Small businesses, just like large businesses, often face moral dilemmas and questions to do with their social responsibility. The other pressures that small businesses face when trying to survive in a free market effect how they deal with these dilemmas. The advantages as well as the disadvantages of small businesses are many, and their role in the greater society is complex and manifold. Understanding how small businesses deal with their social responsibility is very revealing.
Often it costs a business more for it to conduct its business in what would be deemed a more socially responsible way. Steps such as reducing energy consumption or only using biodegradable materials can be very cost-prohibitive. Small businesses face particular disadvantages when dealing with these costs, as they have less disposable income. Many small businesses are simply trying to avoid bankruptcy. The costs associated with social responsibility may ultimately be dangerous to them.
Small businesses often find success by filling small niches in the greater economy by offering boutique services that larger businesses have neglected. Many small businesses have found success by marketing themselves to consumers as being socially responsible. Consumers will sometimes pay more for a product if they know that it has been produced in what they think is an ethical manner. Behaving in a socially responsible way also can be a way to expand your business.
One of the first concerns for every small business is the relation it has with its employees. While a small business may not be able to afford to pay its employees a great deal, it may find other ways to motivate them by behaving ethically. If an employee trusts her employer to deal with her honestly, she is more likely to stay at her position and to want her business to succeed and work hard.
Some economists have argued that the greatest social responsibility of any business is to produce profits. It is argued that this is the role they fill in society as wealth producers. Other responsibilities can be filled by other institutions. Critics of this view argue that businesses also have a duty to the greater community that makes their businesses possible to help to strengthen its civil society. Others argue that both goals can be combined together.