Ashwin’s Commerce World

Social Responsibility of Business & Business Ethics

CONCEPT & NEED for Social Responsibility
Social responsibility of business implies that businessmen must consider wider public interest while taking decisions
and actions relating to business. They should recognise and understand the aspirations of the society in which they
carry on their business. They should work not merely for profits, but should attempt to fulfil the legitimate demands of
They should not work for profit work for the benifit of society .If we are not socially
all those interest groups that have a stake in the business. responsible and respecting the society then the society will also not respect us.

NEED FOR SOCIAL RESPONSIBILITY

1. Self-interest In the long-term, it is in the interest of business to assume social obligations. Enlightened 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

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 at
their command for the benefit of the people. 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. They collectively determine for the nation such
important matters as amount of employment, rate of economic progress and distribution of income among various
groups. Businessmen should assume social obligations commensurate with their social power. Otherwise, their social
power will be taken away by the society through government controls and other regulations.

4. Public Image 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. Social Awareness Nowadays consumers and workers are well informed about their rights. Consumers expect better
quality products at reasonable prices. If business does not fulfil its obligations, there will be industrial unrest and
conflict in society.

6. Free Enterprise If businessmen do not accept and discharge their social obligations they will lose their 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.

RESPONSIBILITIES OF THE BUSINESS TOWARDS DIFFERENT INTEREST GROUPS

1. Responsibilities towards Owners and Investors 2. Responsibilities towards Employees

(a) To ensure safety of investment;
(b) To provide a fair and regular dividend or interest;
(c) To offer reasonable appreciation of capital through
optimum utilisation of resources;
(d) To provide regular, accurate and adequate
information on the financial position and future schemes
of the company;
(e) To offer reasonable opportunities for participation of
shareholders in policy decisions.
(a) To pay a fair and regular wage or salary;
(b) To provide good working conditions;
(c) To ensure welfare facilities such as housing, medical
care, social security, recreation, etc.;
(d) To provide opportunities for education and self-
development;
(e) To develop a sense of belonging and dignity of
labour;

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Ashwin Jaiswal (990-720-2338) Ashwin’s Commerce World
 Ashwin’s Commerce World

3. Responsibilities towards Consumers 4. Responsibilities towards Government

(a) To supply socially useful products that meet the (a) To abide by the laws of the land;
needs of customers; (b) To pay taxes promptly and regularly;
(b) To ensure regular and adequate supply of products; (c) To cooperate with the state in solving national
(c) To provide goods of standard quality; problems such as poverty, overpopulation, illiteracy,
(d) To charge fair prices; concentration of economic power, backward regions, etc.;
(e) To provide prompt and courteous service; (d) To adopt fair dealings in foreign trade in order to
maintain the country’s image;
(e) To refrain from corrupting public servants and the
democratic process;
5. Responsibilities towards the Community
a) To protect the environment from all types of pollution;
(b) To make optimum utilisation of natural resources; e.g. energy conservation.
(c) To assist local bodies in providing amenities such as drinking water, sanitation, public transport etc.;
(d) To provide more and more employment opportunities;
(e) To provide assistance to hospitals, religious institutions, educational institutions, sports bodies, etc.;
Role of Business in Environmental Protection
1. Top management’s commitment to create and maintain work culture for environmental protection.
2. Ensure that all divisions and employees of the firm share the commitment to environmental protection.
3. Comply with the country’s laws and regulations for preventing pollution.
4. Participate in government programmes concerning management of hazardous substances, tree plantation,
checking deforestation, cleaning of polluted rivers, etc.
5. Arrange workshops and training materials for suppliers, dealers and customers in pollution control.
6. Periodically assess pollution control programmes in terms of costs and benefits.
7. Recycle waste and affluent before discharging them from factories
8. Undertake awareness and educational campaigns for protection of environment
9. Modernise manufacturing and other activities to minimise pollution of environment
10. Employ eco-friendly techniques and systems in different areas of business.
MEANING & IMPORTANCE OF BSUINESS ETHICS
Ethics define what is right and what is wrong in human behaviour in terms of norms, ideals and morals of the society. It requires the
businessmen to be honest with themselves and with others.
It is difficult to say what constitutes unethical behaviour on the part of businessmen. However, keeping a double set of accounts to
evade taxes, corrupting public servants to get favours, using misleading advertisements to defraud customers, revealing trade
secrets to competitors, using company’s property for personal benefit are all examples of unethical business behaviour.
IMPORTANCE
1. Businessmen are responsible for the welfare of society. They can discharge their social responsibilities only when they adopt
ethical practices.
2. Modern society is an industrial society and business values, to a large extent, are adopted by most members of the society.
3. If a business adopts unethical practices, it can lose the power and prestige it enjoys in society.
4. A job has a fairly important place in a person’s life. A healthy personality can be developed only when business values are in
harmony with social values.

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Ashwin Jaiswal (990-720-2338) Ashwin’s Commerce World