Integrating Pragmatism and Ethics in Entrepreneurial Leadership for Sustainable Value Creation Author(s): Gita Surie and Allan

Ashley Source: Journal of Business Ethics, Vol. 81, No. 1 (Aug., 2008), pp. 235-246 Published by: Springer Stable URL: http://www.jstor.org/stable/25482208 . Accessed: 09/07/2013 11:07
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(2008) 81:235-246 Journal of Business Ethics DOI 10.1007A10551-007-9491-4

? Springer

2007

and Ethics Integrating Pragmatism in Entrepreneurial Leadership for Sustainable Value Creation

Gita Surie

Allan Ashley

ABSTRACT. ship and ethics In

The has

relationship largely we a been develop

between

characterized a

entrepreneur as anti model that of the

ethics
foundation

in organizations
that

by developing that ethics

a conceptual
lead

characterizes

entrepreneurial

thetical. integrating emphasizes

this

article

conceptual

pragmatism, experimentation leadership, incompatible for

philosophical and action ethics that to

approach characteristic suggest that entrepre

ership part of this foundation.

and then demonstrate

is a critical

entrepreneurial are not two neurial

with and

sustaining necessitates

leadership

value

creation

ethical

Perspectives While theories

on

entrepreneurial

leadership

action to build legitimacy. Case studies from the United States and India highlight the necessity of infusing prag
matism ership. with ethics for sustainable entrepreneurial lead

three recent

of leadership abound, we focus on cross-cultural of leadership perspectives ? that are relevant to entrepreneurial that leadership is, leadership capable of sustaining in high velocity innovation and and uncertain

KEY matism,

WORDS: legitimacy,

ethics,

entrepreneurial value

sustainable

leadership, creation

prag

adaptation
environments.

First,
focuses on

neo-charismatic/transformational
how leaders evoke super-ordinate

leadership
per

formance Entrepreneurial ethics eschewing

focus on goals and

from followers behavior

leaders

are

often

and values
achievement.

because
Yet

perceived of their strong

the most suc

as

self-interested

leaders are able to integrate entrepreneurial with ethics. the importance efficiency Conversely, of the efficiency essential for adaptation dimension, and survival in environments characterized by rapid cessful
change, may be overlooked, given the current

1985; Burns, et al., 1991) transactional role of the leader emphasized in earlier theories et al., Podsakoff 1971; (House, leadership As neo Burns the 1982). (1978, p. 20) observes, charismatic leader and transformational follower pursuit
team oriented Exchange

of through and Bass, 1987; Bass, (Avolio and Frost, 1989; House 1978; Howell in contrast to the instrumental and

a transcendence

act "binds leadership a in mutual and together purpose."

research, focuses on such inter as leadership theory,

and spiritual emphasis on the ethical, value-oriented, as a excesses of result of the dimensions, highlighted as of leaders such Enron, large corporations in the U.S. and Tyco and Parmalat, Worldcom, in Europe. We and Vivendi Ahold, suggest that an and pragmatic orientation is not incom efficiency with ethics. in is patible entrepreneurs Pragmatism to related innovation and accomplishment, while to attention the ethical dimension enables disciplined entrepreneurial legitimacy and change. required for value creation, discovery, Our intent is to address the lack of emphasis on the leader to gain the

continuing
Second, Leader-Member

of a higher

actions

lights leaders to elicit heightened levels of group involve ment and participation 1975; (Graen and Cashman, Graen and Uhl-Bein, 1995). Field studies suggest that leader-member such exchange may predict outcomes as team performance et mana al. (Graen 1982), and and Graen, 1984; see gerial progress (Wakabayashi Graen and Uhl-Bien, 1995 for a review).

leaders and group members, high role exchanges and emphasizes the ability of

between

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236 Gita value-based

Surie and Allan Ashley The creation ethics with of reconciling value difficulty and efficiency has led to criticism of

