Why is social responsibility important in business?

[kritinidhi]

Why is social responsibility important in business?

[kritinidhi]

We all know that people engage in business to earn profits. A business utilizes a lot of society’s resources hence, it the duty of every business and economic systems to provide a satisfactory rate of return to investors, provide a good salary, security and proper working conditions to workers, make available quality products at reasonable prices to its customers etc. Social responsibility is an ethical framework and suggests that an entity, has an obligation to act for the benefit of society at large. All companies have two- point agenda – to improve qualitatively (management of people and processes) and quantitatively (impact on society). Nowadays, the second point is as important as the first. Thus, the concept of social responsibility discourages businessmen from adopting unfair means like black – marketing, hoarding, alteration, tax evasion, cheating customers etc. instead it encourages them to earn profits through judicious management of the business.

Social responsibility is important to a business because it demonstrates to both consumers and media that the company takes an interest in wider social issues that have no direct impact on profits margins. A healthy social responsible policy can impact buying decisions where customers seek to make an ethical purchase. Although an initial investment may be involved to spilled portions of profits, social responsibility in marketing promotes a positive company image which can significantly impact productivity and profitability favorably.

There are numerous examples of how some leading Indian companies like ITC, HUL and ICICI banks improved their profitability by innovating processes to this huge, untapped market, while simultaneously benefiting this society.

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