What are the basic social obligations of management? Do they conflict with the objective of profit maximization? 
Public demands on private business
have expanded greatly in recent years. Business enterprises was once expected
to donate its efforts to producing and distributing goods and services as
efficiently as possible as and to making innovations and improvements in
product and process with the ultimate objective of maximization profits. Now
business is increasingly called upon to promote a variety of social purpose in
addition to these long-standing economic ones. The demand for social
responsibility has provoked enthusiastic discussion and debate, on what new
roles, if has provoked enthusiastic discussion and debate, on what new roles,
if any, business firms should play In the social system.
“Social responsibility of business
refers to the obligation of business 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 the society”
-Haward R. Bowen
“Social responsibility is the
personal obligation of every one as he acts for his own interest to assure that
the right and legitimate interest of all others are not impinges.”
-Koontz O ’Donnel
“In real sense the assumption of
social responsibilities implies recognition and understanding if the.
Aspirations of society and determinations to contribute to its achievement”
-George
A. Sterner
“conceptually social responsibility
may be taken to mean intelligent and objective concern for the welfare of the
society”.
-
K.R. Andrews
Responsibilities Obligation of Business Towards Different Group:
Different interest group always
claim some sort of protection from the business society as such. These interest
groups, no doubt consist of persons connected with business in the one way or
the other. As such we can discuss the claims of this different group in the
light of the responsibilities of the businessmen are as under:
Fig. Social responsibility of Business.
- Responsibility to Shareholders or Owners.
- Responsibility to Employees.
- Responsibility to customers.
- Responsibility to Creditors and suppliers.
- Responsibility to community.
- Responsibilities to Government.
- Responsibility to society.
Responsibility to shareholders or Owners:
The basic
responsibility of business to its owner or it ensure safety of investment,
higher longer running rate of return and a steady amount of capital
appreciation on the investment. Owners of business may be proprietors, partners or shareholder
depending upon whether a business is organized as proprietors concern, a
partnership form or as a body corporate with ownership capital contributed but
the shareholder. Important aspects of social responsibility of business toward
owners, are applicable in varying degrees to all enterprises, irrespective of
the form of ownership follower by them:
- Committing fund in the best possible manner.
- Ensuring a fair rate of return.
- Fair and honest reporting of business operations from time to time.
- To ensure safety of investment.
- To offer responsible appreciation of capital.
Responsibilities to Employees:
Business enterprises own certain
obligation a like customers, towards the employees, who represent an interest
group. Under the present value system of the society, an appropriate approach
to employee’s relation is not found to be satisfactory. Human approach to
required to be given suitable place in place of the traditionally approach to
employees . Important social responsibilities of business towards employees may
be summarized as under:
- Recognize the social needs of workers and provide adequate participation to employees on matters affecting in their life.
- Fair and reasonable rates and pay.
- Creating a healthy work climate. Improving working and living conditions and making the work place safe and pleasant.
- Improving the quality of working life of employees.
Responsibilities to customers:
In a free society, it is the
ultimate consumer who determines what goods shall be produce and
Whether there will be sold or not.
Although the goods are produced and services are provided with an ultimate
object of satisfying the human or consumer’ wants. Yet he consumers (present or
future) are deprived of the opportunity of influencing the prices and even they
can not only determine where, when and how goods will be sold. Theoretically,
consumer not only determines income of the business, but also directly affects
the success and survival of the business.
- Providing quality of goods at reasonable process.
- Avoiding deceitful and false, highly exaggerated advancement and high pressure publicly gimmicks.
- Management should not indulge in anti-social act like black marketing, hoarding etc. And desire of different classes and tastes to consumers ana different pushing power.
- To ensure regular and adequate supply of goods particularly during period of shortage.
- To provide goods of proper quality which provide more satisfaction to consumers or match their wants.
- To serve as a friend and guide by providing prompt and courteous service.
- To ensure a fairly wide distribution of product among all section of consumers.
- To disseminate useful information to consumers about the company new product and services, new uses of existing products etc.
Responsibility to creditors and suppliers:
- To provide accurate information regarding the financial health the organism.
- To ensure a reasonable price of the article supplied and make prompt repayments (involving interest on borrowings). There should be fairness on transactions.
- To promote a healthy atmosphere with creditors, suppliers and other interest groups as they treated as partners in a co-operation endeavor.
Responsibilities to community:
Management has the Responsibility
of informing the community about the company’s policies, activities, problems
and its contribution towards the betterment of the society, locality and
community, because the existence of business depends on the free will of the
society and the public. The following are the important aspects of social
responsibility of business towards the communities.
- To develop construction relationship with those in the community.
- To participate in community activities and promote communities. Welfare renovating neighborhood’s surrounding as the company’s headquarters, building public parks with play ground equipment, and granting employees paid leave of absence to work in social programmers are example:
- To provide safe and livable amenities with goods housing and efficient transportation.
- To avoid extravagant living standards and vulgar display of wealth.
- To promote social institutions like education hospital sports recreational organizations religions institutions etc.
- To help weaker sections of society and backward religion of the country.
Responsibility to government:
- Elimination of poverty and provision of quality health care.
- Preservation of the environment not developing human resource fully.
- Providing sufficient number of the jobs and career opportunities and facilities for all member of society.
- Improving the physical environment and developing human resource fully. Some of the examples in this regard may be conducting educational programmers to combat drug abuse, provision of seed money to minority suppliers’ urban rehabilitation. Loan to construct low-cost houses, providing managerial training to a mall entrepreneur, establishing manufacturing plant in economically backward regions.
In India, a large number of
companies like Discom DCM, Malt al group, Hindustan steel Ltd. Godrej,
Kirloskar’s, ambanis etc. have accorded a place of importance to social action
programmed corporate social responsibilities
is seen as a relevant constraint to business and a large percentage of managers
assign a Hight place for social responsibility, responsibilities is seen with
that of profit. However, the process of social commitment in India is some what
different like starting social trust, anti-pollution measure, adopting villages
or all-around progress and development, starting family planning clinics for
the benefit of workers and resident, allocation of a foxed percentages or
profits to trained unemployed engineers. Technicians and communities’
developments activities like provision of drinking water facilities, conducting
social audit on a voluntary basis, providing medical, recreational facilities,
conducting, tournament to promote sports talents, undertaking consumer
education companies avoiding, unethical, deceptive advertising and so on.