Third,

1997) suggests derived and mission

(House and Aditya, leadership that such leaders articulate a vision values. super-ordinate in a manner that reinforces the to expectations in their ability from

also behave They mission by communicating high confidence followers and conveying to meet

to for its emphasis on willingness entrepreneurship ethics and moral values in the oppor compromise success (Fisscher et al., tunistic pursuit of business 2005; Mintzberg that unethical et al., 2002). Fassin (2005) suggests are a consequence of practices on and individualism, money emphasis

such expectations (Conger and Kanungo, 1987; Shamir et al, 1993). Each of these theories of leadership focuses on the commitment elicited from followers. extraordinary Shamir et al. merely and motivated (1993) suggest instrumental-calculative to enhance that humans but are not self-expressive and maintain self-worth

increasing centralization material consumption (Capra, 2003), dominance of of power resulting from globalization, use in business, and the pervasive of con finance tracts in business. psychological failure or acquire While action ther held Unethical actions also stem from to avoid motivations such as the desire

and identity. Thus, charismatic and transformational effects on followers and leaders achieve profound elicit high concepts and appeals to identity. moral justification draws of such a view However, leadership or the attention from away pragmatic problem which determines the type of dimension, It also focuses on the expressive leadership exhibited. solving aspects of leadership rather than on concrete activi that moral ties, one implication appeals are being to While this may behavior. elicit sufficient desired be the case at a particular juncture in the history of a society, the nature of the problem may be different facing particularly organizations, the charismatic rapid change. Moreover, not the indepen does literature emphasize leadership dent effects on identity of problem-solving and participation in contemporary in those self levels of effort by engaging followers' in the interests of the mission through

celebrity status (Fassin, 2005). the centrality of ethics in entrepreneurial the debate moral persists over whe responsibility publicly to the fiduciary in addition to act on behalf of their owners (Miles bear

is indubitable, and how much firms must

obligation et al. (2004) argue et al., 2004). For example, Miles the that when firms adopt a quality of life orientation
firm's customers tend to pay a price premium, em

ployee lower

investors tend to earn earnings are reduced, risk adjusted returns, fewer jobs are created is often diminished. and social welfare Moreover, ethic (Shane and Venk citing the Protestant work ataraman,

1996; Weber, 1992) they advocate that, in should not invest held corporations general, publicly a probability of earning for their in projects without return principals amarket based, risk adjusted rate of even if an investment In has great social benefits. contrast, Ray (2005) argues in favor of making life intellectual property rights attached to potentially or when innovations public goods sustaining saving markets or unable to pay for the cre are unwilling ation of intellectual property. is that ethics alternative perspective An emerging are not necessarily disassoci and entrepreneurship that thinkers have held ated. Several prominent are necessary for markets agreements is critical for well and that ethics to the

in practice. Finally, research on charismatic leadership focuses on the effect on followers, while paying little
attention to leaders' motivations.

While other

entrepreneurial types of leadership

is similar to leadership in its ability to evoke

in the effort, this ability is founded extraordinary to to need context of the firm's emerging adapt that A basic environmental challenge contingencies. leaders face is to create a willingness entrepreneurial to abandon but career conventional in followers secure failure activities at which for riskier, could have entrepreneurial career negative action,

moral function

impact suggest that entrepreneurial (Gupta et al., 2004). We on problem and focused is pragmatic leadership solving and value creation in the market. However, appeal to values legitimacy be difficult. and ethics, sustaining action for the group to ensure its

of capitalism 1974; Fukuyama, (Arrow, practice Others 1995; Smith, argue that capi 1981/1776). founda if its central moral talism may "implode" In his tions erode or are lost (Caeldries, 1993). (1923) system Knight leaders are not only entrepreneurial ser in creating and producing goods and engaged new values which vices but also in producing noted that elaboration of the free market

without

and gaining survival may

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Integrating Pragmatism emerge

existing

and Ethics

in Entrepreneurial Leadership action neurial through leaders the can

237

as a result
and new

of

altered encounter based

relations
agents.

between dilemmas

economic

Moreover,

lens of pragmatism entrepre into ethics decision integrate suggest that such integration the upon which legitimacy

entrepreneurial in introducing and innovative values

leaders products

ethical

on new

production methods are challenged and changed activities (Fisscher

technologies because existing through entre

we making. Moreover, is essential for gaining

growth of the firm depends. We provide case studies of organizations from U.S.A. and India to illustrate the
ethics.

preneurial

decision-making linked because

2005). Moral are inter and entrepreneurship they each require similar qualities of

et al.,

integration

of

entrepreneurial

leadership

and

and creativity necessary for envisioning imagination and bringing new products and services to market ethical and Rosenthal, Thus, 2005). (Buchholz can be resolved entre "ethical dilemmas through on and the creative process preneurship" by focusing new values emerge by which (Wempe, 2005). and Freeman Wicks However, (1998) note that its is there insufficient relevance, despite emphasis on ethics within mainstream literature organizational possibly because of which epistemology, is qualitatively tific approach entific methods. They as amethod the predominance of positivist a scien value-free posits that superior propose of advancing to non-sci pragmatic in

