After reading this article you will learn about the social responsibility of the management.
Meaning of Social Responsibility:
The term ‘social responsibility’ has three different meanings, viz., social obligation, social reaction and social responsiveness.
According to Milton Friedman and his followers, a corporation engages in social responsible behaviour when it pursues a profit within the constraints of law as imposed by society. Since society permits business to exist, business is obliged to repay society for that right by taking profits.
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This means that legal behaviour in pursuit of profit is socially responsible behaviour, and any behaviour not legal or not in pursuit of profit is socially irresponsible.
As Friedman stated:
“There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, that is to say, engages in open and free competition without deception or fraud”.
Social Responsibility as Social Reaction:
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Social responsibility refers to behaviour directed exclusively (but legally) towards the pursuit of profit. Another meaning of social responsibility is behaviour that is in reaction to “currently prevailing social norms, values and performance expectation”.
This view emphasises the point that business must be accountable for the ecological, environmental and social costs incurred by its actions. Moreover, business must react and contribute to the solving of society’s problems (even those that cannot be directly attributed to business).
Another information — somewhat restrictive — of social responsibility as social reaction is that it involves only voluntary actions.This means that corporate actions that are required by economic or legal imperative are different from those that are initiated by voluntary, altruistic motives. Thus a corporation that pursues only socially obligated behaviour is not socially responsible, because such behaviour is required, not voluntary.
According to Keith Davis:
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“Social responsibility is a firm’s acceptance of social obligation beyond the requirements of the law.”
This view would imply that a firm that accepts social obligation in reaction to pressure groups, consumer boycotts, or adverse publicity would not be socially responsible.
The essence of this view of social responsibility is that firms are reactive. Demands are made of them by certain groups and the firms are socially responsible when they react—whether voluntarily or involuntarily — to satisfy demands of diverse groups.
Social Responsibility as Social Responsiveness:
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According to this view, socially responsible behaviours go beyond social obligation and social reach and are anticipatory and preventive rather than reactive and restorative.
The characteristics of socially responsive behaviour include taking stands on public issues, accounting willingly for actions to any group, anticipating future needs of society and moving towards satisfying them, and communicating with the government regarding existing and anticipated socially desirable legislation.
A socially responsive corporation actively seeks way to solve social problems. Progressive managers apply corporate skills and resources to every problem.
The social responsiveness view is the broadest meaning of social responsibility. It places managers and their organisation in a position of social responsibility instead of being just concerned with economic means and ends. This is so because virtually everything that business does — such as opening or closing a plant or launching a new product line — has distinct social consequences.
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A Continuum of Social Responsibility:
The three general meanings of social responsibility can be depicted as a continuum, as shown in Table 24.1. The continuum formed by the three classes of socially responsible behaviour ranges from an emphasis on profit making to an emphasis on social and economic concerns.
Table 24.1 shows that at one extreme is social obligation — business behaviour that reflects the firm’s economic and legal responsibilities. Social reaction occupies the middle position—behaviour that is demanded by groups having a direct stake in the organisation’s actions. The farthest extreme, social responsiveness, is anticipatory, proactive and preventive behaviour.
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In the real world, a corporation can choose to be anywhere along the continuum. To be socially reactive implies the firm’s acceptance of social obligation as well. In a like manner, to be socially responsive requires both social obligation and social reaction. In short, the three meanings refer to different degrees of departure from the normal activities and performance of profit-seeking business firms.