PDF Ethics and Social Responsibility Practices Among Entrepreneurs Implementing ethical business practices and contributing to local communities can enhance your company's reputation and relationships, which . The WMEC list of companies shows an average annual excess return of more than 8 percent higher than expected profitability. However, he was criticized for routinely covering stories about the companies he invested in and consulted for. If the decision deals with a change that is financially sound and beneficial, if there are an adequate number of customers that need and value the HIV product and are willing to pay that price, then that decision should be made. Papers by Kevin Andr & Anne-Claire Pache and Brett Smith et al. This startling re-buff to the rose-tinted way in which much of the media portray social entrepreneurship is an important and timely intervention. What we have found is that whatever the social entrepreneurs original motives the obstacles to be overcome, the developmental issues arising, the need for different capitals, especially financial, and the relationships engendered; all may contribute to mission drift. This obligation traces its lineage to ancient Greece and the physician Hippocrates. Previous attempts to determine causal influence between . Perrini, F. (2006). There has been a considerable gap in our understanding of ethical implications in relation to opportunity recognition, scaling social entrepreneurship, measuring social contribution and the market mechanism. More recently, Dacin et al. While the creation of social value is a necessary condition of social entrepreneurship, it is the combination of social value creation with other elements that together constitute social entrepreneurship. (2006). When Martin Shkreli decided to increase the price overnight of a lifesaving HIV drug from $13.50 to $750 per pill, the public immediately characterized his actions as unethical. Smith, Cannatelli & Kistruck develop a model of scaling social impact which suggests that the entrepreneurs desire for control, moral intensity and the organizational mode of scaling positively influence the scaling of social impact. Key Takeaways. We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all. Kickul, J., Gras, D., Bacq, S., & Griffiths, M. (2013). Indeed one might ask whether all social entrepreneurs enact such goodness? At the end of this module, the learners should be able to: 1. identify the ethical issues in entrepreneurship; 2. discuss the major ethical issues in entrepreneurship; and 3. formulate a morally defensible position on ethical issues entrepreneurship. To discuss the importance of ethics for entrepreneurs 4. OpenStax is part of Rice University, which is a 501(c)(3) nonprofit. (credit (a): modification of modification of "US Patent US381968A" by Nikola Tesla/Google Patents, Public Domain; credit (b): modification of Coke bottle patent by Unknown/Wikimedia Commons, Public Domain), (a) Published texts and artwork are granted a copyright, which will expire over time (usually a long period), as is the case with Thomas Paines seminal work. Within the process of scaling up, social entrepreneurs turn their attention to resource providers and other stakeholders, and run the risk of diluting the care offered to beneficiaries. This is something we support and have encouraged, since we think that this topic like many others suffers from somewhat of a silo mentality with research developing apace in different sub-disciplines with only limited cross-referencing and learning. There are practical, theoretical and profound philosophical reasons why deepening our understanding of social entrepreneurship is important (Chell 2007). To develop and internalize a moral compass, an entrepreneur and the members of the organization need to continually exercise and develop their ethical muscles. These ethics-based muscles include qualities such as trust, truthfulness, respect, responsibility, commitment, care, love, and justice. Ideally, you should use written contracts whenever you enter into a substantial transaction with another party. To define the term "ethics" 5. 24, 519532. Finally, they speculate as we have mentioned above that social entrepreneurs motives could be impurely altruistic. The pressure to create a new venture, within constraints and limitations, inspires entrepreneurs to find innovative ways to meet potential market demands. It is also a fundamental basis for developing and maintaining trust, which is vital to all contractual and informal commitments between businesses and all their key stakeholders. Another situation in which potential conflicts arise is in the area of professional services, which attracts many young potential business owners. The ethical dimension is specifically based on the premise that empowermenteconomic and cultural freedomis good for the women concerned. These businesses often outperform their market expectations, both in periods of market growth and decline. Arrington became the go-to source for tech enthusiasts and investors. Further how, in a capitalist system, can social enterprises be funded ethically such that the greater good and social outcomes are shown to be achieved and are achievable? Journal of World Business, Social Responsibility in Business: Meaning, Types - Investopedia Understanding social enterprise. A corollary of truthfulness is fairness, which means to be impartial, unbiased, and in compliance with rules and standards of right and wrong behavior. These foundational beliefs, in turn, prepare us for the codes of ethical behavior that serve as ideal guides for business. A conflict of interest occurs when an individual (or company) has interests in multiple areas (financial investments, work obligations, personal relationships), and the interests may conflict with each other. Smith, Cannatelli & Kistruck, in contrast, take a more conventional ethical decision-making lens to understand the influence of moral intensity in scaling social impact. Anyone you share the following link with will be able to read this content: Sorry, a shareable link is not currently available for this article. (1999). This means creating a business environment in which each member of the organization is encouraged, enabled, and supported to develop the ethical capabilities to