T.Y. B.

Com (Sem-V)
Business Administration
Asst. Prof. Dr. Richu Juneja
1. INTRODUCTION OF SOCIAL RESPONSIBILITY
 Social responsibility can be said to be the obligation on the part of business
enterprises to protect and promote society’s welfare. The activities of
businesses should be organized in such a way that the society is benefited and
not affected.

 Business enterprises exist to satisfy needs of the society. It is the society that
provides them the inputs and serves as the market for their produce.

 In other words, all business enterprises are dependent on the society.

Therefore they should ensure that they keep the interest of the society as their
most important consideration in all their decisions and actions.

 The basic requisites expected in this regard are trust, honesty, integrity,
transparency and compliance with the laws of the land.

 Corporate social responsibility focuses on the idea that a business has social
obligation above and beyond making a profit. It requires a management to be
accountable to the full range of stakeholders.
INTRODUCTION CONT….
 Corporate social responsibility (CSR) is the continuing commitment by
the business to behave ethically and contribute to the economic
development of the country while improving the quality of life of the
workforce and their families and local community and society at large.
CSR is achieving commercial success in the ways that honor ethical
values and respect people, communities and the natural environment.

 The concept of social responsibility has been in practice in India for over
several decades. The concept of trusteeship propounded by Gandhiji
and the pioneering welfare measures undertaken by Tata Company
comes under social responsibility.

 Trusteeship is a socio-economic philosophy that was propounded by

Mahatma Gandhi. It provides a means by which the wealthy people would
be the trustees of trusts that looked after the welfare of the people in
general. Gandhiji believed that the wealthy people could be persuaded to
part with their wealth to help the poor.
 Corporates like the TATA, ITC, Aditya Birla, and Indian Oil Corporation,
are few to name who are involved in helping the society ever since their
foundation. Several other organizations through donations and charity
events have been doing their part for the society.

 Today, CSR in India has gone ahead of only charity and donations. It is
approached in a more organized and structured fashion. It is now
considered as an essential part of the corporate strategy. Companies have
CSR teams that develop specific policies, strategies and goals for their
CSR programs and set aside budgets to sustain them.

 These programs are based on a clearly defined social philosophy or are

closely aligned with the company’s business expertise. Employees
volunteer their time and contribute their skills, to implement them and are
considered as the backbone of these initiatives. Overall development of a
community to supporting specific causes like education, environment,
healthcare etc. forms part of CSR programs.
 Organizations like Bharath Petroleum, Maruti Suzuki India, and
Hindustan Unilever, adopt villages where they focus on holistic
development. They provide better medical and sanitation facilities, build
schools and houses, and help the villagers become self-reliant by
teaching them vocational and business skills. This is one of the
examples of CSR.

 Many CSR initiatives are implemented by corporate in partnership with

Non-governmental organizations (NGOs) who are well versed in
working with the local communities and are experts in tackling specific
social problems. They also provide money, medicines and equipment to
non-profit organizations that work towards improving health and
education in under-served communities.
 1.1 DEFINITION OF SOCIAL RESPONSIBILITY
According to Francis Caistonkoltane, Social responsibility of business is an
obligation of a business firm to manage the business so as to achieve business
objectives and to promote welfare of the society as a whole, keeping in view
the interests of various groups of the society.
According to Stanier, Social responsibility of business is concerned with
understanding the society’s expectations and approval thereof by the business
unit, and to cooperate in the fulfillment of their expectations.
“If you are in the luckiest of 1% of humanity, you owe it to the rest of
humanity to think about the other 99%,” said Warren Buffett. Mr. Buffett
understood that the purpose of any business is not only to make a profit but
also to be responsible for its actions and decisions. Social responsibility is the
duty of businesses towards society. Businessmen must review their impact of
decisions and actions on the different sections of society.
Mukesh Ambani to Ratan Tata: Business tycoons
who lead donations in battle against coronavirus

Click on the link and read the article how big or small business
players contributed for the benefit of the society and nation in
the tough times:

https://www.indiatvnews.com/business/news-coronavirus-donation-list-
mukesh-ambani-ratan-tata-business-tycoons-contribution-pm-cares-fund-
covid-19-602567
2. THE NEED FOR SOCIAL RESPONSIBILITY OF
BUSINESS
1) Self-interest: It is in the self-interest of the business to have a social
responsibility as it opens opportunities for understanding the problems
and issues of society.

