Building strong relationships with the both internal and external stakeholders is essential for the success of modern organizations. Many organizations incorporate measures that are meant to protect and improve the welfare of society as a whole. These measures, commonly referred to as organizational social responsibility, enable the organization to coexist in harmony with the government, the community at large and its environment.
As an open system, an organization interacts with stakeholders such as employees, customers, government, local communities, intermediaries, suppliers and financiers. These stakeholders have wide-ranging expectations that they require the organization to fulfill, e.g., employees expect the organization to pay their salaries on time while the government expects it to pay taxes promptly. The management should also consider other positive and negative external factors such as legislation and economic conditions that have a direct bearing on a firm’s survival.
Ethics and Governance
Business ethics and good governance form an integral part of social responsibility. Business ethics concerns the moral judgments and behavior of individuals and groups within organizations. Stakeholders expect organizations to be accountable for their actions and transparent in their dealings, in addition to respecting the society’s norms. The organization should also ensure that it undertakes activities that contribute to the business's success while simultaneously contributing positively to the welfare of society.
Social responsibility entails investing in projects and activities that improve the welfare of the society. As part of the society, organizations can devote some of their vast human and financial resources to address social issues such as sports, health and the environment. Giving back to the community nurtures strong relationships between the society and the organization. Such good relations are important to the organization as the society is both the source of inputs such as labor and raw materials and ultimate market for the organization output.
Reputation and Image
Social responsibility is an important vehicle for building a strong organizational reputation. Organizations with distinctive ethical values and elaborate welfare projects are able to compete effectively in the market. Consumers tend to pledge loyalty to organizations that maintain integrity, good governance and best practice in their operations.
Compliance to laws and regulations is an element of social responsibility. The organization is expected to be law-abiding, pay its taxes promptly and adhere to environmental conservation guidelines.