What is Social Responsibility? Definition, Types, Approaches, Areas, Examples, and Pros/Cons

Do you think companies have to contribute to society, think, and act upon the welfare of society? Or, their goal should be just achieving profit maximization? Let’s find out what the social responsibility of business has to say about this.

What is Social Responsibility?

Social responsibility means that businesses in the course of achieving organizational desired goals should also work upon the welfare of society. It states that a business goal with profit optimization should also be conducting business activities in ways that benefit society and the environment too.

In a simple sense, Organizations are established and function in society. They rely on many societal resources for development and survival. As a result, businesses have some social obligations to ensure the welfare of various stakeholders in society, such as customers, investors, the local community, the government, etc. This caring behavior of an organization for societal benefit is called social responsibility.

Since social responsibility represents the actions of business, it is also called corporate social responsibility (CSR). It puts the obligation of managers (decision makers) on behalf of an organization, to make decisions that assure actions that protect and improve the welfare of society along with their own interests.

The importance of socially responsible activities of the business has increased as the public now positively responds to those businesses that conduct socially acceptable activities, and various investors and shareholders started to sink their money in organizations that execute ethical behavior. The growing competition and globalization effect forced companies to think about socially acceptable business practices.

Today the success of business organizations is highly determined by their image in public. Maintaining a good image in society has been a critical task for management. And, being active in promoting society’s well-being along with achieving organizational interest is what states the fullest level of social responsibility of business.

What is the Objective of Social Responsibility?

Following are the main objectives of social responsibility.

  • Strive to balance between the company’s profitability and society’s welfare.
  • Maintain a cordial and healthy relationship between the organization and society.
  • Establish a good image in society.
  • Put obligation on decision-makers to consider society’s well-being while making decisions.
  • Build society’s (customers and other stakeholders) trust in the company.
  • Ensure the long-term success of an organization.

Approaches to Social Responsibility

Although it offers various significance to business organizations some managers never consider the consequences of their decisions and actions on the health of society. Whereas some managers actively contribute to society’s prosperity.

There are four main approaches to social responsibility you can choose. They are:

Social Obstruction Approach

Managers who adopt this viewpoint believe they are exempt from all social obligations. They believe that the organization cannot resolve social or environmental issues. In their view, taking on social obligations just serves to waste their savings.

Due to the fact that their normal replies are focused on attempting to deny or simply conceal the legal acts, these businesses cross the ethical or legal line that separates acceptable from undesirable conduct.

Social Obligation Approach

One step ahead of social obstruction in social responsibility is a social obligation approach. Under this organizations conduct everything that is required only for formalities but nothing more.

Managers who take a social obligation approach insist that their job is to generate profits with little social contribution just to be free from the action, being unethical.

Social Response Approach

A company that uses the social response approach satisfies its legal and ethical obligations, but only in certain circumstances. Such businesses freely commit to taking part in social projects, but advocates must persuade the organization that the initiatives are worthwhile. These businesses aim to demonstrate how they benefit society.

Social Contribution Approach

The highest form of social responsibility that an organization can adopt is the social contribution approach. Organizations with this approach view themselves as a citizen in society and proactively seek opportunities to contribute.

They believe that social responsibilities are just cultivating their business for the future. So, they contribute their maximum possible amount to social welfare.

Types of Social Responsibility

Companies that are able to balance their economic goal achievement by adhering to society’s and environmental issues can effectively and efficiently achieve long-term success and even in a highly competitive business environment, they can survive.

The key types you can drive your business for socially responsible activities include four. They are:

  • Environmental Efforts – It includes acting upon the protection, preservation, and welfare of the natural environment. Most companies produce large carbon footprints – acting to reduce such footprints can be beneficial for both the company and society.
  • Philanthropy – Organizations can do socially responsible activities by donating money to society’s welfare fund, charity fund, or providing different goods or services to people free of cost. Usually, large businesses can do way better than small businesses in philanthropic activities.
  • Ethical Labor Practices – Labors i.e. employees are the most worthwhile assets of companies. Companies practicing social responsibilities should treat employees fairly, provide fair pay as stated in labor law, and maintain an inclusive workplace.
  • Volunteering – To show companies’ sincerity and dedication to helping society prosper can also be done through participating in different events and encouraging employees to participate in different social causes and issues.

Areas of Social Responsibility

Your organization must not be socially responsible to only one stakeholder but instead to all the stakeholders of the organization.

The areas of social obligation in which businesses have to contribute are investors, consumers, government, employees, and the community. Let’s understand what the social responsibility of a business should be toward these stakeholders.

