Social Responsibilities of Shareholders
... social consequences of business activities. Economic considerations which govern market phenomena cannot be looked upon in isolation from social considerations or social values. • In view of the social consequences of business activities, the influence of business society cannot be measured only in terms of economic gains or gross national product. The ultimate purpose of business, as of any other institution in society, is to be socially profitable. • As business becomes larger, the public is more concerned about its activities because it has a greater impact on society. Business being creature of society, when society’s expectations from business change, business should also change its objectives so as to meet the expectations of society. If business does not respond to social demands, the society will force it to do so by legalization. • It is in the long run self-interest of business to be socially responsive. People who have a healthy environment, education and opportunity of development make better employees, customers and neighbors for business than those who are poor, ignorant and oppressed. Responsibility towards Shareholders It is the primary responsibility of every business to see that the owners or shareholders get a fair rate of dividend or fair return on capital invested. This is a legitimate expectation of owners from business. Naturally the expectations have to be reasonable and consistent with the risks associated with the investment. Owners also expect economic and political security of the capital invested. If such security is not ensured, the inevitable consequence is withdrawn of capital and search for alternative channels other than business. Responsibility towards Employees. As regards responsibility towards employees, the major issues governing employer-employee relationship pertain to wages and salaries, superior-subordinate relations and employee welfare. It is the responsibility of management to provide for fair wages to workers based on the principle of adequacy, equity and human dignity. Maintaining harmonious relationship between superiors and subordinates and providing for welfare amenities for employees are also the responsibilities of management. However, employee welfare cannot be viewed within the narrow limits of legal requirement. Employee welfare is best secured if the management accepts the obligation to secure and maintain a contended work force, and the employees have the opportunity of developing their potential abilities through training and education. Responsibility towards Consumers. Consumers interest are generally expected to be taken care in a competitive market through forces of demand and supply. However, perfect competition does not actually prevail ...