Which principle ensures that businesses consider the impact of their decisions on stakeholders and the community?

The principle of social responsibility is crucial because it emphasizes that businesses have an obligation to consider the effects of their actions on various stakeholders, which include employees, customers, suppliers, the community, and the environment. This principle encourages organizations to act ethically and contribute positively to society beyond merely maximizing profits. By prioritizing social responsibility, companies can create a sustainable business model that promotes community well-being and addresses societal challenges, thus fostering trust and loyalty among stakeholders.

In contrast, legal compliance focuses primarily on following laws and regulations, which can sometimes allow for decisions that may not necessarily be in the best interest of the community or stakeholders, as long as they are legal. Economic profitability centers on financial gains rather than the broader impact of business decisions on society. Employee welfare, while important, deals specifically with the treatment and conditions of employees rather than the wider community and stakeholder relationships. Social responsibility encompasses these aspects but extends further to consider the overall impact on society as a whole.