Social Responsibility of Business: An Essay Analysis

This essay delves into the multifaceted concept of business social responsibility (CSR), particularly focusing on its relevance to Small and Medium Enterprises (SMEs). It explores the core principles of CSR, emphasizing the ethical framework that guides businesses in balancing profit-making with societal benefits. The essay is structured into several modules, discussing the definition and significance of social responsibility, illustrated with examples and diagrams. It further examines various models of CSR, including Carroll's model, and highlights the ethical considerations and audit skills essential for SMEs. The analysis covers the impact of CSR on shareholders, employees, and the broader community, advocating for the integration of ethical practices and responsible business conduct to ensure long-term sustainability and success. The essay concludes by underscoring the importance of ethical behavior and audit skills within SMEs, providing valuable insights for business owners to foster a responsible and sustainable business environment.

Running head: BUSINESS SOCIAL RESPONSIBILITY
BUSINESS SOCIAL RESPONSIBILITY
Name of the Student
Name of the University
Author note

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Table of Contents
Introduction:...............................................................................................................................2
Discussion:.................................................................................................................................3
Module A:..............................................................................................................................3
What is SME?....................................................................................................................3
SME towards Social Responsibility:..................................................................................4
The concept and importance of social responsibility:........................................................5
Module C:...............................................................................................................................6
Carroll’ Model of CSR.......................................................................................................7
Traditional Conflict model:................................................................................................8
The added value model:.....................................................................................................8
Multiple Goals model:........................................................................................................8
Module D:..............................................................................................................................9
Ethics and audit skills in SME:..........................................................................................9
Conclusion:..............................................................................................................................10
References:...............................................................................................................................11
Appendix:.................................................................................................................................13

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Introduction:
The essay is going to be discussed on the impact of the business ethics theory states
that the main priority of an organisation is its shareholders. As they are the source through
which an organisation can raise its funds; therefore, the business firm should be socially
responsible to their shareholders. When an organisation is focusing on the interest of their
shareholders, their main aim is to increase the shareholder’s return to satisfy them and
maintain their interest in the company (Cheng, Ioannou and Serafeim 2014). Shareholder’s
recovery can be increased only if the company earns more profits. The theory argues that
shareholders can voluntarily decide their initiative for taking part in social activities. This
essay focuses on the social responsibility of businesses by relating to the concept of SME. It
is structured in a single section divided into three subheads, firstly the idea of social
responsibility of the company is illustrated along with suitable examples and diagrams.
Secondly, the models of social responsibility are shown with examples of SME. Lastly, the
ethics of business are described.
Social responsibility can be the process in which a business organisation
engages in to increase the value of its shareholders in a way which will benefit society.
Nowadays, social responsibility has become very crucial for organisations and investors. The
primary purpose of the essay is to provide an analysis on social responsibility, which will be
focused on business organisation and it will be further discussed under three significant
sections so that the readers can stimulate their ideas and could apply these methods
appropriately.

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Discussion:
Module A:
Social responsibility is defined as the combined forces of individuals along with
organisations, in which they work together and have specific duties to perform in order to
provide the best interests towards their individual environment and society altogether (Cheng,
Ioannou and Serafeim 2014). Social responsibility should be applied to every business
venture, which is also known as corporate social responsibility (CSR). It serves as the main
idea, in which different kinds of businesses need to maintain balance the activities related to
profit-making aspects along with other events that will tend to benefit the communities
(Crane, Matten and Spence 2019). There are some critical examples of corporate social
responsibility such as reducing carbon emissions, improving the policies of labour,
participation in trade policies, distributing charitable aspects, volunteering in societies,
corporate strategies that will profit the environment, along with with conscious investments
based on the environment and society (Grayson and Hodges 2017).
Social responsibility is highly essential for the organisation that can bolster an
organisation’s image, and it will construct its brand image. The workers always get
influenced by the resources in this corporate life so that they can remove unwanted activities
from the corporate sectors. There are some programs of social responsibility that will help to
boost up the employee’s morale and will contribute them to provide higher productivity at
their workforce. (Follow figure 2).
What is SME?
The small and medium enterprise is the business, which helps in maintaining assets,
revenues, along with the number of employees that exists below a particular level for

