Question

What are some challenges that are preventing entrepreneurs to be socially responsible?

Answer 1

Entrepreneurs faces some challenges that hinders them from being more socially responsible. There is always a trade-off between efficiency and equity. Analogously, entrepreneurs often face a trade-off between efficiency and social responsibility. Some of the responsible factors for this are as follows:

1. Labor and Employees: Employee salaries occupy a large portion of a company’s budget. Many mature companies provide a lot of amenities and benefits to their employees. However, such incentives are not always cost-efficient. Though paying for insurance, subsidized healthcare, a higher number of sick leaves positively impact the employees, it becomes hard for entrepreneurs to sustain such costs for a long time.
2. Sustainability: The very objective of any business is to maximize profits. Social responsibilities create no additional value but increase the amount of cost to the company significantly. Therefore, it becomes budgetarily impossible to sustain such schemes in many cases.
3. Supply chain: Businesses which work with multiple suppliers and operate in multiple countries find it more difficult to identify and analyze socially irresponsible practices.
4. Natural Resources: Businesses which significantly use natural resources in their production, are left with no option other than continuing socially irresponsible practices. Until alternative low resource intensive measures are found, the businesses will have to choose between going out of business or continuing such practices.