2. Contents:
• Social Responsibility
Introduction
Reasons behind the business Social responsibility
Social responsibilities of Business
Carroll’s Four Responsibilities of Business
Responsibility of a business firm
• Ethics
Definition
Ethical Behavior
Foundation of Ethics
Ethics and Information Technology
Ethical Dilemma
Reasons for Unethical Behavior
Relativism
Kohlberg’s Levels of Moral Development
Encouraging Ethical Behavior
Guidelines for Ethical Behavior
Cavanagh’s questions to solve ethical problems
Kant’s categorical imperatives
• Summary and Conclusion
• References
3. Introduction:
• “The responsibility of an organization for the impacts of its decisions and activities on society
and the environment through transparent and ethical behavior that is consistent with
sustainable development and the welfare of society; takes into account the expectations of
stakeholders; is in compliance with applicable law and consistent with international norms of
behavior; and is integrated throughout the organization.”
• Social responsibility implies that a businessman should not do anything harmful to the society in
course of his business activities
• The concept of social responsibility discourages businessmen from adopting unfair means like
black-marketing, hoarding, adulteration, tax evasion and cheating customers etc. to earn profit.
Instead, it encourages them to earn profit through judicious management of the business, by
providing better working and living conditions to its employees, providing better products, after
sales-service, etc. to its customers and simultaneously to control pollution and conserve natural
resources
4. Why should business be socially responsible?
Public Image:
• The activities of business towards the welfare of the society earn goodwill and reputation
for the business
• The earnings of business also depend upon the public image of its activities
• People prefer to buy products of a company that engages itself in various social welfare
programmes
• Again, good public image also attracts honest and competent employees to work with such
employers
5. Government Regulation:
• To avoid government regulations businessmen shoulddischarge their duties voluntarily
• E.g.: If any business firm pollutes the environment it will naturally come under strict
government regulation, which may ultimately force the firm to close down its business.
Instead, the business firm should engage itself in maintaining a pollution free environment
• Government has taken a major step in protecting the environment by passing the
Environment Protection Act, 1986 in addition to having
Water (Prevention and Control of Pollution) Act, 1974,
Air (Prevention and Control of Pollution) Act, 1981
and several other Acts
• Business can equally be instrumental in fighting pollution and protecting the environment
• Business can have three types of role - preventive, curative and awareness
6. Survival and Growth:
• Every business is a part of the society
• For its survival and growth, support from the society is very much essential. Business utilizes
the available resources like power, water, land, roads, etc. of the society
• So it should be the responsibility of every business to spend a part of its profit for the
welfare of the society
Employee satisfaction:
• Besides getting good salary and working in a healthy atmosphere, employees also expect
other facilities like proper accommodation, transportation, education and training
• The employers should try to fulfill all the expectation of the employees because employee
satisfaction is directly related to productivity and it is also required for the long-term
prosperity of the organisation
E.g.: If business spends money on training of the employees, it will have more efficient people to
work and thus, earn more profit
7. Consumer Awareness
• Now-a-days consumers have become very conscious about their rights
• They protest against the supply of inferior and harmful products by forming
different groups
• This has made it obligatory for the business to protect the interest of the
consumers by providing quality products at the most competitive price
9. Internal Interest Group Corporate Social Responsibility:
i. Responsibility Towards Owners:-
Owners are the persons who own the business. They contribute capital and bear the
business risks. The primary responsibilities of business towards its owners are to:
a. Run the business efficiently.
b. Proper utilisation of capital and other resources.
c. Growth and appreciation of capital.
d. Regular and fair return on capital invested.
ii. Responsibility Towards Suppliers:-
Suppliers are businessmen who supply raw materials and other items required by
manufacturers and traders. Certain suppliers, called distributors, supply finished products to
the consumers. The responsibilities of business towards these suppliers are:
a. Giving regular orders for purchase of goods
b. Dealing on fair terms and conditions.
c. Availing reasonable credit period.
d. Timely payment of dues.
