WHAT IS SOCIAL RESPONSIBILITY OF BUSINESS?
Social responsibility of the business means the responsibility or obligation of the business towards the society. The business should act in such a manner that it serves in the best of the interest of the society. The social responsibility of business states that what is good for society is also good for the business and the business house must not act in the way opposes to the public interest or social interest. Social responsibility of business includes the obligations or duties of the business houses towards the various groups of society such as consumers, management, government, legal authorities, employees, creditors, lenders, environment etc.
ACCORDING TO KOONTZ AND O DONNELL
“Social responsibility is the personal obligation of every one as he acts for his own interests, to assure that the rights and legitimate interests of all others are not impugned.”
ACCORDING TO STENIER
“In the real sense, the assumption of social responsibilities implies recognition and understanding of the aspirations of the society and determination to contribute in its achievement.”
ACCORDING TO HOWARD R BOWEN
“The social responsibilities of the businessman are his obligations to pursue those policies, to make those decisions, or to follow lines at action which are desirable in terms of the objections and values of our society.”
ACCORDING TO KEITH DAVIS AND ROBERT BLOMSTORM
“Social responsibility is the obligation of decisions makes to take action which protect and improve the welfare of society as a whole along with their own interests.”
Thus, social responsibility implies all the duties and obligations of the business towards the various social groups and may lead to enhanced goodwill in the eyes of the parties associated with it.
FEATURES OF SOCIAL RESPONSIBILITY
The features of the social responsibility of the business are as follows:
HONEST AND GENUINE CONCERN
Business house is the outcome of the efforts of the persons living in the society. It produces the goods and renders the services to the market by using the resources of the society. So discharging the duties towards social groups is an honest and genuine concern.
RECOGNITION OF NEEDS OF THE SOCIETY
Social responsibility recognizes the needs of the society and the persons living in the society. It does not allow the business to flourish at the cost of the exploitation of society. It makes business recognize and fulfill the various needs of the social people which include:
- Providing and generating employment opportunities.
- Availing good quality products at right price.
- No exploitative practices against consumers.
- Proper welfare, health and safety measures for the employees working in the business.
- No wastages of social resources and so on.
PROMOTE THE WELFARE OF THE SOCIETY
Social responsibility concept promotes the welfare of the society. It makes the business realize that no business should prosper by ignoring the social interest. With the help of social responsibility, the welfare of society is promoted in following ways:
- By providing employment opportunities.
- By employing some part of profit towards social welfare.
- By reducing the wastages of the resources of the society.
- By using the pollution free equipments and ensuring no environment degradation, etc.
BALANCE BETWEEN SOCIAL AND OWN BUSINESS INTERESTS
Social responsibility helps the business houses in maintaining the balance between social interests and own interests. The business house targets at providing the quality products and services to the consumers and also at the same time ensures the adequate profit earnings. To quote Ruskin Bond “Service first and fee second.” This is how the business serves as well as earn profits for its own survival.
WHY BUSINESS SHOULD ASSUME SOCIAL RESPONSIBILITY
The business houses should assume social responsibility as mandatory because of the number of factors operating within and outside the organization. These factors are as follows:
TO AVOID GOVERNMENT CONTROL
Government enacts various laws to regulate the working of the business houses. These laws are enacted to provide protection to the interests of consumers and employees from the exploitative business practices. Of the business do not follow the provisions contained in the laws, there is threat of nationalization. So it is always in the interest of the business to realize the social responsibilities.
TO DEVELOP GOOD IMAGE OR GOODWILL
The business can acquire the goodwill or good image or can be in the good books of the consumers if it discharges all its social responsibilities. A business providing quality goods at moderate prices, generating employment opportunities, promoting no adulterated foods etc can have the good reputation in the market.
TO DEVELOP EXPERTISE
The business can become a leader of the society if he is able to follow all the social responsibilities. This will helps in becoming the expertise of the customer relationship management. This leads to capture of good market share by the business house in this competitive era.
TO AVOID TRADE UNIONS AND LABOR MOVEMENT
Trade and labor unions are the group of the employees which represents the interest of the employees. These unions are formed to protect the interest of the employees towards exploitative practices of business houses. Therefore the business has to take of its social responsibilities towards employees to avoid any movement of labor unions such as strikes.
TO SATISFY CONSUMERS
Social responsibility is also a need of the hour to satisfy the needs of the consumers. With the advent of so many consumer protection organizations and enactment of Consumer Protection Act, 1986; it has become obligation on the part of the business houses to satisfy the consumers by providing them good quality products and services at affordable prices.
TO PREVENT MISUSE OF ECONOMIC RESOURCES
The resources are scarce in nature. The society has provided the economic resources at the disposal of the business for the generation of the wealth. So it becomes the duty of the business houses to use the society’s resources properly towards the good of all.
TO INCREASE PRODUCTIVITY
The business can stay for long in the market only if it is consumer oriented. A good business is that which can generate the profits by satisfying all the needs and wants of the consumers at affordable prices. This will make the consumers stuck to the products of the company. This will result in more demand of the products and ultimately more productivity.
