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Published by Adil Aslam

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Published by: Adil Aslam on Dec 03, 2012
Copyright:Attribution Non-commercial


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Business as it is said, is a product of environment. Thenature of business, location, the product to bemanufactured, the size, volume of operation, etc isdetermined by the environment in which it operates.Similarly it has an impact on the environment in whichit exists. The business decisions in an organizationcompletely depend upon the environment and their impact. The environment can be divided into:Internal EnvironmentExternal Environment
Social Responsibility of business refers to what businessdoes over and above the statutory requirement for thebenefit of the society. The word “responsibility” emphasizesthat the business has some moral obligations towards thesociety.The term corporate citizenship is also commonlyused to refer to the moral obligations of the businesstowards the society. It implies that like individuals,
Environment BusinessDecision
corporates are also the part of the society and their behaviorshall be guided by the social norms.
Social Responsibility has been defined by Davis asfollows:
“Social responsibilities refer to businessman’s decision andactions taken to reason at least partially beyond the firm’sdirect economic or technical interest.” 
Still broader view has been suggested by Andrewswhen he says that:
“By social responsibility, we mean the intelligent andobjective concern for the welfare of the society that restrainsindividual and corporate behavior from ultimatelydestructive activities, no mater how immediately profitable,and leads in the direction of positive contributions to humanbetterment, variously as the latter may be defined.”There has been a growing acceptance of the pleathat business should be socially responsible i.e. it shoulddischarge its duties and responsibilities in enhancing thewelfare of the society of which it is an integral part.H. S. Singhania classifies CSR into two categories: The manner in which a business carries out its own businessactivity.
 The welfare activity that it takes upon itself as an additionalfunction.
Social Responsibility requiresthe identification of variousinterest groups, which mayaffect the functioning of abusiness organization andmay also be affected by itsfunctioning. Normally variousgroups associated with abusiness organization areshareholders, workers, customers, creditors, suppliers,government and society in general. The management owesresponsibility towards all these groups. Therefore,management should show a standardized norm of behavior.
 The first responsibility of the management is to protect theinterest of shareholders. The interests of majority of shareholders and large minority of shareholders aregenerally well protected through either direct participation inthe management actions or they have real power tointervene, if necessary. They should be informed about thefunctioning of the organization adequately and timely.

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