There are two approaches to understand businesses social responsibility
- Classical View
- Socioeconomic View
Classical View of Social Responsibility
According to the Milton Friedman an economist that today managers are professionals, their social responsibility is to minimize the profit. According to him their first priority should be to run the business in the best interest of owners.
Socioeconomic View of Social Responsibility
According to Socioeconomic View of Social Responsibility maximizing profit is the second priority, the first priority is protecting and improving society’s welfare. Now-a-days modern business organizations are not only economic institution, but they engage their self in such activities to influence political process for their benefits. Society encourages business to become involved in its social, political and legal environment.
Business Social Responsibility
Businesses are socially responsible, there are some points which recognize that businesses are socially responsible, these are:
- Public Image. Businesses are striving to develop their public image to increase their sales, access to financing better employees etc. Since the public consider social goals important, business can create a favorable public image by pursuing public goals.
- Better Environment. If the business involve itself socially can help to solve difficult social problems, which help to create a better quality of life in which to attract and keep skilled employees.
- Public Expectation. Public opinion supporting business pursuing social as well as economic goals.
- Long run Profit. Socially responsible business tend to have more secure long run profits. It is the result of better community relations and improved business image.
- Balance Responsibility & Power. Business have a large amount of powers in society, and same amount or responsibility requires to balance both the power and responsibility.
- Stockholder Interest. Social responsibility improve a business stock price in the long run. The stock market will view the socially responsible company. Therefore, it will awarded its stock a higher price earning ratio.
- Possession of Resources. Business organization have financial resources technical experts and managerial talent to support public and charitable projects that need assistance.