habitually and systematically differentiate between right or wrong. Moral intensity concerns the magnitude of consequences, the degree of social agreement about the moral content of the issue, the likelihood that the issue will result in bad or good, the relative immediacy of the consequences, proximity to the consequences and the magnitude of the impact (number of people affected). When Martin Shkreli decided to increase the price overnight of a lifesaving HIV drug from $13.50 to $750 per pill, the public immediately characterized his actions as unethical. London: Sage. integrating social, environmental, ethical, consumer, and human rights concerns into their business strategy and operations. Entrepreneurship with Social Responsibility | IntechOpen Finally, there is a special category of IP known as a trade secret. CSR seeks to harmonize relationships with stakeholders, which the company identifies and implements activities that go beyond legal and ethical standards. For example, an action may be legal that we personally consider unacceptable (consider how many viewed Shkrelis legal price hike). Investigating social entrepreneurship: A multidimensional model. J Bus Ethics 133, 619625 (2016). Likewise, most businesses are likely to have some involvement with tort law: that area of law that protects the rights of people not to be harmed physically, financially, or in any other way, such as a breach of privacy. Any deliberate attempt to hide, change, or bend the truth is an unethical and irresponsible action subject to criminal investigation. Seanor, P., & Meaton, J. 67(3), 219226. Enterprising nonprofits. Social entrepreneurship in theory and practice: An introduction. This demonstrates how a socially responsible lender can quantify both financial and social impact criteria to assess an applicant according to the lenders own values whether that be impact on employment, equality, community outreach or other socially valued criteria. It is an all-too-common situation that could have serious liability consequences for an entrepreneurial business if adequate insurance is not procured. Both the business and employee need to follow these core values, so it's important to define a clear set that lasts long term. The upshot is a balanced score card which reveals the strengths and weaknesses of the application. For example, as an IT consultant, do you recommend to a client that they buy a software product, when unknown to them, you own stock in that company? Which elements illustrate acting legally but not ethically? Andre & Pache draw on the ethic of care. Imagine that upon graduation, you have the good fortune to face two entrepreneurial opportunities. Dealing fairly and ethically with our suppliers. A special issue of the Journal of Business Ethics (Pless 2012) did sterling work of bringing social enterprise into the business ethics literature, but emphasised the social enterprise side of the debate rather than the ethics. De Vries, K. (1985). As a result, in 2009, Eli Lilly was fined $1.4 billion by the office of criminal investigation of the US Department of Justice.11. Legal. On September 26, 2017, the CEO resigned, days before he was to testify before Congress about the breach. CONCLUSION The study interviewed 20 entrepreneurs in Klang Valley, pertaining to practice of ethics and social responsibility in their decision making. This is especially true for the concept of vicarious liability, which is the area of the law that imposes responsibility upon one person for the failure of another, with whom the person has a special relationship (e.g., employer and employee) to exercise reasonable care. Thus, in this Special Issue, Pascal Dey and Chris Steyaert adopt a postmodern, radical humanist, approach to ethics based on the work of Foucault. They theorise three possible courses taken by social entrepreneurs: (a) deliberate or purposive, where vision is an outgrowth of intention which precedes action; (b) vision arises from action either inadvertently where there is an aspiration but no clear pathway, and it is gradually through immersion in their work that a vision, though not necessarily a coherent vision, emerges, or (c) vision is emergent or developmental, arising through actions based on their values and beliefs to make a difference in the world, a vision gradually emerges in an evolutionary fashion. The multiple faces of social entrepreneurship: A review of definitional issues on geographical and thematic criteria. In this special issue, we want to show that both ethical and social lens should be employed to understand social enterprises. Is IP law relevant to my business, and if so, how can it help me? Download to read offline. As an entrepreneur, should Shkrelis concerns be with ensuring the sustainability of his business or with providing patients with a more affordable (less profitable) lifesaving drug? seeks to go beyond the taken-for-granted moral portrayal of social entrepreneurs which we started this article with, that is, that social entrepreneurs are ethical. To review the constant dilemma of law versus ethics 7. It is perhaps noteworthy that on the whole, they emphasise less the traditional, principle and justice based theories, and tend more towards postmodern and critical approaches. Social responsibility empowers employees to leverage the corporate resources at their disposal to do good. Doing business legally and ethically will lead a development to the country. Social entrepreneurship as an essentially contested concept: Opening a new avenue for systematic future research. (2011) have acknowledged social value creation, defined as the primary mission of social entrepreneurship, as the most promising approach to set the boundaries around the concept. Thus, CSR is accepted as an umbrella concept which embraces other elements of business-society relations (e.g. Such values often serve as the foundation for the creation of ethical codes, or codes of conduct. A copyright grants the creator of a work the exclusive right to reproduction of the work for a specified period of time (usually the life of the author plus seventy years). And a business that is committed to improving the world is likely to attract . This is changing, however, as evidenced by the array of codes of conduct and mission statements many companies have adopted over the past century. Pless, N. M. (2012). Definitions of social responsibility and related topics are contested (Lockett et al. A typology of social entrepreneurs: Motives, search processes and ethical challenges. turn to altruism, while Sandra Waddock and Erica Steckler focus on vision, values and beliefs. 