Business 6 (1) · Section 4

responsibility is towards its owners. Some others, however, hold an opposite view and argue that the firm has a social responsibility to serve all sections of society who are affected by its decisions and actions. It would be useful to understand the arguments offered both in favour of and against the assumption of social responsibilities by business. .

. Arguments for Social Responsibility (i) Justification for existence and growth: Business exists for providing goods and services to satisfy human needs. Though, profit motive is an important justification for undertaking business activity, it should be looked upon as an outcome of service to the people. In fact, the prosperity and growth of business is possible only through continuous service to society.

Thus, assumption of social responsibility by business provides justifications for its existence and growth. (ii) Long-term interest of the firm: A firm and its image stands to gain maximum profits in the long run when it has its highest goal as ‘service to society’. When increasing number of members of society — including workers, consumers, shareholders, government officials, feel that business enterprise is not serving its best interest, they will tend to withdraw their cooperation to the enterprise concerned. Therefore, it is in its own interest if a firm fulfills it’s social responsibility.

The public image of any firm would also be improved when it supports social goals. (iii) Avoidance of government regulation: From the point of view of a business, government regulations are undesirable because they limit freedom. Therefore, it is believed that businessmen can avoid the problem of government regulations by voluntarily assuming social responsibilities, which helps to reduce the need for new laws. (iv) Maintenance of society: The argument here is that laws cannot be passed for all possible circumstances.

People who feel that they are not getting their due from the business may resort to anti-social activities, not necessarily governed by law. This may harm the interest of business itself. Therefore, it is desirable that business enterprises should assume social responsibilities. (v) Availability of resources with business: This argument holds that business institutions have valuable financial and human resources which can be effectively used for solving problems.

For example, business has a pool of managerial talent and capital resources, supported by years of experience in organising business activities. It can help society to tackle its problems better, given the huge financial and human resources at its disposal. (vi) Converting problems into opportunities: Related with the preceding argument is the argument that business with its glorious history of converting risky situations into profitable deals, can not only solve social problems but it can also make