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


    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-


      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-


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

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

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


    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


    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

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



    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-


      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


      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

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


    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


      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


    • Do businessmen have power to determ

    the honesty of advertising? To the deg

    that they do, is there also social respo


    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


    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