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in Social Responsibility of Management and Corporate Social Responsibility by (53.6k points)

What do you understand by social responsibility of management. Discuss its concepts.

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Social responsibility : 

The society expects various things from management and the management fulfills those expectations of the society. This is known as the concept of social responsibility. The society provides basic needs of business enterprise in return. It is the duty of business enterprises to fulfill its necessary requirements. 

Concept of social responsibility: 

There are different views of different thinkers and authors on the concept of social responsibility. Some experts are of the view that a manager can discharge his obligation to the society by creating goods and services in exchange of profit within the limits defined by law. Others think that social responsibility is behaviour in reaction to “currently prevailing social norms, values and performance expectations.” Public welfare and community services that come under the concept of social responsibility are poverty alleviation, rural development, health, pollution control, conservation of environment, education and employment, etc.” 

Management, as an economic and catalyst agent of society, is voluntarily responsible for the development of economic and social values to safeguard the interest of consumers and to fulfill the aspirations of different sections of society males, females, youths, senior citizens, rural, urban, professional, working women, and to take initiative in launching programmes or plans or missions to prepare for future challenges. 

Following are the four levels of hierarchy developed by R. Joseph Monsen in context to social responsibility concept :

  • Obeying the law : 

Managers feel they are discharging their social responsibility by merely obeying the law.

  • Catering to public expectations : 

Beyond merely obeying the law, social responsibility also caters to public expectations from the business enterprise. 

  •  Speculation of public expectation : 

At this level, management speculates about public demands and needs and takes the necessary steps to fulfill those needs and demands. 

  •  Creation of public expectations: 

At the highest level of hierarchy, managers not only cater to public demands, but also set standards of social responsibility and want the society to be benefitted by those standards. 

Robert D. Hay and Edmund R. Gray (1980) identified three phases in the development of social responsibility. 

(i) Profit maximising management : 

In this phase, the only objective of managers was to maximise profits and it was seen as a vehicle for eliminating economic scarcity. This concept is based on Adam Smith’s famous creation ‘Wealth of Nations’. This states that a business unit will produce only when it earns profit from producing the goods. The philosophy behind this concept is, “what is good for me is good for my country”. 

(ii) Trusteeship management : 

This concept is inspired by the Great Depression. It is accepted that managements objective is not limited to maximising profit, but it also has responsibility towards different stakeholders like employees, customers, suppliers, banks and the community. With this approach management should protect the interest of shareholders as a trustee of the organisation, in this way, it is assumed that what is good for an enterprise is good for the entire nation. 

(iii) Quality of life management : 

In this phase, companies are expected to solve major social issues according to their knowledge of resources. This approach is based on this notion “what is good for the society is good for our company.” Accepting profit maximisation, believing in quality life, the management will not produce and sell goods that are harmful for society. It works on the basis of public acceptance and wants its work to be evaluated by the society. 

New concept of social responsibility : 

Earlier concept was restricted to welfare activities, but since the mid 20th century, the concept of social quality of life management, social responsibility has developed as a social obligation, social responsiveness and social performance. The real nature of management is humane and social because it is the trustee of The society’s resources. 

According to R. Ackerman : 

“In years, society is having new expectations from management. Important among them is to provide leadership in eliminating social evils.” According to Edward Cole, “Today, the biggest challenge before the management is to evaluate the continuously changing social aspirations and to act in socially desirable manner.” 

Therefore, it is clear that the concept of social responsibility is a compressive concept, which encourages the managers to make decisions, keeping in view the values of social interest. 

In short, the social responsibility of management can be studied under three phases, which are as follows :

  • Lowest level : 

Social responsibility/obligations : At this level, the management has the obligation to work for social betterment according to the prevailing laws and economic system. Managers feel that they are discharging their social responsibility by merely obeying the laws or working for their self interest. 

  •  Middle level : 

At this level, social responsibility transcends social obligation, being actually of a higher level, where it is congruent with the prevalence of norms, values and expectations in terms of performance. Management, at this stage, does not consider public issues or social issues. 

  •  Highest level : 

At this level, adaptation of corporate behaviour to the social needs is done. This is a step of anticipation and prevention. At this stage, management gets aware, proactive, sensitive, towards social issues, social problems and important global issues. The management anticipates the social changes and problems with development of approach and effective policies to meet these needs.

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