2) Better Public Image: Each firm must enhance its public image to secure
more customers, better employees and higher profit. Acceptance of social
responsibility goals lead to improve public image.

3) Conversion of Resistances into Resources: If the innovative ability of

business is turned to social problems, many resistances can be
transformed into resources and the functional capacity of resources can
be increased many times.
4) Long Term Business Interest: A better society would produce a better
environment in which the business may gain long term maximization of
profit. A firm which is sensitive to community needs would in its own
self interest like to have a better community to conduct its business. To
achieve this it would implement social programs for social welfare.

5) Avoiding Government Intervention: Regulation and control are costly to

business both in terms of money and energy and restrict its flexibility of
decision making. Failure of businessmen to assume social responsibilities
invites government to intervene and regulate or control their activities.
The prudent course for business is to understand the limit of its power
and how to use that power carefully and responsibly thereby avoiding
government intervention.

6) Society’s expectations: Society’s expectations from business firms have

undergone a sea change over the years. In the early days, businesses were
viewed only as provider of goods and services. But today, society expects
business to be a responsible citizen and contribute towards social welfare.
 3. ARGUMENTS IN FAVOR OF SOCIAL
RESPONSIBILITY OF BUSINESS
1) The justification for existence and growth: The primary goal of
business is to make profits as only profits can help the business sustain
and expand. Profits should only be made as a return of service to the
society by producing goods and services.
2) The long-term interest of the firm: A firm is to gain maximum profits
in the long run if it has its highest goal as service to the society. As
humans are social beings, when they notice that a particular corporation
is not serving its the best interest socially, they do not support the
organization further.
3) Avoidance of government regulations: Government is the highest
authority in the nation. When a government feels that the business is not
socially responsible or is creating problems like pollution, the government
limits its freedom. In order to avoid such actions having long-term
negative impact, it is preferable to adopt social responsibility.
4) Holding Business responsible for Social problems: Business enterprises
are responsible for many problems such as pollution, discriminated
employment, corruption, etc. It is the duty of the business to solve the
problems created by them.
5) Creating Better Public Image: Any business which involves in fulfilling
the aspirations of the society creates better image in the public. Creation
of this type of image is a source of satisfaction itself for those who operate
business. This also helps in increasing the business volume, both in terms
of taking inputs and giving outputs.
6) Maintenance of Society: Business is one of the important pillars on which
society survives. It is the responsibility of business to take care of
society’s needs. Law alone cant help people with the issues they face.
Therefore, businesses contribute to the well being, peace and harmony of
society.
7) Moral Justification: Social responsibility has moral justification. This
moral justification emerges from the fact that if any one takes
something from others, he must give something to them in return. On
moral ground, this equation must be based on equity so that it
continues. A business takes various inputs (money, materials, people,
information, etc.) from the society and gives outputs (goods and
services) to the society by using various inputs. System of taking
inputs and giving outputs works well only if it fulfills social
requirements.
 4. ARGUMENTS AGAINST SOCIAL
RESPONSIBILITY OF BUSINESS
1) Violation of maximization of the profit motive: This statement argues
that business exists only for maximizing profits and businesses fulfill
their social responsibility best by maximizing profits by increasing
efficiency and reducing costs. They need not take up any additional
obligations.
2) Side effects on Consumers: Customers suffer because solving social
problems and taking social care require huge financial investment. As
the money within the business is used in social help, the business
increase the cost of their products and services.
3) Lack of Social skills: It is often stated that businessmen don’t fully
understand the social problems and thus can’t solve them efficiently.
The outlook of business managers is primarily economic and
technological. They are not trained nor they do possess the requisite
skills or resources to determine which project is socially desirable and
needs support. Hence, if their judgment fails, the amount spent on
such projects shall become a waste.
4) Burden of Additional Costs: The businessman should confine his
activities to his business only. Any assumption beyond the economic
necessities and legal obligations or stipulation would mean some
additional costs.
5) Businessman should mind his Business: The only business of a
devoted businessman is to do his business efficiently. He should
concentrate only in his line of business. He should not get involved in
the social matters. If his attention is diverted into social problems, the
survival of his business unit itself shall become a question.
6) Business should not be given too much Power: Social action
programs should be left to the Government and other Social Welfare
Organizations. If business were given a chance to involve itself in such
programs also, it would lead to excessive concentration of power.
7) Lack of Accountability: Responsibility and accountability should go
together. There is no means or mechanism to ensure accountability
from business to public. Hence in the
absence of any mechanism, it is
meaningless to talk about responsibility
to the society. Such a proposition is not
logical also.
5. SOCIAL RESPONSIBILITY OF BUSINESS
TOWARDS DIFFERENT GROUPS / SCOPE OF
SOCIAL RESPONSIBILITY OF BUSINESS
Consumers

