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Business Environment
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"By soda! responsibility we mean the intelligent and objective concern for the welfare of sotio that restrains individuals and
corporate behaviour from ultimately destructive activities of positive contributions to human betterment, variously as the latter
may be defined."
— Kenneth R. Andrews The Concept of Corporate Strategy,
Burr Ridge, IL Irwin Co. 1971, P.120
Financial performance is better in terms of operating income growth, sales-to-asset ratio, sales growth, return on equity,
earnings to asset growth, return on investment, return on assets, and asset growth.
—Joel Makeover, Beyond the Bottom Line,
New York: Simon& Schuster, 1994, pp.70-71

"Look at well-run companies and you will see that needs of its stockholders, employees and the community at large being
served simultaneously."
—Arnold Hiatt, Former CEO, Stride Rite Corp.
Does corporate social responsibility translate into fiscal responsibility? A landmark study by Professors
Stephen Erfle and Michael Frantantuono found that firms that were ranked highest in terms of their
records on a variety of social issues--charitable contributions, community outreach programs, environmental
performance, advancement of women, and promotion of minorities. Companies ranked higher on these
standards had greater financial performance as well.
Business is not only an economic function but also a social function. It is the only activity that influences
every aspect of the society and nation. Business innovates, develops new products and services to serve
humans, produces goods and services for the nation and society, invents new molecules to cure human
ailments, provides employment, generates earnings, exports, it pays taxes for the smooth functioning of
government, and utilises the resources of society and nation.

But this is one only one side of the picture. The other side is all about exploitation of natural resources,
exploitation of human resource, sexual harassment at the work place, political funding for business interests,
spreading pollution, spreading materialism, abetting terrorism to increase sale of arms and ammunition,
selling smoke and liquor, global warming, acid rain and many others. Therefore, business causes human
kind various sufferings.
All this raises questions about businesses having some social responsibility? Do businesses function
while performing social responsibility? Are businesses accountable to society? What are the social
responsibilities of business?

Accountability of Business to Society

Milton Friedman claims that the ethical mandate of business is to increase the shareholders' profit. It is a
general belief that business is accountable to its shareholders because it is running on their resources.

But this is a misconception. If business is accountable to shareholders because it uses their resources,
then a business should primarily be responsible to society because in real terms, it uses society's resources.
The money that business borrow from banks is that of the society. Business directly or indirectly uses
natural resources of the nation which belong to the society. Business uses human resources of society, and
above all, exists because of society. It is the society that gives business an opportunity to earn. So business
is primarily accountable to society.
Corporate social responsibility is about seriously considering the impact of the company's decisions
and actions upon the environment and the society. The dependence of any business on its social and
ecological environment is so comprehensive that the very existence, survival and growth of any enterprise