The Effect of Social Responsibility on Business Organization


It is very clear that no enterprise operates in a vacuum social issues periodically challenge the ethics of enterprise operations sometimes surrendered by an particular incident of mismanagement or a series of decision that  lead to unforeseen consequence  and occasionally tragedy.

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Because of this there has been a popular out cry for the production systems to be alive to their social responsibilities. The trend is most likely to continue be we now have more enlightened consumer and employees and very citizen is directly or indirectly affected by the activities of the production   system.


Nobody will be happy if he has to drink polluted water breath foul air use unsafe products or be misled by untruthful advertising.  For instance in Bhopal India on 3rd December 1984 in the middle of the might a gas lack age at the union carbide plant spread over  the industrial city Bhopal. The gas that escaped was methlycocyante (ic) which was similar to an extremely toxic tear gas used by the military in warfare.  The agricultural pesticides in India and other countries. The local residents who were exposed to the gas suffered who were exposed to the gas suffered damage to mucons tissues in their lung and eyes those who died literally drained as he lunge filled with fluid other were permanently wounded many creature died within a short time more than 200 people had perished of many more may die prematurely because of damage to their lives and kidneys.  The chairman of  the board W.A Anderson went o India immediately after the incident to know the extent of the disaster to the  company concern even though he know he might face legal action and angry Mobs.  He was infact arrested briefly. Anderson offered (million one million dollars in aid to the thousand of victims and their survivors but lawyers the injured almost immediately asked for billing in damages.



It is true that some disaster may be more spectacular and devastating even before but the actual performance of individual enterprise need to be put of that content has to do with what we expect from an enterprise today. It has been urgency that the gap between the social performance of enterprise and the social expectation for them has continued to grow even  though their actual social performance has improved. Even though enterprise have because legal requirement. Proactive responses and world consistent with the high social expectation.  Reactive reposes are   those that either conforms only with legal requirement or the  attempts to avoid even those through long court cases cloying effort to avows responsibility and so fort



Another way of dealing with the proactive and relative approaches is what is called four face of social responsibility see for example involving N.I.C company the company wanted  to  develop a plastic bottle that could be safely recycled. Since recycling was a big environment issue in recent time the company though it was making a contribution with its cycle safe bottle NIC spent over N10million to market the bottles after a few years they were berried by he food and drng administration because plastic molecules escaped into the bottle contents when they were stored for long periods above 120 degrees.  It was found that rates were likely to develop cancer if fed large quantities of soft drinker stored in this type of bottle.  Environment forces determined that far from being a contribution to social well being the bottle were more socially responsive the expectation of those in society have increased even more quickly

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The result is that managers must be more sensitive and responsive to social issue than ever before or there enterprise is to effectively deal with their environment.



Social responsiveness is as necessary for an enterprise as strategic planning. The extent to which an enterprise has such an ability over the long term will primarily be a result of its short term actions.

  1. Proactive response
  2. Reactive response

Reactive response are involuntary and responses that deal only with basis economic and legal requirement associated with such challengers.

Proactive response are voluntary efforts or challenges facing and enterprise

Managerial ethic is another major factor that affects how socially responsive and enterprise will be in the long run

The ethics standards of an enterprise manager will determine the type of response it will make as it reacts to the tension between he force for change and stability.

As we can see proactive responses are more likely to be ethical since they will go beyond  minimum agency to improve product quality and then being threatened with closure by another for creating a  safety hazard.

This actually happened at a food meat packing plant.  Both agencies threatened to shut the plant down if the managers did not take an action directly contradictory what the others wanted.



Legal but irresponsible action have included developing a direct pill that did what it said it would. Customers lost weight because it contained tapeworm larvae this occurred before enactment of the pure food and drug act.

Allowing inadequate but legal working conditions that could cause black lung disease on its local community.

Making a decision that is an enterprise interest but that will have serious negative repercussion on its local community.

Manufacturing are distributing cigarettes.

This act is not illegal and even receives government support and the accompanying motives from the federal ministry of health sufficiently responsible or do they point out that the cigarettes company is potentially hazardous. They had to be taken off the market so on the course of our study the case is totally the effect of social  responsibility on business organization which stand that every organization are obliged to undergo such responsibilities.

On the process of the faces of social responsibility such faces are divided into four which separated it into two dimension of  enterprise actions such as legal from those that is illegal.



A company could be acting illegal and irresponsible by:

Knowingly using a cancer- causing preservative in food products.

Refusing or line a person because of sex race or physical disability.

Failing to install solution abatement equipment because of the cost of line so is more than the maximum time for non compliance is low.

Assuming the cost of low suits results from injury or death rather than recalling a product know to be defective




The fine public affected by the activities of corporations are the owner the customer the employees residents in the corporations local neighborhoods and the general public.  All fine of these public are concerned in different ways with the inadequacy of current governmental social problem solving and with the survival of the corporations as a socio economic entity.