Conceptual pragmatism leadership

framework: and ethics

reconciling in entrepreneurial

as a has long been Entrepreneurship recognized in local, regional, and leading driver of development economies national 1934), and the (Schumpeter, a in the market entrepreneur "key agent" explaining system creating
neur nations

in neo-classical value

Schumpeter
as an of

theory (Bhide, 2000, p.7) by innovation and employment. the view of the entrepre popularized through
who undertakes means," "new creating combi new

innovator productive

experimentalism inquiry on the the realm of ethics and organization. Drawing as in of such pragmatism epistemology key figures John Dewey, and Richard the view
as

products, nization

William

Rorty, that the purpose

arise"

James, Charles Sanders Pierce, they note that pragmatism offers is to "gain the prob
the

or forms of orga of production 2000, p. 6). (Bhide, is also an important factor in the Entrepreneurship and growth of established firms development methods an Firms with by competition. to action orientation take their entrepreneurial adapt to meet emergent capabilities competition through increasingly beset

the understanding
lems they

of knowledge to deal with necessary

rather than to

"uncover

real" (Dewey, 1988; vol. 4, p. 14). The or not for pragmatists is whether key question is useful in helping people to cope with information antecedently
the world better or to create better organizations. It

flexible
firm to

resource
"use or

deployment,
expand

which

enables
resources

the
and

companies'

thus

raise

long-term
oriented

capacity"
firms also

(Kanter,
enable

1982).
corpo

Entrepreneurially

a pseudonym is not, however, for utilitarianism a contains broad injunction that is adaptable wide range of value systems that may differ stantially from utilitarianism. The arises from practice, is informed

but to a sub

and Bartlett, 1996) by trans into platforms for emergent forming options continuous value creation. A potential result of this (Ghoshal
transformation is firms that can move new products

rate change

value of theorizing by practice and its

aim is to clarify, coordinate and inform practice. By on the practical relevance of focusing scrutinizing ideas in attention the pragmatist context, to the ethical dimension. approach shifts

the marketplace, rapidly mover in emerging advantage domains The and Hodgetts, literature entrepreneurial (Kuratko

into

thus gain first and market product 1989).

and

conditions
an

the growing of the connec acceptance Despite tion between and ethics, how entrepreneurship economic creation with value is ethics integrating is insufficiently good practice emphasized. we a conceptual In the next section develop to show that by viewing framework entrepreneurial business

suggests at least four that encourage action in entrepreneurial the firm. These include the effective communication
entrepreneurial processes vision, to processes secure to resources nurture and

of

innovation,

efforts, and the capacity expertise for entrepreneurial to facilitate continuous and idea gener exploration ation and Litterer, 1995). Consequently, (Jelinek

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238 Gita

Surie and Allan Ashley as a game (Knight, that entrepreneurial creation are not 1923). It should be recognized and value

oriented firms require leadership entrepreneurially to encouraging that is committed entrepreneurial the firm for the "discovery and "action" within strategic (Gupta exploitation et al, 2004).2 Since entrepreneurial leadership involves a crea to environmental tive and proactive response (Brown opportunities leaders can be viewed their view domain of and Duguid, as innovators A social 1991), or creators such in of value creation"

sector, and a to similar approach leadership would consequently in the be appropriate for non-profit organizations is artificial. In fact, social sector since this division in economic value just as sustaining necessitates that for-profit firms generate for society, creating enduring domain requires value generation in the market enables participation value of the market some value in the the type social that

limited

problem-solving to the for-profit

(Lave and Wenger, innovation and that 1991; Wenger, 1998) suggests a in arise within from "activity participation learning in which learners acquire community-of-practice" in and by engaging through socialization expertise the tasks of the involves

"activity." of innovation and learning

construction

Thus, economy. social entrepreneurship and business entrepreneur ship in the private arena are not necessarily dichot
but rather choice a continuum. among Moreover, various actions the is

omous

entrepreneurs'

community. Mastery skills in these tasks increasingly complex acquiring a member From and becoming of the community. are leaders this perspective, experts entrepreneurial who have learned which and how their domain are relevant to problems to solve them and employ create a social context that

system. primary purpose of an ethical or value system is to serve as a guide for choosing amongst various it is for action 1923). Thus, (Knight, possibilities The human action that shapes and reveals to us our ideals and ethical vision, a view endorsed by Sartre (1943, 1947) and supported by the social constructionist view of learning and innovation (Lave and Wenger, individualism and the 1991; Wenger, 1998). While in be useful effi free market system may obtaining ensure to the need for intervention equity ciency, and access evidence addition, economic hence wants nomic is in the field of education) (for example, In of the failure of the price system. determined values are endogenously by the

