Introduction to Management

To be truly effective, organizations should interact with their external environment. The external environment can be divided into the general or mega environment and the specific task environment. Social responsibility refers to the obligation of a business firm to enhance the condition of society along with its own interests. Business firms are accountable to six major stakeholder groups: shareholders, employees, customers, creditors and suppliers, society and the government.

Social responsiveness refers to the ability of a firm to implement policies and take part in activities that would benefit both society and the firm. The following categories are generally considered when measuring social responsiveness: contributions, fund-raising, volunteerism, recycling, diversity policies, direct corporate investment, quality of work life, attention to consumers and pollution control. The need to measure social responsiveness led to the development of social audits. Social audits are of two types - audits required by the government and voluntary audits.