On the other hand, Social responsiveness refers to the “capacity of a firm to adapt to changing societal conditions”, whereby the organization actively seeks to better the society in which it operates, i.e. it goes beyond social obligation and social responsibility and functions in response to society’s demands. Examples of social responsiveness are evident as the Shepparton Preserving Company (SPC) contributes to charity with its “Share a can” day, where volunteers from among employees, growers and suppliers donate a day’s work and materials to produce roughly $750,000 worth of food for the Victorian Relief Agency and Victorian Foodbank. Supporter organizations of social responsiveness believe that the concept replaces philosophical talk with practical action applied to achieving their goal. These firms see it as a more tangible and achievable objective than social responsibility, rather than assessing what is good for society in the long term, managers in an social responsive organization identify the prevailing social norms and then change their social involvement to respond to changing societal conditions.
Within Social Responsibility there are two opposing views that differ greatly from each other. On one side there is the classical or purely economic view that management’s only social responsibility is to maximize profits. On the other hand socioeconomic stance, which holds that management’s responsibility, goes well beyond making profits to incorporate protecting and improving society’s welfare.
The Classical view refers to that “management’s only social responsibility is to maximize a profit” that is the manager is responsible to ensure greatest return on investment (ROI) for shareholders in order to earn the highest profit for the given firm. The most outspoken supporter of this approach is economist Milton Friedman that was constructed within the 1960’s. Mr. Friedman strongly argues that manager’s primary responsibility is to operate the business in the best interests of the shareholders that are the true owners of a corporation. Furthermore, he states that shareholders have single concern and should be concentrating on financial return along with arguing that when managers decide on their own to spend their organization’s resources for the “social good”, they are adding to the overheads of doing business. That is the costs of being “socially responsible” as it affects profits, dividends, shareholders, customers, employees and in the long run society as a whole. For example if wages and benefits have to be reduced to pay for social actions, employees will be the victim of losing. If prices are raised to pay for social actions, consumers will lose and if higher prices are rejected by consumers and sales drop, the business might not survive, finally in which case all the organization’s constituencies lose. This means if social responsible actions affect the above and managers incur greater cost as a result of it; these will reduce attractiveness of a firm to potential shareholders along with a decline in investment. In order to understand Mr. Friedman’s argument in greater detail it is best understood using Microeconomics. This is revealed by “socially responsible” actions adding to the cost of doing business, those costs have to be passed on to consumers in the form of higher prices or absorbed by shareholders through a smaller profit margin.
The socioeconomic position refers to “the view that management’s social responsibility goes well beyond the making of profits to include protecting and improving society’s welfare.” I.e. making profit is second priority while first priority is concerned about the survival of the organization. In this case survival means looking at the long term, whilst organizations which focus on sacrificing “social responsibility” may make short-term profits, however face increase costs in the long term. This was portrayed by the Manville Corporation in the U.S whereby one of its products, asbestos caused several fatal deaths to employees due to lung disease. From a management stance they decided to conceal information from affected employees simply due to maintaining their profit margin. In court a lawyer said, “Do you mean to tell me you would let them work until they dropped dead? The reply was “yes, we save a lot of money that way.” In the short term this was true, however it certainly was not in the long run and as a result the company was forced to file for bankruptcy. This is an illustration of what can happen when managers take a short term perspective.