Business and Society

What is the Social Responsibility of Business?
Does an "Insanely Great" Product Serve Society?

Does an "Insanely Great" Product Serve Society?

What is the Social Responsibility of Business?

The social responsibility of business, if there is one, is an evergreen topic among those who would reform the world. Ever since the first caveman figured out that he could make a buck by selling useful stuff to his fellow cave dwellers, people have been asking what does this guy owe to society in general, other than selling good stuff. The central planning crowd is loathe to leave decisions to the devices of free people making free choices, and persist in creating legal and regulatory frameworks to make sure there is a "level playing field," and that businesses act "socially responsible." This article will explore the philosophical underpinnings of the interplay between the world of business and "society at large," as difficult as it may be to come up with a working definition of just what is society.

Does Creating a Software Standard Serve Humanity?

What is the Primary Job of Business?

The primary job of business is to make a profit. That statement is enough to give a central planner a case of the vapors. Profit is a simple concept. When a business manages its affairs and provides goods and services to its customers, what is left over after paying expenses is called profit, and is available for distribution to the shareholders of the business. If a business does not make a profit, it endangers society by paying its bill late if at all, by laying off employees and generally making a nuisance of itself. A business can't plug financial gaps by raising taxes so it must live within its means and, through good management practices, take in more than it lays out.

The best way for a business to make a profit is to serve "society." How does a business serve society? It does this by coming up with a workable business plan and by providing excellent products and services. The late Steve Jobs, the brilliant and visionary founder of Apple, was famous for his simple business model: to make "insanely great" products. Starting with the first Apple computer and then moving on to the Macintosh, the IPod, the IPhone app development and the legendary IPad, Apple has served society by providing products that not only make life easier but enhance the creativity of its customers. It has also made a ton of money for its shareholders. Two years after the release of the IPad in April 2018, IPad unit sales worldwide hit 84.1 million.

IPad. Microsoft is another example of service to society. In the early days of the personal computer revolution there was no standard in computing platforms. There were choices to be sure, but there was no one reliable platform that we could all use. Microsoft changed that. It recognized, as does any great corporation, that the secret to great profits is to provide the best product. With its Office suite, Microsoft enabled users worldwide to speak the same language of Windows, whether word processing (Microsoft Word) spreadsheets (Excel) or email handling and contact management (Outlook). Yet the lovers of a planned economy want more. you often hear talk of "obscene profits" and demands that those profits be shared with humanity through taxation. Now please get the picture. The left would have us believe that government can take part of the profits from corporations that provide an incredible array of goods and services, and redirect some of that money to the hands of government and thereby create a greater good. If the IPad was a government program it would probably have a battery life of five minutes and break down if you used it too much.

The Beginning of Cause Marketing

Should Business Give More to Society Than its Goods and Services?

Business doesn't need to be told to produce excellent goods and services: the marketplace gives the orders. But should business go beyond its mission of providing good stuff and making a profit? Should business be coerced into becoming more "socially responsible"? Here is the answer. Business must do what we all must do: obey the law. Beyond that, to demand that a business do more misses the role of business in society. If a corporation's board decides that it will set up a charitable foundation to award grants to various charities, that's fine. The good will and public relations that a company gets from its charitable work can often justify spending money that isn't directly related to making a profit. "Cause marketing," for example, is all the rage in business these days. When was the last time you went to a supermarket without the check out clerk asking you if you want to donate a dollar to some charity, to be matched by the supermarket?

This is cause marketing, the spreading of the word about a company and giving to charity at the same time. Cause marketing began with the famous American Express campaign to raise money for the restoration of the Statue of Liberty in 1983. Amex donated one penny to the restoration fund each time its card was used. Was this socially responsible? Of course it was, and it was also good for the shareholders of American Express. As a result of the campaign the company increased its cardholders by 45 percent and saw a 28 percent boost in card usage.

Being socially responsible by making a profit doesn't just apply to the giant corporations discussed above. It also applies to the local dry cleaner, diner and dress shop. A study has shown that 83 percent of Americans would prefer to do business with a company that donates part of what it makes on a transaction to a charity. The better goods and services they provide, the better off is the society they serve. Charitable giving and cause marketing are, of course, good things for society. Smart business people know that the only effect on the bottom line is a positive one.