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example, in the European Union has been well-served organisation SME, which consists of
fewer employees for about two hundred and fifty workers, on the other hand, United States is
also running an SME has been occupied with fewer employees for nearly five hundred
employees (Zhou 2016).
In this way, a small or medium-sized enterprise can be defined as the European
Commission, which also runs businesses along with two hundred and fifty employees and
twenty per cent of the enterprise is not actually owned by one enterprise but it has been
owned by several enterprises (Abdulsaleh and Worthington 2013).
SME towards Social Responsibility:
Therefore, social responsibility in a small and medium enterprise (SME) is turning out
to be a crucial factor especially in the operating system, maintaining specific issues, long-
term survival in which the organisation are getting concerned about the Total Quality
Management as well as Corporate social responsibility (Dincer and Dincer 2013). The social
aspects are quite essential to handle while maintaining the small and medium enterprise. The
employees, the general public and communities will definitely get affected if one does not
preserve the norms and values of business organisation in a small and medium enterprise
(Jammulamadaka 2013). The environmental, as well as economic factors, are also responsible
in such cases for example, business communities always prioritise larger business
organisation but the larger organisations are also linked with smaller enterprises, especially in
the United Kingdom. They will ensure help from the organisational structure in order to their
Corporate social responsibility by gathering initiatives and immense efforts.
Yet another example can be applied in such a case is that in SME, the budget of
business venture is quite low, so in order to maintain social responsibility that must improve
their labour policies so that they can grow in the corporate sector. They may provide a
significant amount of incentives so that they can allow more employees to join their system,

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but they should also keep in mind the essential policies (Vázquez-Carrasco and López-Pérez
2013).
The SME’s should donate less loss to the environment by dismissing fewer hydro-
fluorocarbons, which may degrade the environmental conditions. Therefore, less number of
chemical activities can provide a safer place for all people to live and work appropriately.
The concept and importance of social responsibility:
The idea of Social responsibility is defined as the ethical framework that recommends
an entity, which is linked with the individuals and organisations. It functions under the
critical obligations, which needs to be performed in order to secure the benefits of the
communities at a higher level (Abdulsaleh and Worthington 2013). Therefore, it is medium
of sustaining both the critical aspects of businesses as well as societies.
The primary objective of social responsibility in any business venture is
interconnected with the managers for controlling and sustaining the decision-making in any
business for two reasons, firstly to protect the environment and the interests of the members
of the society and secondly for the shareholders’ values to increase their score of profits
(Dincer and Dincer 2013). Therefore, it is vital to look after the employees, societies, and
customers as a whole. (follow figure 1.)

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Figure 1: SME and Social Responsibility
Figure 2: Social Responsibility
Social
responsibility
in business
Environment
General Public
Local
communities
Administrative
bodies
Customers
Employees
Shareholders

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Module C:
Carroll’ Model of CSR
According to Carroll’s 1991 CSR model, there are four dimensions of social
responsibility in the formation of total CSR including economic, legal, ethical and
philanthropic (Nalband and Kelabi 2014). It is the pyramid of the CSR model, which
constitutes a practical framework and it will help to argue on some basic questions such as
how and why companies need to maintain social responsibilities. Corporate social
responsibility is constructed on the foundation of profits and thus, benefits always come first.
After surviving the environment, the necessity of sustaining the businesses will assure
specific rules and regulations along with social laws added to it (Fadun, S.O., 2014).
There are four dimensions that need to be fulfilled, such as economic, legal, ethical
and philanthropic responsibilities.
Economic responsibilities are focused on the commercial entities of the business
organisations that will be produced and designed in order to generate products along with the
desired services. The principle role of this responsibility is to generate goods and services to
all the customers and to meet the basic economic unit in the communities (Fadun, S.O.,
2014).
Legal responsibilities will ensure the rights towards the society and towards the
businesses at the same time, which will imply specific laws and regulations. It is linked with
federal, state as well as local governments, which must be followed by the business
organisations (Faculty.wwu.edu 2020).
Ethical responsibilities are stated as the ethical norms and values that will ensure
absolute fairness along with moral obligations and justice, and it will embrace various events
and implementation by societal members (Faculty.wwu.edu 2020).

