NCERT Solutions for Class 11 Business Studies Chapter 6: Social Responsibilities of Business and Business Ethics (2026–27)
These Class 11 Business Studies Chapter 6 solutions cover Social Responsibilities of Business and Business Ethics from the NCERT textbook (continued for the 2026–27 session). The chapter explains the concept and need for social responsibility, the arguments for and against it, the responsibility of business towards different interest groups, the relationship between business and environmental protection, and the meaning and elements of business ethics. Below you get step-by-step, exam-ready answers to every NCERT exercise question (all Short Answer and Long Answer questions), plus key concepts, extra practice, MCQs, Assertion–Reason and FAQs.
Class: 11Subject: Business StudiesChapter: 6Topic: Social Responsibility & Business EthicsSession: 2026–27
Chapter 6, Social Responsibilities of Business and Business Ethics, establishes that a business enterprise is not merely a profit-making machine but a social institution that operates with the permission of society. Social responsibility is a firm’s obligation to take decisions and perform actions that are desirable in terms of the objectives and values of society; it is broader than legal responsibility and carries a voluntary element. The chapter weighs the major arguments for social responsibility (justification for existence, long-term interest, avoidance of government regulation, and more) against the arguments against it (violation of profit maximisation, burden on consumers, lack of social skills, lack of public support). It explains the four kinds of responsibility (economic, legal, ethical, discretionary), responsibility towards different interest groups (shareholders, workers, consumers, government and community), the causes and control of pollution (air, water, land, noise) and the role of business in environmental protection. Finally, it defines business ethics as the socially determined moral principles that should govern business activity, and lists its five elements: top management commitment, publication of a code, compliance mechanisms, involving employees, and measuring results.
Key Concepts & Terms
Social responsibility of business: the obligation of a business to take those decisions and perform those actions which are desirable in terms of the objectives and values of society; it is broader than legal responsibility and includes a voluntary element.
Legal responsibility: the obligation of a business to operate within the laws of the land; it can be fulfilled by mere compliance with the law, whereas social responsibility goes beyond it.
Corporate Social Responsibility (CSR): the responsibility of enterprises for their impact on society; in India governed by Section/Clause 135 of the Companies Act, 2013.
Four kinds of responsibility:Economic (produce goods/services and sell at a profit), Legal (operate within the law), Ethical (behave as society expects even where not codified in law), and Discretionary (purely voluntary, e.g. charity, disaster relief).
Interest groups: the sections of society to whom business is responsible — shareholders/owners, workers, consumers, and government & community.
Environment: the totality of man’s surroundings, both natural (land, water, air, flora, fauna) and man-made (cultural heritage, socio-economic institutions, people).
Environmental pollution: the injection of harmful substances (pollutants) into the environment beyond its assimilation capacity, which changes the physical, chemical and biological characteristics of air, land and water. Its main types are air, water, land and noise pollution.
Business ethics: the socially determined moral principles which should govern business activities — for example, charging fair prices, using correct weights, fair treatment of workers and earning reasonable profits.
Code of ethics: a written document defining the principles of conduct for the whole organisation, covering honesty, product safety, workplace health, conflicts of interest, fair selling and financial reporting.
Elements of business ethics: (i) top management commitment, (ii) publication of a code, (iii) establishment of compliance mechanisms, (iv) involving employees at all levels, and (v) measuring results.
NCERT Exercises — Full Solutions
All questions below are reproduced verbatim from the NCERT textbook’s end-of-chapter Exercises. Answers are original, written in CBSE exam-ready style.
Short Answer Questions
1. What do you understand by social responsibility of business? How is it different from legal responsibility?
ANSWERSocial responsibility of business refers to its obligation to take those decisions and perform those actions which are desirable in terms of the objectives and values of our society. It means that a business respects the aspirations of society and tries to contribute to their achievement along with its own profit interests, acting with due concern for the effects of its decisions on the lives of others.Difference from legal responsibility: Legal responsibility can be fulfilled by mere compliance with the law — doing only what the law requires. Social responsibility is broader; it is a firm’s recognition of social obligations even where they are not covered by law, in addition to the obligations laid down by law. Thus, social responsibility involves an element of voluntary action for the benefit of society, while legal responsibility is compulsory and limited to what the statute prescribes.
