Chapter 12 Incorporating Ethics and Social Responsibility into the Business.

Chapter 12

Incorporating Ethics and Social

Responsibility into the Business

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


Successful EntrepreneursAre

Principles Based

• Ethical Conduct

• Vision and Values

• Focus and Determination

• Abstract Thinking and Pragmatic Execution

• Commercialization Flexibility


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.


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.


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.


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.


The Process of Developing a Code of Ethics

• Guidelines from The Josephson Institute of Ethics http://www.josephsoninstitute.org/MED/MED-2sixpillars.htm– Trustworthiness– Respect– Responsibility– Caring– Justice and fairness– Civic virtue and citizenship


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?


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.org


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


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.


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


Vision and Values (continued)

• Strategies and Tactics: – Strategies:

• Plans for achieving company goals– Tactics:

• The means to execute the strategies


Figure 12.1: The Components

of Vision


Core Values and Success

• Constants of success– Purpose– Failure– A sense of satisfaction with

the accomplishment– Earning your success

Chapter 12 Incorporating Ethics and Social Responsibility into the Business.

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Transcript of Chapter 12 Incorporating Ethics and Social Responsibility into the Business.