SOCIAL RESPONSIBILITY OF BUSINESS,
MORALS ETHICS IN ENTERPRISE
MANAGEMENT
Introduction and meaning of social responsibility:
▪Business depends on the society for the needed inputs like men, material and labour.
▪They also depend on the society for selling their products.
▪Hence,business being so much depended on society has definite responsibility
towards the
society.
A businessman should keep his social obligation in mind before
contemplating any action. Social responsibility is understood as the obligation of
decision – makers to take actions which protect and improve the welfare of society
as a whole along with their own interests.
Every decision a businessman takes and every action he
contemplates like decision on expansion, opening a new branch, closure of a branch
or appointment of new employees, will have an effect on the society in one way or
the other. Hence, he has to keep the society in mind before making any decision.
Definition of social responsibility
▪According to Koontz and O’Donnell “social responsibility is the
personal obligation of every one, as he acts in his own interest, to
assure that the rights and legitimate interests of all others are not
infringed”
▪In the words of Adolph Berle “social responsibility is the business’s
responsiveness to public consensus, i.e., the obligation of the
business to meet those demands and aspirations of the society about
which there is public consensus”.
Evolution of social responsibility:
“A Healthy Business and a Sick Society are hardly compatible”.
•The social responsibility has evolved over a period of time. In the
Eighteenth century, businesses were small and few. Even then the
businessmen made contributions to schools, institutions and to
poor.
•During the nineteenth century,
businesses charitable contributions increased as great fortunes
were made in business.
•During the latter part of the 19th century and 20th vigorous
industrial growth had many negative social impacts.
•By 1920’s, government brought about rules that large scale organizations have to
compulsorily contribute towards the welfare of the society or donate to
governmental funds which will be exempted from tax.
Gradually, many new rich business families started setting up trusts or
contribute towards schools, colleges, hospitals, orphanages, art galleries,
museums etc.
Many of Indian leading businessmen-GD Birla , Jamnalal Bajaj , Lala Shri Ram,
Ambalal Sarabhai and others came under the influence of Mahatma Gandhi and
contributed liberally to his programmes for the removal of untouchability , rural
reconstruction, etc. They have started many scientific and technical research and
art academies. For eg -Tata Institute of Fundamental Research, the Birla Institutes
of Technology at Pilani and Ranchi, the Calico Textile Museum in Ahmedabad, etc.
Companies providing bus stop’s shades, sign boards, directions to
various places, road-side warnings (such as drive slowly, don’t drink and drive,
overtake from the right, etc). Many companies are opening schools, colleges,
hospitals and public toilets.
SOCIAL RESPONSIBILITY:
•Entrepreneurs have to follow the ethical norms of the business in the society.
•social responsibility implies responsibility of the entrepreneur towards smooth
operation of the society by efficient utilization of national resources for greater
interest of the people.
To remain in business on a sustainable basis, an entrepreneur has to
exercise his responsibilities to the society in the following ways:
1. Responsibility of the entrepreneur towards conservation of national
resources:
2. Responsibility towards owners/shareholders:
3. Responsibility towards customers: providing quality products
charging reasonable and affordable prices
4. Responsibility towards employees:
5. Responsibility towards creditor/banker:
6. Responsibility towards community:
7. Responsibility towards government:
8. Responsibility to uphold general values and philosophy of the country:
BUSINESS ETHICS: MEANING
“Earning of profit cannot be the objective of a business any more
than eating is the objective of living”. A truly successful business can be
built up only if the objective of service to community is constantly kept in
view. Then, profit will come automatically. Therefore, business ethics are
of much importance to business.
Business ethics refers to the moral principles which are considered
right by the society, and so; should govern and guide the activities of a
business.
In short, business ethics is the study of good and evil, right and
wrong, and just and unjust actions of businessmen.
APPLICATION OF ETHICS TO BUSINESS:
In the past, it was assumed in most companies that ethics was a
matter of individual conscience. Today, many companies are using
managerial techniques that are designed to encourage ethical
behaviours .
The council for Fair Business Practices (CFBP) established in 1966,
by leading private sector industrialists in western India, have given
certain ethics applicable to business. They are
(1) To Charge only fair and reasonable price and take every possible step to ensure
that the prices to be charged to the consumer are brought to his notice.
(2) To take every possible step to ensure that the agents or dealers do not charge
prices higher than fixed.
(3) In times of scarcity, not to withhold or suppress stocks of goods with a view to
hoarding or profiteering.
(4) Not to produce or trade in spurious goods of standards lower than specified.
(5) Not to adulterate goods supplied.
(6) Not to publish misleading advertisements.
(7) To invoice goods exported or imported at their correct prices.
(8) To maintain accuracy in weights and measures of goods offered for sale.
(9) Not to deal knowingly in smuggled goods.
(10) Providing after-sales service where necessary or possible.
(11) Honoring the fundamental rights of the consumers like, Right of safety, Right
to choose, Right to information and Right to be Heard.
(12) Discharging social responsibilities and the responsibility to protect the
environment and nature’s infrastructure.
(13) Ensuring that the product warranty is offered in simple, unambiguous and
concise language, highlights the rights of consumer under it.
The CFBP has instituted a set of prizes and awards called ‘Jamnalal Bajaj Uchit
Vyavahar Puraskar’ to promote exemplary application of the above norms.
The Federation of Indian Chambers of Commerce and Industry has recently
issued a declaration of ‘Norms of Business Ethics’, which is almost identical to that
of
CFBP. The Punjab, Haryana and Delhi Chamber of commerce has also lately
formulated a ‘Code of Ethics’ applicable to business. The code says -
(1) Business must maintain the highest standards of behaviour for the benefit of
industry, employees, customers, shareholders and the society.
(2) Goods and services must conform to the commitment promised to customers.
Business must be realistic and truthful in stating claims.
(3) Customers must be given best possible service and treated with respect and
fairness.
(4) Business must understand and respect the needs, concerns and welfare of the
community and society. It should use knowledge and experience for upgrading
the quality of life. All business endeavours must combine the qualities of private
excellence for public good.
(5) The best way of promoting high standard of business practices is through self
regulation.
Therefore, it is mandatory for all business firms to follows Business Ethics, which
will
result in its own welfare.
Thank you
