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Module 3

Social Responsibilities of Business

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Social Responsibilities of Business: Meaning of Social Responsibility, Social Responsibilities of Business towards Different Groups, Social Audit, Business Ethics and Corporate Governance.

Entrepreneurship: Definition of Entrepreneur, Importance of Entrepreneurship, concepts of Entrepreneurship, Characteristics of successful Entrepreneur, Classification of Entrepreneurs, Myths of Entrepreneurship, Entrepreneurial Development models, Entrepreneurial development cycle, Problems faced by Entrepreneurs and capacity building for Entrepreneurship.

Text Books

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• Principles of Management – P.C Tripathi, P.N Reddy, McGraw Hill Education, 6th Edition, 2017.ISBN-13:978-93-5260-535-4.
• Entrepreneurship Development Small Business Enterprises- Poornima M Charantimath, PearsonEducation 2008, ISBN 978-81- 7758-260-4.
• Dynamics of Entrepreneurial Development and Management by Vasant Desai. HPH 2007, ISBN: 978-81-8488-801-2.
• Robert D. Hisrich, Mathew J. Manimala, Michael P Peters and Dean

A. Shepherd, “Entrepreneurship”,8th Edition,Tata Mc-graw Hill Publishing Co.ltd.-new Delhi, 2012

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• *Presentation Contents based on the Text Books

Meaning of Social Responsibility

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• Social responsibility is the manager’s responsiveness to public agreement.
• Two types of business obligations are:
• Social-economic obligation : The economic consequences of its action do not affect public welfare.
• Social-human obligation:To nurture and develop human values. Different views on Social Responsibility :
• Communist view
• Capitalist view
• Pragmatic view
• Trusteeship view

Social Responsibilities of Business towards Different Groups

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Towards Employees and Workers

• A fair wage to the workers
• Just selection, training and promotion
• Social security measures and good quality of life
• Good human relations
• Freedom, self-respect and self-realisation.
• Increase in productivity and efficiency by recognition of merit, by providing opportunities for talent.

Towards shareholders and other businesses :

• Promoting good governance through internal accountability and transparency.
• Fairness in relations with competitors.

Social Responsibilities of Business towards Different Groups

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Towards Consumer and the community

• Production of Cheap and better quality product
• Production Scheduling
• Deciding Priorities
• Providing Social audit.
• Making Real Consumer needs
• Preventing creation of monopolis

Social Responsibilities of Business towards Different Groups

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Towards the state :

• Shunning active participation in and direct identification with any political party.
• Observing all the laws of land.
• To provide safeguard against errant business practices.
• To allocate limited resources according to social priorities and preferences.
• To enforce distributive justice to weaker selection of community.
• T o implement rural uplift and secure balanced development of the country.

Social audit

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• A systematic study and evaluation of the organizations social performance as distinguished from its economic performance.

Benefits :

• It supplies data for comparison with the organization's social policies and standards.
• It develops a sense of social awareness among all employees.
• It provides data for comparing the effectiveness of different types of programmes.
• It provides information for effective response to external groups which make demands on the organization.

Social audit -Limitations

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• A social audit is a process audit rather than an audit of results.
• It determines only what an organization is doing in social areas.
• They are difficult to measure.
• Their classification under good or bad is not universally accepted.
• Most of them occur outside the organization, makes difficult to secure data.

Business Ethics and Corporate Governance

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Business Ethics

• Business ethics is the application of moral principles to business problems.
• It involves goodness or badness of an act. The four important factors are:
• Government legislation
• Business codes
• Pressure groups
• Personal values of the manager himself.

Business Ethics and Corporate Governance

Corporate Governance:

• In this companies run in an open and honest manner in the best interest of all stake-holders.
• The key elements are transparency and accountability. Major recommendations of this committee are:
• Formal selection process
• Companies should have remuneration committees
• Companies should have Audit committees
• Audit partners should be rotated.

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Corporate Governance

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Benefits

• It creates overall market confidence and long –term trust in the company.
• It leads to an increase in company’s share prices.
• It ensures the integrity of company’s financial report.
• It maximizes corporate security.
• It limits the liability of top management.
• It improves strategic thinking at the top.

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ENTREPRENEURSHIP

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Definition of Entrepreneur

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• The entrepreneur is essentially a visualizer and an actualizer. He can visualize something, and when he visualizes it he sees exactly how to make it happen.
• An individual who bears the risk of operating a business in the face of uncertainty about the future conditions.
• He is the one who innovates, and introduces something new in the economy.
• An entrepreneur is a person who buys factor services at certain prices with a view to selling its product at uncertain prices.

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Entrepreneur-A few definitions

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• “An entrepreneur in any given economy is an individual who introduces something new in the economy”-Joseph Schumpeter
• “An entrepreneur is one who innovates, raises money, assembles inputs, chooses managers and sets the organisation going with his ability to identify them”- Vasant Desai

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Entrepreneur-A few definitions

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• “An entrepreneur is an individual who bears the risk of operating a business in the face of uncertainty about the future condition”- Encyclopedia Britannica
• An entrepreneur is one who always searches for change, responds to it an exploits it as an opportunity” –Peter drucker

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EVOLUTION CONCEPT OF ENTREPRENEUR

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• The word ‘entrepreneur’ is derived from French word ‘Entreprendre’ which means ‘To undertake’
• 16th century it was used for army leaders.
• 17^th century Person bearing risk of either profit or loss in a fixed price contract with government.
• 18^th century an entrepreneur as a person is risk taking and different from person who supplies capital.
• 19^th century An entrepreneur is distinct from both a financier as well as manager.

