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Class 11 Social Responsibilities of Business and Business Ethics: cheat sheet
CBSE Business Studies. Why business owes a duty to society, the four kinds of social responsibility, duties to each interest group, pollution control and the elements of business ethics.
Key ideas
- Social responsibility is the duty of business to act in ways that society values; it is wider than legal responsibility, which is only obeying the law.
- The four kinds are economic (make wanted goods at a profit), legal (obey the law), ethical (fair conduct beyond the law) and discretionary (purely voluntary help).
- Arguments for it: business uses society’s resources, it serves the firm’s long-term interest, it avoids stricter regulation, and problems can become opportunities.
- Arguments against it: it cuts into profit, its cost passes to consumers, business lacks social skills, and no one can clearly hold business accountable for it.
- Business owes shareholders a fair return and true information, workers fair wages and safety, consumers safe goods of good quality, and the community lawful conduct and a clean environment.
- Air, water, land and noise pollution must be controlled to reduce health hazards and liability, save cost and protect the firm’s image.
- Business ethics are moral principles for business; they work through top management commitment, a published code, compliance mechanisms, involving all employees and measuring results.
Remember
| Economic responsibility | e.g. making goods people want and selling them at a fair profit |
| Legal responsibility | e.g. paying taxes on time, getting the pollution clearance the law requires |
| Ethical responsibility | e.g. printing honest labels where no law asks for that detail |
| Discretionary responsibility | e.g. funding a village library or a free health camp |
| Kinds of pollution | air (smoke, fumes), water (waste in rivers and lakes), land (dumped waste), noise (loud machines, horns) |
| Elements of business ethics | top management commitment, a code, compliance mechanisms, involving employees, measuring results |
Watch out
- Calling paying taxes a discretionary responsibility: it is legal, because the law requires it.
- Thinking social responsibility means only giving to charity: it covers economic, legal, ethical and discretionary duties.
- Giving “it reduces profit” as an argument for social responsibility: it is an argument against.
Worked example
Brightway Toys is blamed for toxic waste dumped on open land and loud machines running all night near homes. (a) Name the kinds of pollution. (b) Give two reasons why controlling pollution helps the firm itself. (c) Suggest two steps it can take.
Working: name the pollution by what is harmed: air, water, land or quiet surroundings (noise)
Answer: (a) land pollution; noise pollution (b) e.g. lower health hazards and liability, cost savings, better public image (c) e.g. cleaner technology, waste treatment, training staff, following the law
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