Social Responsibility: Business and Government
Introduction
Social responsibility is a concept that has long been connected to both business companies and government administrations. Basically, it is a term used to describe both sectors’ responsibility on protecting resources and the people’s interest. While these are already known as one of the main duties of the government, some analysts wonder whether social responsibility should really be part of businesses’ operations. Critics’ points of view in general noted that the social responsibility of business organizations is to generate profits by serving its shareholders well. Other businesses also stated that dealing with ethical, legal or economic issues is not covered by their responsibility scope; this should be handled by relevant government agencies or departments. In other words, organizations do not find it appropriate to interfere with the responsibilities others are assigned to perform.
While this may be justifiable, is it really true that social responsibility does not play any significant role to the business sector? Does is not provide any positive effect to their operations or to their profit-oriented objectives? This paper will then try to analyze the belief that businesses should concentrate on profit generation while governments should be the ones in charge of doing social responsibility efforts. The principle behind social responsibility will be discussed in addition to the elaboration of the raised issue. Finally, the role of social responsibility and the reason for its integration to business operations will be identified.
Social Responsibility and the Government
Social responsibility has been defined as the commitment to operate through an economically, environmentally and socially sustainable manner ( 2005). In the business setting, social responsibility refers to the standards and values by which companies operate. It should affect the different aspects of the business, from its raw materials to the development of the products. Social responsibility should also influence how organizations communicate with the government and the media; this should also be the basis on how businesses operate in various parts of the world (, 2000).
According to (1996), social responsibility is supported by the concepts of multidimensional definitions and social marketing. In the multidimensional definitions concept, the focus is on the major responsibilities expected from government and business companies. These major responsibilities include economic, legal, ethical and philanthropic dimensions ( 1991). These responsibilities must be performed in order to benefit not only the government or the business but also their employees, customers, the community and the general public.
(1991) notes that the social marketing concept of social responsibility stresses that government and companies should operate in a way that maintains or enhances the well-being of the people as well as the society. (1992) supported this concept further by stating that social responsibility is the avoidance of harm and the provision of good services. The definition given by the authors on social responsibility may vary to a certain degree. However, the meanings of these definitions emphasize on one matter, and that is, a socially responsible organization must have priorities other that short-term profitability ( 1996).
While the concept of social responsibility has been connected to both government and business sectors, there had been claims that this should solely be placed under the duties of government officials. In the article written by (1970), it was noted that the social responsibility of business is to take part in activities that would increase its profits and shareholder value. The important responsibility businesses must perform is to comply with various business regulations and operate in the absence of fraud, deception and monopoly. Social responsibilities that focus on combating discrimination, preventing pollution and other social activities already require political mechanisms; thus, these are already the responsibilities of the government and related agencies.
It has also been noted that making businesses perform social responsibilities has no value considering that the organizations would only do them out of the influence of unanimity. Generally, sole profit generation within a certain society may have unpleasant connotations; hence, most people stand by the belief that serving the community and proving good services are better than increasing profitability alone. In this case, social responsibility left business organizations no other choice but to do activities related to social responsibility. From this point, it is stressed that businesses should not be tasked to perform social responsibilities as there are only shared values - as most people value the performance of good deeds, businesses are clearly overruled; they have not other alternative then but to conform (1970).
This view clearly emphasizes that it will be useless to have the business sector integrate the principles of social responsibility considering that there are several factors that influence them to comply by force. In one article (2004), of The Economist noted that social responsibility efforts are actually disadvantageous for business companies. This assessment is mainly due to irresponsible media. noted that businesses are performing social responsibility acts just to prevent bad publicity as well as criticisms from non-governmental organizations and not to promote the company or the shareholders’ interest. The issue has in fact made companies hesitant to operate in countries affected by extensive poverty. The emphasis of social responsibility to the business sector had made it difficult for companies to follow societal standards and operate freely.
The role of social responsibility has been strongly aligned to government administrations through actual cases as well. For instance, in 1958 Royal Dutch Shell formed a joint venture with the Nigerian government in order to operate in Ogoniland. While the venture led to significant profit generation, the observers of the World Council of Churches (WCC) reported in 1995 that approximately 56m gallons of oil spills were seen from the community water supplies and farmlands, resulting to massive environmental damages. Extensive protest campaigns had been carried out mainly by the Ogoni people, demanding that the company clean up the spilled oil in their community. The situation had grown hostile, causing violence and death; due to this, Shell pulled out its operation in the area (, 1998).
