Big Picture B in Focus: ULOb.

Explain the ethics and the social and legal responsibilities

of entrepreneurs

Metalanguage
The following are terms to be remembered as we go through in studying this unit. Please
refer to these definitions as supplement in case you will encounter difficulty in understanding this
unit.
1. Policy. “This is a set of ideas or a plan of what to do in particular situations that has been
agreed to officially by a group of people, a business organization, a government, or a political
party”. Source: https://dictionary.cambridge.org/dictionary/english/policy
2. Law. “Refers to the system of rules of a particular country, group, or area of activity”. Source:
https://dictionary.cambridge.org/dictionary/english/law?q=Law

Essential Knowledge
The ethical and social responsibilities of entrepreneurs

While entrepreneurs often have responsibilities to their shareholders, they also have
responsibilities to their stakeholders. The stockholders are composed of small group of people who
are owners of the company while the stakeholders are composed of a larger group that includes all
the people and organizations which have interest in the business. Stakeholders of schools include the
parents, government and community. Meanwhile, the stockholders are the registered and recognized
owners of the private school.

Ethics originated from the Greek word "ethos" which means "character or customs or
accepted behaviors. Ethics now refers to the established standard of what is right and wrong that
prescribe a person of what he ought to do. This set of principles drive the person or organization in
their various undertakings. When these ethical standards are used, a person or organization can
thereby regulate their behaviors in order to clearly distinguish what is right and wrong in the lens of
other people.

Other meanings of Ethics are the following as stated by O'Donnell (2014).

1. Ethics can be defined as the discipline dealing with moral duties and obligation, and
explaining what is good or not good for others and for us.
2. Ethics is the study of moral decisions that are made by us in the course of performance of our
duties.
3. Ethics is the study of characteristics of morals and it also deals with the moral choices that are
made in relationship with others.
4. Ethics is concerned with truth and justice, concerning a variety of aspects like the
expectations of society, fair competition, public relations, social responsibilities and corporate
behavior.

Moreover, business ethics as a form of applied ethics is concerned with the sense of
ethics application in the moral and ethical norms of a business. Business ethics therefore means
a "code of conduct" which includes the principles and expectations that should be followed by a
member of a business organization. A person is considered full of integrity when he is able to
carefully follow the code of conduct at all times.

The social responsibility of a business organization is influenced by their business

ethics. Social responsibility means the obligation of the business to the society in which the
business is operating. The obligations include following the stated laws and policies and
sometimes extend to generating employment for others in order to maximize the human capital
of the area.

Jerusalem, Palencia, & Palencia (2017) cited that the following are the responsibilities
and accountabilities of entrepreneurs.

Responsibilities and accountabilities to employees

1. Pay wages and taxes

2. Create and maintain a safe workplace
3. Facilitate workers' compensation insurance
4. Enforce anti-discrimination law
5. Create and maintain a favorable working environment
6. Respect human rights
7. Support career development
8. Train and educate employees
9. Manage performance
10. Give rewards and benefits

Responsibilities and accountabilities to the government

1. Observe laws, rules and regulations

2. Pay taxes
3. Follow environmental regulations
4. Abide by labor laws
5. Avoid restrictive trade practices
6. Disclose financial statements
7. Avoid corruption
8. Assist in implementing socio-economic policies
9. Help earn foreign exchange
10. Advise the government
11. Contribute to government treasury
12. Contribute to political stability

Responsibilities and accountabilities to creditors

1. Give correct information

2. Provide fair return of investment
3. Strengthen share prices

Responsibilities and accountabilities to the suppliers

1. Practice fair pricing and licensing

2. Avoid coercion and litigation
 3. Maintain stability
4. Maintain confidentiality
5. Pay on time
6. Select suppliers with discernment

Responsibilities and accountabilities to consumers

1. Ensure quality of products and services

2. Ensure consumers' health and safety
3. Provide free training
4. Be fair with prices
5. Be honest in advertising and marketing
6. Be honest in dealings
7. Attend to complaints
8. Service even after sales
9. Respect customers' time
10. Treat customers well

Responsibilities and accountabilities to the general public

1. Be fiscally responsible
2. Consider public input
3. Take care of the community

Responsibilities and accountabilities to the environment

1. Comply with environmental legislation

2. Dispose waste properly
3. Recycle
4. Conserve and protect biodiversity
5. Prevent and remedy damages to environment
6. Report incidents related to damage or danger to the natural environment
7. Use scarce natural resources sparingly

Legal issues in Entrepreneurship

Entrepreneurs often face the challenge of establishing their own structure.

Entrepreneurs are expected to pursue innovation while considering the legal constraints and
limitations. This offered pressure to new entrepreneurs as they need to learn the legalities and
be constantly updated with new policies that concerns their business.

The following are the some of the most common legal issues in Entrepreneurship.

