chapter 2: entrepreneurial ethics

what does the word ethics come from?

the greek word ethos, meaning custom or mode of conduct

what does greek philosopher Chilon say about ethics

a merchant does better to take a loss than to make a dishonest profit

ethics

the basic rules or parameters for conducting any activity in an “acceptable” manner

the four rationalizations:

• the activity is not “really” illegal 

• it’s in the corporation’s best interest

• it will never be found out 

• because it helps the company, the company will condone it 

non-role

go against the firm with acts of stealing

role failure

go against the firm by not providing the managerial role they are suppose to 

role distortion

the behavior of individuals who think they are acting in the best interests of the firm

role assertion

the behavior of individuals who assert their roles beyond what they should be, thinking (falsely) that they are helping the firm

what is the first thing that ethics researcher LeRue T. Hosmer reached regarding the relationship between legal requirements and moral judgement?

the requirements of law may overlap at times but do not duplicate the moral standards of society. Some laws have no moral content whatsoever (e.g., driving on the right side of the road), some laws are morally unjust (e.g., racial segregation laws, which were in effect in the United States into the 1960s and 1970s), and some moral standards have no legal basis (e.g., telling a lie).

what is the second thing that ethics researcher LeRue T. Hosmer reached regarding the relationship between legal requirements and moral judgement?

legal requirements tend to be negative (forbidding acts), whereas morality tends to be positive (encouraging acts)

what is the third thing that ethics researcher LeRue T. Hosmer reached regarding the relationship between legal requirements and moral judgement?

legal requirements usually lag behind the acceptable moral standards of society

why does unethical behavior take place in businesses?

• greed

• distinctions between activities at work and activities at home

• a lack of foundation in ethics

• survival (bottom line thinking)

• a reliance on other social institutions to convey and reinforce ethics

complexities of business decisions (bullet points)

• ethical decisions have extended consequences 

• business decisions that involve ethical question have multiple alternatives 

• ethical business decisions often have mixed outcomes

• most business decisions have uncertain ethical consequences 

• most ethical business decisions have personal implications 

code of conduct

a statement of ethical practices or guidelines to which an enterprise adheres

what is true about code of conducts and modern times?

• codes of conduct are being come more prevalent in industry 

• the recent ones are proving to be more meaningful in terms of external legal and social development 

ethical consciousness

the responsibility of the entrepreneur, because the entrepreneur’s vision created the venture

ethical process and structure

refer to the procedures, position statements, and announced ethical goals designed to avoid ambiguity

institutionalization

a deliberate step to incorporate the entrepreneur’s ethical objective with the economic objectives of the venture