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Social Responsibility of Business: Concept, Approaches and Areas


Social Responsibility of Business:


Social Responsibility of Business: Concept, Approaches and Areas



Social responsibility is the obligation of an organization to protect and enhance the society within which the organization operates.


Concept:

Organizations are established by people from the society, run by social partners, use the resources of the society and work for society. Social responsibility is the obligation of an organization to protect social norms and rules within which the organization is operated. Business organizations exist and expand their business in society. Every organization is a part of society.  Business organizations utilize natural and other resources for their productions activities. Their objective is to earn reasonable profits by providing satisfaction to customers and other stakeholders.  There should be a correlation between business and society for the fulfillment of common objectives. Thus, Business is considered and taken as socio-economic activity. It has a certain social obligation along with the fulfillment of economic interest. Different scholars have defined social responsibility in different ways.

"Social responsibility refers to the obligation of decision-makers to take actions which protect and improve the welfare of society as a whole along with their own interest.          ~ Keith Davis

"Social responsibility is the  set of  obligations  an organization  has to protect and enhance the society in which its functions''        ~ R W Griffin



Approaches to social responsibility:

In business operation, every business organization needs to fulfill some of the social responsibility and environmental needs. However, their controversy among managers regarding the level of social responsibility they have to fulfill. Griffin has given four approaches,


Approaches to social responsibility:


(i) Social obstruction:

This approach has a traditional view regarding social responsibility. The managers of this approach emphasize only the economic welfare of the firm. They show unethical behavior and try to ignore the legal provision regarding social responsibility. The ethical matter is the lower concern for them.


(ii) Social obligation:

This approach is one step forward than social obstruction. The managers of this approach also emphasize that their job is to earn profit advocate that the business organization is to earn profit. They only consider the legal requirement regarding social responsibility and do nothing more than that. It means they follow the legal provision only at lower-level standards.


(iii) Social response:

The managers under this approach fulfill their legal and ethical requirements for social responsibility and also go beyond these requirements on a priority basis. They willingly agree to participate in social programs but somebody needs to convince them that their presence will be worthwhile.


(iv) Social contribution:

This approach considers the highest degree of social responsibility and activity takes part to contribute to society. The managers in this approach believe that they are the goods citizens of the society and seek opportunities to contribute to social welfare programs. Managers at this level believe that the fulfillment of social responsibility will automatically fulfill the economic objective of the business organization.


Areas of Responsibility

Areas of Responsibility


(i) Responsibility toward shareholders:

Shareholders invest capital in the business and bear risks. The business organization has a responsibility toward them as they invest money and grow business. They want fair dividend and the value of investment.


(ii) Responsibility toward customers:

Business organizations need to satisfy their customers by producing goods and services of their demand. The responsibilities of business toward customers are- providing quality products at reasonable price, provide after- sales services etc.


(iii) Responsibility towards employee:

Employees are the assets of the business and their welfare and wellbeing should be the main concern of the management. They should be treated as a part of the organization and encouraged to produce higher productivity. They should be properly trained and provided monetary and non-monetary benefits.


(iv) Responsibility toward government:

All business activities should be conducted within the rules and  regulations of the government. The business organization must fulfill the responsibilities toward the government such as- follow government rules and laws, pay different taxes, avoid monopoly and unfair trade practices.


(v) Responsibility toward society or community:

Business organizations perform their business activities in the society. Therefore, business organizations have some responsibilities towards society or community. They are: create employment opportunities to the people, promote the program of community welfare services, maintain the social and cultural values, etc.


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