Social Environment

 Business and society

 Corporate social responsibility
 Human development
 Rural development
 Introduction
• Business is an integral part of the social system and it is influenced by other
elements of society which, in turn, is affected by the business.
• The modern concept of business is a very broad one; business is viewed as a
subsystem of the total social system.
• According to the modern view of business, its activities and attitudes are
subject to societal judgement, which may have far-reaching implications. A
business enterprise shall make profit only by accomplishing the socially
accepted goals and by satisfying society.
• Davis and Blomstorm point out that, in taking an ecological view of business in a
systems relationship with society, three ideas are significant in addition to the
systems idea. The three ideas are values, viability and public visibility:
• Values
• Business, like other social institutions, develops certain belief systems and values for
which they stand, and these beliefs, and values are a source of institutional drive.
• These values derive from a multitude of sources, such as the mission of business as
a social institution, the nation in which a business is located, the type of industry in
which it is active and the nature of its employees.
• These values become guides for employees’ decisions in the interface of business.
Second, they become strong motivators for people in a business.
• Viability
• Davis and Blomstorm define viability as the drive to live and grow, to
accomplish the potential not yet reached, and to achieve all that a living
system is capable of becoming.
• If a business is to be a viable, vigorous institution in society. It must
initiate its share of forces in its own environment, rather than merely
adjust to outside forces.
• Every business needs a drive and spirit all its own to make it a positive
actor on the social stage rather than a reactor or a reflector.
• Public Visibility
• The term public visibility refers to the extent that an organisation’s
activities are known to persons outside the organisation.
• Public visibility is different from the idea of a public image. The term
public image refers to what people think about an organisation’s acts,
while public visibility refers to the extent to which its acts are known.
• The importance of public visibility is that it subjects business activities
to public examination, discussion and judgement.
• If acts are not known, they cannot be judged.
 Corporate social responsibility
• Corporate social responsibility (CSR)/corporate citizenship refers to the moral
responsibility of the business to the society by the virtue of being a part of the
society and resourceful to serve the society.
• According to Keith Davis, the term ‘social responsibility’ refers to two types of
business obligations:
– (a) the socio-economic obligation and
– (b) the socio-human obligation.
• The socio-economic obligation of every business is to see that the economic
consequences of its actions do not adversely affect the public welfare. This includes
obligations to promote employment opportunities, to maintain competition, to curb
inflation, and the like.
• The socio-human obligation of every business is to nurture and develop human
values (such as morale, cooperation, motivation, and self-realisation in work).
SOCIAL RESPONSIBILITIES OF BUSINESS TOWARDS DIFFERENT
GROUPS
A) Responsibility Towards the Customers
• To provide customers with goods and services that fulfill their needs and requirements.
• To provide them with qualitative goods and services.
• To maintain a regular supply of goods and services in the market.
• To provide customers with goods and services at reasonable and affordable prices.
• To provide them with proper after-sales services for the purchased goods and services.
• To provide customers with every essential information including warnings regarding the
goods and services.
• To follow proper and fair trade practices and take corrective measures against malpractices.
• To ensure that the grievances of the customers are listened to and resolved quickly.
• https://www.youtube.com/watch?v=1bpf_sHebLI
B) Responsibility Towards the Owners/Investors

• To run the business efficiently.

• To allocate and utilize capital and resources.
• To ensure appreciation and growth of capital.
• To provide a fair and regular return on capital invested.
• To provide required and essential information regarding the schemes of
future growth.
• To ensure the safety of investors’ investments.
• To provide regular payment of interest.
• To give timely repayment of the principal amount to the investors.
C) Responsibility Towards Suppliers

• To give regular orders for the purchase of goods.

• To make a deal with fair terms and conditions.
• To avail reasonable credit period.
• To pay the dues on time.
D) Responsibility Towards Employees
• To provide the employees and workers with timely and regular salaries
and wages, respectively.
• To provide them with a good workplace and safe environment.
• To provide the employees with better career opportunities and
prospects.
• To provide the employees with job security and social security through
Provident Fund, Health Insurance, Retirement Benefits, etc.
• To provide them with proper training for their development and
growth.
• To respect their democratic rights in the formation of unions.
E) Responsibility Towards Society
• To maintain a balance between the economy and the ecosystem.
• To generate employment opportunities.
• To protect the environment by conserving natural resources and wildlife.
• To promote sports and culture.
• To help the weaker sections of society.
• To preserve the social and cultural values of the society and promote
these values.
• To provide proper assistance in education, development, etc., of society.
F) Responsibility Towards Government
• To pay fees, duties, and taxes honestly and regularly.
• To set up new business units as per the guidelines provided by the
Government.
• To follow the pollution control norms set up by the Government.
• To run the business fairly and not indulge in any corruptive and unfair
activities.
G) Responsibility towards competitors
• Offering unusually high sales commission to distributors, agents, etc.,
• Offering huge discounts or free products in every sale to the customers,
and
• Defame rivals through false or vague advertisements.
 Challenges for Social Responsibility of Business
• Knowledge about the relationship between social responsibility and business
performance;
• Teaching and training about the role of social responsibility, especially in commercial
and management schools;
• Awareness and resources among SMEs;
• Transparency, which stems from lack of generally accepted instruments to design,
manage, and communicate social responsibility policies;
• Consumers’ and investors’ recognition and endorsement of social responsibility
behaviours; and
• Coherence in public policies.
• CSR Practices in India

