CHAPTER - 6 SOCIAL RESPONSIBILITIES OF BUSINESS AND BUSINESS ETHICS

CHAPTER - 6

SOCIAL RESPONSIBILITIES OF BUSINESS AND

BUSINESS ETHICS

INTRODUCTION

            Business is very much linked with society.it owes its existence to society and draws its strength from it. Any business which does not act in the best interest of society can neither be tolerated nor allowed to continue .so business must assume certain social responsibilities which are essential for its own survival and the well being of the society.

CONCEPT OF SOCIAL RESPONSIBILITY

            Social responsibility refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action, which are desirable in terms of the objectives and values of our society.

Needs for social responsibility

            It has new dimension of social nature that have a direct connection with quality of life in society.it implies that business organizations have some obligation to the society in which they are part.

Arguments for social responsibility

1. Long term self interest of business

            It is in the interest of business to assume social obligation for growth and progress. 

2.To avoid misuse of national resources

            Business community command a significant portion of the resources of the country.

3.Avoidance of government regulation

            If there is pollution of air or water due to manufacturing activity the businessman should take step to prevent it.

4.To win over public confidence

            This is achieved through activities undertaken for social good.

5.To avoid class conflicts

            Industrial peace with the support of employees is essential for the success of a business.

6.Moral justification

            It makes use of physical and human resources and funds for running the business

7.Consumers consciousness

            Complaints of consumers about defective or inferior quality goods and over changing are taken up by these voluntary bodies.

Argument against social responsibilities

1.Profit maximization

            They consider business to be primary an economic activity means for maximization of profits. Profit only goes to the shareholders.

2.Cost of social involment

            Business has very limited resources to use and hence they should be employed wisely.

3.Lack of social skill

            Their skills are best suited for handling business operations.

4.Dilusion of business goals

            It is also feared that involved in social activities by business may dilute its emphasis on productivity , divide the interest of persons at the helm of affairs and may weaken its presence in the competitive market place.

5.Undermines free enterprise system

            It is argued that the concept of social responsibility would undermine the principles of a free enterprise system.

6.Reduced international competitiveness

            If business enterprises in India are spending huge amounts towards social obligations, it adds to the cost of production

Kinds of social responsibility

1.Economic responsibility

            Its primary and basic responsibility is economic ,ie.,produce goods and services and sell them to society at a profit

2.Legal responsibility

            Business enterprises have the responsibility to operate within the laws of the country

3.Ethical responsibility

            These refer to the behavior of business enterprises expected by society but not codified in law

4.Discretionary responsibility

            A company has the discretionary responsibility of safeguarding the capital investment by not indulging in speculative activities

Social Responsibilities Towards Different Interest Groups

1.Responsibilities towards owners

            The management of business must provide safe, fair, adequate and stable long run rate of return and steady capital appreciation to the shareholders for their investments.

2.Responsibility towards employees

Responsibility of business consists of paying fair wages ,providing security to job and opportunities for promotion to employees.

3.Responsibility toward consumers

            Management of business must develop a liberal and fair attitude towards the consumers.

4.Responsibility towards suppliers

            This is needed to ensure regular and timely supply of raw materials for production purposes or items of merchandise for trading purposes.

5.Responsibility towards government

It is expected that the business should pay tax honestly and in time.

6.Responsibility towards the community

            Production of goods and services in factories on a large scale often leads to the pollution of air ,water and atmosphere. businessmen must take suitable steps to prevent it on humanitarian grounds.

Business and environment protection

            The absence of effective enforcement of law ,many air and water pollution industries were set up in urban areas .all these lead to serious environmental pollution.

Causes of environment pollution

            It is better to classify environmental pollution into the following two categories

1.The pollution of earths surface: land and water

a:Simple biodegradable pollutants

b:Complex biodegradable pollutants

C:Non degradable pollutants

d:Pollution caused by physical agents

2.The pollution of earths atmosphere

            This category includes gases, vapors and fine particular material which escape in to the atmosphere.

Need for pollution control

1:Aesthetic objective

2:Reduce nuisance or inconvenience

3:Economic losses

4Rreduces safety hazards

5:Reduces healthy hazards

Approaches to pollution control

1:Environmental Evaluation

2:Setting Up Pollution Standards

3:Regulation

Role of business in environmental protection

            Business enterprises can take the following steps for environmental protection

·        A definite commitment on the part of top management to create a work culture for environmental protection and pollution control.

·        Sharing the ideas of environmental protection throughout the organization by division and employees.

·        Developing policies and programmes for using good quality materials ,introduction superior technology ,using scientific method of waste disposal and developing employee skill for pollution control.

·        Abide by the laws and regulations of the government for prevention of pollution.

·        Participation in government programmes connected with management of hazardous substance, clearing up of polluted water sources, plantation of trees, checking of deforestation,

·        Timely assessment of pollution control programmes.

·        Arranging seminars to share technical information and experience with interested parties of business to get them actively involved in pollution control programmes.

Concept Of Business Ethics

            Following are a few examples of ethical business practices

·        Fair and reasonable price for the goods and services

·        Correct weights and measures

·        Actual profits disclosure and correct tax payment

·        Fair treatment to the employees

·        Sale of genuine products to customers

·        Take reasonable profits

·        No bribes and personal gifts

            Following are common unethical practices

·        Adulteration

·        Poor quality goods and services

·        Black marketing and hoarding

·        Misleading advertisements

·        Fake goods

·        Deceptive packaging

·        Pollution of environment

·        Exploitation of workers

Elements Of Business Ethics

1.Identification

            This implies proper identification  of the significance of ethical issues in decision making.

2.Evaluation

            Evaluation of ethical issues should be based on principles and standards set.

3.Tolerance of ethical disagreement

            Business enterprises have to make certain adjustments to certain conditions with dis agreement.

4.Integration of managerial and ethical competence

            Ethical competence is an inseparable aspect of managerial competence.

5.Sense of ethical obligation

            Managers must have a proper understanding of values involved in term of all the affected persons.

Relationship Between Business Ethics And

Social Responsibilities

            Business ethics and social responsibility are interrelated. Business ethics refer to the moral principles to be followed by businessmen in relation to society. Social responsibility and business ethics are thus the two sides of the same coin.