Business And Social Bottom Line – Part 1.

by Patrick Liew on December 15, 2013

Traditionally, the responsibility of private business does not include social missions as it is perceived to be the job of the government or charitable organisations.

In the words of Theodore Levitt, the “government’s job is not business, and business’s job is not government” (Levitt, 1958).

Milton Friedman echoed the same sentiment when he added that the only one responsibility of business towards society is the maximization of profits to the shareholders within the legal framework and the ethical custom of the country’’ (Friedman, 1970).

Proponents of this view argue that that the focus of business should be on creating financial profits and maximizing its sustainable dividends to shareholders.

Anything else will distract the business, resulting in not only a decrease in returns but also the erosion of its competitive edge. It may also affect its existence and growth.

The responsibility of supporting social missions should not be part of the business charter. It should be exercised at the discretion of shareholders and on a personal basis.

They should be the decision makers on how they wish to donate all or part of their dividends.

In recent times, the table has been overturned.

Consumers and communities expect and in some cases, demand that enterprises do their part to contribute to society and the environment.

The role of a business depends on the values of the community and the people’s needs and requirements at that point in time. It is therefore important that the business should proactively engage its stakeholders and determine their expectations.

At the basic level, a business should be managed lawfully and ethically. It should not only be doing so but it should also be seen to be doing so in the eyes of the public.

It should not be a burden to the community but a nett contributor to its well-being.

The responsibility of a business encompasses the way it designs its business model and exercises its corporate governance.

It includes selling of value-added goods and services in a responsible and fair way, equitable creation and sharing of wealth, and respect for the rights of its stakeholders.

There is also an increasing obligation for business to contribute to “sustainable development,” a process which is defined by World Business Council for Sustainable Development (2000) to include “the integration of social, environmental, and economic considerations to make balanced judgments for the long term’’.

For example, in the property industry, there is a growing demand for developers to build green buildings.

These buildings are not only more environmentally-friendly, they are also proven to contribute to a healthier environment for the people who work, learn, play, and live in it.

Preston and Post (1981) advocate that business should carry “public” and not just “social” responsibility.

According to them, ‘‘public policy includes not only the literal text of law and regulation but also the broad pattern of social direction reflected in public opinion, emerging issues, formal legal requirements and enforcement or implementation practices.”

In this regard, business should play an active role and intervene in policy-planning process. It should provide feedback and even help to craft policies, especially when the task is within the scope of its expertise.

Business can also implement cause-related marketing, a process of “formulating and implementing marketing activities that are characterized by an offer from the firm to contribute a specified amount to a designated cause when customers engage in a revenue-providing exchanges that satisfy organizational and individual objectives’’ (Varadarajan and Menon, 1988).

By supporting a cause that is endearing to the customers, such as adopting fair trade practice, the business will strengthen its relationship with them. It can also strengthen its image as a responsible and reliable company that will look after stakeholders’ interest.

Business can use its knowledge, competence, and other resources to help resolve a social problem that is related to its business mission.

In doing so, Porter and Kramer (2002) argue that it will improve its competitive advantage because it will create more social values than what an individual, an organization, or the government can deliver to society.

The social capital generated will also strengthen its branding and stakeholders’ support for the

For example, a computer company can offer to teach students how to use its software to improve their productivity and lifestyle. By doing so, it is not only contributing to educational development, it is also grooming the next generation of potential customers.


Levitt, T. (1958). The dangers of social responsibility. Harvard Business Review, September-October, pp. 41-50.

Friedman, M. (1970). The social responsibility of business is to increase its profits. New York Times Magazine, September, 13.

Freeman, R. E. (1984). Strategic management: A stakeholder perspective. Englewood Cliffs, NJ: Prentice Hall.

World Business Council for Sustainable Development. (2000). Corporate social responsibility: Making good business sense, World Business Council for Sustainable Development, Geneva, pp. 2.

Preston, L. E. and Post, J. E. (1981). Private management and public policy, California Management Review 23(3), pp. 56–63.

Varadarajan, P. R. and Menon, A. (1988). Cause-related marketing: A coalignment of marketing strategy and corporate philanthropy, Journal of Marketing 52(3), pp. 58–58.

Porter, M. E. and M. R. Kramer M. R. (2002). The competitive advantage of corporate philanthropy, Harvard Business Review 80(12), pp. 56–69.


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