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Chapter: 11th Commerce : Social Responsibility of Business and Business Ethics

Need for Social Responsibility

Business is expected to be responsible to society due to the following reasons

Need for Social Responsibility

Business is expected to be responsible to society due to the following reasons

1. Self-Interest

A business unit can sustain in the market for a longer period only by assuming some social obligations. Normally businessmen recognise that they can succeed better by fulfilling  the demands and  aspirations of society. People who  have  had a  higher standard of living and have been exposed to an environment conducive to healthy growth make better employees and customers for business than those who are poor, ignorant and  oppressed. For example, provision of higher wages and good working conditions motivates workers to work hard and produce more. Labour turnover and absenteeism are reduced.

2. Creation of Society

Business is a creation of society and uses the resources of society. Therefore, it should fulfil its obligations to society. Businessmen should respond to the demands of society and should utilise the social resources for the benefit of the people at large. In the long run a successful business can be built on the foundations of a happy community and a satisfied work force.

3. Social Power

Businessmen have considerable social power. Their decisions and actions affect the lives and  fortunes  of  the  society. They collectively  determine  for  the nation such important matters as level of employment, rate of economic progress and distribution of income among various groups. Businessmen should assume social obligations commensurate with their social power. The government controls and regulations intervene in the social power of business in the absence of business taking up social responsibility. It  is,  therefore,  the moral and right thing for business enterprises to assume social obligations.

4. Image in the Society

A business can improve its image in public by assuming social obligations. Good relations with workers, consumers and suppliers help in the success of business. Social obligations improve the confidence and faith of people in a business enterprise.

5. Public Awareness

Now-a-days consumers and workers are well informed about their rights. Consumers expect better quality products at reasonable prices. Similarly, workers desire fair wages and other benefits. They exercise pressure on the employer’s through-trade unions. There will be industrial unrest and conflict in society, if business does not fulfil its obligations.

6. Free Enterprise

A business enterprise which accepts and discharges social obligations enjoys greater freedom. For example, the  government  has passed the Consumer  Protection  Act to prevent  businessmen  from  indulging  in adulteration, black  marketing  and  other anti-social practices. Thus, social responsibilities are essential for avoiding governmental action against business. Such action will reduce the freedom of decision making in business.

7. Law and Order

Any business unit can survive and grow only when there is law and order in society. If business exploits the weaker sections of society for too long, these sections will take the law in their own hands. The resulting chaos will threaten the very survival of business.

8. Moral Justification

In a large country like India, government alone cannot solve all the problems. Business has money and talent with which it can assist the government in solving problems. For example, business can play a vital role in solving regional disparities, unemployment, illiteracy, scarcity of foreign exchanges and such other problems in the country. Moreover, business has created some social problems such as pollution, health hazards, etc. Therefore, business should help society in solving its problems.

9. Socio-Cultural Norms

India has arichcultural heritage. Businessmen who help in preserving and promoting this heritage will naturally enjoy  the patronage of the society and the government. Business should, therefore, promote equality of opportunity, healthy relations with employees and customers, etc.

10. Professionalism

Management of business enterprises is being professionalised. An owner-manager nurses a greater greed  for  profiteering  because all the gains go to him. But a salaried and qualified manager is less likely to be lured because he does not benefit from the profits earned through questionable practices.

11. Trusteeship

Mahatma Gandhi suggested that “those who own money or property should hold and use it in trust for society.” Businessmen should run business firms not for their self- enrichment but for the good of the society.


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11th Commerce : Social Responsibility of Business and Business Ethics : Need for Social Responsibility |


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