The owners of the corporations are convened as individual about the made qeuency  of current efforts to solve social problems because the quality and security of their lines are threatened.  As owners or shareholders they are concerned abut the increasing inefficiently and reduced productivity of their enterprise which stern form unsolved  social problems :social problems arise the costs of doing business, this reducing earnings for shareholders” Clark CABT (1977)

Crimes raises insurance rates  and operating costs drug abuse raise labour costs by increasing the cost of recruitment and  decreasing the productivity of labour. Social and racial conflicts increase the cost of labour and of personnel management environmental pollution free technology.  Altogether, unsolved social problem adduced profit.

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Owners of corporations are also concerned about the survival of the corporation as an economic from with cost increasing and profits declining as a result of social problems and with growing demands for public intervention in the management of corporation to assure their social responsibility the corporation as an organization from is threatened with extension wither  through in profitability heading to bankruptcy or through absorption with the government by increasing regulation with the socialization of industry the game of picking the winner will be all over for shareholder.  There will be only one game which will be mainly a political problem limited to fewer individuals.

Ironically the main effect of an egalitarian striving socialism will be a new elitism with a higher and narrower pyramid of power than the one we now have under liberal capitalism.

The customers of the corporation are concerned about unsolved social problems because they fear a decline in the quality and availability of goods and service.  As the cost of doing business are driven up by social problems may of this costs are passed on the consumer in the form of higher process or lower quality of both furthermore as government regulation increase the availability of a variety of goods and services declines with the corporations totally under government operation the variety quality and availability of product and service would be typical of that under most government monopolies.  In consumer good  and service these has never been very good.

Employees are concerned about the major social problems of poverty crime drug abuse race conflict social injustice and environmental pollution because these problems directly affect the quantity and security of their lines.

At the same time employees are concerned with the survival of the corporation not necessary because they have it so well but because they bear the insecurity of seeking their economic incomes and perhaps their psychic income elsewhere to go for gainful employment except the government the educational institutions and firms owned by individuals the government and educational institution together can offer only some 30 percent of the jobs needed and individuals proprietorship are difficult and very risky if corporations were to increase their existence even the shift to socialist all government employment would mean many changes and the distribution of many vocations and careers not to mention the money new constraint the would then be imposed on employees by an all powerful employer.

The resident of the local environment of corporations are concerned about the corporation attitude toward social problems partly because they are also members of the other three public employee owner and customer, but also because the effects of corporate activities spill over onto their lives and properties.

The small householder living near a chemical plant suffers directly  from plants neglect of such social issues as pollution, furthermore if local corporation become unprofitable and go out of business the entire community tax will suffer with attendant decline in municipal services.

Finally the general public is concerned  about the solution of social problems with the participation of industry because it seen little hope of the government doing the job alone and because of a general concern with the stability survival and growth of the country’s traditional economic system .



Corporation social responsibility is required by law in the forth of FDA EEO EPA OSHA FCC and federal and state regulations by public and consumer opinion by employee opinion and by stockholders to the extent that it affects profits [which it does] “according to a majority of executive opinion in large corporations the requirement for business social responsibility will be increasingly enforced in future both by government regulation and by organized consumer and employee action”. George Steiner’s survey(1974)

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The requirement will encompass the planning of corporate actions that have social impact documenting and measuring the cost and benefits (inputs and outputs) of such action and actual implementation of such actions act operating level including the procedure and incentive required to make the action effectives.

Since not the  all of these requirement can be met within the  current operational or conceptual capability of many corporations investment in some research and development in this even seems essential for them. This ROL investment cam be justified by the probable increase in productivity as a result of socially responsible action by a reduction in the risk of adverse opinion and by the public consumers employees stockholders and    local and national government and a greater feeling of participation in major social problem solving of the times on the  pent of management.

While it is time that most organizational pent of management.

While it is time that most organizational reforms including those in public institutions are initiated by outside pressure and by the lower eidolons of the organizational hierarchy rational social policy requires the attention of top and middle management.  In the face of complete demands for time and resources no important new activity is likely to be implemented in any corporation unless it receives impetus from top management follows up to make sure that lower level of management actually execute the new policy. It is top management that must integrate the pressure for corporate measurement with the traditional demands for economic performance  and devise a plan fro action

Business management can establish priorities among the different corporate consistencies employees stockholders consumers neigholouring communities and the general public by determining the number of people affected in  each constituency and the extent to which they are affected. These must then be balanced against the  basic survival condition of the organization economic and operational.

The following list of social performance activities is derived from a survey of the efforts to develop measures of social performance.

  1. Ensuring employment and advancement for minorities.
  2. Increasing productivity in the proximate sectors of the economy.
  3. Improving the innovativeness and performance of business management.
  4. Improvement of world career opportunities
  5. Installation of modern pollution abatement equipment



Bankruptcy the branch of business life is an ability to meet the liabilities a business has towards financial bankruptcy which occurs when a firms liabilities exceed its assets and it creditor are unwilling to extent further credit.  The metaphor of “moral” bankruptcy is applied to individuals or institutions that have exhausted their “morel” capital having run out of moral assets so to speak in paying for their moral liabilities social bankruptcy is a terms that can be used either metaphorically or literally.

If a firms social liabilities exceed its social assets and the lenders of social assets are unwritten to extend further credit the firms is social bankruptcy.

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