PECBE 001 –Entrepreneurial Management

MODULE 2 – ETHICAL & SOCIAL RESPONSIBILITIES OF THE ENTREPRENEUR

II. FACTORS INFLUENCING ETHICAL BEHAVIOR

➢ Ethical behavior, whether by a person or a business entity, is influenced by any or a

combination of the following:

1. situation;
2. reward system;
3. individual differences; and
4. other factors.

➢ Circumstances vary, and the reactions of the firms or individuals also vary. For instance, a
firm that behaves ethically during prosperous times may act unethically in times of
financial hardships.

➢ The expectation of high rewards for committing unethical behavior motivates a person to
do it. However, when he knows that there is a possibility that he would be convicted, the
motivation is diminished. For instance, a person who is considering adultering his products
to increase profits will be more inclined to do it, especially if the community does not
vehemently condemn such acts. Another example is photocopying original works of others.

➢ People are different from one another, and that includes differences in reacting to specific
situations. For instance, a trader may think selling food products that had already expired
is not bad. Another person would think differently and would not want to engage in such
an activity.

➢ When a person is in competition with others and wants to win, he is more inclined to adopt
unethical behavior. An example is a trader who spreads rumors to discredit competitors.

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