Social responsibility of business Social Responsibility units
Social responsibility is the business obligation of businessmen towards the society. Businessmen should review the impact of their decisions and actions on the other sections of the society.
According to Howard R. Bowen, ‘Social responsibilities refer to the obligations of businessmen 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’.
Social responsibility of business is two-way traffic, i.e., (1) Social responsibility of business towards different sections of the society, and (II) Social responsibility of the different sections of the society towards the business. Let us study both these aspects of social responsibility of business:
1. Social Responsibility towards different sections of the Society
A business is responsible for fulfilling its social responsibility towards the following sections of the society:
(i) Towards Customers/Consumers: Customers/consumers are the backbone of every business enterprise. Hence it is the primary duty of every business enterprise to fulfill its social responsibility towards customers/consumers, such as, (i) maintenance of quality, (ii) providing after sale services, (iii) keeping away from monopolistic tendencies, (iv) guarding against adulteration, misleading and false advertising, hoarding, profiteering, (v) satisfaction to customers/consumers by providing sufficient amount of goods and services at the right time, at the right place and at the price etc.
(ii) Towards Employees : A business enterprise can run successfully only with the active support of its employees. It is possible only when the business enterprise is fulfilling its social responsibilities towards employees, such as, (i) providing incentive wages, (ii) good working and living conditions, (iii) providing adequate social security, (iv) participation in labour welfare activities, (vi) provision for education, training and promotion of employees, (vii) development of code of conduct, (viii) encouragement to workers’ participation in management, (ix) early settlement of workers! grievances and disputes, (x) stability in service tenure etc.
(iii) Towards Supplier I Goods : Supplier means supplier of raw materials, machines and tools and other items as and when required by the business enterprise. The social responsibility towards suppliers is (i) to motivate indigenous suppliers, (ii) pay fair prices, (iii) promote healthy competition, (iv) provide reasonable time to make supplies etc.
(iv) Towards Shareholders: The shareholders of a company are the owners of the business enterprise. Hence the business has social responsibility towards them also. It includes (i) fair return on investment, (ii) safety to investment, (iii) timely payment of dividends/interest, (iv) improving public image of the company, (v) providing regular, accurate and full information about the working of the enterprise, its progress and financial position etc.
(v) Towards Government: Government provides protection to business enterprises. Hence, the business is required to fulfill its social responsibility towards the government, such as, (i) regular and full payment of all types of taxes in time. (ii) to retrain from malpractices like corruption, black-marketing. hoarding, profiteering and adulteration etc., (iii) to abide by the rule of the land, (iv) to contribute to the social and economic goals of the nation, (v) to follow fair trade practices and refrain from monopolistic and restrictive trade practices.
(vi) Towards Creditors: Creditors provide necessary additional finance to the business enterprise in case of need. Hence, the business should fulfill its social responsibility towards them, such as, (i) payment of interest in time, (ii) fulfilling the terms and conditions of the loan given to them. (iii) provide necessary time for arranging the requisite finance, (iv) proper utilisation of loans, and (v) repayment of loans at the right time along with interest etc.
(vii) Towards Local Community: The establishment and development of business enterprise in a particular locality brings a number of problems to the local community. Hence, business has social responsibilities towards local community also, such as, (i) to take preventive measures against pollution and contribute to community development activities, (ii) to refrain from indulging in antisocial activities, (iii) to channelise the scarce resources of the society in productive lines along with their optimum utilisation, (iv) to participate in local social works, like construction of roads, schools and colleges, hospitals cultural institutions, parks, light, water supply etc., (v) to provide preference in employment to local persons etc.
2. Social Responsibility of the Different Sections of the Society towards the Business
The social responsibilities of different section towards the business may be summarised as under :
(1) Social Responsibility of the Owners: The owners of the business enterprise should take full interest in the smooth running and development of business enterprise, such as, formulation of right policies and their implementation in time, election of right persons to the board of directors, appointment of qualified and experienced persons in the management, adoption of scientific decision-making process, proper treatment with the customers of the business enterprise etc.
(ii) Social Responsibility of the Customers: The regular customers should keep the business enterprise aware of their changing needs, competitive position of the market etc.
(iii) Social Responsibility of Suppliers: The suppliers should maintain regularity of the supplies of raw materials, machines, tools etc. as and when required by the business enterprise. The quality must be maintained at all costs.
(iv) Social Responsibility of Investors : The investors should not with-draw their loan capital before the due date. They should honour the terms and conditions of the loan capital. Further, they should also be prepared to provide additional loan capital as and when required by the business enterprise.
(v) Social Responsibility of the Employees: The employees should perform their duties honestly and with proper skill and diligence. They should not participate in anti-business enterprise activities, such as, participation in illegal strikes, anti-management activities, hunger strikes, etc.
(vi) Social Responsibility of the Community: Since business is part of community, the community should assist the business enterprise in its production, development and distribution activities. They should cooperate with the business enterprise in keeping the environment neat and clean.
From the above discussions, it is clear that the concept of social responsibility of business is a two-way traffic. The business as well as the different sections of the society have mutual interests. Such mutual interest will assist in the establishment, development and successful running of the business in an economy.
