Distinguishing Characteristics of Business vis-à-vis Other Economic Occupations
Whilst business as an economic occupation is vastly diverse, yet only a small portion of population, more so urban educated population engages in it. For example, of all of you pursuing Chartered Accountancy, only a small percentage is going to start a business. Since CA is a professional qualification, most likely you are going to practice as an independent professional or would take up a paid employment somewhere. We have thus introduced two other distinct occupations, viz., employment and profession. A brief description of these two occupations would be in order before we elaborate the distinguishing characteristics of business.
The word profession or professional in common parlance is used to distinguish
from one’s amateurish/ substandard performance or practice as a partime/ hobby.
Professionalism is often associated with perfectionism. The word is also used
derogatively to denote that one greedily works for money. Historically however,
professions emerged in pursuit of nobility; demonstrated highest level of integrity and ethics; and hence were held in very high esteem and social status /respect. Chartered Accountants for example, represent a noble profession for ensuring truthfulness and fairness in the conduct of business and hence instrumental in ensuring its trustworthiness; and, hence the integrity of the entire economic system. The logo of the Institute from The Institute of Chartered Accountants of India (ICAI) is suggestive of the vigilance
expected from the CAs.
Having clarified the meaning and nature of employment and profession as economic occupations, we are now in a position to delve deeper into the nature of business. Before we do that, it would be useful to do a recapitulation of the main points of difference between business, profession and employment (Recap #1).
Recap #1: Distinction between Business, Profession and Employment
Basis of distinction
Entire spectrum of market oriented activities coming under industry, trade and commerce.
Independent rendering of services of specialised nature based on prescribed qualifications under the aegis of a professional body that also prescribes a code of conduct.
Rendering of services under a contract of employment for wages / salaries.
Also, called wage- employment.
Mode of establishment
Entrepreneur's decision and other legal formalities, if necessary
Membership of a professional body and certificate of practice.
Letter of Appointment and service agreement.
Source of livelihood
Wages & Salaries.
qualifications for each type of job
Some requirement e.g. Office/ Chamber / Clinic
Personal autonomy / freedom
The most- you are your own boss
Quite a bit
Popular psychological motive
Service to the clients/ society
Certainty of income
Least. However either way.
Quite a bit
Contractually determined periodic income
Stability of tenure / Durability of occupation
Transfer of interest/ succession
Idealistically, business must lead the world toward more egalitarian, participative and collective prosperity that is sustainable for generations. This ideal corresponds to the ideal of sustainable development that at business level may be interpreted as simultaneous pursuit of profitability, people well-being and planet sustainability (See Think #1).
Think why is sustainable development necessary and how business, instead of focusing solely on profits must also attend to people’s problems and planet conservation? Think, why it is not sufficient that business and a country just balances economic (profitability) and social (people) concerns or economic and ecological concerns or social and ecological concerns only leaving out the third element. Whilst you think through, let us highlight the plurality of the objectives of business in Concept Elaboration #1.
Concept Elaboration #1: Objectives of Business
#1. Interdependence. Business draws its factors of production from the society and is dependent on it for the sale of its goods & services.
#2. Multiple stakeholders. A firm is not only the owners. It is as much other investors /lenders, employees, customers, suppliers, competitors, the community and the larger society and the ecology of which business is a part
#3. Amount of profit. Profit is just about that much and that less an objective of business as is eating for living. Do we eat to live or live to eat? Likewise, profit is a minimum concept, in fact a cost, cost of being in and cost of staying in business.
#4. Primacy of Customer. If at all there is a single purpose of business, it is the creation and maintenance of customers through product quality, service, and delivering value for money.
#5. Performance is the precursor to profits. To be able to earn profit, the firm has to excel in all its functionalities, viz., procurement, production, sales & marketing, accounting & finance. Thus even if profit is the objective, it has to be broken down to the relevant objectives for each of these areas
|Organic Objectives||Social Responsibilities|
Legal, Ethical and
|Sales, profits, return on investment, eficiency (resource conservation,|
achieving more from
less) economic value
added (profits in
excess of cost of capital invested in business), market share
|Survival, health (age of assets, fitness of human resources, reservescapital,|
during calamities &
|Respect for law in|
letter and spirit, fair
& integrity. Green
& disposal, lower
waste handling and
disposal, preservation of air, water and soil quality
|Responsible businesses: wishful thinking or meaningful enterprise?|
|Asbah- India’s first social|
enterprise focused on
|ITC- The Greenest Hotel Chain in the World||Lemon Tree Hotels providing gainful employment to persons with disabilities||Hindustan Unilever|
Ltd.’s Project Shakti
of Rural Women
The plurality of the objectives of business suggests that businesses must be assessed not only in terms of their economic returns but also their social and ecological returns. In fact, the trend surely is toward development of more holistic and more balanced measures of business performance. Having said so one has to be aware enough that there will always be unscrupulous persons in the mindless pursuit of greed. We should be able to discriminate between them and those who justly, fairly do their business and care for the community, society and the environment in which they live.
Some argue that to an extent responsible business behaviour depends on the ownership forms, more so corporate forms of business organisation. The argument is that corporations are regulated. There is a separation of ownership and management, the latter being professional and hence more aware and engaged in social and ecological issues. We do not intend to engage in this discussion. However, let’s get acquainted with the various forms of business organisation.