SOCIAL RESPONSIBILITIES OF ENTREPRENUERS

The concept of social responsibility has various meanings to different individuals.

To a BANKER his social responsibility is to lend money even to the poor producers, and
not only to the rich ones.
To a MANUFACTURERS, their social responsibility is to create quality products, and not to
pollute the environment.
To the RICH, their social responsibility is to share their excess wealth with the less
fortunate.
What is the SOCIAL RESPONSIBILTY of Entrepreneurs?
Professor HOWARD BOWEN defines it as the obligations of businessmen to pursue their
policies, to make those decisions, or to follow those lines of actions which are desirable in terms
of objectives and values of society.
Theory of Karl Marx
Marx, a German Philosopher, stressed the social importance of labor. He said that the
workers are the real producers of goods. Yet, he claimed that the benefits of production go to the
capitalist and not to the workers.
ROBERT OWEN, the Social Utopian
Robert Owen, being social reformer, believed that society must be completely restricted
on the basis of common ownership, equal rights and collective labor. He contrasted his social
system to that of capitalism which is a system of competition and exploitation. He linked the
worsening conditions of the working class to the introduction of machine during the Industrial
Revolution.
The Creation of Wealth
I believed the power to make money is gift of Godto be developed and used to the best
of my ability for the good of mankind. Having been endowed with the gift I possess, I believe it is
my duty to make moneyand still more money, according to the dictates of my conscience.
The Influence of Labor Unions
Before the 1930s, businessmen enjoyed too much freedom. Government protection and
promotion of the welfare of the consumers and workers were minimal. It was still LAISSEZ
FAIRE situation.
Theories on Social Responsibility
1. Economic Model. This is based on the traditional concept of business. That is, primary
objective of business is to earn a reasonable profit, as well as to offer quality goods and
services, and to provide employment.
2. Socio-economic Model. It believes that the businessmen have their responsibility to
stockholders as well as to their employees, customers, suppliers, and the general
public.
3. Classical Model. An entrepreneur is socially responsible if it stressed to use as
efficiently as possible the resources at its disposal in producing the goods and services
that society needs at the price consumers are willing to pay.
Arguments for Social Responsibility

1. Business cannot and should not ignore social problems because it is a part of society.
2. Business has resources, like financial, technical and managerial, that are required for
solving social problems.
3. Business can earn more profits in the long run by helping eliminate or reduce social
problems.
4. Business can expect less government intervention if it performs its social responsibility.

Arguments against Social Responsibility

1. Business managers are primarily responsible to stockholders. Thus, their job is to earn
profit for their investors.
2. The resources of the enterprise time, money and talent should be used to maximize
profit, not to solve the problems of society.
3. The effects of social problems on society is very general. Business should not be
expected to solve such problems.
4. Social problems are the responsibility of the government officials. They were elected
basically to solve social problems. This is their fundamental responsibility to the voters.
Social Responsibility to Consumers
1. The Right to Safety. This means products are safe for their intended use, contain
clear and complete instructions for their proper use, and have been tested by the
manufacturers for quality and reliability.
2. The Right to be informed. This refers to the availability of complete and correct
information about the use of the products.
3. The Right to choose. It is the policy of the government to encourage competition
among sellers or producers, so that consumers can choose the best product in the
market.
4. The Right to be heard. This is based on the concept the customer is always right,
Sellers should listen to their buyers and act immediately on their complaints.
Other Social Responsibilities
1. EMPLOYMENT. Business enterprises should adopt the policy of equal opportunity
employment.
2. EDUCATION and TRAINING. Business organizations, particularly the big and successful
ones, should contribute their resources to the education and training of the poor and
disabled persons in the community.
3. COMMUNITY DEVELOPMENT. The business organization is very much part of a
community. Thus, it is its social responsibility to help the development of the
community, so that it will be a better place to live in.
Business Ethics
ETHICS is the study of right or wrong. It is a moral choice by an individual. In business, it
is the application of moral standards on business decisions and actions. Business ethics involves
relationships with employees, investors, customers, creditors, and competitors. There are many
businessmen who are not fair and honest in dealing with the said groups. For instance, they
exploit their workers. They do not pay their creditors on time. They cheat their buyers by selling
poor quality products or use wrong weights and measures.