Is the Business of business simply to generate profits, or is it to fulfil other societal objectives?
The term business or corporate social responsibility has a deep meaning including business ethics, business citizenship, commercial liability, and sustainability. As clearly commented by Carroll, CSR has surely become a “front – burner” in the business community (P. 27l). When the term “social responsibility” of the business sector gets discussed in professional parlence, it is not only the commercial achievement of success. Rather it is the achievement of success by the company by way of legal, ethical, commercial and other related expectations of the society. Thus, the company or the business has to make appropriate decisions that balance the expectations of the society as well as the stakeholders. Thus, it is very important for the corporate to guard their responsibility towards society.
Every company has a set of rules or policies that are set apart for the well being of the society. Werther and David are of the firm views that "The industry perspective is grounded theoretically in industrial economic"(p.31). It has a set of policies, practices, programs which are amalgamated into industry processes, supply chains, decision making, etc that helps fabricate the purpose of fulfilling the responsibilities towards society. Whenever a company makes decisions on certain aspects, it calculates about the responsibility of the present, past and future impact that it has on the society.
It is found that the corporate social responsibility (CSR) has increased to a greater extent for the past several years. Werther and David have firmly asserted that "CSR in a meaningfulway, the focus of the firm has to be on maximizing both ecnomic and social value over the long term and acting in areas in which it has expertise (related to core operations)" (p.47). Many companies are advancing themselves and adapting to the social welfare associations to improve the status of the society in their location. There are several unions and social networking sites that are prevalent in the company for improving the status of life of the society.
When the histories of some of the companies that have endured for long term, get analyzed, it is found that they have different business performance. In most cases, capitalism is estimated to be the way of promoting social and environmental friendly process that can profit society. Author Thurow stated that the problems intrinsic to capitalism are inequality and instability. These problems crop up when the capitalism gets introduced into the society by the companies or business corporate (Thurow, 1966:325; Zohar, 1997, Hawken et al, 1999). It is an established belief that the root for the failure of global capitalism lies in greater focus on making money and profit, and ensuring economic development.
In this process of scramble for money-making, capitalism forgets to social, democratic, and political accountability of inclusive growth, especially for the poor and the downtrodden. Heald has emphatically stressed the fact that “Undoubtedly the social responsibilities of business provides essential background for understanding and developing social role of the corporation and fr assessing its future direction” (p. 342). They do argue that there is nothing or has very little to do with the social system and the business. Unlike the past years, people are now working for the welfare of the society. The recent years have seen the emergence of more visionary CEOs, chairs of boards, employees, civil society groups, and NGOs engaged in serving the society. As the writer Thurow puts it, 'There simply is no social limit" in capitalism.' (Thurow, 1966:303).
It is interesting to denote that there are number of people who are in the mainstream of business who have a social conscious. They do set apart their time serving the society. These in turn eventually profit the company or the corporate in which they are working. Whereas, corporate social responsibility is a multidimensional construct. It comprises of economic, legal, ethical, and voluntary philanthropic responsibilities. When giving a thought about the economic responsibility of corporate, it is understandable that it speaks about the production of goods for the welfare of the society. It is important to note that the produced goods should be ecologically sustainable, and its price should be affordable to people. Thus, business economy plays a vital role in business related to competition, stakeholders, consumers, employees, and the local community.
In the case of the legal responsibilities, it is all about the rules and regulations that they must obey. It all draws down to the rules and regulations regarding the products produced and the consumer’s forum for upgradation and limitations of the production of goods. Ethical responsibilities are those that are related to the behaviors and activities related to the business environment.
It is rather acceptable that the trend of establishing a section named “corporate social responsibility” is becoming common in most corporate houses. Each of them showcase and implement its responsibility in multiple ways for the social roles and responsibilties. After referring to all these, there are people who still refute an influential social role for business, and the liabilities that go along with it (Henderson, 2001, Levitt, 1958, Kennedy, 2000).
The factors impacting these differences hinge on the mission, vision, discipline, size, culture, and ethics of the company and its leaders. Werther and David have exhorted that "Aligning its vision, mission, strategy, and tactics gives direction to the firm and focus to its employess. As important, this chain also informs the organization of what it will not do" (p.29). Therefore, there are some companies that mainly focus on a domain such as environment, poverty alleviation, or sanitation. On the other hand, there are some companies that inherits and nurtures the philosophy of social responsibility as an integral part of their functions and operations. The feasilibility for doing so needs further interpretation into the related elements.
