The Social Responsibility of Business
Since a business does not operate in a vacuum, decisions made by business have far-reaching effects on society. In the past, many business decisions were made solely on a cost-benefit analysis with the concept of the bottom line being most important. A theory of social responsibility says that a corporation has a duty to take actions that maximize profits for shareholders. The interests of other constituencies are not important in and of themselves. Such decisions may cause negative externalities for others. Therefore businesses are considered to owe some degree of social responsibility for their actions.
Within the degree of social responsibility, a business should exhibit a moral minimum or a social responsibility that says a corporation's duty is to make a profit while avoiding harm to others. As long as business avoids or corrects the social injury it causes, it has met its duty of social responsibility. The legislative and judicial branches of government have established laws that enforce the moral minimum of social responsibility on corporations. Some of the concepts covered later in this course include and are not limited to occupational safety laws and consumer protection laws for product safety.
Business must also consider the effects its actions have on persons other than its owners, stakeholders, or stockholders. A business has a responsibility to do good and is responsible for helping to solve social problems. As such businesses owe a duty to promote the same social goals as do individual members of society.
To enable an ethical culture within the business, a social audit can be helpful to assess its behavior and influence on society. This audit should be extended to include the moral health of the business. In this way a social audit will be more apt to prevent unethical and illegal conduct by managers, employees, and agents. The audit could examine how well employees have adhered to the company's code of ethics, and if the company has met its duty of social responsibility. This method could promote employment opportunities for members of protected classes, increase worker safety, and include a section on environmental protection and consumer protection.