Social responsibility arises from the social power which vests upon society and society has social charters. Business shall operate as a two way open system with open receipts of inputs from society and open disclosure of its operations to the public.
Both social cost and benefits of any activity or product or service shall thoroughly be calculated and considered in order to decide whether or not to proceed with it.
Arguments for and against social responsibility
- A case for social responsibility
- Social actions can be profitable because they bring together society and business which leads to profit maximization.
- Social responsibility is an ethical thing to do because the rules of morality require that no one decision should harm others.
- It is in the best interest of business to improve and promote the communities where it does business.
- Through social responsibility the business will improve its corporate image also known as public image.
- Social responsibility is necessary because social cultural norms require it.
A case against social responsibility
- Social responsibility might be illegal particularly when business organizations engage themselves in illegal activities.
- Social responsibility is unnecessary because business plus Government equals to monolith i.e. some business firm collide with government officials to exploit the society.
- Social actions cannot be measured because most of them are in services and are not tangible.
- Social responsibility violates the motive of profit maximization of the business because what is extended as social responsibility is part of profit of the business.
- Business organizations lack social skills to solve some societal problems because they have no experience.
Areas of social responsibility
1.Towards the consumer and community
Socially responsible firms are expected to do the following to the consumers and the society:
- Production of cheap and better quality goods and services
- Locating the factories and markets at proper places and rationalizing the use of capital and labor.
- Leveling out seasonal variations in employment and production through accurate forecast.
- Deciding priorities of production in the country’s interest and conserving natural resources.
- Avoiding ostentation i.e. production of prestigious goods.
- Honoring contracts and following honesty trade practices.
- Providing for after sale services.
- Achieving better public relation through education and other means.
- Ensuring that their products are safe and well designed.
- Preventing the creation of monopolies.
2.Towards the employees
Socially responsible firms should ensure the following towards their employees and workers;
- Paying a fair wage to workers
- Ensuring just selection, training and promotion.
- Ensuring satisfying conditions of work and social security measures.
- Ensuring good human relation in terms of maintaining industrial peace.
- Provision of freedom, self respect and self realization. And in general empowering the employee.
- Increase in productivity and efficiency by recognition of merits by providing opportunities for creative talents and incentives.
3.Towards the shareholders and other business.
- Arousing interest in the shareholders to abjure high dividends so that enough profits may be ploughed back for innovation and expansion.
- Fairness in relation with competitors. Competition with rival businesses should be fair and based on rules of ethics.
- Maintaining a balance between heavy industry, small industry and cottage industry.
- Help in the growth of professional practice.
- Towards the state
- Maintaining impartiality towards political affairs.
- Observing all the laws of the land which may have the following objectives:-
- To provide direction to the economic and business life of the community.
- To bring about harmony between the limited enterprise interest and the wider social interest of the country.
- To provide safe guard against errant business practices.
- To compel business to play fair to all participants in the economy in terms of employees, shareholders, consumers, creditors etc.
- To prevent oppression or exploitation of weaker partners in business.
- To enforce maximum production according to the priorities of sectors and production lines laid down by the government.
- To allocate limited resources according to social priorities and preferences.