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Concept of ‘Entrepreneurship’:

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• The work carried out or the character showed by entrepreneur, becomes entrepreneurship
• Some particular definition for the entrepreneurship are
• “Entrepreneurship is the process of creating something new and assuming accompanying risks and rewards” -Robert Hisrich
• “Entrepreneurship is the purposeful activity of an individual or a group of associated individuals, undertaken to initiative, maintain and realize profit by producing or distributing economical goods and services.” –A.H. Cole

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Concept of ‘Entrepreneurship’

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• Entrepreneurship is a behavior includes
• 1) Risk Bearer-Cantilon
• 2) Organizer-Baptist
• 3) innovtor-Schumpeter
• Introduction of new product in the market.
• Use of new method.
• Opening of new market.
• Discovery of new source of raw materials and bringing new form of organisation.

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Characteristics of entrepreneur

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• Creativity
• Innovation
• Dynamism
• Leadership
• Teambuilding
• Achievement of Motivation
• Problem solving
• Goal orientation
• Risk taking and Decision making

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Classification of entrepreneur

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• Based on Functional Characteristics
• Innovative entrepreneur
• Imitative or adaptive enterpreneur
• Fabian entrepreneur
• Drone entrepreneur
• Based on Development angle
• Prime mover
• manager
• minor innovator
• satellite
• local trading

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Classification of entrepreneur

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• Based on types of entrepreneurial Business
• Manufacturing
• Wholesaling
• Retailing
• Service
• Based on nine personality types

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Classification of entrepreneur

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• Based on the schools of thought on Entrepreneurship
• The Great person school of entrepreneurship
• The psychological Characteristics
• The Classical School
• The management school
• Leadership school
• Intrapreneurship school

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Myths of Entrepreneurship

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• Entrepreneurs are born, not made
• Entrepreneurs are academic and social misfits
• Entrepreneurs fit an ideal profile.
• All you need is money to be an Entrepreneur.
• All you need is luck to be an Entrepreneur.
• A great idea is the only ingredient in a recipe for business.
• My best friend will be a great business partner.
• Having no boss is great fun.
• I can make lots of money
• I will definitely become successful
• Life will be much simpler if I work for myself.

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Entrepreneurial Development Models

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The models suggested for the development of Entrepreneurship are:

• Psychological Models
• Sociological Models
• Integrated Models
• Psychological Models: This model signifies that psychological factors are responsible for the development of entrepreneurial behavior in individuals.
• McClelland: Importance to achievement motives Latent need for achievement among adults Motivation-training programme to make entrepreneurs willing and eager to exploit the opportunities provided Creative Personality - status withdrawal (Everett Hagen’s theory of social change) John Kunkel – entrepreneurial supply as a function of the surrounding social structure.
• Can be influenced by manipulating economic and social incentives.

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Entrepreneurial Development Models

Sociological model

• This model considers societal factors responsible for the development of entrepreneurial behavior in individuals.
• Young’s theory: Change based upon Society’s incorporation of relative subgroups
• Relativeness of a subgroup which has a low status in a larger society will lead to entrepreneurial behavior if the group has better institutional resources than others in the society at the same level.
• Suggests the creation of supporting institutions in society as the determinant of entrepreneurship

Integrated models

• TV Rao – Entrepreneurial disposition
• Need for motive Long-term involvement either at thinking level or activity level , Personal, social and material resources , Suitable socio-political system for establishment and development of enterprise l models

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Entrepreneurial Development Cycle

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The activities are:

• Stimulatory activities
• Support Activities
• Sustaining Activities

Stimulatory activities: These activities ensure the emergence of entrepreneurs in the society.

The activities are:

• Entrepreneurial education
• Planned publicity for entrepreneurial opportunities.
• Identification of potential entrepreneurs through scientific methods.
• Motivational training to new entrepreneurs.
• Help and guidance in selecting products and preparing project reports.
• Making available techno-economic information and product profiles.
• Evolving locally suitable new products and process.
• Creating entrepreneurial forums.

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Entrepreneurial Development Cycle

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Support Activities :

• These activities help a person to develop into an entrepreneur.
• They nurture and help entrepreneurship to grow.
• The activities are: Registration of unit Arranging finance Providing land, shed, power, water and so on.
• Guidance for selecting and obtaining machinery.
• Supply of scare raw materials.
• Getting licenses/ import licenses Providing common facilities Garneting tax relief or other subsidy.
• Offering management consultancy services.
• Help marketing the product.
• Providing information.

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Entrepreneurial Development Cycle

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Sustaining activities:

• These activities are all those that help in the continuous and efficient functioning of entrepreneurship.

The activities are:

• Help modernization
• Help diversification/ expansion/ substitute production.
• Additional financing for full capacity utilization.
• Deferring replacement/ interest.
• Diagnostic industrial extension/ consultancy services.
• Production unit legislation/ policy change.
• Quality testing and approving services.

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Problems faced by Entrepreneurs

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The problems faced by entrepreneurs are:

• Internal Problems
• External Problems
• Specific management Problems Internal Problem

-Planning

-Technical feasibility

-Economic viability

-Implementation

-Production

-Production management , Labour management, Marketing management, Financial management , Administrative management

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Problems faced by Entrepreneurs

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• External Problems
• Infrastructural
• Financial
• Specific management problems
• Management deficiency
• Finance
• Manufacturing and technical problems
• Product planning
• Selection of equipment, plant and machinery
• Human resource development
• Technical know-how
• Preparation of project report.

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Capacity building for Entrepreneurship

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• To build capacity for entrepreneurship following measures can be taken such as availability of credit, imported raw materials, skilled labour, technology and equipment, infrastructural facilities, advisory services and access to market.
• Along with to
• Create the right environment for success.
• Ensure that entrepreneurs have access to the right skills.
• Ensure that entrepreneurs have access to smart capitals.
• Enable networking and exchange.

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Thank You

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