Business ethics and social responsibility

Business Ethics

A business should earn profits without harming the environment and any other party. For that it is necessary to follow a code of ethics when running businesses. Those business ethics depend upon the values of the people who are involved in the business.

Common agreements arrived at in writing, verbally or symbolically, by a person or a group of people regarding what is right and what is wrong or what is good and what is bad are called business ethics.

Examples :-
Giving priority to the consumer in every business affair
Doing business without harming the natural environment

Three main parties influence the determination of business ethics.

1. Proprietors
2. Members of the organization
3. External society

Social Responsibility of a Business

The traditional view regarding the social responsibility of a business is that a business should provide maximum returns for the capital invested by the owners. But at present, the social responsibility of a business has become a broader concept.

Social responsibility of a business indicates that a business has a responsibility towards the owners of the business as well as the whole external society within which the business is operated and nurtured.

Hence businesses should pay attention to the prevailing issues of the society including protecting the environment, economic development, social and cultural development and establishment of a peaceful society.

Levels of Social Responsibility of a Business

Social responsibility of a business can be fulfilled according to the following ways.

1. Economic responsibility
2. Legal responsibility
3. Ethical responsibility
4. Philanthropic responsibility

1. Economic responsibility

The responsibility to contribute to increase the rewards of the owners of the business. Fulfillment of this is essential for the survival of the business.

Examples :- Securing the financial stability of the business, profitability, using limited resources efficiently.

2. Legal responsibility

This is to conducting the business according to the rules and regulations imposed by the government and other institutions.

Examples :-
Paying Employees Provident Fund properly
Refraining from environmental pollution
Refraining from using prohibited raw materials

3. Ethical responsibility

This is to comply with the written or symbolic rules which are believed to be right by the society in which the business operates. Even though these responsibilities are not compulsory in order to conduct the business, they are fulfilled by businesses as they represent the expectations of different social parties.

Examples :-
Giving equal job opportunities to women and to the minority
Training and development of employees
Improving the quality of the product/service

04. Philanthropic responsibility

These are the responsibilities which are not essential for the survival of the business and not directly expected by different parties of the society from the business. These are the high level responsibilities which are fulfilled voluntarily by a business without expecting anything in return.

Examples :- Sponsoring community events including sports, educational and health events


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