Chapter 4 Understanding the Entrepreneurial Perspective in Individuals Chapter 5 Developing Creativity and Understanding Innovation Chapter 6 Ethical and Social Responsibility Challenges for Entrepreneurs
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Defining Ethics Ethics provide the basic rules or parameters for conducting any activity in an acceptable manner.
Illegal
Corporate Decisions
Legal
Unethical
Managerial Rationalizations
The four rationalizations are believing: 1. That the activity is not really illegal or immoral; 2. That it is in the individuals or the corporations best interest; 3. That it will never be found out; and 4. That because it helps the company, the company will condone it.
Direct Effect
Against the firm Against the firm For the firm For the firm
Examples
Expense account Cheating Superficial performance appraisal
Role Distortion
Role Assertion
Bribery Not withdrawing product line in face of initial allegations of inadequate safety
2.
3. 4. 5.
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.
Ethical Practices and Codes of Conduct A code of conduct is a statement of ethical practices or guidelines to which an enterprise adheres.
Amoral Management
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.
Moral Management
Managerial activity conforms to a standard of ethical, or right, behavior. Managers conform to accepted professional standards of conduct. Ethical Leadership is commonplace on the part of management.
A Holistic Approach
Principle 1: Hire the right people Principle 2: Set standards more than rules Principle 3: Dont let yourself get isolated Principle 4: The most important principle is to let your ethical example at all times be absolutely impeccable
Personality Traits
Level of Openness
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
The Opportunity for Ethical Leadership by Entrepreneurs An owner has the unique opportunity to display honesty, integrity, and ethics in all key decisions. The owners actions serve as a model for other employees to follow.