Social responsibility is a major subject of concern and action for all but the smallest or least aware of companies. Today it is generally accepted that business firms have social responsibilities that extend well beyond what in the past was commonly referred to simply as the “business economic function.” In earlier times managers, in most cases, had only to concern themselves with the economic results of their decisions. Milton Friedman states that: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits”. Many businesses behave this way forgetting about responsibilities and duties before the community and citizens. In reality, social responsibility involves legal, ethical, moral, and social impact and repercussions of their decisions on community, environment, and the state.
It is possible to disagree with Friedman that the only social responsibility of business is to make profits. It is not a responsibility but the nature of business, its essence, and the core of all activities. Keeping the company in business to keep people employed and still generating a reasonable profit for its stockholders are also primary concerns and top priorities of the company (Kotler and Lee 2004). The main problem is that many companies replace responsibility before the community with their interests and values. In many company organizations, this area of social responsibility is often not identified as a major or separate functional area. Most companies find it no simple matter to formulate and implement socially responsible actions and programs.
However, all companies must become concerned and involved in this area (Frederick, 2002). To operate without major disruptions, a company must at all times comply with legal requirements — international, federal, state, and local. It must develop, establish, implement, and police a code of ethical and moral conduct for all members of its organization. Public responsibility, social obligations, and business morality were synonyms for social responsibility and described the term social responsibilities of businessmen as: “It refers to the obligation of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of objectives and values of our society” (Kotler and Lee 2004, p. 43).
Large companies, with large planning, policy, and strategy staffs, maybe in a better position to make the “doing good to doing better” concept work. On the other hand, medium-sized and smaller companies with limited resources may have serious problems in applying this concept of social responsibility (Mahoney 1990),. Two major obstacles that must be overcome for this concept to work, even to a limited extent, can both be listed under the heading of “education.” To accomplish the concepts, goals, and objectives requires developing a company culture tuned to such a concept. Conditioning company culture requires an extensive educational process, which takes time and management commitment (Velasquez, 1992). Of equal importance, however, is educating the stakeholder to understand what is going on in the industry and what the industry is trying to do. The stakeholder also has a social responsibility to be aware of and understand the socioeconomic process (Frederick, 2002).
Today, the corporate strategy of many companies is based and guided by social responsibility issues. To a greater extent than ever before, most people support companies becoming involved in social responsibility. Modern companies develop a code of morals and ethics. Consideration must be given to existing and proposed laws, Judeo-Christian values, family norms, society and industry as a whole, the firm, and the background and desires of owners, managers, and other employees. Because many people perceive right and wrong from different angles, the objective of the company in the area of ethical and moral standards must be to establish what it will and will not tolerate (Frederick, 2002).
Once the level of integrity has been established, then the areas of vulnerability must be examined and limits established in each of these areas. Since not detecting or overlooking violations weakens the fear of punishment, a system of inspection must be implemented and strict levels of punishment enforced for violation of the code. Great care must be exercised in all of these areas. Expenses for implementation and control cannot get out of hand and policing and enforcement cannot be done in a way that adversely affects the attitudes or the creativity of the employees. Complying or not complying with the law is fairly straightforward; however, great care must be exercised in assessing and evaluating the correctness or incorrectness of moral and ethical codes and philanthropic giving. Extensive value judgments and the personal desires of top management enter into these decisions.
In sum, the rapid expansion and growth of old-line businesses, the explosive growth of numerous new companies, and the continued entry and exit of new entrepreneurs in the marketplace have helped the growth and improvement in social awareness and responsibility of both the government and the companies themselves. The government has accepted many new socially oriented laws to protect workers and the environment from poor or negligent business practices. The business has also developed and implemented many new socially responsible features into their business operations as a result of greater social awareness and responsibility and as a protection against competitive pressures from other companies.
Frederick, R. (ed.) 2002, A companion to business Ethics. Blackwell Publishers.
Kotler, Ph, Lee, N. 2004, Corporate Social Responsibility. John Wiley & Sons.
Mahoney J., 1990, “An International look at business ethics”, Journal of Business Ethics, Vol. 9, no 7, pp. 545-550.
Treviño, L.K., Weaver, G.R., Gibson, D.G., et al., 1999, ‘Managing ethics and legal compliance: what works and what hurts’, California Management Review, 41 (2), pp.131-151.
Velasquez, M., 1992, Business ethics: concepts and cases. 3rd edn, Prentice Hall, Englewood Cliffs.