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Importance of Social Responsibility in Business

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Introduction:

Most people think Businesses are only done with a purpose of making profit which is not so. From a view of an entrepreneur and investors this thinking does not justify the purpose and meaning of business. Business exist to serve a purpose, transform customer life to a better and to preserve environment for future.

Businesses organization must respect aspiration and expectation of the society from the business. Conventional view says that if you invest in ethical stock then you would sacrifice but it is wrong.

Companies have to follow certain dimension for enhancing social responsibility by having cooperative culture within organization and having loyalty towards their customers. Caring about society is not at expense of profit but it support profit in long term.

So to reach the lands of profit follow the road of purpose.

Terminology:

Social responsibility- understanding social need of people instead of thinking about profit.
Purpose – having a specific aim towards business for the betterment of life of people.
Ethical – it is related to moral values that are required for betterment of society.
Customer – benefited from the service of business.
Investor – one who invest his money in business.
Performance- the net annual profit of company as well as its social responsibility towards society.
Profit – the net annual profit of company in terms of money.
Satisfaction – feeling relaxed in what you acquired.
Clients – all those who deal with particular business.
Share holder – they are investors dealing in business.
Policy – it is framework of set of rules and regulation.
Management- managing employee, business and customers.
Unemployed – not having source of income.
Nominal price – the minimum price that one can pay for best service.
Reputation – status in society.
Analysis – deep knowledge of particular business.
Firm value – total asset value of company.
Qualitative aspect – dealing with quality.
Dimension – various sphere of looking business.
Bottom line – company earnings per share.

Discussion:

There is a great impact of corporate social responsibility (CSR) in any business as a research shows that it takes 4 to 5 years to show the impact of corporate social responsibility. Forbes magazine every year publish 100 best companies to work with, they judge companies on the basis of social being.

Enhancing dimension of social responsibility will improve firm value and net profit of the company in long term. As we all know profit is only by product it is not end of the goal.

Companies face challenges and limitations as they implement CSR but studies show that implementation is purely dependent on leader. Leadership’s play very important role in initiating and developing CSR programs within and across organizations. Various models have been framed for implementing CSR. Some of them are:

Committee of economic development model (appendix B)
Archie Carroll model of CSR: (appendix B)

There are many businessmen who understand importance of CSR while facing real life situation. Considering example of George Merck president of Merck pharmaceuticals experience need of its business with an example of Anne miller the first women treated with penicillin drug in 1942. After the incident Merck decided to share its process of making medicine with their competitor also to serve more life of people.

In other way it can be said that corporate theory is an extension of theory of sustainable development. Stakeholder or investor must think twice before investing in business with a company as investing for company that are social good for worker and society will pay them high in return.

Conclusion:

There is emerging need that business has to manage its relationship with various aspect of society well being. Many business leaders should require making a perspective of how to grow in sustainable development and to develop new innovative business model in accord with the triple bottom line. CSR indeed contain a wide range of issues and topics like workers benefits, customer satisfaction, environment and judicial use of resources for sustainable development. Companies must have a balance between commerce and social responsibility. Elements that may lead to good relationships include speedy resolution of problems; respect for the partner; and transparency in its dealings, which include information sharing, clear communication, and fair but firm negotiations. As said by American writer Henry David Thoreau Goodness is the only investment that never fails.

References

Zubaida Bai Kellen McMartin “Corporate Social Responsibility: A new perspective for alleviating poverty while maximizing profits” Science and Technology for Humanity (TIC-STH) 2009 IEEE Toronto International Conference pp. 827-830 September 2009.
Liu Chang-Chui Kong Xiao-ting “Positive Research on Society Responsibility Accounting Information Highlight” Accounting Research vol. 3 pp. 30-33 October 2006.
Griffin J. J. and J. F. Mahon: 1997 ‘The Corporate Social Performance and Corporate Financial Performance Debate’ Business & Society 36(1) 5-31
Deegan C. Rankin M. and Tobin J. (2002). An examination of the corporate social and environmental disclosures of BHP from 1983-1997: a test of legitimacy theory. Accounting Auditing and Accountability Journal 15(3) 312-343.
Eng L. L. and Mak Y. T. (2003). Corporate governance and voluntary disclosure Journal of Accounting and Public Policy 22 325-345. (Pubitemid 36742612)
Fan J. P. H. and Wong T. J. (2002) “Corporate ownership structure and the informativeness of accounting earnings in East Asia” Journal of Accounting and Economics 33 401-425.
Griffin J. J. and J. F. Mahon: 1997 ‘The Corporate Social Performance and Corporate Financial Performance Debate’ Business & Society 36(1) 5-31.
Haniffa R. M. and Cooke T.E. (2002). Culture Corporate Governance and Disclosure in Malaysia Corporations. ABACUS 38(3).

Appendix A

CSR topic list