Social obligation means the responsibility of business to act in manner which will serve the best interest of the society. Some people argue that a business is an economic entity and so it should follow economic objectives only. It should not devote itself to social objectives. If its spends on social obligation, its profitability will go down. The arguments against assumption of social responsibility by business are given below:

(i)    Relation between Profit and Responsibility. Social responsibility and profit have a sequential movement profit come first and corporate social responsibility later. Therefore, before committing any cost towards social cause an enterprise has to make sure that it has sufficient profits to meet the obligation. No enterprises can take up social cause unless its cost is known and cost is well witching range of its earned/accumulated profits.

(ii)    Difficult to Estimate Positive Impact. It is tough to ascertain the impact of social responsibility on profit. Enterprise may commit its funds to social causes, which may generate better feeling, good thinking about an enterprise. But what impact these positive thinking in minds of people may lead to is difficult to ascertain. Thus, cost of corporate social responsibility may or may not always bring positive results for an enterprise.

(iii)    Compliance of Law. Social sentiments, value-system, ethics are pure persuasive matters and not binding on an enterprise. The only obligation an enterprise owes is complying with laws made. It is, therefore, sufficient for business enterprise if they abide by laws of land they operate in. In short, business has no responsibility than the compliance of law.

(iv)    Extent of Responsibility. Business can be socially responsibility only to the extent of contractual obligation it may owe. As the scope and definition of corporate social responsibility is so large and unpredictable that society and stakeholder try relate all negative impacts on them to business enterprises. Business firms, therefore, own only such responsibilities that squarely relate to them.

(v)    Role of Society in Safeguarding its Interests. Society must create its own safeguards. There is no system, which may compensate business for harmful effects of social decisions. Merely business liable for all ill-effects on society is not the solution. Thus, the argument that society is a powerful institution and it must safeguard its interests holds good.

(vi)    Complex Ethical Issues. Ethical issues and value system of society is so compels that there is no unanimity as to the scope and extent of corporate responsibility. It really becomes difficult for business to understand the social concern in the manner it perceives.

Kinds of social Responsibility

Social responsibility of the business can be classified into four categories as:

1.    Economic Responsibility. No doubt, business is an economic activity. Therefore, the primary responsibility of the business is economic. It should produce goods and services as per needs of the society and sell them at a profit. There is no dispute regarding honoring economic responsibility by the business.

2.    Legal Responsibility. Every business should carry on its business as per the law of the land. The government has enacted various laws and regulations in the interest of the business and society. The businessmen are requited to behave as a socially responsible citizen and abide rules and regulations.

3.    Ethical Responsibility. It is the irresponsibility of the business in the interest of the imposed by society. It is not law. The business may or may not honour ethical responsibility.

4.    Discretionary Responsibility. It is purely voluntary for the business to assume this responsibility. For example, providing donation to charitable and educational institutions or helping flood and earthquake victims are at the discretion of any business.

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