'Business is essentially a social institution and not merely a profit making activity'. Explain.

The primary objective of any business enterprise is profit maximisation. This is because profit acts as a measure of success and at the same time is the main source of income for an enterprise. Also, profits are often used to finance the expansion projects of a business enterprise. However, it is argued that business enterprises are not mere profit-making entities. They are considered as social institutions, too, as they are created by society. As every business makes use of society’s resources in terms of human and physical capital, it cannot work in isolation from society. That is, its operations are affected by social problems such as unemployment and poverty. Thus, a need arises to create a balance between the business interests and social interests of a business enterprise, such that it can grow by doing the maximum good to society. Hence, we say that a business enterprise is a social institution and not merely a profit-making entity. In this regard, the following are some of the responsibilities that must be fulfilled by an enterprise:

(a) Paying taxes on time

(b) Paying fair wages to employees.

(c) Supplying quality products at reasonable prices to customers

(d) Cooperating with the government in solving social problems, such as unemployment, poverty and illiteracy.