Social Responsibility of the Business

Social Responsibility of the Business
Businesspersons overlook their social responsibilities in order to minimize their cost of production and operation and increase the profit margin. However, businesses have a role to play in the society and a neglect of these roles not only affects the society and the business but it also affects other concerned stakeholder such as the government and other institutions indirectly associated with the business. Neglecting of social responsibilities by business affects the decision-making at the business level that in turn affects the decision making of the industry in which the business operates. From the industry, the effects spread to the region in which the business operates and later on the global economy and global decision-making.

Ignoring the social responsibilities by business has long-lasting effects that not only affect the business but also the society. Most businesses however do not consider their social responsibility and this leads to the lack of definite indicators. With the general economic knowledge, this issue becomes simplified since the general indicators of macroeconomic apply to the lack of social responsibility by business. Lack of social responsibility will therefore be indicated by inflation, large-scale unemployment, and poor investment policies. Although this phenomenon is obvious, the macroeconomic theory provides a better understanding into the subject by providing the relationship of the above indicators (Bade & Michael, 2001). When using the macroeconomic theories, it is also possible to establish how the above indicators relate to attain the resultant phenomenon. This paper therefore analyzes the application of macroeconomic theory as presented in Arnold to determine the effects of lack of social responsibilities in businesses.

The rational expectation theory is a major theory in macroeconomics and it is concerned with the role played by rational expectation in decision-making. The theory also add that the rational expectations are based on empirical forecast and that people will use such forecast to predict and also to make future plans (Hirschey, 2009). A business depends on the society since the society provides the market, labor and expertise needed by the business. On the other hand, the society need the business in order to obtain essential goods and services required in life. These different needs determine the role that each party needs to play for them to co-exist in the business-society relationship. Businesspersons however neglect their role in order to maximize their output by lowering their cost of production and operation. Consequently, the society suffers from this neglect and in order to avoid this in future it tends to make plans and projections that will favor them. The society will therefore make plans based on future expectations depending on the level of neglect by the businesspersons operating within the society. The plans and projections of the society are based on empirical forecast that the society forms from experiences.

Businesses usually neglect their social responsibility through lack of input or investment into the society that support the business. This implies that the business is getting more from the society than it is giving back to it or the business is exploiting the society. If a business neglects its social responsibilities the society also tends to neglect its roles towards the business and this is indicated in the macroeconomic indicators. The society tends to minimize their spending onto the business and this affects the amount of money in circulation. The society can also overspend due to anticipations of future increase in prices and this would cause inflation. The neglect of the society by businesspersons will also cause a shift in investment or change the investment trends in society and this causes a shift in the regional decision making (Bade & Michael, 2001). Generally, the society plans and projects to counter the effects of lack of concern by businesspersons and this stands out through indicators of macroeconomics. The rational expectation theory best explains this behavior by relating expectations of the society to plans and projections made by the society. The theory also explains the resultant indicators and this demonstrates the importance of social concern by businessperson.

The monetary theory is a major macroeconomic theory that explains the quantity, demand and the roles of money in the society. Business activities and the society behavior play a major role in the determination of the amount of money in circulation. This in turn affects the quantity of money in circulation and this determines the demand for money in the society and businesses. A business that has concern for the society takes responsibilities towards the society by meeting their expectations (Hirshleifer, Hirshleifer & Glazer, 2005). It is therefore possible to estimate the amount of money in circulation or the demand for money in the society with a fair degree of accuracy. On the other hand, in a society with businesses that lack social concern, the amount of money in circulation is unstable due to the expectations of the society and therefore determining the quantity of money in circulation or demanded is difficult.

Lack of society concern by business therefore makes the society to have expectations, which they use to make plans. The society can therefore increase or decrease their rate of spending which corresponds to the amount of money in circulation or the demand for money under circulation. In most cases the society will tend to minimize their spending and this reduce the demand for money and lowers the amount of money in circulation (Hirshleifer, Glazer & Hirshleifer, 2005). On the other hand, a business that has concern for the society will have a stable society that has stable income and spending. Such societies will experience a stable demand for money and this will lead to stability on the amount of money in circulation. Such societies will also have low levels of inflation, employments and improved investment. In such a society, the decision made by the concerned parties at the regional and global level will focus on sustainability and maintenance. In addition, decision made in a society characterized by businesspersons that neglect their social responsibilities will mainly comprise of recovery measures and strategies.

Social responsibility of businesses has become a major topic of discussion in modern economics mainly due to the current trends of lack of social concern by businesspersons. Social concern or lack of social concern by businesspersons determines the behavior in the society, which determines the decisions made by the society. The decisions made at the society level determine the decisions made at the regional level and this influences the decisions made at the global level. The decision made by either businessperson or society will affect the rate of spending and the decisions made concerning future expectations. The decisions made at the society level will therefore determine the unemployment level, the rate of inflation and the trends of investment and this will in turn affect the global and the regional output.


Bade, R. & Michael, P. (2001). Foundations of microeconomics. New York: Addison Wesley
Hirschey, M. (2009). Fundamentals of managerial economics 9th Ed. Boulevard: Cengage Learning.
Hirshleifer, D., Hirshleifer, J. & Glazer, A. (2005). Price theory and applications: Decisions, markets, and information. London: Cambridge University Press.