Social
Responsibilities of Business
Business
is an economic activity, which is carried out on a regular basis to earn
profit. However, you must have been seen businessmen spending money on different
aspects, which is not going to give them any profit straightway. For example,
you must have seen businessmen maintaining and developing gardens and parks on
streets and squares in cities. Some businessmen engage themselves in research
for improving the quality of products; some provide housing, transport,
education and health care to their employees and their families. In some places
businessman provide free medical facility to poor patients. Sometimes they also
sponsor games and sports at national as well as international level.
Definition
Social responsibility of business means the
obligation of any business to protect and serve public interest.
Objectives
After studying this lesson,
you will be able to:
1.
Explain the concept of social responsibility of business
2.
Appreciate the importance of social responsibility
3.
Recognize the responsibility of business towards different interest
groups,
4.
Explain the concept of social values and business ethics’
5.
Identify the causes of environmental pollution
6.
And describe the role of business in preventing and controlling
environmental pollution.
What is social responsibility in your daily life,
you perform a number of activities. For example brushing your teeth, listening
to your parents, showing respect to elders obeying traffic rules on road etc.
Now business studies why do you perform all these activities? It is because you
live in a family as well as in a society and the members of your family as well
as the society want you to do all of them.
They
do several things for you and expect something from you, which you must do. The
expectations of the family or society become your obligations, which you need
to fulfill. For example, taking care of your parents or children, keeping the
road clean by not throwing garbage on it, etc. There are also obligations to
towards yourself, which you need to fulfill. For example, taking food timely,
going to sleep early at night, etc. that keep fit and takes care of your
health. Now you fulfill all these obligations by performing certain activities
which are called your responsibilities. Any responsibility you have,
particularly towards members of the society with whom you interact or towards
the society in general, are called your social responsibility.
This
is true in case of business also. As we know, every business operates within a
society. It uses the resources of the society and depends on the society for
its functioning. This creates an obligation on the part of business to look
after the welfare of society. So all the activities of the business should be
such that they will not harm, rather they will protect and contribute to the
interests of the society. Social responsibility of business refers to all such
duties and obligations of business directed towards the welfare of society.
These duties can be a part of the routine functions of carrying on business
activity or they may be an additional function of carrying out welfare
activity.
Let
us take an example. A drug –manufacturing firm undertakes extensive research
and thus, produces drugs which are qualitatively superior. It also provides
scholarships or fellowships to the family members of its employees for studying
aboard. We find, in both the cases, the drug-manufacturing firm is carrying out
its social responsibility. In case of the. Former, it is a part of its routine
business function while in the latter case it is a welfare function.
Concept of
Social Responsibility
We all know that people engage in
business to earn profit. However, profit making is not the sole function of
business. It performs a number of social functions, as it is a part of the
society. It takes care of those who are instrumental in securing its existence
and survival like- the owners, investors, employees, consumers and government
in particular and the society and community in general. So, every business must
contribute in some way or the other for their benefit. For example, every
business must ensure a satisfactory rate of return to investors, provide good
salary, security and proper working condition to its employees, make available
quality products at reasonable price to its consumers, maintain the environment
properly etc.
However, while doing so two things need
to be noted to view it as social responsibility of business. First, any such activity
is not charily. It means that if any business donates some amount of money to
any hospital or temple or school and college etc., it is not to be considered
as discharge of social responsibility because charity does not imply fulfilling
responsibility.
Secondly, any such activity should not
be such that it is good for somebody and bad for others. Suppose a businessman
makes a lot of money by smuggling or by cheating customers, and then runs a
hospital to treat poor patients at low prices his actions cannot be socially
justified. Social responsibility implies that a businessman should not do
anything
harmful to the society in course of his business
activities.
Thus, the concept of social
responsibility discourages businessmen from adopting unfair means like
black-marketing, hoarding, adulteration, tax evasion and cheating customers
etc. to earn profit. Instead, it encourages them to earn profit through
judicious management of the business, by providing better working and living
conditions to its employees, providing better products, after sales-service,
etc. to its customers and simultaneously to control pollution and conserve
natural resources.
