Business entities should pay attention to the welfare of workers, consumers needs and their security, the well-being and privileges of creditors, government regulations and the obligations of the enterprise towards the social order as a whole.
Nowadays, numerous organizations are concerned about social activities and are playing an active role in the same. While the outlook of the society have transformed, companies have become further conscious of their social responsibilities. A cautious analysis of opinions for and against the participation of organizations in social welfare activities is essential to conclude whether an organization should employ social programs.
Arguments Favoring Social Responsibilities of Business
The needs of present day customers have changed, ensuing in a change in their outlook of businesses. As businesses oblige their profits to humanity, they have to thus counter to the needs of the society. Society and business gain mutual advantage when there is a symbiotic association between them. Society benefits through economic expansion and the proviso of employment prospects; and business gains through the employees and customers provided by the same society.
A company that supports the community wherein it operates, has the advantage of enhanced performance through image-building, and has the effect of empowering that community. It is therefore right in assessing that, those companies that play a major role in corporate social leadership can maintain their competitive advantage over other market players. A first in the market is seen as a big step forward to maintaining a competitive advantage. Becoming a CSR leader can also create competitive advantages. CSR helps to create a motivated workforce, which is easy to recruit and retain. It is thus natural to say that a constructive relationship with the community leads to knowledge exchange and mutual profit.
By being socially responsible, business entities attract a smaller amount of attention from regulatory agencies, this gives them superior liberty and suppleness in their operations. Businesses have substantial command and influence. The application or use of this command should be accompanied by an equivalent amount of accountability. Most firms are open systems, that is, they interact with the external environment. The internal activities of such firms have an impact on the external environment to avoid negative impact on the external environment, firms should be socially responsible. In addition, by being socially involved a company can improve its image and thus protect its shareholders interests.
Social responsibility entails the preservation of natural resources. Preservation can be beneficial for organizations. Through social involvement, a firm can create a favorable public image for itself and endear itself to society, by so doing a firm can attract customers, employees and investors. Businesses have a history of coming up with innovative ideas, therefore they are likely to come with solutions for social problems, which other institutions were unable to tackle.
Businesses should make the best possible utilization of the expertise and aptitude of its managerial workforce and also its capital resources in order to manufacture good quality products and services. Thereby, the businesses will be able to accomplish their responsibility towards the society. It is in the interest of the business entity to avoid social harms. Instead of allowing large scale unemployment to lead to social unrest, which in turn will harm business interests, businesses can be resources of employment for qualified youth.
Arguments Against Social Responsibility of Business
The most important rationale of a business is revenue maximization. Hence social involvement may not be reasonably feasible for a business. When a business incurs disproportionate cost for social participation, it passes the charge on to its clientele in the form of elevated prices. Society, therefore, has to tolerate the burden of the social participation of business by paying elevated prices for its merchandise.
A destabilized international balance of payments state may be created by the social participation of organizations, as the cost of social programs would be appended to the cost of the goods, the multinational companies doing business in international markets would be at a inconvenience when contending with domestic companies which may not be involved in social actions.
Businesses are intrinsically prepared with a firm amount of power. Their participation in social activities can lead to an augment in their influence and power. This boost in power and influence may corrupt them.
Business people do not have power over the necessary skills to tackle social problems. Their proficiency and knowledge may not be pertinent to deal with such problems. Until a proper method to establish the responsibility of businesses is developed, they should not get implicated in social activities. There is no conformity regarding the kind of socially responsible actions that a business should embark on.
Business owners have their own sense of skewed ideas of doing business and their business practices. When businesses take up social responsibilities, the business owners tend to get these quirks into such actions too. This might at times lead to disastrous consequences. As in most situations there is no firm right thinking or wrong thinking. Businesses getting involved in social activities have their own strengths and weaknesses. There are definitely both sides to the coin.
A mere word of concern is that, there must be a sense of balance when businesses get involved in social activities and they must not go overboard nor overlook the primary purposes of their businesses.