1. 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 (c) 2004 by South-Western, a division of Thomson Learning. All rights reserved.

2. Chapter 6 – Ethical and Social Responsibility Challenges for Entrepreneurs

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

4. Classifying Decisions Using a Conceptual Framework
Ethical
Quadrant II: Ethical and Illegal
Quadrant I: Ethical and Legal
Codification
Manifestation
Corporate
Decisions
Illegal
Legal
Quadrant IV: Unethical and Illegal
Quadrant III: Unethical and Legal
Unethical

5. Ethics and Laws

6. Managerial Rationalizations
The four rationalizations are believing:
That the activity is not “really” illegal or immoral;
That it is in the individual’s or the corporation’s best interest;
That it will never be found out; and
That because it helps the company, the company will condone it.

7. Types of Morally Questionable Acts
Direct Effect
Examples
Nonrole
Against the firm
Expense account Cheating
Role Failure
Against the firm
Superficial performance appraisal
Role Distortion
For the firm
Bribery
Role Assertion
For the firm
Not withdrawing product line in face of initial allegations of inadequate safety

8. Major Problems Regarding Laws Reflecting Ethical Standards
The moral standards of members of a society may be based on a lack of information relative to issues of corporate conduct.
The moral standards of members of a society may be diluted by the formation of small groups.
The moral standards of members of society may be misrepresented in the consensus of large organizations.
The moral standards of members of a society may be misrepresented in the formulation of the laws.
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.

9. 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.

10. Establishing a Strategy for Ethical Responsibility

11. Ethical Practices and Codes of Conduct
A code of conduct is a statement of ethical practices or guidelines to which an enterprise adheres.

12. Approaches to Managerial Ethics
Immoral Management
Amoral Management
Moral Management
Managerial decisions, actions and behavior imply a positive and active oppositions to what is moral (ethical).
Decisions are discordant with accepted ethical principles. An active negation of what is moral is implied.
Management is neither moral or immoral, but decisions lie outside the sphere to which moral judgments apply. Managerial activity is outside or beyond the moral order of a particular code. A lack of ethical perception and moral awareness may be implied.
Managerial activity conforms to a standard of ethical, or right, behavior. Managers conform to accepted professional standards of conduct. Ethical
Leadership is common- place on the part of management.

13. 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

14. Ethics and Business Decisions

15. Four Main Themes of Ethical Dilemmas for Entrepreneurs
Conflict of Interests
Personality Traits
Social Responsibility to Stakeholders
Small-Business Ethical Dilemmas
Level of Openness

16. 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

17. 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.

18. 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.