ROSELINE LUBULELLAHSTRATHMORE UNIVERSITY

ETHICAL ISSUES AND SOCIAL RESPONSIBILITY OF

ENTREPRENEURS

DEFINING BUSINESS ETHICS

Ethics is the determination of what is right and proper or just and fair, by an entrepreneur by undertaking decisions and actions that reflect this. (Hisrich and Peters,2002)

It is all about acting in an acceptable manner

Ethics refers to a set of principles prescribing a behavioral code that explains what is good and right or bad and wrong. It outlines moral duty and obligations. (Koratko and Hodgetts, 2004),

ETHICAL ISSUES

Ethical decision making is a challenge that confronts every business person involved in large or small enterprises.

Recent scandals : Anglo-leasingGoldenbergNyaga Stock brokers/Francis Thuo StockbrokersEnron, Citicorp, and other several large companies

Such scandals have made consumers concerned about the ethical standards that businesses hold.

ETHICAL ISSUES (contd)

Even after defining ethics as “a set of principles of right conduct or a theory or system of moral values” it is still difficult to determine which businesses are better at complying with ethical standards and which businesses are acting unethically. WHY?

This is because people disagree about what is right and wrong

Common Examples Of Unethical Actions By A Firm Or Entrepreneur TheftFalsificationBriberyEmbezzlementStealing suppliesManipulating suppliersFailure to withdraw a defective product

from the market place

Reasons for Unethical Behavior

Businesses seem to take part in unethical behavior for different reasons today than in the past.According to Vogel (1987), corporate misdeeds during previous generations resulted from a lack of governmental controls. However, time has changed and there are government controls. Some reasons for unethical practices include1.A lack of foundation in ethics2.Survival drives (bottom line thinking)3.Reliance on other institutions to convey or reinforce ethics

Reasons for Unethical Behavior (contd)

4. Balancing work and family demands

5. Poor leadership

6. Work hours and work load

7. Need to meet high targets

8. No recognition given for achievements

9. Company politics

Strategy

1.The main strategy is to develop a set of ethical

practices and codes of conduct for the employees to

follow.

A code of conducts is a statement of ethical practices or

guidelines to which an enterprise adheres.

These codes cover many areas ranging from how to use

corporate asset, conflict of interest, use of inside

information, equal employment practices, falsification of

books or records.

2.Another strategy is to teach ethics in business

schools

How Businesses Can Improve Ethical Standards

There are certain actions a company can take to help its employees maintain ethical standards. A business can encourage employees to adhere to a company’s code of ethics by engaging in the following actions.a)Review the relevant laws and regulations pertaining to the business.b)Review which values produce highly ethical and successful people or productsc)Compose a code of ethics for the business. Within the code, attempt to associate two example behaviors with each valued)Identify the top five to ten ethical values that are high priorities within the organization.

How Businesses Can Improve Ethical Standards (contd)

e) Include wording that indicates all employees are expected to conform to the values stated in the code of ethics.

f) Make sure there are no double standards and that management sets a good example by following the same code of conduct the employees must follow.

g) Codes of conduct are an important first step – begin today by putting business values on paper, then begin to live by them.

ConclusionEthical business standards could be strengthened if companies uphold a code of ethics on a day-to-day basis.

Business ethics that are modeled by CEOs, management, and employees can help a company remain profitable and stable and avoid corporate scandals.

Although embracing ethical behavior does not guarantee success, good ethics combined with business competence is still a winning combination.

SOCIAL RESPONSIBILITY

The firm has certain obligations to society. Some areas where the firm owes obligations include:1.Environment2.Energy3.Fair business practices4.Human resources5.Community Involvement6.Products

The Future of Entrepreneurship

Entrepreneurship is about risk-taking, creativity, independence and rewards.

These are and will continue to be the driving force behind the notion of entrepreneurship in the future.

The Future of Entrepreneurship (contd)

The future of entrepreneurship appears bright; this is because the field is being given prominent recognition by:

Education institutionsGovernmentsSocietyCorporationsWhat other factors will contribute to the development of the field of entrepreneurship?