can business afford to ignore social responsibilities

8/18/2019 Can Business Afford to Ignore Social Responsibilities

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Can Business Afford To Ignore

Social Responsibilities?

K E I T H D A V I S

When you m ake business decisions that involve social res

sibilities, you should keep in mind the three basic ground 

presented here.

Few persons would deny that there are sig-

nificant changes taking place in social, politi-

cal,

  economic, and other aspects of modem

culture. Some of these changes businessmen

may wa nt an d others they m ay dislike, but in

either instance the changes do exist and must

be faced. As our culture changes, it is appro-

priate—even mandatory—that businessmen

re-examine their role and the functions of

business in society. One area undergoing ex-

tensive re-examination is the responsibility

businessmen have to society in making busi-

ness decisions.' These are the questions that

are being asked:

Why do businessmen have social respon-

sibilities, if in fact they do?

How does a businessman know in what

directions his social responsibilities lie?

If businessmen fail to accept social respon-

sibilities incum bent up on them , what con-

sequences may be expected?

  For sharpening some of the ideas herein the author

wishes to thank members of the UCLA Summer Execu-

tive Program, where he served as conference leader of

sessions on Th e Social Responsibility of Bus iness in

1958 and 1959; however, the author takes full responsi-

bility for the ideas presented in this article.

^ For excellent examples of cu rrent literature see

Howard R. Bowen,

  Social Responsibilities of the Busi-

nessman

  (New York: Harper and Brothers, 1953); Ed-

ward C. Bursk, Ed.,  Business and Religion  (New York:

Harper and Bitothers, 1959); Ralph J. Cordiner,

  New

Frontiers for Professional Managers (New York: McGraw-

Hill Book Company, 1956); Crawford H. Creenewalt,

It is my purpose in this article to dis

these questions in a very fundamental

Without looking at specific company p

tices and without insisting upon a partic

program of action, I wish to discuss t

basic ideas which must underlie all of

thinking about social responsibility, reg

less of w hat choices we eventually m ake.

first two ideas are constant and enduring

matter what social changes occur. The t

is more d irectly related to social change

day, b ut I believe it is just as fundament

the others.

Social responsibility is a nebulous

and, hence, is defined in various ways.

used here within a management contex

refer to  businessmen's decisions and

 a

taken for reasons at least partially bey

the firm's direct econ om ic or technica

terest. Thus, social responsibility has

rather different faces. On the one hand, b

nessmen recognize that since they are m

aging an economic unit in society, they h

a broad obligation to the community w

regard to economic developments affec

the public welfare (such as full employm

inflation, an d m aintena nce of competition

qu ite different typ e of social responsibilit

on the other h and , a businessman 's obliga

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 self

e. Accordingly, the term social respon-

lity refers to both socio-economic and

Note that the importance of social respon-

ctions toward others . Social

  influences  a businessman's decision even

  rarely  would

.

While it is true that only businessmen

  per se make socially

S O C I A L R E S P O N S I B I L I T I E S 7 1

social power.  It comes to businessmen be-

cause they are leaders, are intelligent men of

affairs, and speak for the important institu-

tion we call business. They speak for free

enterprise, for or against right-to-work

pohcies, for or against the ir local school bond

election, and so on, in their roles as business-

men.

  When they speak and act as citizens

only, and those involved recognize this fact,

then whatever social power businessmen

fKJSsess is that of a citizen and is beyond the

bounds of this discussion. In practice, how-

ever, it is often difiBcult to distinguish be-

tween these two roles, thereby further

comphcating the situation.

To the extent that businessmen or any

other group have social power, the lessons of

history suggest that their social responsibility

should be equa ted with it. Stated in the form

of a general relationship, it can be said that

soci l responsibilities

 of businessmen need to

be commensurate with their social power.

Though this idea is deceptively simple on its

face,

  it is in reality rather complicated and

is often overlooked by discussants of social

responsibility. On the one hand, it is argued

that business is business and anything which

smacks of social responsibility is out of

bounds (i.e., keep the fK)wer but accept no

responsibility). On the other, some would

have business assvmie responsibilities as sort

of a social godfather, looking after widows,

orphans, water conservation, or any other

social need, simply because business has

large economic resources. Both positions are

equally false.

The idea that responsibihty and power go

nand in hand appears to be as old as civiliza-

tion  itself.  Wherever one looks in ancient

and medieval history—Palestine, Rome,

Britain—men were concerned with balanc-

ing power and responsibility. Men, being

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7 2 C A L I F O R N I A M A N A G E M E N T R E V I E W

The idea of co-equal power and responsi-

bility is no stranger to business either. For

example, one of the tenets of scientific man-

agement is that authority and responsibility

should be balanced in such a way that each

employee and manager is made responsible

to th e extent of his au thority, a nd vice versa.*

Although this tenet refers to relationships

within  the firm, it seems that it would apply

as well to the larger society outside the firm.

As a matter of fact, businessmen have been

one of the strongest proponents of co-equal

social power and responsibility, particularly

in their references to labor unions.

Based upon the evidence, it appears that

both business leaders and the pubhc accept

the idea of co-equal power and responsibility.

Although businessmen accept the logic of

this idea, their problem is learning to respect

and apply it when m aking decisions. Granted

tha t th ere are no pa t answers, they still need

some guides, else each shall take off in a

different direction. At this point, the idea

already stated continues to offer help. If

  social responsibihties of businessmen need

to be comm ensurate with their social pow er,

then , in a general way, in the specific operat

ing

  re s

 where there is power, responsibility

should also reside. Let us take an examp le:

Com pany A is the only major employer

in a small town. It is considering moving

its entire plant out of the area. Com-

pan y B is considering moving its plant

of the same size out of a large city

where it is one of many employers. It

would seem that, other things being equal.

Com pany A should give more weight to

social responsibilities to the community

when considering its move.

Even accepting the greater responsibility

ity can at best serve only as a rough gu

but a real one. For example:

• Do businessmen by their industrial e

neering decisions have the power to af

workers' feeling of accomplishment

self-fulfillment on the job? If so, the

roughly a co-equal responsibility.

• Do businessmen have power as busin

men to influence unem ploym ent? To

extent that is so, is there not also so

responsibihty?

• Do businessmen have power to determ

the honesty of advertising? To the deg

that they do, is there also social respo

biUty?

One matter of significance is that the c

ditions causing power are both internal

external to the firm. In th e exam ple of ad

tising honesty, power is derived prima

internally from the authority structure of

firm and management's knowledge of p

uct characteristics. In the case of Comp

  A

described earlier, much of its so

power is derived from the external fact

it is the only employer in a small town . E

case is situational, requiring reappraisa

power-responsibility relationships each t

a major decision is made.

There are, of course, other vievi^po

concerning the extent of business social

sponsibility, and most of them offer a m