2. What is environment? What is environmental pollution?
ANSWEREnvironment is defined as the totality of man’s surroundings — both natural and man-made. These surroundings are in the nature of resources useful for human life: natural resources such as land, water, air, fauna, flora and raw materials, and man-made resources such as cultural heritage, socio-economic institutions and the people.Environmental pollution is the injection of harmful substances into the environment. It occurs when pollutants — the materials or chemicals discarded during production or consumption — are released into the environment beyond its assimilation capacity. Pollution changes the physical, chemical and biological characteristics of air, land and water, harming human life and other species and degrading living conditions. Its main forms are air, water, land and noise pollution.
3. What is business ethics? Mention the basic elements of business ethics.
ANSWERBusiness ethics refers to the socially determined moral principles which should govern business activities. It concerns itself with the relationship between business objectives, practices and techniques, and the good of society. A businessperson behaves ethically when his or her actions are upright and serve the interests of society — for example, charging fair prices, using fair weights, giving fair treatment to workers and earning reasonable profits.Basic elements of business ethics:(i) Top management commitment — the CEO and senior managers must be openly committed to ethical conduct and provide leadership for upholding the organisation’s values.(ii) Publication of a ‘code’ — defining the principles of conduct for the whole organisation in a written document covering honesty, product safety, workplace health, conflicts of interest, fair selling and financial reporting.(iii) Establishment of compliance mechanisms — suitable systems (ethics-based recruitment, training, audits and reporting channels) to ensure decisions comply with ethical standards.(iv) Involving employees at all levels — since it is employees who implement ethics policies, their participation through discussion groups is essential.(v) Measuring results — auditing to monitor compliance with ethical standards and discussing the results for further action.
4. Briefly explain (a) Air Pollution, (b) Water pollution, and (c) Land pollution.
ANSWER(a) Air pollution is the result of a combination of factors which lower the air quality. It is mainly due to carbon monoxide emitted by automobiles and the smoke and chemicals released from manufacturing plants. Resultant air pollution has contributed to a hole in the ozone layer, leading to dangerous warming of the earth.(b) Water pollution is caused primarily by chemical and waste dumping. For years business enterprises have dumped waste into rivers, streams and lakes with little regard for the consequences. Water pollution has led to the death of several animals and poses a serious threat to human life.(c) Land pollution is caused by the dumping of toxic wastes on land. It damages the quality of land, making it unfit for agriculture or plantation, and restoring land that has already been damaged is a very difficult problem.
5. What are the major areas of social responsibility of business?
ANSWERThe major areas of social responsibility relate to the different interest groups affected by business decisions:(i) Towards shareholders/owners — providing a fair return on and safety of their capital investment, and giving regular, accurate and full information about the company’s working and growth plans.(ii) Towards workers — providing opportunities for meaningful work and good working conditions, respecting the workers’ right to form unions, and ensuring a fair wage and a fair deal.(iii) Towards consumers — supplying the right quality and quantity of goods and services at reasonable prices, avoiding adulteration, poor quality and misleading advertising, and giving the right information about products.(iv) Towards the government and community — obeying the laws of the land, paying taxes honestly, behaving as a good citizen, protecting the natural environment and developing a proper image in society.
6. State the meaning of Corporate Social Responsibility as per the Companies Act 2013.
ANSWERIn India the concept of Corporate Social Responsibility (CSR) is governed by Clause 135 of the Companies Act, 2013. CSR refers to the continuing commitment of a company to contribute to economic development while improving the quality of life of its workforce and their families as well as of the community and society at large — in short, the responsibility of enterprises for their impact on society.Under the Act, the CSR provisions apply to companies having an annual turnover of Rs. 1,000 crore or more, or a net worth of Rs. 500 crore or more, or a net profit of Rs. 5 crore or more. Such companies are encouraged to spend at least 2% of their average net profit of the previous three years on CSR activities, which must be undertaken in India and must benefit society at large rather than only employees and their families.
