According to Earnest Dale, it is the duty of business to provide a fair return to the shareholders, fair working conditions to the employees, fair deal to the suppliers and customers and to make the business an asset to the local community and the nation.
1. Owners of Business:
Management must provide fair, adequate and stable long-run rate of return and steady capital appreciation to the shareholders for their investments. It must also provide to them regular, accurate and up-to-date information about the working of the company.
Maximum disclosure about the progress and achievements of the company is very satisfying to the shareholders. It must ensure planned growth, solvency of the business and optimum utilisation of the resources of the business.
Employees need security of job, higher wages, full employment, better conditions of work, opportunities for self-development and promotion. They want to unite and form their trade unions to achieve rights and to seek protection against highhandedness of the management. They also desire their work itself to be rewarding.
Management, as a part of its social responsibilities, is expected to provide for their social security, welfare, grievances settlement machinery and sharing of excess profits. Management should serve as a model employer.
A model employer is one who does not exploit his employees. As a model employer the management should provide stable employment, adequate wages, good and safe working conditions, job satisfaction and opportunities for self-development.
Healthy trade union practices may be encouraged. Employees may be considered as a partner in business, since their interests in business is not very much different from the interests of the shareholders.
They may be allowed to participate in the decision-making process at all levels of management. A feeling of fellowship and a sense of belonging to the company as a whole should be allowed to grow.
In the words of Henry Ford, management must provide those goods and services which the society needs at a price which the society can afford to pay. Management is supposed to provide good quality products to the consumers at reasonable prices. It should develop a liberal and fair attitude towards the consumers.
It must maintain regular supply of high quality products and provide services to the consumers. Managers must meet the needs of the consumers of different classes, tastes and with different purchasing power at the right time, place, and price and in right quality.
A businessman should act as a friend and guide to the consumer. It is his duty to protect consumers’ interest at any cost.
He must guard against adulteration, poor quality, lack of service to the consumer, misleading and dishonest advertisement, under-weighing, supply of stale goods etc. He must handle the complaints of the consumers more carefully and efficiently.
The concept of social responsibility of private business may be new to the western world, but in India it has not been so. Gandhiji reminded us of these values when he propounded the theory of trusteeship.
The rich businessman should recognise that he is the trustee for all the wealth which he has collected from the members of the society. So the entrepreneur has to strike a balance between profit and social good.
The concept of social responsibility of business was first mooted by President Wilson in USA as early as 1913 as a measure of the “New Democracy”. He’ gave a new shape to the manners and morals of business through the Chamber of Commerce under the doctrine of self-rule in industry which listed fair trade practices and enforced self-discipline by the business community.
Social issues with which business corporations have been concerned since the 60s may be divided into three categories.
The first of these refers to social problems external to the corporation which were not caused by any direct business action. Poverty, drug abuses, decay of the cities is examples of problems in this category.
The second category consists of the external impact of regular economic activities. Pollution by production is a case in point. The quality, safety, reliability of goods and services, deception from marketing practices, the social impact of plant closings and plant location belong to this category.
The final category of issues occurs within the firm and is tied up with regular economic activities. Equal employment opportunity, occupational health and safety, the quality of work life and industrial democracy belong to this category.
Second and third categories are of increasing importance and are tied up with the regular economic operations of business. Improved social performance demands changes in these operations.
Broadly speaking, business has two major objectives economic and social.