Toward Investors (Shareholders)

Investors are the owners of the company. The organization should have the following responsibilities toward investors.

  • To maximize the return on investment.
  • Ensure the safety of the investment.
  • Provide reasonable dividends regularly.
  • To provide an opportunity to participate in important meetings and decision-making processes.
  • Providing fair and true financial status.
  • Maximize the value investment through effective utilization of other resources.

Toward Consumers

Consumers are the ultimate users of the products. Following are some social responsibilities that organization should bear:

  • Provide better quality products at the right time at a reasonable price.
  • Ensure after-sales service based on the nature of products.
  • Consulting customers’ needs and wants and offering their desired products.
  • Avoid unfair trade practices like unfair pricing, cheating on product quality, adulteration, etc.
  • Promoting products by means of socially acceptable marketing messages.
  • Treating consumers fairly.

Toward Employees

  • Provide fair wages and other benefits like bonuses, allowances, a share of profits, etc.
  • Ensure job security.
  • Treating ethically and fairly all employees.
  • Valuing all the differences in employees that may in terms of education, qualification, culture, caste, age, etc.
  • Ensure welfare facilities like further education, promotion, medical facilities, foreign visits, training, growth opportunities, etc.
  • Maintain a healthy working environment.
  • Promotes participative management.
  • Job design is based on the interests and capabilities of employees.

Toward Government

  • Paying tax regularly and honestly to Government.
  • Abide by the laws, rules, and regulations imposed by the government.
  • Support national problems like unemployment, poverty, illiteracy, inflation, family planning, etc.
  • Supporting government programs.
  • Showing political impartiality and ethical business practice.

Toward Community (Society)

  • Create employment opportunities for society’s people.
  • Prevents pollution and ensures conserving natural resources for environmental protection.
  • Utilizing natural resources properly or ethically.
  • Designing and implementing programs for weaker sections of society.
  • Maintain and develop social and cultural values and norms.
  • Give best efforts to improve society’s well-being and protect the long-term interests of society.

Advantages and Disadvantages of Social Responsibility

The following are common pros and cons of social responsibility in business.

Advantages of Social Responsibility:

  • Good Public Image – People always like businesses that work on improving the health of their inhabitants. It aims to treat the society and public in a way that benefits their way of conduct.
  • Happy Stakeholders – It contributes to the company’s stakeholders the way they benefit like consumers, employees, society, investors, and government – increasing their satisfaction.
  • Customer Satisfaction – Customers have satisfaction in a company that provides good quality products and aims to not harm society’s well-being. Their satisfaction level increases and they more become engaged with a brand.
  • Survival and Growth of Business – In today’s competitive market customer satisfaction, satisfied employees, and a good public image is necessary for the long-term survival and growth of an organization.
  • No Government Pressure – The government as a regulatory body also has a law to support society – ensuring social responsibilities also reduce the unwanted pressure from the government.
  • Long-Term Relationship With Society – It respects the principle of treating customers and society fairly. As a result, it promotes a good and healthy bond between the company and society.

Disadvantages of Social Responsibility:

  • Cost More – One of the disadvantages of social responsibility is that it requires more money to help society. Big organizations can afford to allocate some percentage of money for social welfare but small businesses may not.
  • Customers May Be Impatient – Most customers want to see the immediate results of the actions of businesses. As such when companies’ efforts to support well-being take more time people might think of it as not a campaign for their support.
  • Might Lead To Greenwashing – Greenwashing refers to the conduct of businesses where they attempt to work as environmentally friendly but none of the actions support the health of a green environment.

Examples of Social Responsibility

Today companies are actively involved in helping the life of society along with achieving their self-interests. Some examples of social responsibility of business may include:

  • Supporting Society
  • Making decisions & products that protect the long-run interests of communities.
  • Launching environment protection campaigns.
  • Acting on reducing carbon footprints
  • Adopting ethical business practices.
  • Building an inclusive work culture.
  • Adhering to social norms and values.
  • Taking a part in charitable programs.
  • Ensuring providing healthy and environmentally products.
  • Treating employees fairly and ethically.
  • Respecting the customer’s interests and treating them fairly.
  • Providing employment opportunities to the community’s people.

In addition to these examples, take an example of Google – Google’s CSR initiatives take into account the needs of its employees as a key stakeholder group by offering competitive pay and a fun work environment. High salaries as well as numerous incentives and bonuses, including complimentary meals and flexible work schedules, are all part of the company’s compensation strategy.

In Conclusion…

Hence, social responsibility is an effective way for companies to earn long-term profit by ensuring the long-term interests of society and the environment. It should be taken as the everyday responsibility of business, not as a forced task.

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