ETHICS AND ENTREPRENEURSHIP

 To define the term “ethics”

 To discuss the importance of ethics for
entrepreneurs.
 To study ethics in a conceptual framework for
a dynamic environment.
 Derived from Greek word ethos = custom or
mode of conduct
 Brodest sense-ethics provide the basic rules or
parameters for conducting any activity in an
“acceptable” manner.
 More specific- represent of a set of principles
prescribing a behavioral code that explain what
is good and right or bad and wrong
 Society operating in a dynamic and ever-
changing environment-prevalence of scandals,
fraud and various forms of executive
misconduct in corporation.
 Coflict arises for a number of reasons:
 Business enterprises are confronted by many interest
both inside and outside of organizations.
 Society is undergoing dramatic change-values,
norms have gone through a drastic evolution.
 Hire the right people
 Set standards more than rules-be clear about
standards, let people know the level of
performance you expect.
 Don’t let yourself get isolated-you are
responsible for whatever happens in your
office or department .
 The most important principle is to let your
ethical example at all times-always do the right
things.
 The entrepreneur’s guiding values and
commitments must make sense and be clearly
communicated.
 Entrepreneurs must be personally committed,
credible and willing to take action on the
values they espouse.
 The espouse values must be integrated into the
normal channel of the organization’s critical
activities: planning innovation, resource
allocation, information etc
 The ventures system and structure must
support and reinforce its value.
 Employees throughout the company must have
the decision-making skills, knowledge, and
competencies needed to make ethical sound
decisions every day.
Social responsibilities consists of obligations a
business has to society.
 Environment – pollution control, recycling

efforts,
 Energy-effort to increase the energy efficiency

of products, energy-saving programs eg

company sponsored car pool.
 Fair business practices-employment and

advancement of women,minorities and

disabled
 Human resources-promotion of employee
health and safety, employee training and
development, career counseling, child day care
facilities, employee physical fitness, stress
management programs.
 Community involvement-donation,
sponsorship, education support, cooperation in
community projects
 Products-enhancement in product safety,
improvement in nutritional value of
products,improve in packaging & labelling
 Ethics is a set of principles prescribing a
behavioral code that explains right and wrong;
it also may outline moral duty and obligations.
 Because it is so difficult to define the term, it is
helpful to look at ethics more as a process than
as a static code.
 Entreprenuers face many ethical decisions
especially during the early stages of their new
ventures.
 Entrepreneurs can make 4 types of decisions:
legal and ethical, legal and unethical, illigal
and ethical and illigal and unethical.
 To establish ethical strategies, some
corporations create code of conducts-more
prevalent in organizations today.
 Software piracy-from Fortune , corporations to
sole proprietorships can fall victim to software
piracy-software manufacturers lose an estimate
2.3 billion in revenue annually.
 Giving a gift of $50,000 to a foreign minister to
secure a business contract with his country (a
customary practice in his country) and then
writing off the gift as a tax-deductible item.
 Knowing that 1% of all tires have production
defects but shipping them anyway and giving
mileage allowances to anyone whose tires wear
out prematurely.
 Manufacturing a new fuel additive that will
increase gas mileage by 10 %
 Offering a member of the city council $100,000
to vote to give the entrepreneur the local cable
television franchise.
 Obtaining inside information from another
brokerage that results in the entrepreneur
netting more than $2 million.
 Producing a vaccine, already approved by the
Food and Drug Administration, that will retard
the growth of bone cancer.
 Producing and selling a drug that will reduce
heart attacks but failing to complete all of the
paperwork that must be filed with the
government prior to selling the product.