Why should
business be socially responsible: Social responsibility is a voluntary
effort on the part of business to take various steps to satisfy the expectation
of the different interest groups. As you have already learnt, the interest
groups may be owners, investors, employees, consumers, government and society
or community. But the question arises, why should the business come forward and
be responsible towards these interest groups. Let us consider the following
points:
i. Public Image
- The activities of business towards the welfare of the society earn goodwill
and reputation for the business. The earnings of business also depend upon the
public image of its activities. People prefer to buy products of a company that
engages itself in various social welfare programmes. Again, good public image
also attracts honest and competent employees to work with such employers.
ii. Government Regulation - To avoid government
regulations businessmen should discharge their duties voluntarily. For example,
if any business firm pollutes the environment it will naturally come under
strict government regulation, which may ultimately force the firm to close down its
business. Instead, the business firm should engage itself in maintaining a
pollution free environment.
iii. Survival
and Growth -Every business is a part of the society. So for its survival
and growth, support from the society is very much essential. Business
utilizes the available resources like power,
water, land, roads, etc. of the society. So it should be the responsibility of
every
business to spend a part of its profit for the welfare of
the society.
iv. Employee satisfaction - Besides getting good salary and working
in a healthy atmosphere, employees also expect other facilities like
proper accommodation, transportation,
education and training. The employers should try to fulfill all the expectation
of the employees because employee satisfaction is
directly related to productivity and it is also
required for the long-term prosperity of the organisation. For example, if
business spends money on training of the
employees, it will have more efficient people to work and thus, earn more profit.
v. Consumer Awareness -Now-a-days
consumers have become very conscious about their rights. They
protest against the supply of inferior and harmful products by forming
different groups. This has made it obligatory
for the business to protect the interest of the consumers by providing quality
products at the most competitive price.
vi Responsibility Towards Different
Interest Groups
After getting some idea about the
concept and importance of social responsibility of business let us look into
the various responsibilities that a business has towards different groups with
whom it interacts. The business generally interacts with owners, investors,
employees, suppliers, customers, competitors, government and society. They are
called as interest groups because by each and every activity of
business, the interest of these groups is affected directly or indirectly.
v Business
v Investors
v Employees
v Government
v Competitors
v Society
v Customers
v Suppliers
RESPONSIBILITY
OF BUSINESS TOWARDS DIFFERENT INTEREST GROUPS.
i. Responsibility towards owners
Owners are the persons who own the business. They
contribute capital and bear the business risks. The primary
responsibilities of business towards its owners are to:
a. Run the business efficiently. Owners
Social Responsibilities of Business
b. Proper utilization of capital and other resources. '^~
c. Growth and appreciation of capital.
d. Regular and fair return on capital invested.
ii. Responsibility towards investors
Investors are those who provide finance by way of
investment in debentures, bonds, deposits etc. Banks, financial
institutions, and investing public are all included in this category. The
responsibilities of business towards its investors
are:
a. Ensuring safety of their investment,
b. Regular payment of interest,
c. Timely repayment of principal amount.
iii. Responsibility towards employees
Business needs employees or workers to work for it. These
employees put their best effort for the benefit of the business. So it is
the prime responsibility of every business to take care of the interest of their employees. If the employees are
satisfied and efficient, then the only business
can be successful. The responsibilities of business towards its employees
include:
a. Timely and regular payment of wages and salaries.
b. Proper working conditions and welfare amenities.
d. Opportunity for better
career prospects.
e. Job security as well as social security like facilities
of provident fund, group insurance, pension, retirement benefits,
etc.
f. Better living conditions like housing, transport,
canteen, creches etc.
g. Timely training and development.
iv. Responsibility
towards suppliers
Suppliers are businessmen who supply raw materials and
other items required by manufacturers and traders. Certain suppliers,
called distributors, supply finished products to the consumers. The
responsibilities of business towards these suppliers are:
a. Giving regular orders for purchase of goods.
b. Dealing on fair terms and conditions.
c. Availing reasonable credit period.
d. Timely payment of dues.
Responsibility
towards customers
No business can survive without the support of customers.
As a part of the responsibility of business towards them the
business should provide the following facilities:
a. Products
and services must be able to take care of the needs of the customers.
b. Products
and services must be qualitative
c. There must
be regularity in supply of goods and services
Social
Responsibilities of Business
following are the various responsibilities of business
towards the different interest group as discussed above.
i. Protection
of environment.
ii.
Better living conditions like
housing, transport, canteen, creches etc.
iii. Promotion
of sports and culture.
iv. Opportunity for better career prospects
v. Regular
supply of goods and services
vi. Proper
working conditions and welfare amenities
vii. Goods and
services at reasonable and affordable price.
viii. Prompt after
sales services.
ix. Conservation
of natural resources and wildlife.
Relate the above social responsibilities of business to the
following interest groups by writing their
serial number in the empty circles:
v Society
v Customers
v Employees
Social Values
and Business Ethics
Every society generally views certain
activities, conduct and behaviour of its members to be undesirable
or harmful to others. Similarly, desirable acts and conduct of people are
recognized and
appreciated in society. Social values refer to the general recognition in
society about which acts are good and
desirable on the part of people and which acts are not. In relation to business, social values of business may indicate:
a. the characteristics of good business;
b. objectives which are desirable for business to follow;
and
c. the manner in which business activities should be
conducted in the interest of society.