related

to a particular

value

or ethical

to their knowledge and value creation. facilitates problem-solving on that research suggests creativity Similarly, to the innovation also results from engage in ability sustained conventional who want trial and error and the abandonment of Entrepreneurs approaches. in order their ideas to work are realists

to improve value creation for their organizations. Hence, they to tend not to be ideological, but, rather, wiUing change their entrepreneurial for approach discovery-driven and limits, problematic specifying new to business strategic commitment
that results in value creation. As a re

approach leaders

if it is flawed. use a

In addition,

resources

deals with the allocation of system, which to satisfy individuals' and, preferences, of which wants and whose with the question are to be satisfied. The activity of the eco

mandating
development

feel that they have "not only the sult, team members to seek out new opportu the but obligation right to make and them nities happen" (Gupta et al., leaders are creative 2004). Thus, entrepreneurial innovators creation The who are committed to action and value in the market. view

system extends both to the creation of wants as well as to the means for their gratification, which are products of the system. Knight (1923) charac terizes business as a competitive game and suggests a key motive of that while imitation, competitive

in the business, adds to the pleasure of participating to conducive it is not necessarily game of business, Since values and morals. character emerge raising the action within through how a system that is efficient is critical. be designed
Pragmatism in ethics extends

of entrepreneurial leadership as action is not new. A seminal oriented and problem-solving McClelland (1959) suggests that accom study by are important moti and achievements plishments vations, particularly influence not only performance. recognized and that these for entrepreneurs, the individual, but also societal the appeal of action was Additionally, of economic activity

system, understanding in the moral arena can

an

action-oriented

problem-solving

approach

to the moral

arena

early in the notion

about assumptions epistemological rejecting nature and rationality, of truth, objectivity Pragmatism practice over theory. emphasizing

by the and in

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Integrating Pragmatism

and Ethics

in Entrepreneurial from

Leadership

239

ethics emphasizes the primacy of habit and repetition in shaping behavior, including habits of thinking. are socially constructed and shaped by prior Habits us habits the power to think and act give experience; and yet circumscribe deliberation to diminish, us. and requires ronment Changing the altering new our social habits envi them

on the moral focusing sphere. For example, customer quality is an important factor in achieving trust. entre and Histories of satisfaction, loyalty, pro suggest that cessing, or Estee Lauder in cosmetics, most built the reputation of their firms by differen tiating their products on the basis of quality (Koehn, in business 2001). The spirit of rivalry and emulation indicates leaders
services.

leaders and founders of organizations preneurial asWedgewood in fine china, Heinz in food

such

eliminate,

and, thereby, indirectly Stuart Mill emphasizes

guiding the centrality

stating that "the deliberative muscular powers, are improved only by being used" is (Mill, 1978). Thus, pragmatists claim that morality a habit that has the same structure as other habits. Moral evolution
force

John of practice by and the moral, like the

or strengthen "action."

that value requires or

creation that

organization

team
a

by other entrepreneurial that their they too ensure or delivers quality products
part of the value created

Moreover,

large

occurs
us

when

shifts
into

in the
moral

social
ni

environment

to move

new

firm by the entrepreneurial which encompasses identity member of the business serves certain norms with

often being

lies in its brand an one "ethical"

theorizing of inquiry, it is not divorced from practice and grows out of experience. Thus, familiarity with a range of moral practical problems through theories or litera ture is likely to be solutions to problems in finding reasonable helpful for practice and moral insight

ches. While

moral

is an essential

element

that ob community, treatment to its of regard

for example. This impact on brand value employees, is increasingly being recognized in most companies and senior executives have been assigned to head corporate Inattention ethical market strations initiatives. (CSR) responsibility to practices to that ensure adherence standards may lead to loss of credibility in the as exemplified students' demon by college social

can only be advanced through dialogue and conflict with other ideas and experiences (Lafollette, 2001). As James (1904) notes, the pragmatist "clings to facts
and concreteness, observes truth at work in partic

ular cases, and generalizes. Truth, for him, becomes a class-name for all sorts of definite working-values it remains a pure fixed and therefore, an to instrument immutable, but, rather, malleable, that for (1983) observation guide action. Durkheim's in experience. abstraction..." For the rationalist is not, Truth pragmatism, "thought has as its aim not the repro duction of a datum, but the construction of a future
reality" suggests that its dominant attitude of

