Business Studies · Ch 6 — Social Responsibilities of Business and Business Ethics
Summary
Summary
- Concept of social responsibility: The obligation of a business to take decisions and perform actions that are desirable in terms of society's objectives and values — broader than mere legal compliance and carrying an element of voluntary action.
- Need for social responsibility: Arises from both the firm's own interest and society's interest; there are arguments both for and against it, and the reality of what businesses do lies in between.
- Arguments for social responsibility: (i) justification for existence and growth, (ii) long-term interest and image of the firm, (iii) avoidance of government regulation, (iv) maintenance of an orderly society, (v) availability of resources with business, (vi) converting problems into opportunity, (vii) better environment for doing business, and (viii) holding business responsible for social problems.
- Arguments against social responsibility: (i) violation of the profit-maximisation objective, (ii) burden on consumers, (iii) lack of social skills, and (iv) lack of broad public support.
- Reality of social responsibility: Despite the debate, businesses are concerned with social responsibility because of external forces — (i) threat of public regulation, (ii) pressure of the labour movement, (iii) impact of consumer consciousness, (iv) development of social standards for business, (v) development of business education, (vi) the complementary relationship between social and business interest, and (vii) development of a professional managerial class.
- Social responsibility towards different interest groups: to shareholders/owners (fair, safe return and full information), workers (meaningful work, good conditions, fair wages and treatment), consumers (right quality and quantity at reasonable prices, plus information), and government and community (obeying laws, paying taxes, being a good citizen, protecting the environment).
- Business and environmental protection: The environment is the totality of natural and man-made surroundings; pollution — the injection of harmful substances — is largely the result of industrial production and harms human and other life.
- Causes of pollution: Industry is the major generator of waste in quantity and toxicity; enterprises cause air, water, land and noise pollution.
- Need for pollution control: (i) reduction of health hazards, (ii) reduced risk of liability, (iii) cost savings, (iv) improved public image, and (v) other social benefits. …