The Necessity of Social Responsibility in Business
By: Kayla Stevens 03/05/2015
According to Investopedia, the definition of social responsibility is, “The idea that companies should embrace its social responsibilities and not be solely focused on maximizing profits. Social responsibility entails developing businesses with a positive relationship to the society which they operate in. According to the International Organization for Standardization (ISO), this relationship to the society and environment in which they operate is "a critical factor in their ability to continue to operate effectively. It is also increasingly being used as a measure of their overall performance."”
Social Responsibility First Introduced
Milton Friedman of The New York Times first introduced social responsibility in business in 1970. In his article, Friedman gave the opinion that the social responsibility of a business was to increase its profits. He stated, “Only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but "business" as a whole cannot be said to have responsibilities, even in this vague sense. The first step toward clarity in examining the doctrine of the social responsibility of business is to ask precisely what it implies for whom. Presumably, the individuals who are to be responsible are businessmen, which means individual proprietors or corporate executives.” Friedman felt that the idea of social responsibility in business was ludicrous. The business world has changed a great deal since then.
Ignoring Social Responsibility in Business is Dangerous
In today's world, most entrepreneurs and business owners realize that there are significant risks to their business if they ignore social responsibilities. Once a business gains the reputation of being unethical, it is nearly impossible for that business to change its stripes. Customers, as well as other business owners may shun the socially irresponsible business all together. Those who ignore social responsibility could also end up facing legal issues and more.
Customers Expect Social Responsibility in Business
In business, the most important asset is your customer. With this in mind, one should note that regardless of how the entrepreneur and business owner may feel about social responsibility, customers care a great deal about it. Most customers factor in the social responsibility of a company when making decisions about that company. As Time magazine points out, “a survey by Landor Associates, the branding company, found that 77% of consumers say it is important for companies to be socially responsible.”
Today's world is much different for the customer than it was in 1970. With the internet at their fingertips, customers have constant access to the practices of businesses and their owners. As iGive CEO Robert Grosshandler shares, “In the Information Age, customers have more access to information. They’re more educated. They’re no longer hidden from how their food is produced or how their iPods are made. And, because of things like social media, like-minded people more easily find each other, have their say and effect change. There’s a level of transparency that wasn’t there before.”
Social Responsible Companies Draw The Best Employees
In business, if you want to have employees which are dependable, ethical, and responsible, you must present them with a company that is all of these things. According to Towers Perrin, social responsibility is the second most important lure for employees to the businesses they work for in the United States. A Deloitte survey which was conducted in 2014 suggests that seventy percent of those between the ages of 18 to 26 feel that “a company’s commitment to the community has an influence on their decision to work there. 'The Millennial generation has seen a lot of natural disasters, political disasters and corporate disasters. They think the world is screwed up,' says Kellie McElhaney, who is the faculty director of Haas’ Center for Responsible Business. 'They feel personally responsible, and they feel empowered to create change.'” (Time)