Long Answer Questions
1. Build up arguments for and against social responsibilities.
ANSWERArguments FOR social responsibility:(i) Justification for existence and growth — business exists to satisfy human needs, and its prosperity is possible only through continuous service to society, which justifies its existence.(ii) Long-term interest of the firm — a firm earns maximum profit in the long run when its highest goal is ‘service to society’; an irresponsible firm loses the cooperation of workers, consumers and others.(iii) Avoidance of government regulation — by voluntarily assuming social responsibilities, businesses can reduce the need for new laws that restrict their freedom.(iv) Maintenance of society — laws cannot cover every situation; people who feel cheated may resort to anti-social activities that harm business, so it is desirable for business to act responsibly.(v) Availability of resources with business — business has valuable financial, human and managerial resources which can be effectively used to solve social problems.(vi) Converting problems into opportunities — business has a history of turning risky situations into profitable deals and can do the same with social problems.(vii) Better environment for doing business — a society with fewer problems provides a better environment for a firm to conduct its business successfully.(viii) Holding business responsible for social problems — since business has created or worsened some problems (pollution, unsafe workplaces), it has a moral obligation to help solve them.Arguments AGAINST social responsibility:(i) Violation of profit maximisation objective — business exists only for profit maximisation; it serves society best by maximising profits through efficiency and reduced costs.(ii) Burden on consumers — social responsibilities like pollution control are costly; businessmen tend to shift this burden to consumers through higher prices, which is unfair.(iii) Lack of social skills — businessmen do not have the understanding and training to solve social problems, which should be handled by specialised agencies.(iv) Lack of broad public support — the public generally dislikes business interference in social programmes, so business cannot succeed in these without public confidence and cooperation.
2. Discuss the forces which are responsible for increasing concern of business enterprises toward social responsibility.
ANSWERA number of social and economic forces have forced and persuaded businessmen to consider their social responsibilities:(i) Threat of public regulation — welfare governments take action to regulate enterprises that behave irresponsibly, so the fear of regulation makes business concerned with social responsibility.(ii) Pressure of the labour movement — an educated and organised labour force and a powerful labour movement have forced enterprises to pay due regard to the welfare of workers, abandoning the ‘hire and fire’ policy.(iii) Impact of consumer consciousness — education, mass media and competition have made consumers aware of their rights; the principle of caveat emptor has given way to ‘customer is king’, so firms follow customer-oriented policies.(iv) Development of social standards for business — new social standards accept the economic activity of business as legitimate only if it also serves social needs; business is judged on the basis of these standards.(v) Development of business education — business education rich in the content of social responsibility has made consumers, investors, employees and owners more sensitive to social issues.(vi) Relationship between social interest and business interest — firms now realise that social and business interests are complementary, not contradictory; long-term benefit lies in serving society well.(vii) Development of a professional, managerial class — professional managers, unlike the old owner-managers, are more interested in satisfying the multiple interest groups in society than in pursuing profit goals alone.
3. ‘Business is essentially a social institution and not merely a profit making activity’. Explain.
ANSWERA business enterprise is permitted by society to carry on industrial or commercial activities and earn profits; in return, society expects it not to do anything undesirable from society’s point of view. Although profit is an important justification for business, profit should be looked upon as the outcome of service to the people, not as the only aim.Business is no longer a mere occupation; it has become a socio-economic activity. It is an economic institution that has to reconcile its short-term and long-range economic interests with the demands of the society in which it functions. A number of social and economic forces — consumer consciousness, the labour movement, social standards and professional management — have combined to make this so.Because it is the society that permits business to exist and grow, business must act with due concern for the effects of its decisions on the lives of other people — shareholders, workers, consumers, the government and the community. While business must ultimately justify itself on economic performance, it is also an organ of society and must justify its continuance by fulfilling its roles and responsibilities towards society. Hence business is essentially a social institution, not merely a profit-making activity.
4. Why do the enterprises need to adopt pollution control measures?
ANSWEREnterprises need to adopt pollution control measures for the following reasons:(i) Reduction of health hazards — many diseases such as cancer, heart attacks and lung complications are caused by pollutants; pollution control checks such diseases and supports healthy life.(ii) Reduced risk of liability — an enterprise may be held liable to pay compensation to people affected by the toxic wastes it releases, so installing pollution-control devices is sound business policy.(iii) Cost savings — an effective pollution-control programme saves costs, since improper technology produces more waste, raising the cost of waste disposal and plant cleaning.(iv) Improved public image — as society becomes conscious of environmental quality, a firm that controls waste enjoys a good reputation and is seen as socially responsible.(v) Other social benefits — pollution control gives clearer visibility, cleaner buildings, a better quality of life and the availability of natural products in purer form.
