Responsible management: definition and principles

There is a computer, a phone in the foreground. And then the hand of a man who is thinking about responsible management
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Responsible management definition still evades many people even though this gets practiced around us daily.

However, the concept is still entirely a new one.


Therefore, due to this, there could be some debate as to what the actual definition is.

What is responsible management in business?

In business, responsible management is the commitment that management and leaders consider the ethical and moral significance of their everyday decisions.

Responsible management in business has so far shown to be the most efficient and effective management structure for integrating ethics, sustainability, and the principles of entrepreneurship into any given business model.

The tool is not just a management framework. It is a structure that ensures that certain standards are upheld as an integrated part of all the functions of a company.

Responsible management is important to ensure a more sustainable and inclusive socio-economic development.

It is the best management structure that both business people and social entrepreneurs can use to keep their enterprises sustainable and impact-driven.

On a bigger scale, responsible management has a greater propensity to boost the competitive edges of economies.

It does this when businesses come up with social enterprises that are economically viable.

It can also lead to increasing the environmental and social appeal of enterprises.

In both mentioned cases, responsible management helps increase sustainability while also taking durability into perspective.

By general definition, there seems to be a certain level of an understanding of the concept from a global perspective.

The definition of responsible management can also be understood as looking for equilibrium in the whole world’s interest.

This global interest represents that of people, businesses, and the environment to prosper and benefit both the present and unborn generations.

What are the 4 main areas of social responsibility?

Responsible management has social responsibility as one of its principles.

This helps to understand the corporate leadership structure and how they impact society through their everyday decisions.

It is important to state that regardless of the circumstances (even if they stand to lose millions). A good leader takes responsibility.

In business, the four primary areas of social responsibility are:

1). The responsibility towards owners/shareholders: A company has a certain responsibility always to be productive and make an income for its owners/investors/shareholders based on their initial investments. The business also has a responsibility to ensure that such investments are completely protected at all times.

2). The responsibility towards staff/employees/workers: A company/enterprise also has a certain level of responsibility towards its entire workforce. This means equal treatment of employees as well as treating them the way they deserve to be treated.

3). Responsibility towards its clients/consumers: A business owes its client base/customers an unflinching responsibility in producing the right quantity and quality of goods/services at all times. It is also important that these services/goods are made available at fair prices.

4). The responsibility towards authorities and the general society: A business has to abide by its home country’s laws and stipulations. This means honestly and regularly paying taxes. It should comply with all laws and not engage in acts that could be detrimental to society. This is one of the aspects of responsibility that most companies do not ignore.

Business ethics and social responsibility

Business ethics and social responsibility are almost like similar concepts.

But, the movement behind social responsibility is one part of the entire subject of business ethics.

The practice of social responsibility by businesses came up predominantly in the 1960s.

Companies solely focused on making profits while ignoring the well-being of society.

Not until social responsibility got introduced that lots of businesses started considering the general welfare of the community.

The movement helps drive companies’ consciousness to be ethical in their every day dealing in matters that are significant to society’s general interest and the natural environment.

Social responsibility primarily relates to both the functions and policies of a company, especially related to the general public.

It is a moral compass to judge whether the activities of a certain enterprise are in the good interest of society.

It is the study of the position of a certain company on matters involving the general public including its employees.

On the other hand, business ethics guide an enterprise’s management on how they should behave when faced with certain controversial situations and dilemmas.

This often includes different scenarios on the pricing of materials, how the company is operated, their roles in society’s events, whether they produce harmful items to the community, and other things.

The field of ethics is very wide because it has various topics.

Many companies uphold high ethics to ensure that they are never into any lawsuit and help keep their public images clean.

This leads to sustained trust from the general public.

The importance of ethics to an enterprise

Ethics are important to an enterprise for different reasons. In the first instance, ethics ensure that your company is run within the land’s stipulated laws.

Ethics are what companies use to ensure that they do not break the laws concerning their customers, employees, consumers, society, and other important parties.

There are lots of benefits that come from the awareness of ethics by companies who abide by them.

One importance is trust.

There are road signs in the city. On the first is written "trust" with right arrow, on the second is written "mistrust" with the left arrow.
Image by Gerd Altmann from Pixabay 

This increases between the consumers and the business.

If consumers trust a certain company, they will be willing to choose the company instead of its rivals.


Some companies can use some parts of their ethics/social responsibility as a marketing tool. Especially if they have decided to emphasize a very popular social problem.

If ethics is wisely leveraged, it could result in an increased company brand equity.

One big program that most companies partake in to drive their ethics is their corporate social responsibility program.

This is what separates an ethical company from one that is not.

Ethical companies are attractive to investors and shareholders.

These parties will be happy to invest more in the company because of adherence to standard ethical practices.

And properly leveraging them can easily clear up the path to success for lots of companies.

When companies follow good ethics, they end up becoming very attractive to top talents.

Employees do not only like an employer that is aware of their social needs but also acts in their best interests.

This can lead to a more devoted workforce and will certainly lead to minimizing employee turnover.

Types of Business Ethics:

Business ethics is a very important part of responsible management.

It has lots of concepts that can become the principles of responsible management.

All companies should strive to uphold these principles.


For a company to become trustworthy, the management and the lower-tiered workers have to become honest and transparent in their actions and communications.

If a company is trustworthy, it can be able to externally and internally impact people positively.

Most consumers like it when companies are open. It enables them to know how they function and conceptualize their business functions.

Employees also want their companies to be honest and open to them.


A company’s ability to respect its customers and employees delivers on every promise made while providing their honest apology if anything goes wrong.

It is also one of the principles of responsible management.

A company should still be able to respect its workers and consumers by compensating them when appropriate.

Vector image with handshake and inside of two arms are written some words like: "respect", "tolerance" etc.
Image by John Hain from Pixabay 

If a business does not respect its customers, the customers will go public with the problem, which will lead to a tarnished reputation for the business.

A lack of respect also leads to unhappy employees and ultimately forcing them to leave the company.


One of the most important types of ethics in the company is treating both employees and customers fairly.

It is quite unhelpful and unethical to engage in manipulative behaviors.

The primary priority of all enterprises is to help their employees and customers at their times of need.

Treating everyone equally is fairly important for the management of a company.


Companies are made up of humans.

Human beings work to produce the services or goods of a company that other human beings consume.

Companies need to show the people on both sides of the spectrum some form of empathy and compassion.

This is a valuable tool for companies to use to their benefit, albeit sincerely; when a company shows its employees and customers that it cares.

It boosts both the company’s external and internal perceptions.

Ethics and Social Responsibility

Social responsibility is one of the principles of a company’s corporate ethics and an important part of responsible management, whereby people are held accountable for their civic responsibilities.

It also supports that an individual’s actions have to be beneficial to society as a whole.

This way, ethics and social responsibility look to create a balance between a company’s economic growth and the general welfare of the community and the environment.

Social responsibility is attained only when this balance is maintained.

Examples of Responsible Management:

Minimizing carbon footprints

• Taking part in fair trade

• Improving internal labor policies

• Taking part in charitable activities

• Community volunteering

• Environmentally beneficial corporate policies

• Making investments that are both environmentally and socially conscious.

• Producing products/services according to agreed qualities/quantities.