1. Chapter 12 Incorporating Ethics and Social Responsibility into the Business

2. Copyright © Houghton Mifflin Company. All rights reserved.12 | 2 Learning Objectives Explain the role of ethics in entrepreneurship Discuss how entrepreneurs can demonstrate social responsibility Describe how an entrepreneur’s vision and values contribute to the culture of the new venture Discuss the relationship of core values to success

3. Copyright © Houghton Mifflin Company. All rights reserved.12 | 3 Successful Entrepreneurs Are Principles Based Ethical Conduct Vision and Values Focus and Determination Abstract Thinking and Pragmatic Execution Commercialization Flexibility

4. Copyright © Houghton Mifflin Company. All rights reserved.12 | 4 Ethics Definition: The moral code by which we live and conduct business. Source: Derives from the cultural, social, political, and ethnic norms with which we are raised as children.

5. Copyright © Houghton Mifflin Company. All rights reserved.12 | 5 Ethics (continued) Conflicts of interest: When a person’s private or personal interests clash with professional obligations. Survival tactics: What an entrepreneur does today out of desperation will follow him for the rest of his business career.

6. Copyright © Houghton Mifflin Company. All rights reserved.12 | 6 Ethics (continued) Stakeholder pressure: All stakeholders want what is owed them when it is owed them. Pushing the legal limit: Entrepreneurs who regularly play too close to the edge of legality eventually get caught and the price is often their businesses and their reputations.

7. Copyright © Houghton Mifflin Company. All rights reserved.12 | 7 Ethics (continued) Learning from real-life dilemmas: There is no better way to understand the role of ethics in any business than to encounter real-world dilemmas and determine how they might be resolved. The importance of developing a code of ethics: When a code of ethics is spelled out and written down, people in the organization take it more seriously.

8. Copyright © Houghton Mifflin Company. All rights reserved.12 | 8 The Process of Developing a Code of Ethics Guidelines from The Josephson Institute of Ethics http://www.josephsoninstitute.org/MED/MED- 2sixpillars.htm http://www.josephsoninstitute.org/MED/MED- 2sixpillars.htm –Trustworthiness –Respect –Responsibility –Caring –Justice and fairness –Civic virtue and citizenship

9. Copyright © Houghton Mifflin Company. All rights reserved.12 | 9 Questions to Assist With Ethical Decision-making Will the actions taken result in the “greatest good for all parties involved?” Will the actions respect the rights of all parties? Are the actions just? Will anyone be hurt by the actions? Would I be proud if my actions were they announced in my local newspaper?

10. Copyright © Houghton Mifflin Company. All rights reserved.12 | 10 Social Responsibility Definition: “Social responsibility is operating a business in a way that exceeds the ethical, legal, commercial and public expectations that society has of business.” * *Business for Social Responsibility http://www.bsr.orghttp://www.bsr.org

11. Copyright © Houghton Mifflin Company. All rights reserved.12 | 11 Social Responsibility (continued) Effective ways to become socially responsible: –Donate products or services –Get other companies involved –Offer the company’s expertise free of charge –Contribute to the community

12. Copyright © Houghton Mifflin Company. All rights reserved.12 | 12 Vision and Values Core Values: –The fundamental beliefs that a company holds about what is important in business and life in general. –Based on the founder’s personal values and beliefs –They tell the world who the company is and what it stands for.

13. Copyright © Houghton Mifflin Company. All rights reserved.12 | 13 Vision and Values (continued) Purpose: –The company’s fundamental reason to be in business Mission: –The company’s mission brings everyone together to achieve a common objective –The mission statement communicates the mission

14. Copyright © Houghton Mifflin Company. All rights reserved.12 | 14 Vision and Values (continued) Strategies and Tactics: –Strategies: Plans for achieving company goals –Tactics: The means to execute the strategies

15. Copyright © Houghton Mifflin Company. All rights reserved.12 | 15 Figure 12.1: The Components of Vision

16. Copyright © Houghton Mifflin Company. All rights reserved.12 | 16 Core Values and Success Constants of success –Purpose –Failure –A sense of satisfaction with the accomplishment –Earning your success