Arguments for social responsibility
The rationale for assuming social responsibility lies in the following arguments;
A business organisation is a coalition of several interest groups or stakeholders. Example – shareholders, customers, employees, suppliers, etc. Business should, therefore, work for the interest of all of them rather than for the benefit of shareholders / owners alone.
Business is a sub-system of society. It draws support and sustenance from society in the form of inputs. Socially responsible behaviour is essential to sustain this relationship between business and society.
During the course of its functioning, a business enterprise makes several decisions and actions. Its activities exercise a strong influence on the interests and values of society. Business must fulfil social obligations as a compensation for undermining the legitimate interests of society.
Large corporations have acquired tremendous social power through their multifarious operations. Social power may be misused in the absence of social responsibility. There should be a equilibrium between social power and social responsibility.
It is in the enlightened self-interest of business to assume social responsibility. Social responsibility legitimises and promotes the economic objectives of business. By improving social life, business can obtain better customers, employees and neighbours. Social responsibility thus builds good citizenship as well as good business.
Business organisations and their managers have proved their competence and leadership in solving economic problems. Society expects them to use their competence to solve social problems and thereby play a leadership role.
Professional managers are required to display a keen social sensitivity and serve the society as a whole. Social responsibility is one of the professional demands on managers. They adhere to the code of conduct and ethics applicable to respective area of operation.
Adoption of social responsibility as an objective will help to improve the public opinion of business. A good public image is a valuable asset for business. For example maintaining parks, traffic islands and organising awareness camps etc.,
Critics of the social responsibility concept put forward the following arguments:
The concept of Social responsibility is very vague and amenable to different interpretations. There is no consensus on its meaning and scope. In such a situation, it would be futile as well as risky to accept social responsibility.
By accepting social responsibility, business will compromise with economic goals. Business is an economic institution and its only responsibility is to make maximum possible profits for its owners. It would endanger its economic viability by accepting any other responsibility.
Business organisations and their managers are not familiar with social affairs. There are special social service organisations such as Government and Non-Governmental Agencies which can better deal with social problems.
If business deals with social problems, cost of doing business would increase. These costs will be passed on to consumers in the form of higher prices or will have to be borne by owners. This would lead to taxation without representation.
Business organisations possess only economic power and not social power. It is unjust to impose social responsibilities with social power. If business is allowed to intervene in social affairs it may perpetuate its own value system to the detriment of society.
Acceptance of social responsibilities will involve diversion of precious managerial time and talent on social action programmes. It may result in dilution of valuable corporate resources.
Profitability is the common criteria for decision-making in business. Tampering it with social responsibility would make the decision-making process quite complex and controversial.
The proper role of business is to use its resources and energies efficiently so as to earn the best possible return on investment within the confines of law and ethics. Business should concentrate on economic performance leaving social service to other organisations.
Business organisations are already serving society by providing goods and services, generating employment, developing technology and contributing to public exchequer through tax payments. It would be unjust to overburden them with further responsibilities.