CHAPTER 6

ENTREPRENEURIAL ETHICS AND SOCIAL RESPONSIBILITY

Objectives:

At the end of the chapter, students will be able to:

1. Practice the ethical standards stated in the Entrepreneurial Code of Ethics in managing a
business.

2. Apply good ethics in business.

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 society.

Business Ethics refers to the rules about how entrepreneurs ought to behave. The
ethical behavior required of entrepreneurs are determined by the following:

*the public
*interest groups (i.e. Phil. Animal Welfare Society)
*business organizations
*the individual’s morals and values

Successful entrepreneurs operate on sound business ethics which are approved and

accepted in any society.

Entrepreneurial Ethics are those codes of conduct, employed by entrepreneurs which

impact society positively, thereby increasing the entrepreneur’s chances for greater success. 

Entrepreneurial ethics would lead to positive attitudes towards raising successful

entrepreneurs, who would, in turn, build entrepreneurial institutions for societal growth and
advancement.

When entrepreneurial ethics are practiced and visible, the entrepreneurs and their team,
work with great zeal, dedication, and purposefulness, to achieve the organization’s objectives,
and together, they work for the common good of all.

It can be clearly seen that when good entrepreneurial ethics are demonstrated,
businesses can handle or tackle difficulty when they arise. 

A healthy entrepreneurial spirit is certainly a viable option for many countries facing
unemployment crisis, especially in the third world countries. Entrepreneurial ethics, combined
with integrity and all the right motives, would allow for economic growth and gradual
development throughout the primary, secondary and tertiary sectors in the economy. 
  Sound Entrepreneurial ethics helps to develop relationships built on mutual trust and
respect. Without this trust, businesses will not survive; investments will not be made. Successful
business empires have gained credibility and reliance as a result of their sound ethical
entrepreneurial practices. 

Ethical Entrepreneurial practices bring forth positivity with the vision and mission of an
organization. It, therefore, necessitates a great sense of self-discipline and humility which
grows small businesses into successful empires. 

Good business ethics should be visible to all who come into contact with the business.
Ethical policies should be included in business plans, in the business’s mission statements, and
in all other business documents. 

For the individual entrepreneur, a reputation for much needed ethical practices can place
your business on the top lists of ethical businesses with which others will unhesitatingly choose
to do business with, increasing your opportunities for successful business partnerships.

The Code of Ethics for Entrepreneurs

Being a good entrepreneur takes more than a creative idea and a superior work ethic.
It also requires understanding the importance of ethical business practices, giving back to
your community and running your business in a way that minimizes harm to others and the
environment.

Labor

How a company treats its workers is the first test of its ethical soundness. An
entrepreneur who attempts to cheat or underpay his employees will probably find his company
experiencing low morale, high staff turnover and possibly even problems with theft or
sabotage. Treating your employees well is the right thing to do, but it will also benefit you
because most people will respond in kind, developing good work habits and a loyalty to the
company. Maintaining open lines of communication with workers is necessary to know how
they are feeling about things and to be sure that everyone is benefiting from their association
with your company.

Customers

If you run a retail operation, it is obvious how dependent your business is on

customers. Working in retail gives you the opportunity to personally treat customers well and
express your appreciation when they support your business. The best way to do this is to
make a point of always providing goods and services that are as good as you can make them.
An entrepreneur with a healthy ethical sense realizes that doing your best every day is not
only a good business decision but an ethical choice as well. Offering customers superior
goods at a fair price allows them to benefit from your business.

Environment

It is difficult, and perhaps impossible, to engage in business while having no impact on

the environment. There are many ways that a business can minimize its impact on the natural
world, including recycling, carpooling, minimizing packaging and reducing wasteful business
practices such as junk mail. A business also has a public profile that entrepreneurs can
effectively use to promote environmentally sound practices. While all of these activities have a
practical basis in that they increase the cleanliness of your environment and the public
reputation of your business, they also have a basis in the ethical challenge of treating the
natural world with the respect and gratitude that it deserves.

Integrity

Hand in hand with entrepreneurial ethics is integrity in business.

It is important that entrepreneurs today don’t get caught up in moneymaking schemes

and lose sight of the importance of doing the right thing for the common good.

Any entrepreneur who willfully and dishonestly engages in business activity with the
motive of ripping people off or profiting at the expense of others, creates a harmful business
environment of distrust and antagonism.

When you build a business on integrity, and set off with an attitude of nobility, humility
and service, and the intention of making a living by providing your community with needed
goods and services, you contribute to, rather than detract from, the general good. An early and
consistent stand against questionable conflicts of interest is an important aspect of any
entrepreneur’s ethics effort. 

It is imperative, that the entrepreneur today understand that the business they run has
responsibilities to everyone. 

Businesses must do more than provide jobs and make a profit. They also are expected
to run their business responsibly.

Being responsible entrepreneur involves more than a philanthropy. Philanthropy is the

act of making charitable donations to improve the welfare of society.

For a business to survive, it must exhibit social responsibility. Social Responsibility

is the principle that companies should contribute to the welfare of society and not solely devoted
to maximizing profits.

Guidelines for Responsibility to Customers include:

*Do not mislead customers

*Give complete information proper use
*Label unsafe products as such
*Offer the best quality products at the lowest prices

May small businesses have found ways to be generous to the community, including:

*donating their products and services

*involving employees in philanthropy
 *joining with other companies to promote social responsibility
Being a socially responsible Employer

*As a small business owner, you have the responsibility to treat your employees fairly.
*One can offer flexitime, health care, telecommuting, on-site child care, and assistance
to employees with impairments.

Being a socially responsible Employee

* Personal responsibility is the basis of social responsibility.

*Responsible employees maintain high ethical standards when dealing with co-workers,
management, and customers.