Employees
Society
and Workers

Investors /
State
Shareholders

Inter-business
Community Relationships
5.1 SOCIAL RESPONSIBILITY TOWARDS CUSTOMER
A business cannot work without consumer. The survival and growth of
business depends on consumer satisfaction, service and support. The
commercial organization should win the confidence of the customers. This
is possible by following a positive attitude towards customers and fulfilling
following social responsibilities towards them:

(1) Quality: The company should produce quality goods. The company
should try to improve its quality because at no time quality can be 100%.
There is always room for improvement of quality.

(2) Fair Prices: The customers should not be cheated by charging high
prices. It is not possible to fool the customer at all the time. Thus, fair price
convert a customer into permanent customer.
(3) Honest Advertising: The customers want to know the facts, features,
advantages, side-effects, etc. of the product. The advertisement conveys this
information. Thus, the company must see that the advertisement is not
being misleading and it must be done by providing the true and actual
information.

(4) After Sales Service: The company is expected to provide after sale
service for maintenance of goods during the period of warranty. Efficient
and effective after sale service helps to establish good relation between the
customers and the company.

(5) Research and Development: The consumers require that the business
organization must conduct research and development for the purpose of
improving the quality and reducing the cost of production. That is, it must
provide ISI or AGMARK products to the customers.

(6) Consumer's Safety: The business must ensure that the product supplied
will not adversely affect on the life and health of the customers. Unsafe
product must not be marketed by the company.
(7) Regular Supply: Consumer should be supplied with the goods
regularly as and when required by them. The commercial organization
should not create artificial shortage of goods.

(8) Attend Complaints: The consumer complaints must be attended

immediately.

(9) Training: The commercial organization should arrange to train the

customers either free or for a fee. For example, in case of computers, etc.
5.2 SOCIAL RESPONSIBILITY TOWARDS EMPLOYEES
Employees provide human resources to the organization. They are very
important to the company. Therefore, the responsibilities of a business
organization towards the employees should be fulfilled in proper manner
because this will give a greater productivity to the organization. The
responsibilities of a business organization towards employees in brief are as
follows:

(1) Meaningful Work and Job Satisfaction: In a country like India, the job
opportunities are limited with a serious problem of unemployment. Therefore,
to provide a good work, proper working conditions and job security are the
social responsibilities of commercial organizations.

(2) Fair Returns: Workers should be paid sufficient wages and salaries, other
incentives like bonus, medical allowance, traveling allowances, etc. Prompt
payment to the workers results in higher motivation to the work force.
(3) Best Physical and Mental Atmosphere: Fresh and decent working
conditions, proper sanitary facilities, cool and fresh drinking water and etc.
items are the essentials of employees. Therefore, by taking into
consideration these requirements, proper attention should be given to the
facilities.

(4) Participation in the Management: The workers must be encouraged to

take part in management by forming workers committee, suggestion
scheme, profit sharing, co-partnership, etc. It is an important responsibility
of commercial organization.

(5) Training, Promotion and Welfare Schemes: Modern business

demands efficient and trained staff. Therefore, proper training should be
provided to the employees. Welfare facilities like scholarship, transport
facility, refreshment facility, games, etc. should also be provided to the
employees so that they can complete the work in efficient manner.