For example, we consider it bad, if any
business indulges itself in selling adulterated goods or
charging higher price or polluting the environment. Thus, social values of the
business form the base for social responsibilities.
Business Studies
Ethics refers to conduct and activities of people based on
moral principles. Honesty, truthfulness, compassion, sympathy, feeling
of brotherhood etc. are considered ethical.
Business can also be guided by certain
moral principles say, running the business without adopting
unfair practices, being honest and truthful about quality of goods, charging
fair prices, abiding to laws, paying taxes,
duties and fees to the government honestly. The basic question underlying business ethics is whether business
should aim at earning profit by any means?
Obviously, not. Thus, businessmen should charge only fair price for the goods
and services supplied, never sell adulterated
products as pure. Indeed business ethics suggest certain principles to conduct
business so as to be morally justified. Just like social values, business ethics also play a
major role while fulfilling social
responsibilities.
Environmental
Pollution and Role of Business.
To preserve the society it is important
to protect the environment. And, therefore, every business must take
measures to protect the environment rather than damaging it. In this section let us learn more about different types of
environmental pollution and role of business.
Nature has given us air, land including
mountains, hills, forests etc. and water in the form of rivers,
lakes, sea etc., which create an environment in which we live. Our health and
well being largely depend on the quality of
such environment. However, it is observed that the quality of this environment is deteriorating day by day. We
are getting neither pure water to drink nor
clean air to breathe. We are having untimely rains, storms, cyclones, floods,
extended summer,
etc. We are also suffering from various
diseases because of such lower quality of environment.
When the quality of environment deteriorates, it is said that the environment is getting polluted.
Thus, environmental pollution refers to contamination of environment by various substances that have adverse effects on living and
non-living matters.
Environmental pollution is of three types:
i) Air
pollution,
ii) Water
pollution, and
iii) Land
Pollution.
Let us have a brief discussion about these three types of
pollution.
i. Air Pollution
As we know the air we breathe contains several gases, dust
particles etc. Our body mechanism helps us in filtering the
unwanted ones and retaining those required for our survival.
However, if there is an
imbalance in the proportion of gases and dust particles in air, beyond a
certain point, our body mechanism fails to
filter them and we face problem. This is also true in care of other natural things like forests, river etc. Thus, air
pollution refers to the presence of any unwanted
gases, dust particles etc. in the air, that can cause damage to people as well
as nature.
Causes of Air
Pollution
Let us know how air gets polluted. Some of the common
causes of air pollution are emission of fumes from vehicles pollution
simply means presence of any un- wanted substance that creates
inconvenience in the natural behaviour of living and non-living matter.
Emission of
smoke dust and chemicals from manufacturing plants.
Emission of gases and dust arising from atomic plants. Emission
of smoke from oil refineries, burning of trees and plants in forests, burring of coal, etc.
Impact of Air
Pollution
Air pollution has a lot of impact on our surroundings and
on us. Some of them are-
i. Presence of gases in air, which
are not required by human beings, animals and birds, creates serious health
problems. It can
create diseases like asthma, cough and cold, blindness,
hearing loss, skin disease etc. It also causes genetic disorders. In the long
run and in extreme cases it can also be fatal.
ii. Air Pollution creates smog in the
winter, which is caused by smoke and dust when they mix with fog. It reduces
natural visibility and irritates the eyes and respiratory tract.
iii. Ozone layer is a protective layer of
gases around our earth, which protects us from harmful ultraviolet rays that
come from the sun. It gets depleted because of air pollution and
thereby causes gene mutation, genetic defects and skin cancer.
iv. The temperature of the earth increases
due to air pollution. This is because whatever heat our earth receives from the
sun is not radiated to the atmosphere due to the excessive presence
of gases like carbon dioxide, methane, nitrous oxide, etc.
v. Air pollution causes acid rain which
means excessive presence of various poisonous gases like sulphur dioxide,
nitrogen oxide etc. in the rainwater. This causes lot of damage
to vegetation, trees and marine life, buildings and monuments etc. Environment
is also polluted through excessive noise, known as Noise Pollution Noise
simply means an unwanted sound that causes
irritation. It is caused by modern machines and gadgets such as rail engines,
loud speakers, generators, aeroplanes, vehicles, machineries, telephones,
televisions etc. It initially distorts communication process, but prolonged exposure
to noise pollution can cause loss of hearing, headache, irritation, high
blood pressure, neurological or psychological
disorders, etc. Water Pollution. Have you seen
river Yamuna near Delhi?
Are you aware about the clean Ganga project?
