ENTREP GROUP 4

THE ETHICAL AND SOCIAL RESPONSIBILITIES OF

THE ENTREPRENEURE
Ethics is the study of moral obligation involving the distinction between
right and wrong.

Business Ethics are the rules about how entrepreneurs ought to behave.

Ethical behavior required of entrepreneurs is determined by the following:

1.
2.
3.
4.

The public
Interest groups like the Society of Prevention of Cruelty to Animals.
Business organizations
The individuals personal morals and values

FACTORS INFLUENCING ETHICAL BEHAVIOR

1. The situation
2. Reward system
a. Extrinsic Rewards- basic needs
b. Intrinsic Rewards- self esteem, development
3. Individual differences
4. Other factors

THE EFFECT OF ADHERANCE TO ETHICAL STANDARDS

Adherance to
Ethical
Standards

Establishment
of trust

-between buyer
and seller

By Entrepreneurships

-between lenders and

borrowers

Selling is faster

Smooth flow of
Business
Exchanges

HOW ETHICAL BEHAVIOR IS ENCOURAGED

Ways of encouraging ethical behavior:
1. Adaption of a code of ethics
Code of ethics - adopted by organizations to assist members in
understanding the difference between 'right' and 'wrong' and in
applying that understanding to their decisions.
2. Institution of rewards and punishments concerning ethical behavior
3. Adaptation of internal programs for resolving conflicts
4. Provision of training in ethics for employees
5. Top management support

REQUIREMENTS FOR EFFECTIVE CODE OF ETHICS

1. It should refer to specific unethical practices like receiving gifts,
avoiding warranty claims, bid-rigging, making fictitious claims.
2. It must be supported by top management. Support comes in various
forms such as providing sufficient funds for its implementation and
assigning specific employees to handle ethical infractions of other
employees.

REWARDS, PUNISHMENTS AND ETHICAL BEHAVIOR

A code of ethics is sufficient for some people if ethical behavior is
required. For many people however, this may not be enough to motivate
them to act ethically.
1. Reward - a thing given in recognition of one's service, effort, or
achievement. Example: cash, gifts, promotion or citation
2. Punishment - inflict a penalty or sanction on (someone) as retribution
for an offense, especially a transgression of a legal or moral code.
Example: dismissal demotion, suspension or reprimand.
INTERNAL PROGRAMS FOR RESOLVING CONFLICTS
Conflicts arise, even when ethical conduct is concerned. It is important
for entrepreneurs to adapt a program of resolving conflicts.
Example: meetings.

ETHICS REVIEW COMMITTEES

To encourage ethical behavior, the entrepreneurship may create an
ethics review committee. The committee is usually composed of company
employees as well as some who are not employed by the company.

PROVISION OF TRAINING IN ETHICS

Company personnel who are exposed to activities that are ethically charged
must be provided with sufficient training in ethics. Such training should make

them sufficiently prepared to deal with various ethical issues they would
encounter in their respective workplaces.

TOP MANAGEMENT SUPPORT

It is very difficult for any program or activity to succeed without
sufficient support from the top management. For instance, when unethical
conduct is committed and no sanction is imposed by top management, it can
be expected that more violations of good ethics must be made.

ETHICAL ISSUES FACING ENTREPRENEURSHIPS

Entrepreneurships face ethical questions on a daily basis. The spring form
the following relationships:
1.
2.
3.
4.

Between
Between
Between
Between

the
the
the
the

company
company
company
company

and
and
and
and

the costumers
its personnel and employees
its business associates
investors and financial community.

RELATIONS WITH COSTUMERS

When ethical abuses are committed, the most probable victims are
costumers. This is expected because of the high frequency or transactions
between the company and the costumers.

CONSUMER RIGHTS
1.
2.
3.
4.

Right to be safe
The right to be informed
The right to choose
The right to be heard

EMPLOYERS RESPONSIBILITIES TO THE EMPLOYEES

1.
2.
3.
4.

Workplace safety
Quality of life issues
Avoiding discrimination
Preventing sexual harassment

What to do to prevent sexual harassment?

1. Issue a specific policy statement prohibiting
2. Develop a complaint procedure for employees to follow
3. Create a work environment that encourages sexually harassed
employees to report their experiences.
4. Establish a committee to investigate sexual harassment claims
5. Take disciplinary actions against harassers.