(6) Recognition of Unions: Organizations should recognize workers right

of forming union. It will help in maintaining industrial peace.
(7) Proper Personnel Policies: There must be proper personnel policies
in respect of transfers, promotions, recruitment, training, etc. There should
be no partiality in promotion, transfer or any other activity for the
employees.

(8) Health and Safety Measures: The commercial organization should

take adequate measures to protect health and safety of the employees.
They should be provided with proper canteen, medical and other facilities.

(9) Grievance Procedure: There should be proper grievance procedure to

handle employee complaints. It must be make sure that grievance
redressal should be fast and resolution must be just and fair.
 5.3 SOCIAL RESPONSIBILITY TOWARDS
SHAREHOLDERS
 If it is a company organization, then naturally it owes its very existence
to its shareholders who in turn expect something served and reasonable
from the company not only in the form of fair amount of dividend or
their holdings but also they expect that the company shall also be
fulfilling its obligation to the capital market as well. In company form of
organization management has to ensure a reasonable amount of return
and ensure company’s progress to the satisfaction of the shareholders.

 The responsibility of a company to its shareholders, who are the owners,

is indeed a primary one. The fact that the shareholders have taken a great
risk in making investment in the business should be adequately
recognized.
 To protect the interests of the shareholders, “the primary business of
a business is to stay in business”. To safeguard the capital of the
shareholders and to provide a reasonable dividend, the company has to
strengthen and consolidate its position.

 Hence, it should develop and improve its business and build up its
financial independence. Needless to say, to provide dividend, the
company should earn sufficient profit. Adequate reserves should be
built up so that it will be able to declare a reasonable dividend during a
lean period as well. If a company fails to cope with changes in a
changing and dynamic world, its position will be shaken, and the
shareholders’ interests will be affected. By innovation and growth, the
company should consolidate and improve its position and help
strengthen the share prices.
 The shareholders are interested not only in the protection of their
investment and the return on it but also in the image of the company.
It shall, therefore, be the endeavor of the company to ensure that its
public image is such that the shareholders can feel proud of their
company. It may be mentioned here that the shareholders also have
certain responsibilities, which they have to discharge to protect their
own interests.

 They shall not only offer wholehearted support and cooperation in

the positive efforts of the company but shall also guide and control
properly its policies and activities. At the same time, they shall
appreciate the responsibility of the business to other sections of
society – to the workers, consumers and the community.
5.4 SOCIAL RESPONSIBILITY TOWARDS SUPPLIERS /
INTER-BUSINESS RELATIONSHIPS
The services of the suppliers are also important for any business because they
supply raw materials, machinery, labor, and other materials. Without them,
the smooth operation of the business is quite difficult.
The responsibilities of the entrepreneurs towards the suppliers are as follows:

1. To Pay Fair Prices of Goods: The entrepreneurs should pay reasonable

prices for the materials purchased from the suppliers. Often, the farmers
provide cotton, sugarcane, and jute etc. to various industries for use as a raw
material. However, the Industrialists pay them very low prices for these
commodities. Entrepreneurs should pay reasonable prices for the raw
material.

2. To Pay in Reasonable Time: The responsibility of the entrepreneurs is

that payment to the suppliers must be made in time so that they may not have
to face financial difficulties and may carry out their functions smoothly.
3. To Inform about Changes in Market: The entrepreneurs have the
responsibility to provide regular information to the suppliers regarding
changes happening in the demand of the commodities in domestic and
foreign markets, fashion and design, etc. So that the suppliers may make
necessary changes and mold themselves according to the changing
circumstances.
Besides, they should also be provided information about likely increase in
demand for their material, so that they may become capable of increasing
the resources, required to meet the increased demand.

4. To Give Guarantee of Minimum Price: The entrepreneurs should give

the guarantee of minimum prices to the suppliers so that they may feel
assured about the certainty of the price and may continue to maintain their
will power.
5. To Motivate Indigenous Supplies: If the suppliers of the raw
materials, machinery, and equipment are both indigenous and foreigners,
indigenous suppliers should be encouraged.
The materials of the indigenous suppliers should not be rejected in the
attraction of foreign suppliers.

