Does it pay business to be good to society?

The role of business in society and the accompanying responsibilities that emanate from that role is rapidly becoming very crucial. In principal, the “business of business is business” and thus it has only one responsibility and that is to generate profit for shareholders while adhering to the law.

Contrary to that argument is the thinking that recognises business as a system in society that is affected by and affects other systems in society (such as the surrounding community, government bodies, other types of organizations, the natural environment, etc.). Thus business needs to work with these systems to attain its economic goals in a way that will also benefit the system (society) as a whole.

Although business has always had a social bond with society, the nature of this bond is rapidly changing. The social bond summarises the complex societal and ecological relations and related responsibilities between business and society.

In this business era, the bond embraces not just direct stakeholders (such as consumers, employees, regulators and shareholders) but also, and increasingly, a broader set of stakeholders (such as the communities where companies operate, the media, academics and the nonprofit sector).

Today’s significance of social responsibility reinforces the need for a collaborative approach to addressing socio-economic and environmental challenges. Consequently, other stakeholders in society, that is, business and civil society, are increasingly stepping up their interventions to promote social good.

For business the changing social bond implies purposeful involvement with stakeholders to achieve improved economic, environmental and social performance. The nature and extent of this involvement, however, varies depending on company size, industry or business scope. The most evident difference is the utilization of reactive/defensive means vs. proactive/offensive strategies. Consequently, corporate citizenship management, practice and behaviour differ. The emergence of new stakeholder engagement strategies, including strategic alliances and partnerships, social partnerships and multi-sector collaborations, means that collaborative strategies (as opposed to purely competitive strategies) have become a critical means for the private sector to pro-actively engage society.

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