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Philanthropic responsibilities are linked with the responses of the society that
organisations need to be well-behaved corporate citizens. It will include engaging in some
events along with programs in order to promote goodwill as well as welfare.
Traditional Conflict model:
Traditional conflict model is another essential, model which will ensure corporate
social responsibility by incorporating social responsibilities, benefits and values are
recognized in the conflict with the profits of shareholders (Bizfluent.com 2020). This model
will ensure the SMEs to implement the various forms of social responsibilities that may add
costs for performing such activities, especially towards environmental activities.
The added value model:
The added value model is defined as the next most essential model in order to
conceptualize social responsibility by the corporate sectors so that recognise the
environmental and social commitments so that they can increase the profit ratio
(Bizfluent.com 2020). The critical decisions may lower the conflicts in any business and may
generate number of new revenues.
Multiple Goals model:
Multiple Goals model is the last and effective model; it will help in understanding the
corporate decisions along with economic values in any business venture. The primary goals
will definitely ensure monetary gain, but SMEs need to maintain the development of the
communities along with the environmental factors (Bizfluent.com 2020).

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Module D:
Ethics and audit skills in SME:
Ethics in the field of business is defined as the appropriate implementing policies of
the company along with proper practices that will be related to some controversial subjects.
Some critical issues are interlinked with ethics such as trading facilities, corporate
governance, discrimination, bribery, fiduciary responsibilities and social responsibility
(Ferrell and Fraedrich 2015).
The importance of ethics in SMEs is linked with an individual’s moral values,
judgments, and making decisions about the right and wrong things. Ethical behaviour and
corporate social responsibilities will incorporate essential benefits to its individual businesses
(Muhammad et al. 2013). There is a list of ethics in companies that are, honesty, loyalty,
fairness, respect, law-abiding, and trustworthiness, along with integrity.
There are audit skills regarding ethical issues that will examine specific conflicts of
particular interests like accessing to the information of the company, bidding, and practices of
awards to the employees, receiving and giving away gifts, and discrimination issues of the
employees (Mahzan and Yan 2014).
Small and medium-sized enterprise need to provide the business owners along with a
valuable perception of their individual business. These activities are entirely linked to
financial statements. Some crucial challenges can be rectified by applying financial results
after focusing on the audit services and it may exceed the overall cost by delivering high-
quality audit services (Mahzan and Yan 2014). Therefore, the small and medium-sized
enterprise need to look into their financial reports by applying cost-cutting theory in order to
sustain their businesses.

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Conclusion:
Therefore, social responsibility in business is highly essential to maintain and sustain
the companies and such companies need to consider all the social regulations. It will continue
to encourage and motivate the small and medium-sized enterprise after gaining essential
profit structure. Thus, they will provide an ample amount of shares to its shareholders,
stakeholders, business partners and investors and firstly, they need to maintain such norms,
values and environmental aspects in order to sustain its businesses in the upcoming future.
The audit skills will ensure various types of benefits in the forthcoming years if the
organisation utilise it appropriately.

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References:
Abdulsaleh, A.M. and Worthington, A.C., 2013. Small and medium-sized enterprises
financing: A review of literature. International Journal of Business and Management, 8(14),
p.36.
Bizfluent.com (2020). The Three Models of Corporate Social Responsibility. [online]
Bizfluent. Available at: https://bizfluent.com/info-8142792-three-models-corporate-social-
responsibility.html [Accessed 28 Feb. 2020].
Cheng, B., Ioannou, I. and Serafeim, G., 2014. Corporate social responsibility and access to
finance. Strategic management journal, 35(1), pp.1-23.
Crane, A., Matten, D. and Spence, L. eds., 2019. Corporate social responsibility: Readings
and cases in a global context. Routledge.
Dincer, B. and Dincer, C., 2013. Corporate social responsibility decisions: a dilemma for
SME executives?. Social Responsibility Journal.
Faculty.wwu.edu (2020). Carroll's CSR model: The pyramid model. [online]
Faculty.wwu.edu. Available at: http://faculty.wwu.edu/dunnc3/rprnts.pyramidofcsr.pdf
[Accessed 28 Feb. 2020].
Fadun, S.O., 2014. Corporate social responsibility (CSR) practices and stakeholders
expectations: the Nigerian perspectives. Research in Business and Management, 1(2), pp.13-
31.
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases.
Nelson Education.
Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make
corporate social responsibility work for your business. Routledge.
Jammulamadaka, N., 2013. The responsibility of corporate social responsibility in SMEs.
International Journal of Organizational Analysis, 21(3), pp.385-395.