Social responsibility is defined as the obligation and commitment of managers to take steps for protecting and improving society’s welfare along with protecting their own interest. The managers must have social responsibility because of the following reasons:

1. Organizational Resources - An organization has a diverse pool of resources in form of men, money, competencies and functional expertise. When an organization has these resources in hand, it is in better position to work for societal goals.

2. Precautionary measure - if an organization lingers on dealing with the social issues now, it would land up putting out social fires so that no time is left for realizing its goal of producing goods and services. Practically, it is more cost-efficient to deal with the social issues before they turn into disaster consuming a large part if managements time.

3. Moral Obligation - The acceptance of managers’ social responsibility has been identified as a morally appropriate position. It is the moral responsibility of the organization to assist solving or removing the social problems

4. Efficient and Effective Employees - Recruiting employees becomes easier for socially responsible organization. Employees are attracted to contribute for more socially responsible organizations. For instance - Tobacco companies have difficulty recruiting employees with best skills and competencies.

5. Better Organizational Environment - The organization that is most responsive to the betterment of social quality of life will consequently have a better society in which it can perform its business operations. Employee hiring would be easier and employee would of a superior quality. There would be low rate of employee turnover and absenteeism. Because of all the social improvements, there will be low crime rate consequently less money would be spent in form of taxes and for protection of land. Thus, an improved society will create a better business environment.

But, manager’s social responsibility is not free from some criticisms, such as -

1. High Social Overhead Cost - The cost on social responsibility is a social cost which will not instantly benefit the organization. The cost of social responsibility can lower the organizational efficiency and effect to compete in the corporate world.

2. Cost to Society - The costs of social responsibility are transferred on to the society and the society must bear with them.

3. Lack of Social Skills and Competencies - The managers are best at managing business matters but they may not have required skills for solving social issues.

4. Profit Maximization - The main objective of many organizations is profit maximization. In such a scenario the managers decisions are controlled by their desire to maximize profits for the organizations shareholders while reasonably following the law and social custom.

Social responsibility can promote the development of groups and expand supporting industries.