Chapter 02 Revised

7/27/2019 Chapter 02 Revised

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Cha pter 2Cha pter 2

Cha pter 2Cha pter 2

PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie Cook

The University of West AlabamaThe University of West Alabama

CopyrightCopyright2006 Thomson Business & Professional Publishing.2006 Thomson Business & Professional Publishing.

All rights reserved.All rights reserved.

Part 1 Entrepreneurship:Part 1 Entrepreneurship:

A World of OpportunityA World of Opportunity

EntrepreneurialEntrepreneurial

Integrity: AIntegrity: A

Gateway to SmallGateway to Small

BusinessBusiness

OpportunityOpportunity


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Copyright 2006 Thomson Business &

Professional Publishing. All rights

reserved. 24

Integrity and EntrepreneurshipIntegrity and Entrepreneurship

What Is Integrity?An uncompromising adherence to doing what is right

and proper

Honesty, reliability, and fairness in business practices

An essential element of successful businessrelationships

Integrity is as much about what to do and it is who tobe.

Doing the Right Thing

Ethical issuesquestions of right and wrong

Legal and ethical considerations

Conflicts of self-interestEntrepreneurs Are People Of Principle and Integrity ?Entrepreneurs Are People Of Principle and Integrity ?


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Difficult Ethical Issues Facing Small FirmsDifficult Ethical Issues Facing Small Firms

Ethical IssuesEthical IssuesAffectingAffecting

SmallSmall

BusinessesBusinesses

Human ResourceHuman Resource

DecisionsDecisions

EmployeeEmployee

ObligationsObligations

ManagerialManagerial

Processes andProcesses and

RelationshipsRelationships

RegulatoryRegulatory

ComplianceCompliance

Relationships withRelationships with

SuppliersSuppliers

EnvironmentalEnvironmental

and Socialand Social

ResponsibilitiesResponsibilities

CustomerCustomerRelationshipsRelationships

Source: Leslie E. Palich, Justin G. Longenecker, Carlos W. Moore, and J. William Petty, Integrity and Small Business: A Framework and Empirical

Analysis, Proceedings of the 49th World Conference of the International Council for Small Business, Johannesburg, South Africa, June 2004.


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A Framework for IntegrityA Framework for Integrity

Personal Integrity of the OwnerSocial responsibility for all stakeholders versus a

narrow focus on using the firms resources only for

honest profit making (Milton Friedman).

Respecting CustomersService orientation and respect in the treatment of

customers is both ethical and profitable.

Valuing Employees

Fair and honest treatment of employees is a sign of

managerial integrity.


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Kinds of Ethical IssuesKinds of Ethical Issues

Ethical Issues in Business OperationsIncome and expense reporting (income tax fraud)

Truth in advertisingpersuasion and deception

Bribing customers and rigging bidsDirect sellingpyramid schemes, bait-and-switch

selling

Effects of owners ethics on their employees

Accurately reporting financial information


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Kinds of Ethical Issues (contd.)Kinds of Ethical Issues (contd.)

Ethical Issues and EmployeesTo do an honest days work

Fraudulent workers compensation claims

Theft of company property and embezzlement offunds

Violation of personal ethics to make a sale

_ Temptations to act unethical , Big or Small Business ?_ Temptations to act unethical , Big or Small Business ?


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Social Responsibilities and Small BusinessSocial Responsibilities and Small Business

Social ResponsibilityThe role of a small business as a good citizen in its

community is meeting its ethical obligations to

customers, employees, and the general community.

Regarded as the price of freedom to operate in a freeeconomic system.

Frequently takes the form of personal contributions,volunteerism, and the contribution of services by thefirm and its employees.


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Social Responsibilities of Small FirmsSocial Responsibilities of Small Firms

SocialSocial

ResponsibilitiesResponsibilities

ConsumerismConsumerism

Support ofSupport of

EducationEducation

Compliance withCompliance with

GovernmentGovernment

RegulationsRegulations

Response toResponse to

Community NeedsCommunity Needs

Contributions toContributions to

CommunityCommunity

OrganizationsOrganizations

Obligations toObligations to

StakeholdersStakeholders

EnvironmentalEnvironmental

ProtectionProtection


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The Challenges and BenefitsThe Challenges and Benefits

of Acting Ethicallyof Acting Ethically

The Vulnerability of Small Companies

The limited resources of small firms tempt them to cut

ethical corners if an issue directly affects profits.

The Integrity Edge

Exhibiting integrity in business may actually boost a

firms performance.

The greatest benefit of integrity is the trust itgenerates.


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Ethics and Small Business (contd.)Ethics and Small Business (contd.)

Internet EthicsRisks of buying and selling on the Internet

Maintenance of personal privacy

The use of cookies to profile customers usage of theWeb

Monitoring employees e-mail and Internet access atwork

Protection of intellectual property rights Misappropriation of content providers original

intellectual creations, including inventions, literarycreations, and works of art, that are protected bypatents or copyrights


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Ethics and Small Business (contd.)Ethics and Small Business (contd.)

International Ethical PerspectivesIllegal immigrants and forced labor in sweatshops

Outsourcing into cheap labor markets

Application of Federal Corrupt Practices Act

Bribery versus customary local business practicesEthical imperialism

The belief that the ethical standards of ones owncountry are superior and can be applied universally

Ethical relativismThe belief that ethical standards are subject to localinterpretation

When in Rome, do as the Romans do


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Building a Business with IntegrityBuilding a Business with Integrity

A Strong FoundationUnderlying values: unarticulated ethical beliefs that

provide a foundation for ethical behavior in a firm

Are based on personal views of the universe and

mankind

Strongly held views can lead to tough choices

Ethics of the firm affect how outsiders view the firmand their decisions about the firm


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Building a Business with Integrity (contd.)Building a Business with Integrity (contd.)

Leading with IntegrityOwner/leaders and their ethics have more direct and

pronounced effects in small firms.

Owner/leaders can insist that ethical principles be

followed by employees.


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A Supportive Organizational CultureBuilding an ethical culture requires:

Full commitment to ethical conduct by the firm

Strong, ethical managerial leadership

Code of ethics

Official standards of employee behavior set by thefirm

The foundation for ethical conduct by employees

Clarifies the rules and gives guidance to employees_ The Bake Principles ?_ The Bake Principles ?

_Religious Values ?_Religious Values ?


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Better Business BureauProvides free buying guidelines and information about

companies to consumers

Attempts to resolve questions or disputes concerning

purchasesBait advertising

An insincere offer to sell a product or service at a verylow price, used to lure customers in so that they canbe switched later to a more expensive product


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EnvironmentalismEnvironmentalismCost or OpportunityCost or Opportunity

The Burden of EnvironmentalismEnvironmentalism is the effort to protect and preserve

the environment.

Potential of Environmentalism

Enhances firms image with customersImproves firms image in the community

Provides business opportunities (e.g., recycling)

Adverse impact of environmentalismCost of updating and modifying facilities

Government regulations and lawsuits

Documents

Chapter 02 Revised