Interrelationship Between Management Functions

SOCIAL RESPONSIBILITY OF BUSINESS

According to George A.Steiner,“The assumption of social responsibilities by the business implies recognition and understanding of the aspirations of the society and determination to contribute to its achievement”. A business enterprise must try to understand the goals of the Society of which it is a part and take steps to contribute towards the achievement of those goals. While taking decisions, the business enterprises must take into consideration the broad social system, its needs and its expectations.

Social responsibility or business means obligation to act in a manner which will serve the best interests of the society. Social obligation of a business is different from legal obligation. Legal obligation is fulfilled by mere compliance with the provisions of the law. But social obligation relates to the voluntary efforts on the part of businessmen to contribute to the social well being. It is based on the assumption that what is good for the society is also good for the business. For example, TISCO has contributed a lot in the areas of community development, social welfare, tribal development, rural industrialization, etc.

Case for Social Responsibility

Why should management assume social responsibility? Some people argue that a business is an economic objective only. It should not devote itself to social objectives. If it spends money and energy on social obligations, its profitability will go down. But the modern view or business advocates assumption of social obligations. The arguments advanced for assumption of social responsibility are discussed as follows:

1. Social Entity. Business is the creation of the society and so it should respond to the demands of the society.As business uses the resources which belong to the society, it is necessary that it should fulfill its social obligations. Business managers are obliged to use the social resources for the common good of society.

2. Self Interest. It would be in the long term interest of business to fulfill the demands and operations of the society. The people who have good environment, education and opportunities make good employees, customers and neighbors for the business.

3. Moral Justification. Every business uses capital, physical and human resources of the society for achieving its purpose. It is also dependent on the society for the acceptance of its output or goods and services. Further, business firms make use of various social facilities or infrastructure like roads, power and water supply. Therefore, it is the moral responsibility of business to pursue its social obligations and contribute to the well being of the society.

4. Public Image. Public image of a business will improve if it follows its social obligations. The business will retain the needed credibility with the public. It will also avoid conflict with the society, which is in its own interest. Good relations with the workers, consumers and suppliers will lead to success or business.

5. Avoidance of Government Intervention. In case the business fails to respond to social needs voluntarily, the government will force the business to discharge its social obligations through legislation. This will reduce the freedom and flexibility of the business. Hence it is in the interest of the business to voluntarily fulfill its obligations to the society.

6. Consumers’Awareness. These days, the consumers are well informed. They expect higher quality products at reasonable rates. If they do not get fair treatment from the business, they can organize themselves in the form of consumers' associations and compel the business to assume its social obligations.