Social responsibility is the recognition that business activities have an impact on society and the consideration of that impact in business decision-making. Obviously, social responsibility cost money. It is perhaps not so obvious-except in isolated cases-that social responsibilities is also good business. Customer eventually find out, which firms are acting responsibly and which are not. And, just as easily as they cast their dollar votes for a product produced by a company that is socially responsible, they can vote against the firm that is not. .
Government regulation and public awareness are external forces that have increased the social responsibility of business. But business decisions are made within the firm-and, there; social responsibility begins with the attitude of management. Two contrasting philosophies, or models, define the range of management attitudes toward social responsibility.
According to the traditional concept of business, a firm exists to produce quality goods and services, earn a reasonable profit, and provide jobs. In line with this concept, the economic model of social responsibility holds that society will benefit most when business is left alone to produce and market profitable products that society needs. To the manager who adopts this traditional attitude, social responsibility is someone else's job. Managers who concentrate on profit believe they fulfill their social responsibility indirectly, through the taxes paid by their firms. As a result, social responsibility becomes the problem of government, various environmental groups, charitable foundations, and similar organizations.
In contrast, some managers believe they have a responsibility not only to stockholders but also to customers, employees, suppliers, and the general public. This broader view is referred to as the socioeconomic model of social responsibility. It places emphasis not only on profits but also on the impact of business decisions on society.