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Social Responsibilty-Business And Its Environment

   Posted On :  04.05.2018 03:33 am

Social responsibility is the obligation of decision-makers to take actions, which protects and improves the welfare of society as a whole along with their own interests.

Social Responsibilty
Social responsibility is the obligation of decision-makers to take actions, which protects and improves the welfare of society as a whole along with their own interests. Every decision the businessman takes and every action he contemplates have social implications.

Definition Of Social Responsibility

“Social responsibility refers to the business decisions & actions taken to reasons atleast partially beyond firm’s direct economic or technical interest” – Keith Davis


Arguments For Social Responsibility

  •   Business has to respond to the needs and expectations of society.
  •   Improvement of the social environment benefits both society and business.
  •   Social responsibility discourages additional governmental regulation and intervention.
  •   Business has a great deal of power, which should be accompanied by an equal amount of responsibility.
  •   Internal activities of the enterprise have an impact on the external environment.
  •   The concept of social responsibility protects interests of stockholders.
  •   Social responsibility creates a favourable public image.
  •   Business has the resources to solve some of social problems.
  •   It is better to prevent social problems through business involvement than to cure them.

Arguments Against Social Responbility

  •   Social responsibilities could reduce economic efficiency.
  •   Social responsibility would create excessive costs for business.
  •   Weaken international balance of payments
  •   Business has enough power, and social involvement would further increase its power and influence.
  •   Business people lack the social skills necessary to deal with the problems of society.
  •   Business is not really accountable to society.

Social Stakeholders

Managers, who are concerned about corporate social responsibility, need to identify various interest groups which may affect the functioning of a business organization and may be affected by its functioning. Business enterprises are primarily responsible to six major groups:

  •    Shareholders
  •   Employees
  •   Customers
  •   Creditors, suppliers and others
  •   Society and
  •   Government.

These groups are called interest groups or social stakeholders. They can be affected for better or worse by the business activities of corporations.

Social Responsibilitysocial Responsibility Towards Stakeholders Customer:

  •   Avoid misleading advertisement.
  •   Avoid misleading name of the product.
  •   Avoid authorized dealer name for misleading customer.
  •   Avoid wrong information.
  •   Avoid exploiting customers.
  •   Avoid collusive agreements with other firms to exploit customer.


  •   Fair wage, bonus & incentives to employees.
  •   Cordial relation towards employees.
  •   Providing better working condition.
  •   Creating opportunities for creative and talent employees.
  •   Proper training.
  •   Proper and transparent performance, appraisal and promotion


  •   Assuring security to their fund
  •   Proper payment of return on investment(roi)
  •   Providing correct information about the company.


  •   The business activities should be law abiding.
  •   Prompt payment of tax & other duties.
  •   Abiding by pollution controls.

Creditors & Suppliers:

  •   Maintenance of cordial relationship.
  •   Timely payment & obligation.
  •   Providing true & correct picture of financial position


  •   Preventing monopoly.
  •   Disposal of waste & effluents.
  •   Creating employment opportunities.
  •   Balanced regional rural development.

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