10. iii. Responsibility Towards Employees:-
The prime responsibility of every business to take care of the interest of their
employees. The responsibilities of business towards its employees include:
a. Timely and regular payment of wages and salaries
b. Proper working conditions and welfare amenities
c. Opportunity for better career prospects
d.Job security as well as social security like facilities of provid fund, group
insurance, pension, retirement benefits, etc.
e. Better living conditions like housing, transport, canteen etc.
f. Timely training and development
iv. Responsibility Towards Investors:-
Investors are those who provide finance by way of investment in debentures, bonds,
deposits etc. Banks, financial institutions, and investing public are all included in this category. The
responsibilities of business towards its investors are:
a. Ensuring safety of their investment
b. Regular payment of interest
c. Timely repayment of principal amount
11. External Interest Group Corporate Social Responsibility:
i. Responsibility towards society
A society consists of individuals, groups, organizations, families etc. Business, being a part of
the society, so maintains its relationship with all other members of the society.
a. To preserve and promote social and cultural values
b. To generate employment
c. To protect the environment
d. To conserve natural resources and wild life
e. To developmental research on education, medical Science, technology etc.
ii. Responsibility towards competitors:-
Competitors are the other businessmen or organizations involved in a similar type of
business. It also sometimes encourages the business to take care of in negative activities like
resorting to unfair trade practices
a. not to offer exceptionally high sales commission to distributers, agents etc.
b. not to offer to customers heavy discounts and /or free products in every sale
c. not to defame competitors through false or ambiguous advertisements
12. iii. Responsibility towards customers
No business can survive without the support of customers. As a part of the responsibility of
business towards them the business should provide the following facilities:
a. Products and services must be able to take care of the needs of the customers.
b. Products and services must be qualitative
c. There must be regularity in supply of goods and services
d. Price of the goods and services should be reasonable and affordable.
e. Grievances of the consumers, if any, must be settled quickly.
f. Unfair means like under weighing the product, adulteration, etc. must be avoided.
iv. Responsibility towards government
Business activities are governed by the rules and regulations framed by the government. The various
responsibilities of business towards government are:
a. Setting up units as per guidelines of government
b. Payment of fees, duties and taxes regularly as well as honestly.
c. Not to indulge in monopolistic and restrictive trade practices.
d. Conforming to pollution control norms set up by government.
h. Not to indulge in corruption through bribing and other unlawful activities.
14. • Discretionary expense: Discretionary expense is a cost that is not essential for the operation of a
business
E.g.: A business may allow employees to charge certain meal and entertainment costs to the company to
promote good will with employees
• Ethical Responsibility: Ethical Responsibility is a moral course of action and draws a line between
right and wrong
E.g.: A business may realize they have an ethical obligation to instruct the sales stall to conduct needs
based selling and not to “oversell”. During a month when sales are slow, however, living up to that
obligation by not pressuring the staff to “sell” can mean the difference between turning a profit or
not
• Economic Responsibility: Economic responsibility means striving to ensure that we are profitable in
order to create long-term value for our stakeholders and contribute to a global and sustainable
economy
• Legal Responsibility: The companies are required to follow the law, which impact organizations
planning process. In order to operate soundly, a company must familiarize itself with external factors
that govern the industry that the company operates within
15. Responsibilities of a Business Firm:
• Social capital:
– the goodwill of key stakeholders, that can be used for competitive
advantage
– opens doors in local communities
– enhances reputation with consumers
16. Benefits of Being Socially Responsible:
• May enable firm to charge premium prices and gain brand loyalty
• May help generate enduring relationships with suppliers and distributors
• Can attract outstanding employees
• Can utilize the goodwill of public officials for support in difficult times
17. Ethics:
• Definition: The established customs, morals, and fundamental human relationships that exist
throughout the world
Foundations of Ethics:
• Values are the relatively permanent, deeply held preferences of individuals or groups. These
