way of investment in debentures, bonds, deposits
etc. Banks, financial institutions, and investing public are all included in this category. The
responsibilities of business towards its investors are :
a. Ensuring safety of their investment,
b. Regular payment of interest,
c. Timely repayment of principal amount.
iii. Responsibility towards employees
Business needs employees or workers to work for it. These employees put their best effort
for the benefit of the business. So it is the prime responsibility of every business to take care
of the interest of their employees. If the employees are satisfied and efficient, then the only
business can be successful. The responsibilities of business towards its employees include:
a. Timely and regular payment of wages and salaries.
b. Proper working conditions and welfare amenities.
d. Opportunity for better career prospects.
e. Job security as well as social security like facilities of provident fund, group
insurance, pension, retirement benefits, etc.
f. Better living conditions like housing, transport, canteen, crèches etc.
g. Timely training and development.
iv. Responsibility towards suppliers
Suppliers are businessmen who supply raw materials and other items required by
manufacturers and traders. Certain suppliers, called distributors, supply finished products
to the consumers. The responsibilities of business towards these suppliers are:
a. Giving regular orders for purchase of goods.
b. Dealing on fair terms and conditions.
c. Availing reasonable credit period.
d. Timely payment of dues.
v. Responsibility towards customers
No business can survive without the support of customers. As a part of the responsibility of
business towards them the business should provide the following facilities:
a. Products and services must be able to take care of the needs of the customers.
b. Products and services must be qualitative
c. There must be regularity in supply of goods and services
Business Studies
42
d. Price of the goods and services should be reasonable and affordable.
e. All the advantages and disadvantages of the product as well as procedure to use
the products must be informed do the customers.
f. There must be proper after-sales service.
g. Grievances of the consumers, if any, must be settled quickly.
h. Unfair means like under weighing the product, adulteration, etc. must be avoided.
vi. Responsibility towards competitors
Competitors are the other businessmen or organizations involved in a similar type of business.
Existence of competition helps the business in becoming more dynamic and innovative so as
to make itself better than its competitors. It also sometimes encourages the business to
indulge in negative activities like resorting to unfair trade practices. The responsibilities of
business towards its competitors are
i. not to offer exceptionally high sales commission to distributers, agents etc.
ii. not to offer to customers heavy discounts and /or free products in every sale.
iii. not to defame competitors through false or ambiguous advertisements.
vii. Responsibility towards government
Business activities are governed by the rules and regulations framed by the government. The
various responsibilities of business towards government are:
a. Setting up units as per guidelines of government
b. Payment of fees, duties and taxes regularly as well as honestly.
c. Not to indulge in monopolistic and restrictive trade practices.
d. Conforming to pollution control norms set up by government.
h. Not to indulge in corruption through bribing and other unlawful activities.
viii. Responsibility towards society
A society consists of individuals, groups, organizations, families etc. They all are the members
of the society. They interact with each other and are also dependent on each other in almost
all activities. There exists a relationship among them, which may be direct or indirect. Business,
being a part of the society, also maintains its relationship with all other members of the
society. Thus, it has certain responsibilities towards society, which may be as follows:
a. to help the weaker and backward sections of the society
b. to preserve and promote social and cultural values
c. to generate employment
d. to protect the environment
e. to conserve natural resources and wildlife
f. to promote sports and culture
g. to provide assistance in the field of developmental research on education, medical
science, technology etc.
No comments:
Post a Comment