5. What steps can an enterprise take to protect the environment from the dangers of pollution?
ANSWERBusiness enterprises command huge financial, physical and human resources and the know-how to prevent pollution at source. The specific steps they can take are:(i) A definite commitment by top management to create, maintain and develop a work culture for environmental protection and pollution prevention.(ii) Ensuring that the commitment to environmental protection is shared throughout the enterprise by all divisions and employees.(iii) Developing clear-cut policies and programmes for purchasing good-quality raw materials, employing superior technology, using scientific techniques of waste disposal and treatment, and developing employee skills for pollution control.(iv) Complying with the laws and regulations enacted by the Government for prevention of pollution.(v) Participating in government programmes relating to management of hazardous substances, clearing polluted rivers, plantation of trees and checking deforestation.(vi) Periodical assessment of pollution-control programmes in terms of costs and benefits, to increase progress in environmental protection.(vii) Arranging educational workshops and training to share technical information and experience with suppliers, dealers and customers and get them actively involved in pollution control.
6. Explain the various elements of business ethics.
ANSWERSince ethical business behaviour is good for both the enterprise and society, an enterprise can foster ethics through the following elements:(i) Top management commitment — the CEO and higher-level managers must be openly and strongly committed to ethical conduct and give continuous leadership in developing and upholding the values of the organisation.(ii) Publication of a ‘code’ — enterprises with effective ethics programmes define the principles of conduct for the whole organisation in a written document (the “code”) covering honesty and adherence to laws, product safety and quality, workplace health and safety, conflicts of interest, employment practices, fairness in selling/marketing, and financial reporting.(iii) Establishment of compliance mechanisms — suitable mechanisms to ensure that actual decisions comply with ethical standards, such as paying attention to values in recruitment and hiring, emphasising ethics in training, auditing performance, and instituting communication systems for reporting unethical behaviour.(iv) Involving employees at all levels — because it is the employees who implement ethics policies, their involvement (for example, through small discussion groups) is essential to make ethical business a reality.(v) Measuring results — although end results are difficult to measure accurately, firms can audit to monitor compliance with ethical standards, and the management and employees should discuss the results for further course of action.
7. Discuss the guidelines enumerated by the Companies Act 2013 for Corporate Social Responsibility.
ANSWERIn India CSR is governed by Clause 135 of the Companies Act, 2013, which received the assent of the President on 23 August 2013. The CSR provisions apply to companies with an annual turnover of Rs. 1,000 crore or more, or a net worth of Rs. 500 crore or more, or a net profit of Rs. 5 crore or more. The main guidelines, applicable from the fiscal year 2014–15 onwards, are:(i) Such companies must set up a CSR committee consisting of board members, including at least one independent director.(ii) Companies are encouraged to spend at least 2% of their average net profit of the previous three years on CSR activities.(iii) The indicative activities that can be undertaken under CSR have been specified under Schedule VII of the Act.(iv) Only CSR activities undertaken in India will be taken into consideration.(v) Activities meant exclusively for employees and their families will not qualify under CSR.
Projects/Assignments
The textbook also lists three project/assignment activities. These are practical, student-driven tasks; brief guidance is given below.
1. Develop and put in writing a code of ethics for use in the classroom. Your document should include guidelines for students, teachers, and the principal.
GUIDANCEThis is a writing activity. Prepare a short code under three headings. For students: be honest in tests, respect classmates and property, complete work on time, avoid bullying. For teachers: be fair and unbiased, give timely feedback, maintain confidentiality, treat every student with dignity. For the principal: ensure transparency, apply rules equally to all, encourage participation and protect student welfare. Add a short preamble on why the code matters. (Your own version is accepted.)
2. Using newspapers, magazines and other business references, identify and describe at least three companies that you think are socially responsible and three that you think are socially irresponsible.