Nike's labor upon discovering exploitive a in to which led Indonesia, practices significant in a technologically inter drop in sales. Moreover, connected world in which most firms are embedded action can rapidly unethical networks, a and brand value that has taken destroy reputation and market consid years to build. Thus, efficiency
erations are not separate from ethical ones.

in alliance

Thus,
espouse

while
conventional

entrepreneurial
ideology,

leaders
they

need
do

not

require

is not merely empiricism compatible with and parcel of the spirit of entrepreneurial

but is part leadership.

in order to enact their vision. Research legitimacy studies suggest that new ventures suffer from the newness of and often fail lack of from liability legitimacy and resources (e.g. Singh et al., 1986) and alliances with large organizations with legitimacy can this problem help to mitigate (Powell et al., 1996). new ventures start or leaders who Entrepreneurial the existing organization through a new or of are innovation development product in the process of catalysts for change and engaged a new creating reality (MacGrath and Macmillan, change 2000). Consequently, they are likely to communi cate their vision in language that makes these new values more salient to followers. To the extent that the ideal of rationality and the value system of the

Sustaining through

entrepreneurial legitimacy

leadership

the central importance of value creation Therefore, and problem-solving in entrepreneurial leadership in new innovative and services developing products are likely to be suggests that these same orientations we may, for applied in the domain of ethics. While the purpose of analytical distinction, differentiate between value creation, and in ethics, efficiency outcomes cannot be separated practice, efficiency

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240

Gita

Surie and Allan Ashley significant cost associated with unethical on trust behavior.

inWestern is dominant markets socie competitive com while if ties, entrepreneurial ideas, different, municated logically and in harmony with the style of the dominant values of the system are likely to gain support. However, in traditional free market well-developed to values and ethics may when the knowledge underlying preneurial disseminated vision or well or understood. lacking a a system, stronger appeal be necessary, particularly societies a particular entre is not widely

Long-term (Arrow, 1974; Fukuyama, 1995), amoral virtue among a host of others recognized by leading theorists as a key to the capitalist entre contributor system. Thus, leaders, preneurial can also contribute wider community in building to making (see Figure trust and legitimacy, ethics salient to the 1).

commitment

is based

innovation

If the working of the competitive economic sys tem leads to too high a level of inequity, a correction would and ethical values require appeals to morality to prevent and result in regulatory such changes outcomes in the future. In such a climate, a focus on ethics gains salience since the credibihty of business is, in general, rather low. While appeals to values and ethics may be just an in public relations and gaining exercise legitimacy, over the long-term may organizational performance leaders be difficult stakeholders. to achieve without Organizations considerations may thus lack the wider support ciency resources to for sustained growth. necessary gain is supported by Hosmer This position (1994) who argues that ethics are good for business because they and are a prerequisite for entail positive externalities trust various with internal and external building stakeholders long-term
observes that

Case We

studies

of entrepreneurial

firms

include four case studies of entrepreneurial leaders sector and drawn from industry and the non-profit from different our these conceptual cultures model (the US and India) to support In each of and perspective.

leaders focused on entrepreneurial examples, pragmatic ethics and values, on creating value through and on creating a stable organi system productivity zational
cases,

community
entrepreneurial

to make
leaders

this feasible.
developed

In most
an over

earning that focus solely on effi

the trust of

arching vision that appealed to organizational mem bers, building linkages with various stakeholders such as customers, the government and other employees, access resources to to institutions and to ensure gain that the vision could be enacted.

which, cooperation.
the

in turn,
existence of

However,

is a prerequisite for Schwab (1996)

widespread corrup

Heinz
the founder of the

Henry

Heinz,

entrepreneurial

tion, to enforce with compliance regulations standards suggest that ethics and business
necessarily viewed as synonymous. Moreover,

lax standards

and

the presence

of

laws

and

food focused

ethical are not

he

company processing on providing the purest

established

in

prepared

1876, foods

concludes

that being

ethical

is not

may be costly valuable when greater flexibility

that ethical given to others. it is visible in the absence ethics

always easy, and is only behavior Also there is

1 i

? *B "3 'B

of ethical

standards.
P

Organization pays Organization pays | attention to all or most attention to creating stakeholders but value & to stakeholder 8 2 insufficient attention to ;?*???*?, ~ gll interests value creation Organization builds little value and pays no attention to ethical v W issues Organization is innovative but with little attention to ethical issues

prac Arguments de-linking leaders who tice notwithstanding, entrepreneurial that is sustainable must wish to build an organization be to gain the commitment members. Although organizational able of followers ethical or behavior

from business

g 1 oil g- | J "Ig

Low Entrepreneurial

to avoid the burden be cosdy and incentives in the short term, over the may not be detrimental can lead to a failure to elicit commitment long-term lack of legitimacy. This may limit access to resources may and impede growth suggesting that there may be a

