Social Environment of Business and Factors

What is Social Environment of Business?

Social environment prepares background for entrepreneurial activities. Today business is regarded as a social institution. It forms an integral part of the social organization having responsibilities to a wider circle of individuals like entrepreneurs, workers and consumers, etc. who participate in the business activities.

Social structure, social values and conventions, consumerism, labor attitude etc. constitute the social environment. Since an entrepreneur is a part of the society so he is governed by the social values and conventions.

Factors of Social Environment in Business

An effective but favorable social environment is necessary for entrepreneurship. The factors of social environment in business are as follows:

  1. Social Structure
  2. Social Values and Conventions
  3. Consumer’s Opinion
  4. Labor Motives
Factors of Social Environment in Business
Factors of Social Environment in Business

Social Structure

Functional division of community in the social structure determines the level of entrepreneurial activities. In India VARNA arrangement is guided by functional distribution of duties like Brahmins, Kshatriyas, Vaisyas and Sudra. In practice, Varna distribution affects the forms of entrepreneurial behaviour. Vaisyas think that their duties lie only in business activities.

Mammaries and Gujarati’s Vaisyas are proved to be more risk-taking communities. But in recent years there is a dramatic change in the social behavior. Improvement in level of education, government incentives and subsidies etc. has motivated other Varnas of the society to undertake entrepreneurial activities.

Social Values and Conventions

The values are the belief that shape individual and groups attitudes. Values and attitudes mold people behavior and influence the needs and wants that they seek to fulfill through interaction with business enterprises.

Generally, individuals try their level best to protect their social values and conventions. Production of public goods, avoidance of unethical behavior, fulfillment of social obligations are being treated as part of the social behavior and entrepreneurs cannot avoid them in their entrepreneurial behavior.

Consumer’s Opinion

Consumers’ opinion with regard to consumption of goods and services also affects the form of entrepreneurial activities. Economic condition of the consumer, taste, habit, fashion etc. regulate the volume and form of production.

A product having more demand due to change in fashion, taste, habit etc. motivates the entrepreneur to undertake production of that product in most of the cases.

Labor Motives

Labor mentality towards production process also plays an important role in shaping the form of social environment. Generally, there is conflict of interest between the two employer and employee.

There will be more conflict if labor thinks that employer is their competitor and exploiter, then volume of entrepreneurial activity will be slashed.

FAQs Section

What are the factors of social environment?

The factors of social environment are:
1. Social Structure
2. Social Values and Conventions
3. Consumer’s Opinion
4. Labor Motives.