SCOPE OF SOCIAL RESPONSIBILITY OF BUSINESS
The business is the socio-economic organ of the economy. It usually comes into contact with various other groups or sections of society on regular basis. Business has some kind of responsibility towards them which is as follows:
RESPONSIBILITY TOWARDS EMPLOYEES
Employees are the inseparable part of the business. The business cannot survive by having no employee in it. All the success of the business depends upon the quality of the employees hired by it. So it is very important for the business to make the employees a part of it. This can be possible if the business management succeed in satisfying the psychological as well as economic needs of the employees. The following are the responsibilities of the business towards the employees:
- To provide fair wages and remuneration to the employees.
- To provide the sense of job security.
- To orient the new employees properly.
- To train the employees on regular basis.
- To provide the opportunities of promotion.
- To launch the schemes of rewards giving and recognition programmes that will motivate the employees to work hard.
- To provide good working conditions to workers.
- To ensure proper health, safety and welfare measures installed in the work place for ensuring no harm and safe working by the employees.
- To develop the sense of dignity of labor.
- To provide opportunity to the workers to participate in management.
RESPONSIBILITY TOWARDS CONSUMERS
Consumer is the king of the market. Only that business can survive which produces as per the requirement of the consumers. But some business houses may resort to exploitation of consumers by adopting unfair trade and marketing practices like food adulteration, black marketing, hoarding etc. But with the advent of consumer awareness organizations and enactment of Consumer Protection Act, 1986; the consumer has been enough aware of his rights and duties. This make the business realize that it has some responsibilities towards the consumers section of the society. These responsibilities are as follows:
- Providing the quality goods to the consumers.
- Maintaining the regular supply of the goods and services in the market.
- Genuine prices must be charged for the goods and services. There should be no overpricing practice for any good.
- There should be no adoption of the unfair trade practices like black marketing, hoarding etc.
- There should be proper labeling of the product so that consumer may know about the contents of the products and precautions to use it.
- To provide useful information through advertisement.
- The products should be manufactured keeping in view the requirements of consumers.
- To provide different variety of products to suit different tastes of the consumers.
- To dispose of the consumer complaints and grievances quickly.
- To provide after sale services.
- To not exercise monopoly practices for exploitation of consumers.
- To ensure fair distribution of products during shortages.
RESPONSIBILITY TOWARDS GOVERNMENT
Government regulates the business activity by the enactment of various laws such as factories act, industrial disputes act, consumer protection act, trade unions act, Indian contract act, limited liability partnership act, sale of goods act etc. The government also ensures the protection of domestic business houses from foreign businesses. The government is responsible for levying taxes on the incomes of businesses and also for providing adequate subsidies to promote industrial activities in the economy. So the business has responsibilities towards the government which are as follows:
- To follow all the provisions of the laws enacted by the local government, state government and central government.
- To pay the taxes on time and do not resort to tax avoidance or tax evasion practices.
- The responsibility of not adopting monopoly or restrictive trade practices.
- To encourage the exports.
- To keep the books of accounts fairly and ensure its regular auditing.
- To cooperate the government in solving the problems of economy such as poverty, illiteracy etc.
- To help government at the time of any natural calamity such as drought, flood, earthquakes, heavy storms etc.
RESPONSIBILITY TOWARDS SHAREHOLDERS AND OTHER INVESTORS
Shareholders are the persons who are the owners of the business. These are the persons who have invested their funds in the business. Finance which is the life blood of the business is provided by the shareholders and investors. The shareholders and investors do so by taking the risk regarding the return on the investments. So there are some responsibilities on the part of the business towards this group. These responsibilities are as follows:
- To ensure the fair return on the money invested.
- To regard their say in managing the affairs of the company.
- To ensure the safety of the funds invested.
- To ensure regular return on investment in the form of dividend and interest.
- To provide true and fair information regarding the affairs of the business.
- To provide the notice of annual general meeting to all the shareholders.
- To provide opportunities for the participation in the decision making.
RESPONSIBILITY TOWARDS SUPPLIERS
Suppliers are the persons who supply the raw material for manufacturing or goods for trade to the business. There are some responsibilities of the business towards the suppliers which is as follows:
- To make payments to suppliers on time.
- To develop and maintain healthy relations.
- To adopt fair trade practices in getting the regular supply of goods.
- To assist the small units.
- To patronize the chambers of commerce and trade associations.
RESPONSIBILITY TOWARDS COMPETITORS
Competition resorts to innovations if it is a healthy competition. The responsibilities of the business towards fellow businesses are as follows:
- To adopt fair trade practices regarding price, quality, timely delivery and service.
- To record mutual transactions accurately.
- To make the prompt payments.
- To avoid unnecessary competitions.
- To trade fairly in case of joint ventures.
- To support the small business units in same industry.
- To maintain good business relations with other competitors.
- There should be no development of monopolies.
RESPONSIBILITY TOWARDS COMMUNITY
Business and community are complementary to each other. Community depends upon the business to satisfy their needs and wants by consuming the goods and by availing the services rendered by the commercial enterprises. Business depends upon the community to get the resources to be used for producing the goods and services. The responsibility of business towards community is as follows:
- To preserve and protect the environment from pollution.
- To recycle the waste products.
- To provide employment opportunities to society.
- To help in the upliftment of the society such as disabled persons, orphans and widows etc.
- To ensure optimum use of natural resources.
- To undertake national integration activities.
- To preserve social and cultural values by providing help to museum, art galleries and institutions of music and dance etc.
- To help local bodies in providing amenities like drinking water, sanitation, public transport etc.
- To provide assistance to hospitals, sports and educational institutions etc. for the development of the society.