3. Socially responsible companies should adopt policies . To critically examine the decisions of an individual such as Shkreli, one needs an enhanced awareness of the multitude of stakeholders to be considered, as opposed to only shareholders. Article Entrepreneurship & Regional Development, It can be said that these individuals possess a good character, are able to earn trust, and have qualities that are deemed necessary for leadership. In what ways might company contributions to a cause carry more power to impact the cause? In this regard, it begs the question posed by Waddock and Steckler of what is the vision and how did it arise. But profit cannot be the sole objective of the entrepreneur. Unlike working in a large corporate environment with an established structure, entrepreneurs often create and operate a new business venture by their own rules. (PDF) Social Entrepreneurship and Business Ethics: Does - ResearchGate From my perspective, a CSR strategy shows a company is compassionate and treats all people, including employees, well. Having filed 300 patents, Tesla is considered by many to be one of the fathers of modern electricity. Cheltenham UK, Northampton, MA, USA: Edward Elgar. Journal of Business Venturing, Ethical reasoning often is more topical and reflects the changes in consciousness that individuals and society undergo. But it is more than just consistency of character. To study ethics in a conceptual framework for a dynamic environment 6. (2014b). Bacq, S., & Janssen, F. (2011). Dec 12, 2022 OpenStax. They find that in contrast to the dominant idea that a strong entrepreneurial orientation is a source of ethical approach, they find that the reverse is true. An example of illegal competition would be the competition and patent war between Intel Corporation and American Micro Devices (AMD). Entrepreneurs should pay especially close attention to the legal implications of how patent law can affect a business. A moral compass is a state of mind where an individual has developed the needed capabilities to differentiate between right and wrong, or between just and unjust in challenging circumstances. 5.7 Ethics and Social Responsibilities of Entrepreneurs An enterprise must earn profits for its own survival, for expansion, for bearing the risks and finally for theprestige of its management. (2007). Being successful as an entrepreneur may therefore consist of much more than simply making money and growing a venture. In 2009, AMD filed a suit against Intel claiming that the company had used leveraging dominance to exclude AMD from effectively competing in the marketplace through exclusionary pricing, discounts, and similar practices. N. Ireland: Belfast. 2007), the article by Helen Haugh and Alka Talwar focuses on the importance of the constructs of empowermentin particular of womenand changing social norms to produce an innovative framework for Emancipatory Social Change. This development poses further ethical challenges on the shoulders of the social entrepreneurs. doi:10.1177/0007650314523256. Furthermore, if the mission and motives are impure then this potentially raises a number of ethical issues and questions. Corporate sustainability and responsibility - Internal Market, Industry At times, ethical conduct and legal conduct may seem intertwined; in other circumstances, they are quite different. Contracts can be formal or informal agreements. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.. are not subject to the Creative Commons license and may not be reproduced without the prior and express written The authors put forward a five-point plan to help maintain the ethic of care in the scaled-up organization and by that token avoid mission drift. Social entrepreneurship and the ethical challenges of - SlideShare ), Social entrepreneurship (Vol. (OpenStax) via source content that was edited to the style and standards of the LibreTexts platform; a detailed edit history is available upon request. Emphasizing corporate social responsibility is crucial. Without it, our society would be in chaos. If the decision to raise the price adds value and usefulness for shareholders, then that decision should be made. One whose track record gives evidence of honest business practices. Chapter Objectives 1. Important terms and concepts. INTRODUCTION. A trademark is a registration that provides the owner the ability to use a name, symbol, jingle, or character in conjunction with a specific product or service, and prevents others from using those same symbols to sell their products. 3.2: Corporate Social Responsibility and Social Entrepreneurship The paper moves beyond traditional approaches around socially responsible lending to incorporate a focus on social impact which is just as complex as the mechanisms commonly used for financial impact. How Ethical Behavior is Encouraged Good ethical conduct requires entrepreneurs to be aware of their responsibilities to employees. Think of examples for each scenario. Being a professional of integrity means consistently striving to be the best person and professional that you can be in all your interactions with others. Ethical entrepreneurs consistently strive to apply ethics-based concepts in practice, including truthfulness and full disclosure. What Is Social Responsibility and Ethics? Types and Examples The entrepreneur should do business without affecting the society. Business and Society, One example of a firm that has repeatedly run into several serious, embarrassing, and costly legal issues is Eli Lilly. The issues have tended to highlight relationships, at individual-level, within the enterprise and with the community. Further, we find that a range of conceptual lenses and methodological approaches is valuable as the social entrepreneurship field matures. Our special issue ends by coming back to a broad view of an element of the social entrepreneurs life and the literature and media buzz around social entrepreneurship: the much-maligned concept of vision.