Social Responsibility of

Business

What is the social

responsibility of a business?

Social responsibility of a business refers

to what the business does , over and
above the salutary requirement , for the
benefit of the society .

There are four dimensions

of business responsibility
Economic - responsibility to earn profit for
owners
Legal - responsibility to comply with the law
(societys codification of right and wrong)
Ethical - not acting just for profit but doing
what is right, just and fair
Voluntary and philanthropic - promoting
human welfare and goodwill
Being a good corporate citizen contributing
to the community and the quality of life

 Legal

- responsibility to comply with

the law (societys codification of right
and wrong)

 Ethical

- not acting just for profit but

doing what is right, just and fair

 Voluntary

and philanthropic promoting human welfare and

goodwill

 Being

a good corporate citizen

contributing to the community and
the quality of life

Why business has some

responsibility for society?
They are getting resources from the society
Shareholders
Employees
Consumers
So they have some responsibility for all of
them.

Responsibilities to different
sections
or social interest of business.
Shareholders
Employees
Government
Society
Consumers
Local

community

Responsibility to the
shareholders

The responsibility of a company to its

shareholders , who are the owners , is indeed
a primary one
Provide to them dividend if your business is
earning profit
Make feel proud of their company as a
shareholders
The shareholders are interested not only
protection of their investment but also return
on it.

 fair

Responsibility to the
employees

wages
best possible working conditions
labour welfare facilities
proper training and development
promotion

 Appreciation

and encouragement of
special skills and capabilities of the
workers

To protect the interest of the shareholders

and employees
the primary business of a business is to
stay in business.

Responsibility to the
consumers
increase productivity and reduce prices

improve quality and

make good distribution system {easily available
}.
To introduce better and new products .do R&D
to introduce new and better products.
Reasonable price.
After sale services.
To avoid misleading the customers by improper
advertisements or otherwise.
To understand customers needs.

Responsibility to the
community
prevent

environmental .
Overall development of the locality
conserve scarce resources
Development of backward areas.
Making possible contribution and
promotion of education and population.
Contributing to the national effort to build
up a better society.

 Pay

Responsibility to the
government

tax.
Professional tax.
Black-marketing.
Obey the act.

Responsibility to the
society
Minimize

the percentage of the pollution.

Financial support for education.
Medical facility.
Develop the backward area.

ETHICS
a

set of beliefs about right and

wrong.

Ethics guide people in dealings with

stakeholders and others, to determine
appropriate actions.
Managers often must choose between
the conflicting interest of stakeholders.

Ethical model
Figure 5.2
Social Ethics:
Legal rules, customs

Organizations
Code of Ethics

Professional Ethics:
Values in workplace

Individual Ethics:
Family influence

Ethics origin
Societal

Ethics: standards that

members of society use when
dealing with each other.

Based on values and standards

found in societys legal rules, norm, and
mores.
Codified in the form of law and
society customs.
Norms dictate how people should
behave.

Ethics origin
Societal

society.

ethics vary based on a given

Strong beliefs in one country may differ

elsewhere.
Example: bribes are an accepted
business practice in some countries.

Ethical decision
A

key ethical issue is how to disperse harm

and benefits among stakeholders.
If a firm is very profitable for two years, who
should receive the profits? Employees,
managers and stockholders all want a share.
Should we keep the cash for future slowdowns?
What is the ethical decision?

What

about the reverse, when firms must

layoff workers.
Final point: stockholders are the legal
owners of the firm!

Why Behave Ethically?

Managers

should behave ethically to

avoid harming others.

Managers are responsible for protecting

and nurturing resources in their charge.

Unethical

managers run the risk for

loss of reputation.

This is a valuable asset to any manager!

Reputation is critical to long term
management success.
All stakeholders are judged by reputation.

Arguments Against Social

Responsibility
Profit

Maximization

Society has to pay the cost

Social Overhead cost

Lack of social Skills

Lack of Accountability

Lack of Broad Support

Why social responsibilities are

important for business?
Social involvement may create a
better public image for the company
which may help you it in attracting
customers , investors , to get help
from the government of the country.

you

Thank