Most companies have a perfect decision making group. These groups decide on the future stand of the company. They decide on a mission, vision and values of the company that help in making progress towards the development. These decisions in turn depend on the goals and aspirations of the company towards the society. They also provide insight into the values, culture, and strategic planning of the company.
The mission or vision of the company towards the society goes beyond the profit. It mainly works on the factor of responsibility rather than the profit of the company. There are also ethical issues related to the social responsibility. Werther and David have presented their views that "Although many people say thry want responsible companies, there is a limit to how much society and stakeholders are willing to impose their views. How many stakeholders are willing or able to pay for socially responsible behavior - and how much - is debatable.” (P. 61). In this domain of social ownership, there is an urgent need to strike a balance between different stakeholders such as ecology, employees, suppliers, and customers.
In this modern age of globalization and informational transparency, it is explicit to believe that functional autonomy is paramount for developing a culture of creativity and innovation. This culture enables the intuitive flourishing of an organization.In addition, there is also a need to bridge the gap between words and actions. All these actions and reactions help in building a value-based culture of discipline and commitment towards society and humanity.
Many companies have established ethics and social responsibility committees of their boards to review the strategic plan, assess progress and offer guidance about emerging corporate issues of importance. There are some boards that are sans committees to explore the humanistic need to address the problems and challenges of social responsibility in the corporate sector. Besides these committees and boards, there are some companies that redefine their guidelines in order to govern their own practices and policies. Ultimately, this process helps in ensuring the smooth governance of the corporate sector.
The corporate institution frames the mission, the vision, and the values so as to serve and benefit the society. These provide increased and structured goals and aspirations to the business sector. They also provide specific strategies to achieve the goals and aspirations. In this process the mission and vision of the corporate go beyond gaining profit for the company rather than just enhance the value of the business sector. Such decision-making will enhance the profit and welfare of the stakeholders, employees, customers, suppliers, and natural environment. Carroll has presented the facts firmly that “In total corporate social responsibility is a combination of economic, legal, ethical and philanthrophic responsibilities. It should help the company to make a profit, obey the law, be ethical, and be a good corporate citizen.”
Beyond just framing the mission, vision and the values, maintaining public relations help the company to spread word about the initiatives taken to support the society. Right from giving jobs till conducting blood donation camps, it is highly necessary to connect and communicate to the public. This will ease out the operations of the company which will inturn allow the profit growth. Strong public relations in a company surely allows better emplementation of corporate social responsibility.
When thinking of corporate sections, and their social responsibility, the first thing that comes to my mind is the words of a French man “Social responsibilities of business in a free-enterprise system”. It reminds the fact that the business is not only for profit but also it has a social conscience. Thus, every company is responsible for providing employment; eradicating prejudice, and maintaining socio-economic balance of the society. So,each of stakeholders such as consumers, suppliers, empoyees, and fund raisers play a key role in upholding the social relvance and accountability of organization. Werther and David have firmly asserted that "CSR is important, therefore, because it influences all aspects of a company's operations. Increasingly, consumers want to buy products from companies they trust, suppliers want to form business parternership with companies they can rely on, employees want to work for companies they respsct, large investment funds want to support firms that they perceive to be socially responsible, and nonprofits and NGOs want to work together with companies seeking solutions to common goals.” (p. 19). Thus, growth and sustenance of every company is directly proportional to the growth and development of the society in which it gets established. In turn, the corporate cannot be profitable without the social support because they are not separate entities.
There are lots of potentials and intellectuals who are in the society. If the company does not promote the employment of these youngsters who are in the society, there is no gain or profit for the company or the business. It will become static over a period of time.
In a broad sense, when it is said that a business has responsibilities, it does refer to the individuals in the company or the corporate. They do have their own share in enhancing the status of society. In a deep sense, the corporate is an artificial set up and it cannot have responsibilities even in an indistinct manner.
In other words, it is not only the social responsibility that matters but also the responsibility of an individual. In a private firm or a corporate system, the corporate executive plays a pivotal role in taking care of his employees. Thus, the responsibility of the executive is to conduct the business in accordance with the well fare of his employees. In turn, it will also enhance his business profit as well as the profit of every employee in the organization. A strong framework of principles and policies, cordial relationship with employees and with public will help communicate, motivate and promote societal welfare activities.
