Build up arguments for and against social responsibilities.


Arguments for Social Responsibility


(i) Justification for existence and growth: Goods and services are provided by the business to satisfy human needs. Profit is important for business, it should be looked upon as a reward by people for the service. Business is possible only through continuous service to society. Hence, social responsibility provides justifications for the existence and growth of the business.


(ii) The long-term interest of the firm: Maximum profits by a firm, in the long run, is achieved when it has its highest goal as service to society. Increasing members of society including workers, consumers, shareholders, government officials, feel that business enterprise lacks its interest, they withdraw their cooperation from the concerned firm. Therefore, it is a firm that fulfils its social responsibility. The firm can improve its public image when it supports social goals.


(iii) Avoidance of government regulation: Government regulations are undesirable because they limit freedom of business. Therefore, by following social responsibility one can avoid government regulations.


(iv) Maintenance of society: Argument is that laws cannot be passed for all circumstances. People not getting their due from the business may resort to anti-social activities, not necessarily governed by the law which in turn harms the business. Hence, it is desirable that business enterprises should assume social responsibilities.


(v) Availability of resources with business: Business institutions have valuable financial and human resources which can be effectively used for solving problems is what this argument holds. For example, the business has a pool of managerial talent and capital resources, supported by years of experience in organising business activities. Society can tackle its problems better if given proper finance and human resources at its disposal.


(vi) Converting problems into opportunities: The argument that business with its glorious history of by converting risky situations into profitable deals, not only solves social problems but can also make them effectively profitable by accepting the challenge.


(vii) A better environment for doing business: For a business to operate in a society which has complex and diverse problems may have little chance of profit and success in the long run. Therefore, it is argued that the business should do something to meet its needs before it is confronted with a situation of its own survival in social environment endangered due to enormous social illnesses. Whereas, a society with fewer problems provides a better environment for business.


(viii) Holding business responsible for social problems: It is argued that some of the enterprises eternalize social problems. For example, Environmental pollution, unsafe workplaces, corruption, and discrimination at work. Therefore, it is important for the business to get involved in these and solve them at its earliest instead of expecting that other agencies will deal with them on their own.


Major arguments against social responsibility are:


(I) Violation of profit maximisation objective: According to this argument, a business can best fulfil its social responsibility if it maximises profits through increased efficiency and reduced costs for the people


(ii) Burden on consumers: It is argued that social responsibilities like pollution control and environmental protection are costly and require huge investments. In such a case, business turns the cost towards people by charging higher prices for the commodities. Therefore, in the name of social responsibility, it is totally unfair for the consumer to bear the tax and higher prices.


(iii) Lack of social skills: Solving social problems are totally different from solving business problems and it cannot be solved the way business problems are solved. Businessmen lack proper knowledge about it hence, different agencies should do this work.


(iv) Lack of broad public support: Business cannot operate successfully because of lack of public confidence and cooperation in solving social problems due to business involvement or interference in social programmes which is not liked by the public in general.


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