A new philosophy of management is emerging which has deeply influenced corporate goal and business policy. The major elements that contributed to its evolution are:
1. The business leaders as a whole were becoming increasingly conscious of the fact that the public was an integral part of the general business scheme. Sense of service thus came to qualify and modify the greed for profit.
2. The second element that helped the process of the evolution of the new idea was the purchasing power of the public. The demand of the public meant nothing unless sufficient purchasing power was placed in their hands.
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Industry had come to understand that one of its proper functions was to manufacture and distribute purchasing power as well as to manufacture and distribute merchandise.
The most important effect of this changed attitude was a new business policy which demanded a persistent tendency towards higher wages and lower prices.
3. The third consideration in the process is the rise of a new relationship between the public and business, slowly displacing the era of purely private business for private profits. Business has a duty to report to the public, whose money it is constantly asking for, in order to conduct the business itself.
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The concept of social responsibility of Oliver Sheldon, a British business leader, was derived from four basic observations of the social environment. First, he saw an awakening of public interest in the inner workings of business. This was a result of the close co-operation that existed between industry and the community during the war effort.
Secondly, Sheldon observed a demand of the workers for more leisure time and increased opportunity for self-development. Thirdly, he observed that the association of workers into large groups such as trade unions and political clubs was the beginning of an atmosphere conducive to social change.
Lastly, he noted a new spirit of enquiry emerging from application of the scientific approach to problem-solving. He subscribed to the view that the future problem of management would be to obtain a proper balance between production and human areas.