form the basis for attitudes and personal choices
Instrumental Values: Standards of conduct or methods for attaining an end
Terminal Values: Goals an individual will ultimately achieve
Ethics and Information Technology:
• Employee Perspective: Concerns about organizations and government agencies gaining
greater access to private information about individuals
• Organizational Perspective: Concerns over unethical acts by employees as a result of
access to information technology in the workplace
• Societal Perspective: Also, concerns rose in regard to businesses providing customer
information to other organizations
18. Ethical Dilemma:
• A situation, in which a person must decide whether or not to do something that, although
beneficial to oneself or the organization, may be considered unethical and perhaps illegal
• Managerial Guidelines for Ethical Dilemmas:
Utility Approach: A situation in which decisions are based on an evaluation of the overall
amount of good that will result
Human Rights Approach: A situation in which decisions are made in light of the moral
entitlements of human beings
Justice Approach: A situation in which decisions are based on an equitable, fair, and
impartial distribution of benefits and costs among individuals and groups
19. • Reasons for Unethical Behavior:
Unaware that behavior is questionable
Lack of standards of conduct
Different cultural norms and values
Behavior-based or relationship-based governance systems
Different values between business people and stakeholders
20. Relativism:
• Moral relativism
– claims that morality is relative to some personal, social or cultural standard and that
there is no method for deciding whether one decision is better than another
• Naïve relativism
– based on the belief that all moral decisions are deeply personal and that individuals have
the right to run their own lives
• Role relativism
– based on the belief that social roles carry with them certain obligations to that role
• Social group relativism
– based on a belief that morality is simply a matter of following the norms of an
individual’s peer group
• Cultural relativism
– based on the belief that morality is relative to a particular culture, society or
community
21. Kohlberg’s Levels of Moral Development:
• Preconvention level
– concern for one’s self
• Conventional level
– considerations for society’s laws and norms
• Principled level
– guided by an internal code of ethics
22. Encouraging Ethical Behavior:
• Code of Ethics
– specifies how an organization expects its employees to behave while on the
job
• A code of ethics:
clarifies company expectations of employee conduct in various situations
makes clear that the company expects its people to recognize the ethical
dimensions in decisions and action
• Whistleblowers
– employees who report illegal or unethical behavior on the part of others
23. Guidelines for Ethical Behavior:
• Ethics
– the consensually accepted standards of behavior for an occupation, trade or profession
• Morality
– one’s rules of personal behavior based on religious or philosophical grounds
• Law
– the formal codes that permit or forbid certain behaviors and may or may not enforce
ethics or morality
• Utilitarian approach
– proposes that actions and plans should be judged by their consequences
• Individual rights approach
– proposes that human beings have certain fundamental rights that should be respected in
all decisions
• Justice approach
– decisions must be equitable, fair and impartial in the distribution of costs and benefits
to individuals or groups
24. Cavanagh’s questions to solve ethical problems:
• Utility: Does it optimize the satisfactions of the stakeholders?
• Rights: Does it respect the rights of the individuals involved?
• Justice: Is it consistent with the canons of justice?
Kant’s categorical imperatives
• Actions are ethical only if the person is willing for the same action to be taken by everyone
who is in a similar situation
• Never treat another person simply as a means but always as an end
25. Summary and Conclusion:
• Social responsibility is an ethical theory, in which individual are accountable for fulfilling
their civic duty; the action of an individual must benefit the whole of society
• In this way, there must be a balance between economic growth and the welfare of society
and the environment
• If this equilibrium is maintained, then social responsibilities are accomplished
• The theory of social responsibility is built on a system of ethics, in which decisions and
actions must be ethically validated before proceeding
• If the action or decision causes harm to society are the environment then it would be
considered to be socially irresponsible
• Moral values that are inherent in society create a distinction between right and wrong
• In this way, social fairness is believed to be in the “right” but more frequently than not this
“fairness” is absent
• Every individual has a responsibility to act in manner that is beneficial to society and not
solely to the individual