6. To Provide Technical Advice: The entrepreneur has the responsibility

to provide technical assistance to the suppliers for the production of new
and substituted commodities.

7. To Promote Healthy Competition: The entrepreneur should not

encourage unhealthy and cut throat competition among the suppliers, for
the sake of obtaining goods from them at the minimum price. Only
healthy competition should be encouraged. Besides, encouragement
should be provided to individual suppliers and institutional suppliers.
5.5 SOCIAL RESPONSIBILITY TOWARDS COMMUNITY
A business has a lot of responsibility to the community around its location and
to the society at large.
These responsibilities include:
1) Taking appropriate steps to prevent environmental pollution and to
preserve the ecological balance.
2) Rehabilitating the population displaced by the operation of the business, if
any.
3) Assisting in the overall development of the locality by promoting cultural
enrichment of the community by encouraging greater appreciation of art,
music and drama and also by encouraging sports and providing
recreational facilities.
4) Taking steps to conserve scarce resources and developing alternatives,
wherever possible.
5) Help the local civic administration to provide better public services by
providing financial and technical help to municipalities and district boards.
6) Contributing to research projects and development of backward areas.
7) Promote community help by aiding Red Cross, hospital boards and
medical research institutes.
8) Promotion of ancillarization and small-scale industries.
9) Making possible contribution to social causes like population control
and promotion of education by aiding schools, colleges and other
educational institutions.
10) Organize community forums and discussion groups and thus promote
better understanding of national and local affairs.
11) Contributing to the national effort to build up a better society.
 5.6 SOCIAL RESPONSIBILITY TOWARDS STATE /
GOVERNMENT
The social responsibilities of a business organization towards government can be
explained with the help of the following points:

(1) Observation of Rules and Regulations: The organization are required to

follow the rules and regulations laid by the government in proper manner.

(2) Payment of Taxes: The business organizations must pay taxes and duties
regularly to the government such as Goods and Service Tax (GST), income tax,
custom duty, or any other taxes in place, etc. Non payment of taxes is an offense,
because it would be difficult for the government to undertake development
programs in absence of tax revenues.

(3) Assistance in Implementing Socio-Economic Policies: The Government

declares various policies for achieving economic, social and industrial progress
of society. Business organization is expected to help the government in the
implementation of various socio-economic programs. The organization should
also allocate its resources according to social priorities and preferences.
(4) Earning Foreign Exchange: The government also expects from business
organization that it will earn foreign currency by exporting goods in the foreign
market. The government requires this foreign currency for importing capital goods
and technical know-how. All rules and regulations pertaining to imports and
exports should be strictly followed.

(5) Advising the Government: The business organization has to provide timely
advice to the government in respect of framing important policies such as
Industrial policy, Import & Export policy, Licensing policy, etc.

(6) No Favors: The commercial organization should not take any type of favor
from government officials by bribing or influencing them.

(7) Contributing to Government Treasury: The commercial organization must

contribute the funds to government treasury during the emergencies and natural
calamities like floods, earthquakes, etc.

(8) Political Stability: For economic growth the national security, political
stability is required. A stable government often brings more returns and peace in a
democratic society. Business units should not support those groups or individuals
who are interested in creating political disturbance.
5.7 SOCIAL RESPONSIBILITY TOWARDS SOCIETY
Business organization has certain responsibilities towards the society at a
large. They are as under:

(1) Protection of Environment: Pollution is a major problem of present

times, which is due to commercial organizations. Air pollution, Noise
pollution and water pollution are due to the industries, chemical plants,
cement plants, etc. Business organizations should take all possible
measures to minimize pollution.

(2) Reasonable use of Resources: Business organizations should make

proper use of available resources in the large interest of the society.
The resources like fuel, water, land, etc. must be used economically.

(3) Reservation for Weaker Section: The commercial organization are

expected to provide the jobs and employment opportunities for lifting
up economically weaker section of the society.
(4) No Participation in Anti-Social Activities: The organization should
not participate in such activities which will adversely affect the society in
general. No financial help should be provided to such anti-social activities.

(5) Development of Backward Regions: The society requires that the

business organization should be started in backward areas. This will create
employment opportunities and increase purchasing power among the rural
population of India resulting into development of backward regions.

