Is Increasing Profits the Only Social Responsibility of Business?
For a long time, the society believed that increasing profits is the main social responsibility of each and every business enterprise. However, businessmen and various scholars have many opposing views since some maintain that business is not only concerned in making profits but also in meeting social ends. Others believe that a business has only a social responsibility of making profits and by so doing, it end up meeting other social needs. As indicated in the studies of Newton & Ford (2006), business has social conscience and has several social responsibilities which are inclusive but not limited to provision of employment, reduction of health hazards like pollution and promoting social justice through eliminating discrimination. However, as mentioned earlier, many scholars think that by looking at the issue critically, business cannot and does not have any social responsibilities as it is only human beings who can have responsibilities. Bent on that, this essay shall critically answer the question whether increasing profits is the only social responsibility for businesses.
One cannot help it but agree with the fact that, behind the establishment of each and every business corporation regardless of the size is a pressing need to make and increase profits. However, having said that, it is important to critically analyze how that is actually carried out. For every business to make profit, it has to establish a need in people and establish ways and means of meeting that need. For instance, an entrepreneur may locate a place where there are no restaurants. The need of the people in such a place will be food and other services provided by the restaurant. For the entrepreneur to make any profit, he has to identify the specific need and the best way of meeting the need. It is therefore clear that such a business has a social responsibility of providing food to the community and other services though at a fee. In case the restaurant closes down, the society and the people served by the restaurant starts to complain. The same case happens when someone finds a certain shop closed without notice. One cannot help but complain and that clearly illustrates that however how much one may want to argue that businesses are only concerned with making profits, they still have got other important social roles which contribute greatly to the welfare of the community.
According to Newton & Ford (2006), there are different entities that determine the success of each and every business which are inclusive but not limited to the community, suppliers, customers and the employees. Each group holds different expectations from the business. Employees want to earn income, suppliers are aimed at selling their supplies, customers expect their needs to be met and finally the community at large expects the business to influence life positively. There are some businesses which are customer centered and not profit centered. However, even the customer centered businesses end up making profits after specializing on the interest of the customer. The interest of the employees must be met because they are very important people as they deal with the customers directly. They not only benefit from the income but the business has a great responsibility of providing job satisfaction, safe environment and personal development. All those are social responsibilities of each and every business.
Businesses have a very big role to the community and the environment. As much as we may maintain that given that the business belongs to investors it has a major role of increasing the share value in order to benefit the investors as Rodgers (2005) illustrates, that may be just but shallow thinking. This is due to the fact that many large organizations donate their profits to support the non-governmental organizations. By doing so, they not only end up having a good reputation but the same becomes a marketing strategy as the members of the organizations supported end up becoming regular customers. In addition, as human beings, corporations have a great responsibility of supporting the community to ensure that as the business prospers, the community also prospers. Such an act may fail to provide short term benefits to the investors but in the long term, it is a real asset.
At this point, it is important to acknowledge the reason why people have thought that the only responsibility of businesses is to maximize profits. This is due to the fact that some managers who have been interviewed as indicated in the studies of Rodgers (2005) explain that their reason for being involved in other acts like philanthropy is actually as a means of increasing profits. Such a situation is a clear illustration that such a business focuses in making profits and can do anything as long as its goal will be achieved. Nevertheless, it is clear that there are many businesses established with other goals other than maximizing profits which are not hypocritical or a means of making more profits.
The social responsibility in every business is defined by the people who established it. If their main social responsibility was to maximize profits, then it cannot be otherwise. Similarly, if a business corporation was established to meet other social needs other than maximizing profits, that remains to be the goal and even if the company makes profits that does not change the original social responsibility of the business. Having said that, one can therefore make a conclusion that there are two categories of businesses. One category of businesses has the social responsibility of only making profits and the other category has businesses which have other social responsibilities other than profit maximization.
However, at this point, it becomes difficult to conclude whether it is true that business has other social responsibility other than making profits. Whether businesses get involved in providing social needs for the sole purpose of making profits or their main aim is to make profits, at the conclusion of the mater, businesses end up meeting other social needs. This is basically to mean that any business cannot avoid social responsibilities as long as it operates as a business. The biggest problem is that businesses only talk about maximizing profits while in the real sense, they do more than that. If businesses can focus on letting the public know their other social purposes other than making profits, the negative view people have on capitalism can actually diminish.
One cannot agree more with Rodgers (2005). His studies illustrate that since businesses are established in the vicinity of the community, they have both positive and negative effect to the same. The same case with human beings, they have responsibilities of providing goods and services as well as creating employment opportunities. Moreover, just as individuals feel the need to support and get involved in charity work, so do businesses feel and that is why majority donate a portion of their profits to non profit organizations. Their social responsibility to the community cannot be quantified and cannot be equal to zero. It is however the role of every business to balance its contributions to the employees, customers, communities, suppliers and investors.
Whether business has any other social responsibility other than making profits depends with the way one looks at the situation. To some, the main aim of the business is to maximize on profits to be in a position to meet social needs. To others, the main aim of a business is to meet the needs of its constituents and thereby make profits. Whichever the case, the conclusion of Rodgers (2005) seems correct which explains that all the statements are equal and correct. However the latter seems to have more weight compared to the former.
References
Newton, L. H., & Ford, M. M. ( 2006). Taking Sides: Clashing Views in Business Ethics and Society. New York : McGraw-Hill.
Rodgers, T. (2005). Rethinking the Social Responsibility of Business. Retrieved August 31, 2010, from http://reason.com/archives/2005/10/01/rethinking-the-social-responsi/2
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