Business Law & Ethics

Corporate social responsibility (CSR) means operating a business in a socially responsible

manner. CSR is sometimes described as being a tacit contract between business and a
community, whereby the community permits the business to operate within its jurisdiction to
obtain jobs for residents and revenue through taxation. It is now seen as a vital tool in promoting
and improving the public image of some of the world’s largest companies and corporations.

Social responsibility of business refers to management decisions and action taken for reasons at
least partially beyond the organization direct economic or technical interest. The concept of
social responsibility is merely in growing stage towards social effectiveness of business. It is the
philosophy which justifies business involvement in its community. The simple fact is that
business is a socialinstitution. In the operation of pluralism many groups influence
business.According to Bowen H R “Social Responsibility of Businessmen”, 1953 It is the
“obligation of businessmen to pursue those polices, to make those decision, or to follow those
lines of action which are desirable In terms of objectives and values of society.

Business ethics is the behavior that a business adheres to in its daily dealings with the world. The
ethics of a particular business can be diverse. They apply not only to how the business interacts
with the world at large, but also to their one-on-one dealings with a single customer. Many
businesses have gained a bad reputation just by being in business. To some people, businesses
are interested in making money, and that is the bottom line.It could be called capitalism in its
purest form. Making money is not wrong in itself. It is the manner in which some businesses
conduct themselves that brings up the question of ethical behavior.Good business ethics should
be a part of every business. There are many factors to consider. When a company does business
with another that is considered unethical, does this make the first company unethical by
association? Some people would say yes, the first business has a responsibility and it is now a
link in the chain of unethical businesses.Many global businesses, including most of the major
brands that the public use,can be seen not to think too highly of good business ethics. Many
major brands have been fined millions for breaking ethical business laws. Money is the major
deciding factor.

We all know that people engage in business to earn profit. However, profit making is not the sole
function of business. It performs a number of social functions, as it is a part of the society. It Corporate Social Responsibility
takes care of those who are instrumental in securing its existence and survival like- the owners,
investors, employees, consumers and government in particular and the society and community in
general. So, every business must contribute in some way or the other for their benefit. For
example, every business must ensure a satisfactory rate of return to investors, provide good
salary, security and proper working condition to its employees, make available quality products
at reasonable price to its consumers, maintain the environment properly etc. However, while
doing so two things need to be noted to view it as social responsibility of business.

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Business Law & Ethics

First, any such activity is not charity. It means that if any business donates some amount of
money to any hospital or temple or school and college etc., it is not to be considered as discharge
of social responsibility because charity does not imply fulfilling responsibility. Secondly, any
such activity should not be such that it is good for somebody and bad for others.

Suppose a businessman makes a lot of money by smuggling or by cheating customers, and then
runs a hospital to treat poor patients at low prices his actions cannot be socially justified. Social
responsibility implies that a businessman should not do anything harmful to the society in course
of his business activities.Thus, the concept of social responsibility discourages businessmen from
adopting unfair means like black-marketing, hoarding, adulteration, tax evasion and cheating
customers etc. to earn profit. Instead, it encourages them to earn profit through judicious
management of the business, by providing better working and living conditions to its employees,
providing better products, after sales-service,etc. to its customers and simultaneously to control
pollution and conserve natural resources.

Large organizations or publicly held companies often use corporate governance to promote
business ethics and social responsibility. This governance creates the framework of policies,
procedures, and guidelines for all individuals financial invested in a company. Sometimes, an
industry group can give awards to companies to promote a cause within a field of business.
Corporate social responsibility awards can be given by industry leaders to draw attention to or
raise standards in a certain area of social responsibility.What does it mean to say that "business"
has responsibilities? Only people can have responsibilities. A corporation is an artificial person
and in this sense may have artificial responsibilities, but "business" as a whole cannot be said to
have responsibilities, even in this vague sense. The first step toward clarity in examining the
doctrine of the social responsibility of business is to ask precisely what it implies for whom.
Presumably, the individuals who are to be responsible are businessmen, which mean individual
proprietors or corporate executives. Most of the discussion of social responsibility is directed at
corporations, so in what follows we shall mostly neglect the individual proprietors and speak of
corporate executives.

In a free-enterprise, private-property system, a corporate executive is an employee of the owners

of the business. He has direct responsibility to his employers.That responsibility is to conduct the
business in accordance with their desires,which generally will be to make as much money as Corporate Social Responsibility
possible while conforming to the basic rules of the society, both those embodied in law and those
embodied in ethical custom. Of course, in some cases his employers may have a different
objective. A group of persons might establish a corporation for a purpose–for example, a
hospital or a school. The manager of such a corporation will not have money profit as his
objective but the rendering of certain services. In either case, the key point is that, in his capacity
as a corporate executive,the manager is the agent of the individuals who own the corporationor
establish the institution, and his primary responsibility is to them.

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The corporate executive would be spending someone elses money for a general social interest.
Insofar as his actions in accord with his "social responsibility" reduce returns to stockholders, he
is spending their money. Insofar as his actions raise the price to customers, he is spending the
customers 􀀀 money. Insofar as his actions lower the wages of some employees, he is spending
their money.The stockholders or the customers or the employees could separately spend their
own money on the particular action if they wished to do so. The executive is exercising a distinct
"social responsibility," rather than serving as an agent of the stockholders or the customers or the
employees, only if he spends the money in a different way than they would have spent it.

EXPECTATIONS OF BUSINESS TO SOCIETY

1. Set rules are clear & consistent. Society must define what boundaries organizations should
operate within; what minimum standards are to be expected, met or exceeded; what the
performance criteria are. Society must be consistent in its expectations for corporate social
responsibility through the various governmentalregulations affecting this area .
2. Make sure rules perspective, not retroactive. There is a present trend toward retroactivity in an
attempt to force retribution for the past to make today’s rules apply to yesterdays ball game.
3. Make sure are economically feasible& recognize that society itself must be prepared to pay the
cost –not only of their implementation by business but also their administration by government.
4. Keep the rules within the bounds of technical feasibility. Business cannot do the impossible.
However, many of today’s regulations are unworkable in practice.
5. Make rules goal seeking, not procedure prescribing. Tell organizations what to do, not how to
Do it. Level it to American industrial ingenuity to device the best, most economical, & efficient
way to get there.
.The business generally interacts with owners, investors, employees, suppliers, customers,
competitors, government and society. They are called as interest groups because by each and
every activity of business, the interest of these groups is affected directly or indirectly.

Without business we cannot think society. From society business expects many thing and society
may also. Business activities are important because most people need jobs and come to certain
towns forthose jobs and if there is no business most like there won it be any people because
people also need business to supply there necessities. Society must define what boundaries

Corporate Social Responsibility

organizations should operate within; what minimum standards are to be expected, met or
exceeded; what the performance criteria are. Society must be consistent in its expectations for
corporate social responsibility through the various governmental regulations affecting this area.
Businesses create opportunities with information from many individuals, making the deployment
of assets more efficient and more effective than what a government can do.

REFERENCE

01. Business Ethics- Dr. A R Khan

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