(6) Financial Assistance: The society expects donations and financial

assistance for various social causes, such as eradication of poverty,
illiteracy, charitable medical services, etc. They expect company to take
part in anti-drug campaigns, anti-noise campaigns, and so on.

(7) Prevent Congestion in Cities: The companies should also work to

avoid congestion in cities and spread their industries in different places or
locations.
(8) Employment Generation: Business firms should make all possible
efforts to generate employment. Such effort will help to solve problems
caused due to unemployment in the society. Equal opportunities of
employment must be given to applicants of different sections and
categories.
MAIN SOCIAL RESPONSIBILITIES OF BUSINESS
ORGANIZATION

7. Responsibility to provide
1. Responsibility to make profit
quality of life

2. Responsibility to generate 8. Responsibility to safeguard

employment the health

3. Responsibility of optimum 9. Responsibility to do fair

utilization of resources trade practices

4. Responsibility to provide 10. Responsibility of

quality products development of nation

5. Responsibility to protect the 11. Responsibility to fulfill all

environment duties and national obligations
COMMON CHARACTERISTICS OF SOCIALLY
RESPONSIBLE COMPANIES
Companies that care, reward employees and are committed to community
service. To sustain these values, participating companies consistently
demonstrate the following characteristics in their work environment. These
characteristics are the code of conduct for optimal daily business practices.

Companies That Care ...

1) Sustain a work environment founded on dignity and respect for all
employees.
2) Make employees feel that their jobs are important.
3) Cultivate the full potential of all employees.
4) Encourage individual pursuit of work-life balance.
5) Enable the well-being of individuals and their families through
compensation, benefits, policies and practices.
6) Develop great leaders, at all levels, who excel at managing people as
well as results.
7) Appreciate and recognize the contributions of people who work there.
8) Establish and communicate standards for ethical behavior and
integrity.
9) Get involved in community endeavors and/or public policy.
10) Consider the human toll when making business decision.
11) Develop a public image which emphasizes their commitment to
quality and often use non-traditional means to promote it.
12) Constantly solicit feedback from customers on all subjects from
product direction to corporate donations.
13) Take an active role in the operations of their local communities.
14) Offer donations in cash or services to people in need of help.
 CASE STUDY-1
Feeds Ltd. is a company of Gujarat which manufactures feeds for animals.
Company gives priority to surrounding people in the jobs as well as gives
double salary to them. Company has no canteen and no equipment for safety.
Workers take their lunch at their working area. Odors spread far away due to
production. But nobody has complained officially. What is the problem in
this case? Who is responsible? Why?
 CASE STUDY-2
Tata Group is well known for its participation in industrial development and
economic development of the country. It is also famous for its hotel
business. The group has been spending its profit on social welfare for 75
years since its establishment. Apart from this its employees have never been
on strike for their problems.
Many employees of Taj hotel, Mumbai were died in the recent terrorist
attack. Due to this heavy bombardment, the hotel has faced a loss of Rs.
500/- crore. Moreover many people of poor and middle class died in the
bomb blast and their families are ruined. Shall the management of Taj hotel
in such man made disaster, prefer to protect the interest of the employees
and their families or perform the moral responsibilities towards the people of
Mumbai by helping them?
Answer the following question:
Q-1: Which problem of business management Tata Group is facing here?
Q-2: Shall the management in such circumstances perform their
responsibilities either towards their own employees or the people at large?
Why?
 CASE STUDY-3
Nokia Company produces mobile as well as their appliances. Company has
a great prestige in market.
In 2006-07 one of the customer in Delhi had put the phone for charge and
it had exploded. At many places same event had taken place.
Company has come to know about this incident. So company has
continually telecasted the instruction on T.V. set to switch off the particular
type of mobile phone. On other side, company has done the scientific
observation of battery. According to report it has found that battery is
defective. Immediately company has convinced the customer to provide
complete new battery in replacement of old battery. And at last new
batteries are provided.
From above details, can you say that company has accepted proper
responsibilities towards their customers?
Evaluate the above facts with reference to the social responsibility of a
company towards their customers.
THANK YOU