Responsibilities of a Businessman
1. The Iron Law of Responsibility:
The institution of business exists only because it performs invaluable services for society. Society gives business its charter to exist and the charter can be amended or revoked at any time if it fails to live upto society’s expectations.
Therefore, if business intends to retain its existing social role and social power, it must respond to society’s needs constructively.
This is called the Iron Law of Responsibility which is that in the long run, those who do not use power in a manner which society considers responsible will tend to lose it.
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Though the long-run may require decades or even centuries in some instances, history seems to confirm that society ultimately acts to reduce the power of those who have not used it responsibly.
2. To fulfill long run self-interest:
A business organization most sensitive to community needs would in its own self-interest like to have a better community in which to conduct its business. To achieve that, it would implement special programmes for social welfare.
As a result of social improvements, crime will decrease. Less money will be required to protect property. Labour recruitment will be easier. Turnover and absenteeism will be substantially reduced. A better society would produce a better environment in which the business may aim at long run profit maximisation.
3. To establish a better public image:
Each business organisation must enhance its public image to secure more customers, better employees and higher profit. The public image concept may be extended to the accomplishment of various types of social goals.
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According to this line of argument, social goals are now a top priority with members of the public. So, if the firm wants to capture a favourable public image, it will have to show that it also supports these social goals.
4. To avoid government regulation or control:
Regulation and control are costly to business, both in terms of energy and money and restrict its flexibility of decision-making. Failure of businessmen to assume social responsibilities voluntarily invites government to intervene and regulate or control their activities.
By their own socially responsible behaviour they can prevent government intervention. Businessmen have learnt that once a government control is established it is seldom removed even though the warranting conditions change.
If these are the facts, then the prudent course for business is to understand the limit of its power and to use that power responsibly, giving government no opportunity to intervene.
5. To avoid misuse of national resources and economic power:
Businessmen command considerable power on the productive resources of a community. They are obliged to use those resources for the common good of society.
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They should not forget that the power to command national resources has been delegated to them by the society to generate more wealth for its betterment. They must honour social obligations while exercising the delegated economic power. The society will not tolerate indefinitely their misdeeds in wasting away these resources.
6. To avoid class-conflicts:
Industrial peace is a precondition for the success of business. Trade unions are becoming more and more militant and demand social welfare measures, better wages, better working conditions etc.
Their demand derives its force from the fast changing social environment. Businessmen must win over the confidence of workers and avoid violent class conflicts in their own interest.
7. To convert resistances into resources:
If the innovative ability of a business is turned to social problems, many resistances (problems) can be transformed into resources and the functional capacity of resources may be increased manifold. All problems may not be capable of being handled this way, but many of them would be solved to the ultimate benefit of society.
It is recognised that prevention is better than cure. Any delay in dealing with social problems now may leave business managements constantly occupied with extinguishing social fires in future.
It is economical and wise to deal with such problems before they grow into conflagrations and become uncontrollable. Business organisations may do a lot in this regard.
8. The effluence of many businesses positively damages the surrounding environment. They are duty-bound to repair the damage by recognising their responsibility towards society.