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Ethical and Social Responsibilities

of the Entrepreneur

What is Business Ethics?

Ethics is the study of moral obligation involving the

distinction between right and wrong. As a

consequence, the study of ethics paved the way for
the adaption of the general rules of conduct in

What is Business Ethics?

The rules about how entrepreneurs ought to behave

are referred to as business ethics. The ethical

behavior required of entrepreneurs is determined by
the following:

The public;
Interest groups (i.e. Philippine Animal Welfare Society)
Business organizations; and the individuals personal morals
and values.

What is Business Ethics?

Adherence to ethical standards contributes to the

smooth flow of business exchanges. It establishes

trust between buyers and sellers and between
lenders and borrowers.

Laws and regulations requiring ethical behavior

Product safety and quality
Fair employment practices
Fair marketing and selling practices
Use of confidential information for personal gain
Community involvement
Illegal payments to foreign governments to obtain


Factors Influencing Ethical Behavior

Situational Context

Ethics intensity or issue intensity indicates the degree to which

a situation is recognized to pose ethical challenges.

The Person

Ethical framework is a personal rule or strategy for making

ethical decisions.

Family Influences

Sometimes the way a person is nurtured also affects his or her

state of mind towards the community. When a child is brought
up in a very hostile way towards society he or she will find it
very difficult to behave positively ethical in that society.

Factors Influencing Ethical Behavior

Internal environment and the organization

Supervisory behavior, peer group norms and behavior, and

policy statements and written rules.

External environment

Government laws and regulations, societal norms and values,

and competitive climate in an industry.

The norms of the community

The rules of a community usually controls how one should

behave in a community in order to fit appropriately within the

Reward system

How Ethical Behavior is Encouraged

Adaption of a code of ethics
Institution of rewards and punishments concerning

ethical behavior
Adaption of internal programs for resolving conflicts
Creation of ethics review committees
Provision of training in ethics for employees
Top management support

Ethical Issues Facing Entrepreneurs

Between the company and the customers
Between the company and its personnel and

Between the company and its business associates
Between the company and the investors and the
financial community