Despite the campaigns and protests, the company stressed on its defence, acting on the matter would be inappropriate for Nigeria’s sovereignty and its local politics as it is an act of interference. Furthermore, the company believes that the demands of the protestors are beyond the scope of the business and should be covered by the government’s sphere of responsibility ( 1998). From this example, it is clear that some multinational companies believe that social responsibilities should be handled by the government officials rather than the business sector.
Social Responsibility, Business and Related Theories
Based from the description above it has been made clear that there really should be a distinction between the government and business sector when it comes to social responsibilities. However, from the given case of Shell, it does not seem appropriate for the government to handle such issues alone when the organization itself is largely responsible. While there may be divided views as to whether businesses should just focus on profit and value generation, it has also been raised by other analysts that business should not only concentrate on profitability matters (1996). One of the most related concepts in this topic is the utilitarian perspective. The utilitarian perspective is an ethical principle wherein an action is considered correct or appropriate if it is for the good of most people. This principle further stresses the need for business to widen their scope of responsibility and partake in social responsibility efforts.
Several theories had actually been introduced, explaining the relation of business and social responsibility. One of which is the virtue theory developed by Plato and Aristotle. This theory is centered the person himself and the type of person he intends to be. The virtue theory states that becoming a virtuous person is dependent on individual choice. In this theory, the characteristics of a virtuous person are taken into account. More specifically, if a person prefers to become virtuous, he will then live a good, happy and flourishing life. Under ethical principles, one will derive his happiness out of doing good deeds to other people.
In business, the virtue theory serves as a significant motivator for operators, particularly in the concept of social responsibility. Businesses are encouraged to operate by means of helping or benefiting other people due to the belief that doing so will led to their own happiness. This is a relevant theory that shapes business operators’ minds towards goodwill, fair management and community benefit. This theory also explains why business priorities should shift from personal gain to general benefit.
Another theory known as the means-end theory, also stresses that business and social responsibility are related as companies need to broaden their scope in terms of handling various business issues and situations. This theory also promotes the concept that different ethical positions must be analyzed. Specifically, this theory stresses the value of comparative evaluation and human behavior. This theory basically enables the person to see the different sides or merits of various actions. By doing so, the person is able assess which action will most likely lead to a more valuable and moral outcome.
The use of means-end analysis can actually take two types of approaches. These include the deontological and teleological approaches. In the deontological approach, the consequence of an action is not considered; however, actions are categorized as good or bad based on their inherent characteristics. On the contrary, teleological or common sense approach is focused on the consequences of actions. According to (1999), this approach is supported by the utilitarian principle where actions are done based on the number of its beneficiaries.
In general the utilitarian principles as well as the cited ethical theories clearly establish the relation between business and social responsibility. In particular, this concept must explains that businesses today should not constrain themselves to profit-oriented goals alone; they must also consider how their strategies, actions, products, services and operations would affect the general public.
The role of Social Responsibility to Business
The inclusion of the social responsibility concept to the business sector is not only necessary to broaden the companies’ involvement to social matters. The application of social responsibility to organizations is in fact a main contributory factor to their profitability. A study has been conducted with regards to the significance of social responsibility to profitability ( 2001). Although, further studies are still necessary in order to analyze the correlation of these factors, the findings of showed that social responsibility plays a significant role in consumer appeal. The perceptions of consumers however, tends to vary with regards to this aspect. Nonetheless, this stresses the importance of social responsibility not only on benefiting the stakeholders but also in achieving the goals of the companies towards growth and profitability.
At present, business operators have already realized the growing importance of social responsibility and that integrating this concept cannot be sufficiently supported by the optimization of shareholder value. The realization of the value of social responsibility in the business sector was further emphasized by the results of a survey conducted by PricewaterhouseCoopers. The survey used a total of 1161 chief executive officers from various companies found in 33 countries. The findings showed that 68 percent of the respondents stated that social responsibility is essential to business profitability ( 2002). Perhaps, the increasing demand of the public to make global companies accountable for business matters that undermine economic, social and environmental development contributed to this realization as well.
Nations worldwide have also been active in ensuring that social responsibility is observed by the business sector. The European Commission for instance, had proposed that a social and environmental responsibility standard should be developed and applied. This strategy is centered on validations tools, evaluation methods, social and environmental reports. The standards were also developed in order to maintain socially responsible investing (, 2002).
In Canada, the national government is also considering various public policies that would promote social responsibility within the business sector. One of the most interesting developments with this goal was in 2001 where five private citizens organized a commission on accountability and democracy. The outcome of the commission resulted to a final report containing 25 policy recommendations for the promotion of domestic and global social responsibility. The French government also participated on the promotion of social and environmental responsibility by overhauling its corporate law; here, the law mandates business companies to disclose their social, environmental and profit performance ( 2002).
