Study Of The Concept Of Social Responsibility

One of the most revolutionary changes in capitalism over the last 50 years is the development of a `conscience'. Private business which is the hard core of this economic system has realized and has been made to realize by several social, economic and political forces that it has social obligations to fulfil besides ensuring its own existence through profitable activity. Every individual living in the society has social obligations towards it.

Viewed in this prospective, business men who are merely custodians of factors of production belonging to the society, have also an obligation to pursue those policies, to make those decisions and to follow those lines of action which are desirable in terms of the objectives and values of the society. Business managers are also a part of the society. So their decisions must be influenced by their obligations towards the society.

There is no denying the fact that part of this realization is not genuine and takes the form of lip service which is necessary to ensure the survival of private enterprises. But it cannot be denied also that private business does partly realize and recognize the hard reality that a privately owned firm cannot meet the challenge of socialism and allied doctrines unless it sets its house in order, changes its outlook and is prepared to play its legitimate role as an organ of society.

A careful study of the concept of social responsibility reveals that it has two different facets:

  1. Business men recognize that since they are managing an economic unit in the society, they have a broad obligation to the society with regard to matters affecting employment, availability of goods and inflation.
  2. Social responsibility refers to both socio-economic and socio-human obligations of the business. It indicates a business man's obligation to nurture and develop human values such as motivation, morale, co-operation and self-realization in work.

It may be argued by some people that business is wholly an economic unit and therefore, its responsibilities are limited only to economic aspect of general public and it must be judged by its economic performance. If this reasoning is accepted, the business men Management and Society might be concerned with the economic costs of unemployment, but not with the loss of human dignity and social disorganization that accompany it. However, this is not right approach for it is very difficult to separate economic aspects of life from its other values. They are intermixed with each other. Social responsibility of business is not a new concept.

Leading business men of the world have reaffirmed their belief in this concept. It affects their decisions and actions. They recognize that since they are managing an economic unit in the society, they have an obligation to the society with regard to their decisions and actions affecting social welfare.

It will be useful here to go into some of the forces and factors which have formed and persuaded business men to consider their responsibilities and the conditions which we refavourable to the development of business men's concern with social responsibilities.

Some of the more important among them are:-

  1. The threat of public regulation or public ownership.
  2. The pressure of the labour movement.
  3. The development of moral values and social standards applicable to business men.
  4. The development of business education and contact with government and its problems.
  5. Recognition of human factors contributing to the long run interests of the business people.
  6. The development of a professional managerial class with a different motivation and point of view due to the separation of ownership from management in the corporate enterprise.
  7. The increased complexity of the decision-making processes in which various pointsof view and devise interests are expressed.
  8. The change in public opinion about the role of business in modern society.

These and a number of other social, ethical and economic forces have combined together to make business a socio-economic activity. Business is no longer a mere occupation; itis an economic institution operating in social environment – an institution that has to reconcile its short-term and long-range economic interests with the demands of the society in which it functions. Essentially, it is this which gives rise to the general and specific social responsibilities of business.

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