These two questions almost immediately
remind us about the extent to which the water of our rivers has
been polluted. Water pollution refers to contamination of water due to presence of unwanted and
harmful substances thus, making water unfit for use.
Causes of Water
Pollution
The various reasons of water pollution are-
i. Drainage
of human excreta into rivers, canals etc.
ii. Improper
sanitation and sewage system.
iii. Dumping of wastes and effluents by
various industrial units into the rivers and canals.
iv. Drainage of toxic substances like
chemicals and fertilizers used in cultivation, into streams
and rivers.
v. Dumping of
garbage, dead bodies and almost every thing used in rituals to the nearby water source by households.
Effects of Water
Pollution.
The effects of water pollution are:
a. It can create health hazards among
human beings, animals and birds. Diseases like typhoid, jaundice, cholera,
gastroentytis etc. are common.
b. It can endanger lives of various aquatic
species.
c. It can lead to scarcity of drinking
water as the water of rivers and canals as well as underground water get
polluted.
Land Pollution
Land Pollution refers to dumping of
useless, unwanted as well as hazardous substances on the land that degrades the
quality of soil we use. Our land gets polluted because of the human carelessness
towards the soil.
Causes of Land
Pollution the main causes of land pollution are:
(i) Excessive
use of fertilizers, chemicals and pesticides in cultivation.
(ii) Disposal of
solid waste of industries, mines and quarries.
(iii) Disposal of solid waste from construction
of roads, buildings etc. (v) Effluents
of some plants like paper, sugar etc. which are not absorbed by soil.
(vi) Excessive
use of plastic bags, which are non-biodegradable.
(vii) Dumping of non-composable wastes from
households, hotels and hospitals as well as from industries. These
may include combustible items like plastic, cloth, wood etc. and non-combustible items like metal, glass, ceramics,
cement etc.
Effects of Land
Pollution
Land Pollution has the following harmful effects-
a. Reduces the quantum of cultivable land area.
b. Causes health hazards as it contaminates the sources of
food.
c. Causes damage to the landscape.
d. Leads to water and air pollutions
Role of Business
in Environmental Pollution
From the above discussion on environmental
pollution, one thing can clearly be seen that, it is business that
mainly contributes to all sorts of pollution -air, noise, water and land.
Business causes pollution in the following ways:
1. Emission
of gas and smoke from manufacturing plants;
2. Use of machines, vehicles etc. contributing to noise
pollution;
3. Deforestation due to acquisition of
forest lands for setting up plants;
4. Growth of
urbanization and industrialization; .
5. Disposal of wastes
and effluents into rivers and canals;
6. Disposal of solid
wastes in the open space;
7. Mining and quarrying activities; and
8. Increasing use
of transport.
Government has taken a major step in
protecting the environment by passing the Environment.
Protection Act, 1986 in addition to
having Water (Prevention and Control of Pollution) Act, 1974, Air (Prevention
and Control of Pollution) Act, 1981 and several other Acts. Business can
equally be instrumental in fighting pollution and protecting the environment.
Business can have three types of role - preventive, curative and awareness.
i. Preventive
Role
It means business should take all steps
so that no further damage is done to the environment. For this, business must
follow the regulations laid down by government to control pollution. For example,
more and more environmental friendly products can be produced, filters can be
used in chimneys; silencers can be fitted in generators; instead of dumping
industrial wastes into river and land it can be treated properly for further
productive use etc. Businessmen should come forward to play a major role in
preventing further damage done to the environment by human beings. Sulabh
International is the leading example of how to provide proper
sanitation-facilities to the public.
ii. Curative
Role
It means business should rectify
whatever damage has been done to the environment. In addition,
if it is not possible to prevent pollution then simultaneous curative measures
can be taken. For example, planting of trees
(afforestation programmes) can substantially reduce air pollution near the industrial area.
iii. Awareness
Role
It means making people (both the
employees as well as the general public) aware about the causes
and consequences of environmental pollution so that they voluntarily try to
protect rather than damage the environment.
For example, business can undertake public awareness programmes. Now-a-days, we find that some business houses
have taken the responsibilities to develop and
maintain parks and gardens in cities and towns, which shows that they care
for the environment.
REFERENCES
Beckman’s Soviet Theory on the Evolutionary vanguard role
of social business and
responsibility in the review of the African business of economy (No 35 December 1986) pp. 31-35
The Nigeria Journal of Economic and Social Studies of a
business vol.25, No.2 (July 1983) p.160
Omotude 1989 p.4
Larry Diamond, April 1987
Newswatch 1989 p.4
Karl Deutseh 1961 p. 494
Dele Dowu , 1987 p. 228
Nafziger E.W 1983 p. 29