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 qulity 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 overchanging are taken
up by these voluntary bodies.
Argument against
social responsibilities
1.profit
maximisation
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.corporations are not moral agent
It is
individually true but not organizations
7.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 securityto 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,vapours and fine particulated material which escape in to the
atmosphere.
Need for
pollution control
1:aesthetic
objective
2:reduce
nuisance or inconvenience
3:economic
losses
4:reduces
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.a definite
commitment on the part of top management to create a work culture for
environmental protection and pollution control.
b.sharing the
ideas of environmental protection throughout the organization by division and
employees.
c.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.
d.abide by the
laws and regulations of the government for prevention of pollution.
e.participation
in government programmes connected with management of hazardous
substance,clearing up of polluted water sources,platation of trees,checking of
deforestation,etc
f.timely
assessment of pollution control programmes.
g.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 qulity
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 identificationof 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 inseperable 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.
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 qulity 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 overchanging are taken
up by these voluntary bodies.
Argument against
social responsibilities
1.profit
maximisation
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.corporations are not moral agent
It is
individually true but not organizations
7.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 securityto 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,vapours and fine particulated material which escape in to the
atmosphere.
Need for
pollution control
1:aesthetic
objective
2:reduce
nuisance or inconvenience
3:economic
losses
4:reduces
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.a definite
commitment on the part of top management to create a work culture for
environmental protection and pollution control.
b.sharing the
ideas of environmental protection throughout the organization by division and
employees.
c.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.
d.abide by the
laws and regulations of the government for prevention of pollution.
e.participation
in government programmes connected with management of hazardous
substance,clearing up of polluted water sources,platation of trees,checking of
deforestation,etc
f.timely
assessment of pollution control programmes.
g.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 qulity
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 inseperable 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.
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