NON-ECONOMIC ENVIRONMENT OF BUSINESS

The identification of the non-economic environment is particularly essential because of the fact that it influences and gets influenced byt he economic environment.

                The following factors constitute the non-economic environment of business:-

1.Sociological, 2.Educational-cultural, 3.Historical, 4.physical.

1.Sociological: the sociological factors give content and form to the system of values and culture. Among these factors, we can list (i)view towards management-social attitude towards business and managers;business-moral or immoral thing?
 (ii) view towards authority,responsibility,delegation-authority,respectable or condemnable? Workers’ participation-myth or reality?
 (iii) view towards achievement and work-achievement recognized or not? Good work leading to a promotion or transfer?

2.Educational-cultural: (i)Attitude towards education and acquisition of knowledge.
 (ii) Types of education-formal or informal. Liberal arts or technical. Quantity and quality of higher education (iii) literacy level-correlation between formal literacy and the level of culture. 
(iv) educational match with the skill requirements of industry and manpower utilization. In the context of non-economic environment, we can consider the political-legal factors: Laissez faire is no longer an order and the role of the govt, which is the apex institution of the State to regulate business activities, is no longer debatable.

                The political-legal environment of business depends on
 (i)legal rules of the game of business- its formulation and implementation., its efficiency and effectiveness
.(ii) defense and military policy-impact of defense policy on industrial enterprise in terms of trading  with potential enemies, purchasing policies, strategic industrial development etc.
(iii)political stability-impact of factors like civil war, the declaration of President’s rule and emergency changes in the form and structure of govt.administration.
(iv)political organization-ideology of the ruling govt, philosophy of the political parties, degree and extent of bureaucratic delays,red tape, the influence of premier groups, the question of donation of business houses to the political parties.

3.Historical: the historical heritage of the country also influences the current environment of business. The role of historical factors in the context of non-economic environment may not, therefore, be minimized. Here we have to look at the sociological, cultural, educational and related factors which influence business in their historical perspective. For example, the business environment in a number of newly independent nation-states has been largely determined by the colonial status which those countries enjoyed earlier. The French Revolution has much to do with the emergence of capitalist spirit of business and investment. World war I and the Soviet Revolution provided a perspective to realize the ambition of a state-owned/controlled business system. The declaration of Emergency induced a set of business ethics and practices in India.

4.Physical: lastly, though not the least important one, reference must be made to the physical environment,i.e., the role of physical and geographical factors in the realm of non-economic environment. The application of modern technology in industry,it is now argued, leads to rapid economic growth at a huge social cost-deterioration of the physical environment around us like air pollution,noise pollution, so on and so forth. The nature of such costs is being assessed by biologists,ecologists,sociologists,consumers and conservationists. In the light of this, much talk is there about the social responsibilities of business. Business now has to calculate the social net profitability(social benefir-social cost) of its ventures. In this calculation business must consider the physical environmental factors such as the quantity and quality of existing forest wealth, possibility of artificial rain, the exploitation of sea products like fish, the health hazards out of pollution, social costs of rapid urbanization and industrialization, etc.

                To sum up, the non-economic environment, which we wanted to identify in this section, implies a host of environmental factors:sociological, educational-cultural,political-legal, historical and physical.