The cited nations exerted efforts to promote and integrate social responsibility due to its potential to support business profitability. Thus, the belief that social responsibility does not contribute the companies’ profit-making responsibility is possibly a misconception. (1984) indeed noted that social responsibility pertains to the act of taming a dragon where business operators should know how to transform social issues into economic opportunities, human competence, productive capacity, well-paid jobs as well as wealth.
It has been cited by previous analysts that the social responsibility of the business sector should only be centered on profit generation and compliance with business regulations. At present, this is no longer applicable. Socially responsible corporations are now expected to abide with certain standards of behavior that is more the mere compliance of the law. In the business sector, to be socially responsible means building good relations with the suppliers, employees, customers and other stakeholders. While some businesses view social responsibility as the duty of multinational or wealthy companies to give to charity, this is already considered as an old-fashioned philanthropy. Nowadays, the mere act of giving to the poor is not considered social responsibility anymore; rather, corporation should exercise community involvement by means of protecting the environment, supporting local schools and encouraging staff ( 2000).
Several multinational companies had already integrated social responsibility in their operations through the cited means. One of which is Anglo American plc, a mining company that is considered as the global leader in the industry. Its main products include diamonds, platinum, goal, coal, industrial minerals as well as base and ferrous metals. As a global leader, Anglo American operates extensively in a number of foreign sites including Europe, Australasia, North and South America as well as Africa. The company believes that it has a strong commitment towards sustainable development and that the business is helpful in alleviating worldwide issues such as poverty. Furthermore, the company is aware that it has a major responsibility towards the community, considering that the mining business ca cause disruptive effects on people. Thus, the company developed an approach for addressing ethical issues; this approach is contained in the company’s Good Citizenship: Our Business Principles framework (, 2002).
Aside from this, the multinational company also conducted social responsibility acts centered on safety, health and environmental protection. The safety and health aspect of the company pertains to the efforts related to the prevention of work-related injuries and community health diseases. For this issue, Anglo American’s ultimate goal is zero fatalities as well as loss-time injuries. In 2001, the goal of the company was to achieve a 33% reduction on injuries, which will increase over the years. In order to support this goal, the company implemented a safety audit in all of its business sectors. The effort was a successful one as the company acquired a 34% reduction in injuries for every 200,000 work hours. The internal and external audits in all of the company’s operations have become more and more formalized ( 2001).
The health aspect on the other hand is divided into two categories: the occupational and community health. For occupational health, the aim of the company is to have all of its employees and contractors undergo the medical surveillance program, which will increase their preparedness towards the health risks they may encounter at work. Anglo American’s business sectors must also assess their occupational health management systems. On the other hand, the company aims to enhance its AIDS prevention programs through counseling and testing activities ( 2001). Furthermore, the company also aims to involve itself continuously to its malaria eradication international programs.
One of the main developments in the environmental efforts Anglo American was the improved reporting system for incidences related to environmental issues. Under this development, the company now creates reports on environmental incidents and fine, which helps it gauge its performance on conserving the environment. Anglo American plc also maintains the environment by means of effective energy conservation. The company has installed solar switches, energy efficient bulbs and electric motors. Air pollution abatement units were also installed in its operational units, which in turn addresses the problems on gas emissions. In Hudson Bay Mining and Smelting’s (HBMS) for instance, a subsidiary of Anglo American plc, the upgrades done for the sector’s gas handling system resulted to a 30% reduction on CO2 emissions, totaling to about a hundred thousand tones every year (, 2001).
Indeed, the business of business is to generate profit and increase shareholder value. Organizations are creatures of the market that would have to look after their shareholders; doing so would naturally result to higher profits. Nonetheless, this does not limit businesses to this goal.
Conclusion
It has been argued whether the government administrations should be the only ones in charge of performing social responsibility activities while businesses should just focus on profit generation. Some analysts claimed that this role distinction should be maintained considering that it is inappropriate to interfere with others’ duties. It is useless for companies to perform socially responsible act when they are only forced to do them. Others even noted that is economically irresponsible. However, it has also been stressed by a number of theories that the business sector and social responsibility are very much related to each other.
Moreover, contrary to the belief that social responsibility undermines businesses’ profitability goal, this actually help in generating profit through customer loyalty and good company image. From this discussion, it has been emphasized that instead of containing ones responsibility to a limited scope, businesses should optimize social issues into profit resource and broaden their options. Finally, both government and business sectors play a significant role in protecting the interest of community; both should then coordinate with each other in order to perform this duty.
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