Ethics

THE ETHICAL AND SOCIAL RESPONSIBILITIES OF THE ENTREPRENEUR

ETHICS - study of moral obligation involving the distinction between right and wrong.

BUSINESS ETHICS - The rules how entrepreneurs ought to behave.

The ethical behavior required of entrepreneurs is determined by the following:

1. the public

2. interest groups;

3. business organizations; and

4. the individual's personal morals and values

Factors Influencing Ethical Behavior

1. the situation;

2. reward system;

3. individual differences; and

4. other factors

How Ethical Behavior Is Encouraged

1. Adaption of code ethics

Code of ethics –formal document indicating the entrepreneurship's adapted

principles of appropriate behavior

-It serves as a basic reference for employees who make big or small decisions.

A code of ethics can be made effective if the following requirements are met:

• It should refer to specific unethical practice

• It must be supported by top management

2. Institution of rewards and punishments concerning ethical behavior

Forms of Punishment: Forms of rewards:

-dismissal -cash gifts

-demotion -promotion

-suspension -citation

-reprimand

3. Adaption of internal programs for resolving conflict

4. Creation of ethics re view committees

It is usually composed of company employees as well as some who are not employed by the company. These persons have undergone special training in ethics.

5. Provision of training in ethics for employees

Company personnel who are exposed to activities that are ethically charged must be provided with sufficient training in ethics.

Ethics training is more appropriate for persons occupying sensitive

positions in purchasing, waste disposal, personnel,

research and development, sales, and manufacturing.

6. Top management support

When unethical conduct is committed and no sanction is imposed by top management it can be expected that more violations of good ethics will be made.

Ethical Issues Facing Entrepreneurships

1. Relations with Customers

Entrepreneurs are expected by society to treat their customers fairly and not to act that will be harmful to them. Entrepreneur should provide support for consumer rights