Argument for social responsibility:
- Justification for existence and growth : Business exists for providing goods and services to satisfy human needs. Although profit motive is an important justification for undertaking business activity, it should be looked upon as an outcome of service to the people.
- Long-term interest of the firm: A firm and its image stand to gain maximum profits in the long run when it has its highest goals as ‘service to society’.
- Avoidance of government regulations : It is believed that businessmen can avoid the problem :
of government regulations by voluntarily assuming social responsibility, which helps to reduce the need for new laws.
Argument against social responsibility: 1. Violation of profit maximisation objective :
According to this argument, business exists only for profit maximisation. Therefore, any talk of social responsibility is against this objective. In fact, business fulfils its social responsibility if it maximises profits through increased efficiency and reduced costs.
- Burden on consumers : It is argued that social responsibility like pollution control and environment protection are very costly and often require huge financial investments. In such circumstances, businessmen are likely to simply shift this burden of social responsibility by charging higher prices from the consumers instead of bearing it themselves.
- Lack of social skills : All social problems cannot be solved in the way business problems are solved. In fact, businessmen do not have the necessary understanding and training to solve social problems.