High leadership and sustainable value creation

Figure

1. A
ership,

conceptual model
ethics, and sustainable

of entrepreneurial
value creation.

lead

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Integrating Pragmatism

and Ethics

in Entrepreneurial Leadership who cannot be a happy

241 until have

to gain the trust of such as pickles and condiments were to preparing housewives who accustomed these items themselves. brand The on using depended ensure to that ingredients quality
common. Heinz

person

they

consistent
was

purest of the products were at a time when food adulteration

was one of the most

credibility the finest

of the Heinz and

changed the whole society. Drayton's epiphany was en that with a small investment (the organization's tire budget was $12.5 million in 2001) and carefully to make it is possible selected projects, significant changes in social structure. For example, J. B. Sch in 2000, has Fellows ramm, elected one of Ashoka's a simple way to allow found 100,000 young not Americans go to college each year (who would otherwise margin of his high school classmates did not go on to col lege, not for lack of capability, but for lack of family a simple, and school support, Schramm developed on low cost approach to address the problem. the 80 plus percent of students who It focuses are in the do so), thereby shifting them from the into the middle class. Discovering that most

Henry

of a strong law governing proponents outspoken food production, labeling and sales. In early 1905, he sent three company his executives, including eldest son, to seek President Theodore Roosevelt's backing for federal action. Heinz's the campaign for food regulation personal In food. commitment to producing he believed involvement in grew out of his safe and healthy that stringent

addition, for food manufacturing would enhance guidelines the reputation the of the overall business. Hence, pro ingredients, production in the highest cesses, and cleanliness were among the industry. Moreover, the quick of adoption
innovations such as the pressure cooker, and con

middle

firm's

standards

for

of their class, in average or poorly perform schools whose parents typically did not go to ing Since school college. guidance counselors are unable to teach this majority because of their preoccupation

with

tinuous efficiency
conventions

canning technology helped of operations. The company

to ensure that salesmen

to increase
were

the

also held
steeped

the top few and the troubled, Schramm takes to of school four "intense, peer groups juniors high sessions at colleges and universi day workshop ties... where they are

in the organization's values so that they enhanced the perception of quality associated with the Heinz brand the legitimacy in the eyes of customers (Koehn, and increased of the company 2001).

to fill our learning how the essay that can paperwork including all-important a taste of what be key for a student...and having is like." They are also mentored college by trained to high and on returning the volunteers, school, school's homeroom teachers are engaged to provide also works with help. Schramm college admission offices, Among providing those who before deadlines. applications attend the four-day campus overall college enrollment is 75%, more the average for low-income high school to move is beginning the Col across the country after working

Ashoka: Founded
non-profit

innovators for by William

organization

the public Drayton

that

in 1981, Ashoka
champions the idea

is a
of

immersion, than twice

and a venture-capital firm entrepreneurship" to the (minus monetary investors) that funnels profits from individuals and foundations private donations to "Ashoka Fellows" who about currently number "social run projects in fields such as educa 1,200. Fellows tion and prison rural development, reform, drug and rehabilitation, reproductive rights, technology, treatments throughout AIDs Latin America, Africa, central Europe and the United States. The Asia, are people fellows have passed Drayton's who "knockout idea" test ori something completely that has and who ginal possess systematic impact personal "entrepreneurial" qualities such as passion, drive,
social

graduates. Schramm lege Summit model in 10 cities. Other have worked

Ashoka Fellows around the world in areas as diverse as eliminating child labor in India, particularly in the carpet industry, waste and garbage removal and recycling in Peru, and rural electrification in Brazil 1998; (Bornstein, Harvard Magazine, March-April, 2002).

Tata

industries

creativity
entrepreneur

and
as

integrity.
a

Drayton

describes
someone

A nation-building mission was assumed by Jamshetji founder of the Tata group Tata, the entrepreneurial of industries who created organizations such as the

"change-maker,"

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242 Gita Tata Steel

Surie and Allan Ashley and its Ferro Alloys certified. and Minerals Division is also

the Tata (1904), Tata Motors (1945), Power and the Indian company (1890) Hydroelectric ensure to Institute of Science that local (1903) built capabilities electricity and in science and technology. A com production, orientation and national mission remains munity in these flagship organizations prominent despite the current imperative to downsize and become leaner and more Steel efficient. We Tata describe the efforts of Tata to link entrepre companies neurship and ethics. to being one of the best in class In addition of steel worldwide, Tata Steel producers quality retains its reputation for community by building to provide continuing employees with high quality and a clean environment. its Among won has the the achievements, company many award for business in 2000, excellence JRD QV Conservation the National award (1995, Energy healthcare 1997, 2000, for Business 2000. with The standards and 2001) Excellence and in is also welfare the CII-EXIM Indian a and for first leader in award in Industries and other were in manufacturing,

