One of the important elements of corporate social responsibility is social accountability of businesses. The activities of a company always influence and affect society and environment, and this process is in any event mutual, that’s why society must be able to control and supervise those activities (Crowther 41). Not to turn this process of control into violence, each business should report on their activities on a regular basis. In this way social accounting is needed as a way of interaction between society and business. The matter is, not only economic affairs are affected, and not only financial terms are used, but all the sphere of interests of all the stakeholders is included into the subject. When business is accountable, at the same time it becomes more protected and thus more oriented to progress (Gray et al. 9).
Further, social accountability of a company can be also referred to as externality, which stands for transaction’s influence on third parties without financial mediation of market. It is necessary for keeping market equilibrium when external effects result in deadweight losses.
To go on, accounting of businesses is required to provide more active and diligent involvement in achieving the goals of the society. It means that accountability benefits for environmental sustainability and desirability of the company. In general, these are the goals heated while accounting choices are made (Crowther 47). Democratic decision-making process is linked with flow of information prevailing in the society and in the business circles in particular. As for the benefits, business accountability provides a “right of information management for stakeholders” (Davis and Blomstrom 16), keeps a balance between corporate power and corporate responsibility and increases transparency of the activities.
Finally, management control is also one more significant purpose for social accounting. It is meant to achieve the particular goals of the company itself by means of public relations development and image management and marinating legitimacy.
All in all, in this way business accountability contributes to economic success of organization.
Crowther, D. Social and Environmental Accounting. London: Financial Times Prentice Hall, 2000.
Davis, K., Blomstrom, R. Business and Society: Environment and Responsibility. New York: McGraw-Hill, 1975.
Gray, R. H., Owen, D. L. and K.T. Maunders. Corporate Social Reporting: Accounting and accountability. Hemel Hempstead: Prentice Hall, 1987.