Bring out the need for Social Responsibility of a Business Enterprise


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1. Iron Law of Responsibility: Society gives business its charter to exist and that charter can be amended or revoked at any time if it fails to live up to society’s expectations. Therefore, if a business intends to retain its existing social role and social power, it must respond to society’s needs constructively. This is called theIron Law of Responsibility. In the long-run, those enterprises who do not use power in a manner that society considers responsible, will tend to lose it.

2. Conversion of Resistances into Resources: If the innovative ability of a business is turned to social problems, many resistances problems) can be transformed into resources and the functional capacity of resources can be increased many times.

3. Wealth creation: Social responsibility becomes an integral part of the wealth creation process – which if managed properly should enhance the competitiveness of business and maximize the value if wealth creation to society.

4. Effective use of Resources and Power: Businesses command power over the productive resources of a community. They are obliged to use those resources for the common good of society. They should realise that the power to command resources has been delegated to them by the society to generate more wealth for tits betterment. They must honour social obligations while exercising the delegated economic power.

5. Long-Term business Interest: a better society would produce a better environment in which the business may gain long-term profit maximization. A firm which sensitive to community needs would, in its own self-interest, like to have a better community to conduct its business. To achieve that, it would implement special programmes for social welfare.

6. 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 improved public image.

7. Avoiding Government Intervention: Regulation and control are costly to business, both in terms of energy and money 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 to use that power responsibly, thereby avoiding Government intervention.


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