SA 8000

to initiate a regional It is the first Indian company assessment environmental (EIA, during 1992 impact 1994) covering a radius of 15?20 km around the city of a blueprint to develop for the Jamshedpur sustainable development of the region. In addition, the township which was the first planned industrial

city in India continues to be maintained by Tata Steel; the city of Jamshedpur was chosen to participate in the UN Global Compact Cities Pilot Program. More the company has been recognized for its pio awareness. in the work field of HIV/AIDS At neering over, to remaining the same time, Tata Steel is committed the lowest cost producer of steel and providing value to its shareholders (it is one of the few steel companies that is EVA positive ). Tata is India's largest automo Motors, Similarly, revenues of $5.5 billion in with bile manufacturer in engineering 2005-2006 and subsidiaries and automotive manufacturing,
components

in the world

company for worker

setting its relations

construction solutions, equipment auto finance, automotive vehicle

manufacturing, machine tools and fac

it was labor unions; measures labor welfare

among that were

to introduce subsequently introduced aid, works

the welfare legalized. Among an eight hour working were establishment of a welfare leave with cornrnittees, pay, an accident compensation fund,
institute for apprentices,

measures

tool solutions, and high-precision tory automation Tata is Motors Like the other group companies, ing. to corporate It is a committed social responsibility. Nations Global Compact, signatory to the United and social initiatives on and engages in community human standards in rights, labor and environment compliance
Compact. in community

day, free medical

department, workers' provident scheme, a training

and engineering

with
Simultaneously,

the

principles
it also plays serving

of
an

the
rural

Global
role commu

craftsmen

active

graduates, pension onwards)

Steel's

profit scheme

competition

sharing, maternity (Tata Steel, 2005). in the post-liberalization to workforce

did not

benefits, Despite period reduction,

on

and a rising (1991 Tata

pro

development,

nities

leading

locations. adjacent to its manufacturing encom and Thus, pragmatism problem-solving as as to to the well value both value market pass Tata Electric members. and community employees while remains amajor supplier of power toMumbai to conduct the Indian Institute of Science continues as Tata In addition, research. scientific pioneering to have begun Steel and Tata Motors expand glob is viewed in their building community ally expertise as an attractive feature for other Tata tries, particularly in Thailand, investments in Africa. coun developing Steel has made new Bangladesh,
and countries

management

compromise

viding
taken

medical
steps to

facilities.
inculcate

The the

company

has
conscious

also

environmental

ness

community through employees use most to the and and education, training to and methods manage technologies sophisticated envi and conducts and pollution, energy, waste ronmental audits at regular intervals The

in

and

dent ISO

by indepen mines steel works, company's agencies. are and civic services in Jamshedpur and collieries 14001 Tata certified for Environment is the first in Steel's works and Manage in the world for work

South Africa,
Motors' in several

U.K. passenger

and

Australia. vehicles

Tata

commercial

are marketed

ment.

to be conferred conditions

the SA 8000 improvements

certification

in Europe, Asia and in Malaysia,

the Middle Africa, the company has Kenya,

East, Australia, assembly

and

the workplace

Bangladesh,

operations Spain, Ukraine,

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Integrating Pragmatism

and Ethics

in Entrepreneurial Leadership

243 as other The factors is base

adhere to and Senegal. All group companies Russia, the reputation of the Tata code of conduct. Thus, Tata CEOs as industry leaders focused on achieving national founder goals intact and is the legacy of the (Lala, 1981; Surie, 1996). remains

output quality as well employee's as such perceived cooperation. and can double the substantial earnings from piece issue is addressed accountable

bonus

employee's rate. Furthermore, the quality each by holding employee

Lincoln The

electric Electric Company was founded by Mr. and his brother almost a century ago, and have never lost that time its U.S. operations or had the a layoff. "innovative" Its basis for success for has to a strategy of approach

for the quality of each individual piece that is produced. This is accomplished by stenciling name on each product produced. the employee's If a