• https://www.csr.gov.in/content/csr/global/master/home/home.html

• https://www.youtube.com/watch?v=45YGqwT7OeI : Ratan Tata Views

• https://www.youtube.com/watch?v=wkYrej9rHQ0
 Human Development
• The concept of human development (HD) is complex and multi-
dimensional.
• The present concept of HD has gained currency with the efforts of the
United Nations Development Project (UNDP).
• Since its launch in 1990, the Human Development Report (HDR)
published by UNDP has defined HD as the process of enlarging people’s
choices. The most critical ones are to lead a long and healthy life, to be
educated, and to enjoy a decent standard of living. The additional
choices include political freedom, other guaranteed human rights, and
various ingredients of self-respect.
According to Mahbub ul Haq,
• The defining difference between the economic growth and the human
development schools is that the first focuses exclusively on the
expansion of only one choice—income— while the second embraces the
enlargement of all human choices—whether economic, social, cultural
or political. It is sometimes suggested that the expansion of income can
enlarge all other choices as well.
 According to Paul Streeten, HD is necessary on account of the
following reasons:
• HD is a means to higher productivity.
• The ultimate purpose of the entire exercise of development is to treat men, women, and
children— present and future generations—as ends, to improve the human condition, to
enlarge people’s choices. (sustainability)
• It is the experience of all developed countries that has seen improvement in education
levels (particularly of girls), better health facilities, and reduction in infant mortality rates
(IMRs), leading to a lowering of the birth rates. While improved education facilities make the
people aware of the benefits of a small family (a higher-income level, better standard of
living, etc.).
• HD is good for physical environment. Deforestation, desertification, and soil erosion decline
when poverty declines.
• HD can help in reducing the civil disturbances in a society and in increasing the political
stability.
According to Mahbub ul Haq, there are four essential components in
the HD paradigm: equity, sustainability, productivity, and
empowerment.

• Equity
• If a development is to enlarge
people’s choices, people must
enjoy an equitable access to
opportunities.
• Equity in access to opportunities
demands a fundamental
restructuring of power in many
societies
• Sustainability
• The next generation
deserves the opportunity to
enjoy the same well-being
that we now enjoy and this
right makes sustainability an
essential component of the
HD paradigm.
• Productivity
• An essential part of the human
development is productivity,
which requires investments in
people and an enabling
macroeconomic environment for
them to achieve their maximum
potential.
• Economic growth is therefore a
subset of human development
models
• Empowerment
• Empowerment means that people are in a position to exercise choices of
their own free will.
• It implies a political democracy in which people can influence decisions about
their lives.
• It requires economic liberalism so that people are free from excessive
economic controls and regulations.
• It means decentralisation of power so that real governance is brought to the
doorstep of every person.
HUMAN DEVELOPMENT REPORT 2021-
22
• Open the following link to evaluate the HD report of
the whole world including India.
• https://hdr.undp.org/system/files/documents/global-report-
document/hdr2021-22overviewenpdf.pdf
• Identify HDI rank of India.
• HD practices initiated in India
 Rural Development
• ‘Development’ may be defined as an activity or process of
both qualitative and quantitative change in the existing
systems, aiming at an immediate improvement of the living
conditions of the people or increase the potential for a
betterment of living conditions in future.
• World Bank publication defines rural development as
‘improving the living standards of the masses of the low-
income population residing in rural areas making the process
of rural development self sustaining’.
 Rural Development
• This definition is composed of three important elements:
1. Rural development should be viewed as a process of raising the
capacity of the rural people to control their environment. It includes
all aspects of rural life—social, economic, cultural, and political;
2. Rural development as a process should continuously raise the capacity
of the rural people to influence their total environment, enabling
them to become initiators and controllers of changes in their
environment.
3. Rural development must result in a wider distribution of benefits
accruing from technical developments and the participation of
weaker sections of the rural population in the process of development.
 Michael Todaro views of Rural development
• Rural development encompasses:
1. Improvement in levels of living, including employment, education,
health and nutrition, housing and a variety of social services;
2. Decreasing inequality in the distribution of rural incomes and in rural-
urban balances in incomes and economic opportunities, and
3. Increasing the capacity of the rural sector to sustain and accelerate the
pace of these improvements.
 Scope of Rural Development
1.Developing Social Consciousness:
• among people about the different hindrances to their development, the
ways and means of overcoming them, their rights and duties in the
community in which they live, progressive aspects of their traditions,
and their own strengths and potentialities to develop themselves.

2. Collective Decision-making and Collective Action:

• collective decision-making depends upon the sympathy towards others,
helping attitude, collaborative attitude of sharing the gains of collective
work, and the ability to face problems and explore the means of solving
them.
3. Dedicated Village Leadership:
• It is a process that should come from within and it cannot be imposed. It
is only through the honest and dedicated leaders of the village that
villagers can be motivated and a proper direction can be given.

4. Use of Science:
• Through science and scientific reasoning, the illiterate and ignorant rural
poor can be convinced of the causal relationship between events; and
their knowledge and awareness helps in a better understanding of social
relationships and reduces the hold of prejudices and superstitious
beliefs. With scientific knowledge, one can improve work skills.
5. Development of Agriculture and Allied Sectors:
• Agriculture and allied activities should be developed as more rewarding
pursuits with a focus on higher productivity.
6. Provision of Subsidiary Occupations and Incomes:
• The small and marginal farmers, the landless poor, and similar such rural
poor without any asset must be helped to have a gainful employment
through dairy farming and other subsidiary occupations.
7. Development of Cottage and Village Industries:
• The local resources in terms of raw material, capital, and so on, must be
identified and suitable village industries must be started.