GUIDANCEThis is a research activity, so answers will vary. Collect recent reports and, for each company, note why you classify it as responsible (e.g. genuine CSR spending, pollution control, fair labour, quality products) or irresponsible (e.g. adulteration, misleading advertising, pollution, exploitation of workers). Cite your sources. (Use current, verifiable examples from your own reading.)
3. Choose a company and prepare a report on Corporate Social Responsibility undertaken by it. (Hint: Swachh Bharat Abhiyan, Budding Artists Fund, start-ups, Education, Skill India, women and other marginalised groups.)
GUIDANCEThis is a report-writing activity. Pick one company and structure your report as: profile of the company; its CSR policy and committee; the areas it works in (e.g. education, skill development, health, sanitation, women empowerment); the amount spent (about 2% of average net profit); specific projects and their impact; and your conclusion. Use the hints provided as possible themes. (Use real, current data for the company you choose.)
Extra Practice Questions
Short Answer Type Questions
Q1. What is meant by ‘discretionary responsibility’ of business?
ANSWERDiscretionary responsibility refers to the purely voluntary obligation that an enterprise assumes, such as providing charitable contributions to educational institutions or helping affected people during floods or earthquakes. There is no legal or moral compulsion; it depends entirely on the will of the enterprise.
Q2. State any two responsibilities of business towards its workers.
ANSWER(i) To provide opportunities for meaningful work and the right working conditions so as to win the cooperation of workers; (ii) to respect the democratic right of workers to form unions and to ensure them a fair wage and a fair deal from management.
Q3. What is the principle of ‘caveat emptor’ and what has replaced it?
ANSWERCaveat emptor means ‘let the buyer beware’, placing the burden of checking goods on the buyer. With growing consumer consciousness it has been substituted by the principle of ‘customer is king’, under which enterprises follow customer-oriented policies.
Q4. Name the four kinds of social responsibility of business.
ANSWERThe four kinds are: (i) economic responsibility, (ii) legal responsibility, (iii) ethical responsibility, and (iv) discretionary responsibility.
Q5. Why is noise pollution considered a serious problem?
ANSWERNoise caused by the running of factories and vehicles is not merely a source of annoyance but a serious health hazard. It can be responsible for many diseases such as loss of hearing, malfunctioning of the heart and mental disorder.
Long Answer Type Questions
Q1. Explain the four kinds of social responsibility of business with an example of each.
ANSWERSocial responsibility can be divided into four categories. Economic responsibility: a business is basically an economic entity, so its primary responsibility is to produce goods and services that society wants and sell them at a profit; there is little discretion here. Legal responsibility: every business must operate within the laws of the land — since laws are meant for the good of society, a law-abiding enterprise is a socially responsible one. Ethical responsibility: this is the behaviour expected by society but not codified in law, for example respecting the religious sentiments and dignity of people while advertising a product; it has a voluntary element. Discretionary responsibility: this is purely voluntary, such as giving charitable contributions to educational institutions or helping people affected by floods or earthquakes, and safeguarding investment by avoiding speculative activity. Together these four kinds describe the full range of a business’s social obligations.
Q2. Describe the major causes of environmental pollution generated by business activity.
ANSWERAll sectors of society — industry, government, agriculture, mining, energy, transport, construction and consumers — generate waste, but industry is a major generator of waste in terms of both quantity and toxicity. Business activities such as production, distribution, transport, storage and consumption of goods are among the most critical sources of pollution. Wastes contain pollutants — chemicals discarded during production or consumption — which, when released beyond the environment’s assimilation capacity, cause pollution. This results in four main types: air pollution from carbon monoxide of automobiles and smoke of factories (linked to ozone depletion and global warming); water pollution from dumping chemicals and waste into rivers and lakes; land pollution from dumping toxic wastes that make land unfit for agriculture; and noise pollution from factories and vehicles, which is a serious health hazard. Pollution thus changes the physical, chemical and biological characteristics of air, land and water, harming human and other life.
Q3. ‘Ethics and profits go together in the long run.’ Discuss the importance of business ethics.