There are instances where an executive starts his own medical college or private educational society. All these are well structured in the beginning. The goal of the firm might be to promote education and healthcare to the country. Later, it is found that all these institutions run after money, and they do not fulfill the social necessities of the people. Rather they remain as an embodiment of money making. The prime vision of establishing these institutions gets the backseat. Such incidents are prevalent in our professional life. Of course, there are a few still following the vision of the founder. Thus, it cannot be concluded that business is for profit and social justice.
There is another reason behind the social interest of the corporate sector. It is to reduce their taxes. It is intolerable, when the public service servants get exempted from taxes when they do the social services.Social service gains priority when it acts as a tool to provide tax excemption.
Very rarely do they think about the welfare of the society they live in. They are just the show bits. Such cases are the basis for associating the doctrine of "social responsibility" with the acceptance of the socialist view. In this view, it is the political mechanisms, not the market mechanisms, that are acceptable to determine the allocation of scarce resources to alternative uses.
“Business can make a difference in the social fabric”. Even though this is an old saying of 1920s, it plays a major role in determining the social responsibility of the corporate world (Capp, 1950; Bowen, 1953; Heald, 1970; Davies and Frederick, 1984). It has an established conviction about the prevalence of social turbulence and turmoil due to the transition in the social justice system and its impact on capitalism. Market capitalism, predicated as it was upon individuals competing, might well raise material productivity, but at what other social costs? More than 30 years later, can it be said that the problem has been dealt with?
Despite the fact that the genesis of corporate responsibility started from its inception, it always came to an improved idea to profit the society. The primary relationship between the society and the business is the economic growth of the company. The economic growth of the company relies on business profit impact that it has in the society. In the long run, the social profit, the social responsibility fulfillment, and the environmental repurcussions determine the extent and intensity of the corporate growth.In order to substantiate this fact, some of the glaring examples in the history are the incidents like the Exxon Valdez oil spill and the Bhopal gas tragedy in India. These incidents and accidents help us open our eyes for focusing our public and corporate attention on these challenegs and issues. This issue in turn has generated a long term impact on the society.
The profit of the society in relation to profit of the corporate varies in degrees. Every business sector has a set of rules that are set apart for the growth of the society. But there are some companies that live on the vested interest. These companies do not taken into account while the analysis is underway. It is noteworthy that some of the companies in business sector do a lot for the development of the society. Werther and David have firmly presented their views that "It would not be wise, however, for a firm to ignore consistently the government in relation to an important issue that enjoys broad societal support. (p.38). There are business sectors that sponsor the students from the marginal area, sponsor the special education centers. They provide educational facilities for these disabled people.
There are volunteer programs in the companies that cater to the needs of the drop-outs. They voluntarily teach these students and make them better persons for tomorrow. The classes for drop-outs are held on Saturday or Sunday when the corporate professionals have free time. They utilize the free time for grooming these young minds and shaping their future. Thus, social responsibility of every corporate person is important. Every individual plays a supportive role in transforming the society and it is a combined role. But, it goes without saying that an intiative taken by the company serves the purpose a lot easier.
It is necessary that companies try answering few important questions before framing the corporate social responsibility and corporate capitalism.They are:-
- What business responsibility do you wish to implement in your business?
- What are your contributions for social welfare?
- Which are the areas of business that requires improvement?
The answers to these questions will play a key role in devising and defining the policy and program for shouldering the social accountability pragmatically.
It is necessary to understand the social responsibility of every individual. It is not only the business people who are responsible for social well being; rather every individual is responsible for the social well being. Ultimately the group and individual contributions to the society is valued. Werther and David have asserted that "The responsibility is not solely with one group or another, but it is important to acknowledge that "we live in the house we all build." (p. 57). In case of corporate or business sector, they have more advantages of working for the benefit of the society. As these sectors will eventually determine the face of the society, they do have a social responsibility to work for the up-gradation of the society in which they work. It is easy for the corporate and business people to promote the strategic plans to fortify the development of the society.
The doctrine of social responsibility is taken seriously to venture into the scope of the political mechanism for individual human activity. It does not vary from the most collective doctrine. It ends in the belief that there is no improvement without a collective and mutual help in the growth. So, time has come to rethink and collaborate for building a foundation of inclusive growth in a free society. Consequently, it paves the way for open and free competition without deception or fraud for upholding the social responsibility in this modern age.
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