Lincoln

Lincoln during money been

suffers an internal failure, e.g., a piece is product found to be defective before it leaves the plant, the own to repair it on his/her is expected employee If the product exhibits an external failure, i.e., in the field, the employee's bonus may be reduced by up to 10%. time. it fails the most However, rates systems involves and their belief ment, serious deficiency with piece distrust of manage employee that the rates will be lowered they can have re

of productivity, improvement lowering on and these benefits to its customers. costs, passing Lincoln Electric's primary products are arc-welding and associated products, and giant firms equipment such as G.E. andWestinghouse have been unable to it. The innovativeness of their system compete with is that it does not utilize either a typical mass pro duction sys assembly system or a lean production
tem. The system relies extensively on a piece rate

continuous

once management discovers how productive at Lincoln Electric The be. leaders really

sponded to this concern with a series of ethical actions a bond that have of trust between developed and The management. company promises employees unless not be decreased or rates readjusted there is a product change or a work methods Lincoln Electric's empowers change. leadership to new rates and them have employees challenge any that rates will recalculated.
employee-owned,

and system that encourages compensation to continually increase one's also gives incentives to enable system is designed output. The production to be individually thus the work paced, obviating possibility of work) a traditional organized major changes in the pace of work among individ in individual output uals. To facilitate the differences
rates, amounts production the system of work approach. also has to accommodate an anathema significant to a lean in progress,

hard work

Furthermore,
i.e.,

the company
managers,

is primarily
and the

line (or team assembly that does not normally tolerate any

employees,

Lincoln

family neutralizes arrangement investors who do not understand this commitment

hold most

of the voting the possibility

stock. This that outside

been
career

might violate run by the Lincoln family

Lincoln employees who

or accept the value of it. Lincoln Electric has (until 1965)

and are

and by
person

were

in an old piecework the innovations are work the imbedded system production policies in the organization. One of the problems that has What makes characterized fact that system is the piecework incentives for very strong given the from quantity discourage employee to other time valuable "productive" the include activities such as maintain the traditional

to their employees and understand the ally committed the and ethics involved in honoring the workers' logic
trust.

increasing allocating activities.

The Lincoln organization has also pursued a series of symbolic policies that have led to increased trust are no of management There by its employees.
executive assigned parking spots, no separate exec

These

as assisting other ing or improving quality as well and workers, e.g., training temporary jobs accepting to deal with em Lincoln However, emergencies. an individual to in order bonus ploys approach overcome with and problems quality cooperation. The by amount of the individual supervisor, bonus and is determined is based on the the employee's

com dining and offices. These pensation, Spartan management reduce the "us versus factors, although symbolic, them" mentality. Lincoln Electric is a company that has successfully both innovation and integrated facilities, reasonable executive continuously values. The world-class improving productivity with ethics and results are a company that has achieved status (Roberts, 2004).

utive

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244 Conclusion Ethics

Gita

Surie and Allan Ashley

organizations strategic who directions. develop and take the business in new

and entrepreneurial leadership can be inte a action oriented ap grated by applying pragmatic, to arena to trust and the moral generate proach commitment for sustaining innovation and value creation. One leaders must is that entrepreneurial implication in light of their all actions consider

the term "social entrepreneurship" (Bill the founder of the Ashoka Foundation popu Drayton, larized this term; see case on Ashoka in this article) to We
refer to to entrepreneurship in in the the public arena; arena as we refer entrepreneurship private business

use

entrepreneurship. Efficiency of the the arena in the moral to the refers efficiency resources in its in available system using creating it recognizes, values which that is, in producing the quantity of "goods" as measured by its standards

impact on long-term credibility not simply expedi ence. By addressing of values on a the question continuous basis in the process of achieving their are cur to leaders alter goals, entrepreneurial likely rent norms behavior evolved this paper preneurial of ethics and evolve is reinforced as in other new ones. In this way, ethical through practice and standards in domains. The cases outlined

largest

(Knight, 1923, p. 585).

This is not to deny the existence of ideals or an

absolute ethics; Rorty

matists ized like Pierce conceptions, to the they a mechanistic into to

(1961) notes
do practice so because

that although prag

rather they wish of than ideal to avoid things by

emphasize

a glimpse of how some entre provide leaders have implemented the integration

resorting taking EVA financial capital.

in their organizations. Further research a to of is necessary using large sample organizations a on determine the impact of such experimentation wider scale and to study the extent to which dif ferent societies such encourage et al., 1995). (Shane If a prime motivation of business the evolution experimentation is emulation and

context refers

understanding account. value takes into added, account

economic that

a measure the cost

of of

performance

competition, its efficiency on how salient

of the value

in generating desirable and effectively rapidly such values The case on that these values

system and values depends are made the Ashoka

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