ABDUL WALI KHAN UNIVERSITY

MARDAN

Abdul Wali Khan University Mardan Pakistan. http://www.awkum.edu.pk/

 Part II – The Entrepreneurial
Perspective
Chapter 4 – Understanding the
Entrepreneurial Perspective
in Individuals
Chapter 5 – Developing Creativity and
Understanding Innovation
Chapter 6 – Ethical and Social
Responsibility Challenges for
Entrepreneurs

Copyright Abdul
(c) 2004Wali Khan University
by South-Western, Mardan
a division Pakistan.
of Thomson www.awkum.edu.pk
Learning. All rights reserved.
Chapter 6 – Ethical and Social
Responsibility Challenges
for Entrepreneurs

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

 Defining Ethics
Ethics provide the basic
rules or parameters for
conducting any activity
in an “acceptable”
manner.

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

 Classifying Decisions Using a Conceptual
Framework
Ethical
Quadrant II: Quadrant I:
Ethical and Illegal Ethical and Legal
Codification

Manifestation

Corporate Legal
Illegal Decisions

Quadrant IV: Quadrant III:

Unethical and Illegal Unethical and Legal

Unethical

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

Ethics and Laws

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

Managerial Rationalizations

The four rationalizations are believing:

1. That the activity is not “really” illegal or immoral;
2. That it is in the individual’s or the corporation’s best
interest;
3. That it will never be found out; and
4. That because it helps the company, the company will
disregard it.

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

 Types of Morally Questionable Acts

Type Direct Effect Examples

Against the
Nonrole Expense account Cheating
firm

Role Against the

Superficial performance appraisal
Failure firm

Role For the

Bribery
Distortion firm

Role For the Not withdrawing product line in face of

Assertion firm initial allegations of inadequate safety

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

 Major Problems Regarding Laws Reflecting
Ethical Standards
1. The moral standards of members of a society may be
based on a lack of information relative to issues of
corporate conduct.
2. The moral standards of members of a society may be
diluted by the formation of small groups.
3. The moral standards of members of society may be
misrepresented in the consensus of large organizations.
4. The moral standards of members of a society may be
misrepresented in the formulation of the laws.
5. The legal requirements formed through the political
process are often incomplete or imprecise and have to be
supplemented by judicial court decisions or administrative
agency actions.

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

Economic Trade-Offs

We cannot blame single

individuals for the ethical
problems of free enterprise.
Rather, we must understand the
total, systematic impact that free
enterprise has on the common
good.

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

 Establishing a
Strategy for Ethical
Responsibility

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

 Ethical Practices and Codes
of Conduct

A code of conduct is a
statement of ethical practices or
guidelines to which an
enterprise adheres.

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

 Approaches to Managerial Ethics

Immoral Amoral Moral

Management Management Management

Managerial decisions, Management is neither Managerial activity

actions and behavior moral or immoral, but conforms to a standard
imply a positive and decisions lie outside of ethical, or right,
active oppositions to the sphere to which behavior. Managers
what is moral (ethical). moral judgments apply. conform to accepted
Decisions are Managerial activity is professional standards
discordant with outside or beyond the of conduct. Ethical
accepted ethical moral order of a Leadership is common-
principles. An active particular code. A lack place on the part of
negation of what is of ethical perception management.
moral is implied. and moral awareness
may be implied.

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

A Holistic Approach

Principle 1: Hire the right people

Principle 2: Set standards more than rules
Principle 3: Don’t let yourself get isolated
Principle 4: The most important principle is
to let your ethical example
at all times be absolutely
impeccable

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

 Ethics and
Business
Decisions

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

Four Main Themes of Ethical Dilemmas
for Entrepreneurs

Conflict
of Interests

Small-Business
Social
Ethical Responsibility
Personality Dilemmas to
Traits Stakeholders

Level
of
Openness

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

 Complexity of Decisions

First, ethical decisions have extended consequences

Second, business decisions involving ethical questions
have multiple alternatives
Third, ethical business often have mixed
outcomes
Fourth, most business decisions have uncertain ethical
consequences
Finally, most ethical business decisions have personal
implications

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

The Social Responsibility Challenge

Some firms simply react to social issues

through obedience to the laws – social
obligation; others respond more actively;
accepting responsibility for various programs –
social responsibility; still others are highly
proactive and are even willing to be evaluated
by the public for various activities – social
responsiveness.

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk

The Opportunity for Ethical
Leadership by Entrepreneurs

An owner has the unique

opportunity to display honesty,
integrity, and ethics in all key
decisions. The owner’s actions
serve as a model for other
employees to follow.

Abdul Wali Khan University Mardan Pakistan. www.awkum.edu.pk