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Management Concepts & Organisational Behaviour - Social Responsibilities Of Business

The Differing Perspectives-Social Responsibilities Of Business

   Posted On :  17.05.2018 08:48 am

There are different views on the social responsibilities of business. The views may be broadly classified under two categories: those for and against the social responsibilities of business.

The Differing Perspectives
There are different views on the social responsibilities of business. The views may be broadly classified under two categories: those for and against the social responsibilities of business.
One view, strongly advocated by Nobel Laureate in economics, Milton Friedman, on proper role of business “to use its resources and energies in activities designed to increase its profits so long as it stays within the rules of the game and engages in open competition, without deception and fraud”. According to Friedman, socially responsible business is concerned primarily with efficiency and providing its owners with the best possible return on investment within the parameters established by law and ethical conduct. Solving social problems such as eliminating poverty, eradication of illiteracy is the task of government. If business directly deals with social problems, the costs of doing will be reflected in the prices of goods and services.
Other writers contend that profit should not be management’s only concern. Organizations should sacrifice a little for the good of the society. In support of this view, Keith Davis states that business must be socially responsible because of “ a iron law of responsibility” contending that in the long run those who do not use power in the manner that society considers responsible will tend to lose it”
As discussed above, there are divergent views on the issue. One’s views on the correct role of business in society are influenced by one’s values. There is no right or no wrong answers to the question. All the view points are presented in the form of arguments for and against social involvement of business.

Arguments for Social Involvement for Business

1. Public needs have changed, leading to different expectations. Business, it is suggested, received its charter from society and consequently has to respond to the needs of society.
2. The creation of a better social environment benefits both society and business. Society gains through better neighborhoods and employment opportunities; business benefits from a better community which is the source of its labor and where it sells its products and services.
3. Social involvement discourages additional government regulation and intervention. The result is greater freedom and more flexibility in decision making for business.
4. Business as a great deal of power which, it is reasoned, should be accompanied by an equal amount of responsibility.
5. Modern society is an interdependent system and the internal activities of the enterprise have an impact on external environment.
6. Social involvement may be in interest of stockholders.
7. Problems can become profits. Items that may once have been considered waste (for example, empty soft drink cans) can be profitably used again.
8. Social environment creates a favorable public image. Thus, a firm may attract customers, employees, investors.
9. Business should try to solve the problems which other institutions could not. After all, business has a history of coming up with novel ideas.
10. Business has the resources. Specifically, business should use its talented managers and specialists, as well as its capital resources, to solve some of society’s problems.
11. It is better to prevent social problems through business involvement than to cure them. It may be more effective to help the hard-core unemployed than to cope with social.

Arguments against Social Involvement of Business

1. The primary task of business is to maximize profit and to focus strictly on economic activities. Social involvement could reduce economic efficiency.
2. In the final analysis, society may have to pay for business’s social involvement through high prices. Social involvement may create excessive costs to business and keep it from committing its resources to economic opportunities.
3. Business has enough power, and additional social involvement would further increase its power and influence.
4. Business people lack the social skills to deal with the problems of society. Their training and experience are with economic matters, and the acquired skills may not be pertinent for solving social problems.
5. There is a lack of accountability of business to society. Unless accountability can be established, business should not get involved.
6. There is not complete support for involvement by business in social actions. Consequently, disagreements among groups with different viewpoints will cause frictions.

In spite of the growing concern for the social problems, it has to be remembered that profit is essential for the survival of business organization. Profit is to a business what food, water and air are to an individual. As such, every organization has to strike a balance between making profits and discharging social responsibilities. Both are not mutually exclusive,
but are complementary.
According to Keith Davis, “Social Responsibilities refer to the businessman’s decisions and actions taken to reasons at least partially beyond the firm’s direct economic or technical interest”. To quote Andrews, “By social responsibility, we mean intelligent and objective concern for the welfare of society that restrains individual and corporate behaviour from ultimately destructive activities, no matter how immediately profitable, and leads in the direction of positive contribution to human betterment, variously as the latter may be defined”.
H.R.Bowen’s observation on social responsibility is more clear and point to the specifics of the concept. He suggests that business managers are bound 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”. Thus, as the above definitions indicate, the concern for the society on the part of managers implies a particular behaviour which is in line with the societal interests. It suggests that they refrain from actions detrimental to the interests of the society.


Tags : Management Concepts & Organisational Behaviour - Social Responsibilities Of Business
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