1. Intellectual property (IP). This “refers to creations of the mind: inventions; literary and
artistic works; and symbols, names and images used in commerce” (WIPO, 2016). This IP rights
allow the creators and owners to be legally protected. This IP is promoted in order to foster
progress and well-being of humanity because the inventions of various people hugely aid in
making our life better each day. The legal protection will ignited economic growth and generate
more jobs. A patent is “an exclusive right granted for an invention – a product or process that
provides a new way of doing something, or that offers a new technical solution to a problem”.
This protection usually lasts 20 years. A trademark “a distinctive sign that identifies certain
goods or services produced or provided by an individual or a company” (WIPO, 2016).

The Two Categories of Intellectual Property

A. Industrial Property - the patents for various inventions, trademarks, industrial

designs and geographical indications are included in this category.

B. Copyright - this "includes the literary works (such as novels, poems and
plays), films, music, artistic works (e.g., drawings, paintings, photographs and
sculptures) and architectural design. Rights related to copyright include those of
performing artists in their performances, producers of phonograms in their recordings,
and broadcasters in their radio and television programs" (WIPO, 2016).

2. Antitrust. This competition law is limiting the business engagements of an

entrepreneur. This is covered in our Philippine Competition Law (R.A. 10667). Examples
covered in this law is the prohibition of lowering the prices in certain geographical area in order
to push out a competitor. Another popular example is the violation called collusion. This
happens when three manufacturers agree to sell a product at a higher price when they could
have offered it at a lower price. This law was established in order to discourage monopoly and
encourage competition without using unfair tactics.

Self-Help: You can also refer to the sources below to help you further
understand the lesson

O'Donnell, D. P. (2014). Exploration of positive ethics factors and associations with ethical decision
making (Order No. 10307242). Available from ProQuest Dissertations & Theses Global.
(1868788002). Retrieved from
https://search.proquest.com.vlib.interchange.at/docview/1868788002?accountid=172684

Let’s Check

Let us try the following activities to check your understanding in this unit.

Activity 1. Identification. In the space provided, write the term/s being asked in the following
statements: (One point each)

________ 1. Ethics originated from this Greek word.

________ 2. This deals about a person's perception of what is right and wrong.
________ 3. A person is considered full of this when he is able to abide to the code of ethics even
when no one is watching.
________ 4. This is one of the responsibilities and accountabilities of an entrepreneur to the general
public which deals about supporting and participating in events that bring greater good to the
community.
________ 5. The Coca Cola container is under this category of the intellectual property.
________ 6. Illegally using the music of Bruno Mars is a violation of this category of the intellectual
property.
________ 7. The distinctive sign of brands like Nike is called.
________ 8. Globe and Smart telecommunication companies can’t merge due to this law as this will
create monopoly.
________ 9. “This is an exclusive right granted for an invention – a product or process that provides a
new way of doing something, or that offers a new technical solution to a problem”.
________ 10. These are significant groups of publics that can be affected or has interests in the
business other than the shareholders.

Let’s Analyze
Let us try the following activities to know how deep your understanding of the topics of
this unit is.

Activity 1. List 3 patented products and discuss their uses.

Patented Products Discussion

1.

2.

3.
Activity 2. Case Study Analysis.

Instructions.

1. Download and read the “Ecotourism The Boon or Bane for a Marine Sanctuary by: Ruth
Guzman” Source: https://wdi-publishing.com/product/ecotourism-the-boon-or-bane-for-a-marine-
sanctuary/

2. Use the table below in answering the Case Study Questions. You can use extra sheets when
necessary.

Case study Questions and Answers Table

Questions Answers

1. Who are the

stakeholders in this
case? Describe
and discuss each.

2. What are the

ethical problems
presented in the
case?

3. What policies do
you think are
necessary to solve
these ethical
problems?
In a Nutshell

In this part you are going to jot down what you have learned in this unit. The said
statement of yours could be in a form of concluding statements, arguments, or perspective you
have drawn from this lesson. The first three items is done for you.

1. Code of Conduct in an organization must be established. This will guide the employer
and the employee in what to do should there be problems that are related to ethical conducts in
the workplace. It is important that the employees of the organization are informed of this code.
2. Entrepreneurs need to be ethical and responsible. In pursuit of injecting innovation,
entrepreneurs must be mindful of the ethical side of their undertakings as well.
3. Intellectual property is supported by the law. This will protect the artists, creators and
inventors.
Now it’s your turn!
1.

2.

3.

4.

5.

6.

7.
Q&A List
In this section you are going to list what boggles you in this unit. You may indicate your
questions but noting you have to indicate the answers after your question is being raised and
clarified. You can write your questions below.

Questions/Issues Answers
1.

2.

3.

4.

5.

Keywords Index

Ethics Trademark
Business ethics Industrial Property
Social responsibility Copyright
Intellectual property (IP) Antitrust
Patent