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BUSINESS STUDIES

SOCIAL RESPONSIBILITIES OF BUSINESS AND BUSINESS ETHICS

Social Responsibilities of Business and Business Ethics
Topics Covered
Concept of social responsibility
Case for and against social responsibility
Social responsibility towards different interest groups
Environment protection and business
Business ethics

Concept of Social Responsibility
Social responsibility of business refers to an obligation of a businessman to act for the benefit of society
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It is essential that a healthy relationship is maintained between society and the business
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The main motive of business is profit maximisation, but it also needs to
fulfil its responsibility towards society
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2) Long-term interest of an organisation: A business organisation tends to build a good image and
earn maximum amount of profits by fulfilling its social obligation
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Thus, long-term interest of an organisation is in
realising social responsibilities
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Thus, it is best for businesses to voluntarily assume social obligations so that
government intervention can be avoided
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They have a pool of managerial talent and capital
resources which can prove beneficial in tackling society’s problems
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This increase has resulted in the exploitation of resources,
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BUSINESS STUDIES

SOCIAL RESPONSIBILITIES OF BUSINESS AND BUSINESS ETHICS

degradation, deforestation, pollution and depletion of raw materials
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Hence, it is the moral obligation of a business to take measures to solve these problems
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A business
firm should come up with ideas to solve the problem before it affects the survival of the business
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7) Maintenance of society: Law cannot be passed for all the possible situations prevailing in our
society
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Arguments against social responsibilities
1) Violation of profit maximisation objective: In general, a business solely exists for profits
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2) Burden on consumers: As stated, a business purely exists for profit; therefore, most businesses try
to shift the burden of fulfilling social responsibility to consumers
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Thus, they
may not have the skills to comprehend and solve social problems
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4) Lack of public support: Mostly, the public does not have an interest to get involved in social
programmes
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Forces responsible for increasing concern of business enterprises towards social responsibility
Threat of public
regulation
A democratically elected government is assigned the responsibility of welfare of society
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This forces organisations to work towards social
responsibility
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This has resulted in labourers launching labour movements to ensure the welfare and safety of
workers
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Impact of consumer
consciousness
Consumers nowadays are fully aware of their rights and responsibilities because of an increase in
consumer awareness campaigns and media power
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Development for
social standard
Businesses can no longer be considered money-making institutions as they are also responsible
for social welfare
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Development of
business education
With the development of business education, consumers, investors, employees or owners have
grown sensitive towards social responsibility
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BUSINESS STUDIES

SOCIAL RESPONSIBILITIES OF BUSINESS AND BUSINESS ETHICS

Relationship: Social
& business interests
Firms realise that business interest and social interest complement each other
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Thus, there is a need for business to maintain a
balance between business and society for it to exercise its activities smoothly
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 Economic responsibility is the primary responsibility of the business to produce goods and services
according to the wants of society and to sell them at a profit
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 Discretionary responsibility is purely voluntary obligation which a business firm assumes to provide
basic amenities to the affected people
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It also needs to
provide them with accurate and full information regarding its position and working
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It should provide them fair opportunities for growth and development, safe
working environment, fair compensation and benefits
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It should make sure that good-quality goods are delivered to consumers
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Proper
preventive measures need to be taken with respect to adulteration and poor service towards
consumers
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It should see that it is not harming the
environment in any manner
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Responsibility towards
shareholders/investors

Responsibility towards
government/community

Social
responsibility
towards different
interest groups

Responsibility towards
workers/employees

Responsibility towards
consumers
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BUSINESS STUDIES

SOCIAL RESPONSIBILITIES OF BUSINESS AND BUSINESS ETHICS

Environment Protection and Business
The environment comprises things around us
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However, in recent times, there has been an increase in industrial activity and population
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Also, there has been a considerable amount of change in the physical, chemical and biological
characteristics of land, air and water
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Environmental pollution is classified into four types of pollution—air, water, land and noise pollution
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The main causes
are smoke and chemicals emitted from factories and
vehicles
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It is due to various factories dumping their
waste into rivers, lakes, ponds and streams
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It is due to dumping of
various toxic wastes (industrial, urban, fertilisers,
biomedical) into the land
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One of the major reasons for environmental pollution in today’s time is various business
enterprises
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Therefore, for a business to achieve sustainable development, it needs to invest in
pollution control measures
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Thus, control helps maintain
healthy life on Earth
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Thus, if pollution control devices are installed, they could refrain from paying
any kind of compensation to anyone affected by pollution, thereby also saving the environment
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This would automatically reduce
the cost of cleaning industrial plants which could bring down the overall cost incurred by an
organisation
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It has made businesses recognise the need of environment protection on
their part
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5) Other social benefits: Pollution control also helps companies in other social benefits such as better
quality of life for themselves, their families and their employees
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So, if they instal pollution control devices, then they
could refrain from paying compensation to parties affected by pollution and thereby save the
environment
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It deals with the relationship
between business objectives, practices and techniques and the good of society
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Therefore, top-level management such as the CEO, Board of Directors and
managers must be strongly committed towards ethical conduct in the organisation
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It includes ethics for various areas such as health
and safety of employees and employment practices
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It ensures that ethical standards of the organisation are followed to the core
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4) Employee involvement at all levels: Inclusion of employees at all levels is a must to implement
ethical policies in an organisation
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SOCIAL RESPONSIBILITIES OF BUSINESS AND BUSINESS ETHICS

5) Measure of results: Although it is difficult to measure the results of ethical processes, necessary
arrangements should be made to monitor and verify compliance with ethical standards
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