The Social Responsibility of Business

By Elisa Akiko Mann

Businesses exist to serve social purposes, according to Peter Drucker. They have to function in ways that make sense to the society in which they are situated – and in the case of multinational corporations, they often have to function in ways that make sense across more than one society, at a deep level.

In “The Dimensions of Management” from Management: Tasks, Responsibilities, Practices, Drucker identifies three tasks that allow a corporation to contribute well to society:

1. Fulfilling its purpose and mission
2. Creating productive work through the achievement of workers
3. Managing the social side of its impacts and responsibilities.

For for-profit businesses, economic performance is the mission. Other organizations and institutions may have other purposes that are central, but still need to function within economic constraints. The fulfillment of mission through careful strategy keeps organizations able to exist and contribute.

People are the means through which businesses or any organization achieve their missions, and Drucker calls for them to be treated with respect. At the same time he states that it is a management task that workers be helped and encouraged to be highly productive.

Because business or any institution has impacts on its employees, society as a whole, and the environment, business leadership through management (and ideally the whole enterprise) have a special expectation that they will be brave enough, and foresighted enough, to do the right thing – even in a complex environment. Social responsibility was not a fad to Peter Drucker, but a principle.

To fulfill responsibilities, management has to balance present and future concerns. At issue is risk: seemingly spectacular results for the short term that waste resources in a way that endanger the survival of the company in the long term, or wild bets on the far future without strong foundations in reality, can lead to complete decline. Enough attention, analysis and care have to be paid to both present operations and future initiatives to keep the enterprise healthy.

Drucker is strict about effectiveness. A business should focus on the core of its capabilities that bring it extraordinary results. Efficiency is also important, but it cannot be the leading issue; it must go alongside but not usurp what is effective in driving the business forward. To that end, management must be active in fulfilling the tasks that are necessary for the business to flourish.

Writes Drucker, “Success cannot, one might say, be continued forever. Businesses are, after all, creations of man which have no true permanence. Even the oldest businesses are creations of recent centuries. But a business enterprise must continue beyond the lifetime of the individual or of the generation to be capable of producing its contributions to economy and to society. The perpetuation of a business is a central entrepreneurial task – and ability to do so may well be the most trenchant and definitive task of management.”

So many businesses do not pass this test. Many enterprises last as long as there is one talented person to strive and keep producing something day after day, but once his or her (or both of their) enthusiasm and energy end, the business folds. I submit that these businesses are as important as those that have stretched centuries; they are the culmination of earnest effort and sometimes their quality is unmatched. They touch lives and they transform people. Yet they are effective because their management (often also the same people doing so much else – or everything else -- in the business) does every task necessary, and either cannot or prefers not to have a succession plan. These contributions within one lifetime are still real, and still impactful.

For an enterprise to have a life of its own beyond those who first breathe life into it, or for the succession of people who exemplify the meaning of the business to be successful, brings to the fore all the central management tasks, from communication to strategic planning. As society and the environment change, the nature of social responsibility each cadre of management faces, evolves. The challenges shift to a future which is unpredictable, but which carries the strands of many deeply held traditions. What is bedrock is the responsibility that Peter Drucker writes of, to the environment and the society as a whole.