ANSWERThere is a growing realisation worldwide that ethics is vitally important for every business and for the progress of society — ‘ethical business is good business’. Ethical behaviour improves a firm’s public image, earns people’s confidence and trust, and leads to greater success; in the long run ethics and profits go together. An ethically responsible enterprise develops a culture of caring for people and the environment and commands a high degree of integrity in its dealings, which builds durable relationships with customers, employees and investors. Because businesspersons have widespread control over society’s resources, they are expected to maintain higher standards than others, and adhering to moral principles — charging fair prices, using fair weights, treating workers fairly and earning reasonable profits — serves the interests of society. Ethical activity is also valuable in itself because it enhances the quality of our lives and our work. Therefore, far from reducing profits, ethics strengthens a firm’s long-term success.
MCQs & Assertion–Reason
1. Social responsibility of business is:
(a) the same as legal responsibility (b) broader than legal responsibility (c) narrower than legal responsibility (d) opposed to legal responsibility
2. Which of the following is an argument AGAINST social responsibility?
(a) Long-term interest of the firm (b) Availability of resources with business (c) Lack of social skills (d) Better environment for doing business
3. The primary social responsibility of a business as an economic entity is its:
For each Assertion–Reason question, choose: (A) Both true and the Reason correctly explains the Assertion; (B) Both true but the Reason is not the correct explanation; (C) Assertion true, Reason false; (D) Assertion false, Reason true.
A-R 1. Assertion: Social responsibility involves an element of voluntary action.
Reason: Social responsibility is a firm’s recognition of social obligations even where they are not covered by law.
A-R 2. Assertion: Business is merely a profit-making activity with no obligation to society.
Reason: Society permits business to exist and grow, so business must act with concern for the effects of its decisions on others.
A-R 3. Assertion: Installing pollution-control devices is sound business policy.
Reason: An enterprise may be held liable to pay compensation to people affected by the toxic wastes it releases.
A-R 4. Assertion: Legal responsibility can be fulfilled by mere compliance with the law.
Reason: Social responsibility is narrower than legal responsibility.
A-R 5. Assertion: Ethical business behaviour can improve a firm’s long-term profits.
Reason: Ethical behaviour improves public image and earns people’s confidence and trust.
Answer key: 1-(A), 2-(D), 3-(A), 4-(C), 5-(A).
Exam Tips & Common Mistakes
How to score full marks in this chapter
Memorise the eight arguments for and four arguments against social responsibility and the seven forces behind growing concern — list them with one-line explanations to gain marks quickly. Keep the four kinds of responsibility (economic, legal, ethical, discretionary) and the four interest groups (shareholders, workers, consumers, government & community) ready with examples. For environment questions, separate the causes, need for control (five reasons) and steps (seven steps). For business ethics, always give the five elements in order. Quote the Companies Act, 2013 (Clause 135, 2% of average net profit, Schedule VII) for CSR answers.
Common mistakes to avoid
Treating social responsibility and legal responsibility as the same — social responsibility is broader and voluntary.
Mixing up arguments for and arguments against social responsibility in the same list.
Confusing the four kinds of responsibility with the four interest groups.
Forgetting that discretionary responsibility is purely voluntary (charity/relief), not legally required.
Writing only the meaning of business ethics when the question asks for its elements — give all five.
Stating wrong CSR figures — it is 2% of average net profit and Clause 135 of the Companies Act, 2013.
Frequently Asked Questions
What is Chapter 6 of Class 11 Business Studies about?
Chapter 6, Social Responsibilities of Business and Business Ethics, explains the concept and need for social responsibility, the arguments for and against it, the four kinds of responsibility, responsibility towards different interest groups, business and environmental protection (causes and control of pollution), and the meaning and five elements of business ethics.
What is the difference between social responsibility and legal responsibility?
Legal responsibility is fulfilled by mere compliance with the law, while social responsibility is broader — it is a firm’s recognition of social obligations even where they are not covered by law, and it involves a voluntary element for the benefit of society.
What are the elements of business ethics in Class 11 Business Studies Chapter 6?
The five elements of business ethics are: (i) top management commitment, (ii) publication of a code, (iii) establishment of compliance mechanisms, (iv) involving employees at all levels, and (v) measuring results.
