A business is a part of society and it gets the manpower and resources required for the accomplishment of different activities from society. It means that the existence of a business depends upon society, and hence an organization should not ignore its responsibilities toward society. In other words, an organization should ensure that the organizational activities are conducted in a way that successfully fulfills its obligations or responsibilities towards society. It also means that a business should not indulge itself in any socially undesirable practice, such as adulteration, etc. By being socially responsible, an organization can achieve success in the long run, as it can easily gain the trust of consumers. Hence, the Social Responsibility of a business can be defined as the responsibility of an organization to take desirable decisions and actions that are ethical and satisfies the values of the society.
According to Keith Davis, ‘Social Responsibility refers to the businessman’s decisions and actions taken for reasons at least partially beyond the firm’s direct economic or technical interest’.
Social Responsibility towards different Interest Groups
Business social responsibility is a voluntary effort of businesses to take a few steps and measures in order to satisfy the expectations of different interest groups. An interest group represents an association of individuals or organizations that on the basis of one or more shared concerns, attempts to influence public policy in their favor. Business is concerned with interest groups because every decision and action a company takes will directly or indirectly affect the interests of these groups. The following are the responsibilities of businesses towards different interest groups.
1. Social Responsibility of Businesses Towards the Owners
Business owners are the person who owns the businesses. They are liable for all profits and losses. Owners take all the risks of running the business, capital allocation, etc. The following are the responsibilities of businesses towards their owners:
- To run the business efficiently.
- To allocate and utilize capital and resources.
- To ensure appreciation and growth of capital.
- To provide a fair and regular return on capital invested.
2. Social Responsibility of Businesses Towards Investors
Investors are those who provide funds to businesses through various investment instruments(Equity, Bonds, Debentures, etc.). Financial institutions, HNIs, and retail investors fall under this category. The following are the responsibilities of businesses towards their investors:
- To provide required and essential information regarding the schemes of future growth.
- To ensure the safety of investors’ investments.
- To provide regular payment of interest.
- To give timely repayment of the principal amount to the investors.
3. Social Responsibility of Businesses Towards Suppliers
Suppliers are businessmen or merchants who supply raw materials and other items that are required by manufacturers or traders. A supplier also includes a distributor who supplies the final finished product to the consumers or customers. The following are the responsibilities of businesses towards their supplier:
- To give regular orders for the purchase of goods.
- To make a deal with fair terms and conditions.
- To avail reasonable credit period.
- To pay the dues on time.
4. Social Responsibility of Businesses Towards Customers
Businesses produce and sell goods or services to customers. It can not survive without the support of the customers and have to fulfill their wants and needs in order to attain success. The following are the responsibilities of businesses towards their consumers:
- To provide customers with goods and services that fulfill their needs and requirements.
- To provide them with qualitative goods and services.
- To maintain a regular supply of goods and services in the market.
- To provide customers with goods and services at reasonable and affordable prices.
- To provide them with proper after-sales services for the purchased goods and services.
- To provide customers with every essential information including warnings regarding the goods and services.
- To provide them with a manual for the use of goods and services.
- To follow proper and fair trade practices and take corrective measures against malpractices.
- To ensure that the grievances of the customers are listened to and resolved quickly.
5. Social Responsibility of Businesses Towards Employees
All businesses need employees and workers to work for their business. These employees put in their best effort for the benefit of the businesses. If employees are satisfied with their needs and requirements, they will work efficiently, which will help in the success of the business. The following are the responsibilities of businesses towards their employees:
- To provide the employees and workers with timely and regular salaries and wages, respectively.
- To provide them with a good workplace and safe environment.
- To provide the employees with better career opportunities and prospects.
- To provide the employees with job security and social security through Provident Fund, Health Insurance, Retirement Benefits, etc.
- To provide them with proper training for their development and growth.
- To respect their democratic rights in the formation of unions.
6. Social Responsibility of Businesses Towards Society or Community
Society consists of various entities, including individuals, groups, organizations, families, etc. All these entities are related to each other; they interact with each other and also depend on each other, directly or indirectly. It is the responsibility of every entity to perform a job or a business that will benefit society at large. The following are the responsibilities of businesses towards the society:
- To maintain a balance between the economy and the ecosystem.
- To generate employment opportunities.
- To protect the environment by conserving natural resources and wildlife.
- To promote sports and culture.
- To help the weaker sections of society.
- To preserve the social and cultural values of the society and promote these values.
- To provide proper assistance in education, development, etc., of society.
7. Social Responsibility of Businesses Towards Government
Businesses are governed by certain rules and regulations which are set by the government. These rules and regulations also help businesses to perform their responsibilities towards society. The following are the responsibilities of businesses towards the government:
- To pay fees, duties, and taxes honestly and regularly.
- To set up new business units as per the guidelines provided by the Government.
- To follow the pollution control norms set up by the Government.
- To run the business fairly and not indulge in any corruptive and unfair activities.