ETHICAL ISSUES AND SOCIAL RESPONSIBILITY OF ENTREPRENEURS

ROSELINE LUBULELLAH STRATHMORE UNIVERSITY

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

ETHICAL ISSUES
Ethical decision making is a challenge that confronts every business person involved in large or small enterprises. Recent scandals : Anglo-leasing Goldenberg Nyaga Stock brokers/Francis Thuo Stockbrokers Enron, Citicorp, and other several large companies Such scandals have made consumers concerned about the ethical standards that

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

Theft Falsification Bribery Embezzlement Stealing supplies

Manipulating suppliers
Failure 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 include 1. A lack of foundation in ethics 2. Survival drives (bottom line thinking) 3. Reliance on other institutions to convey or reinforce ethics

Reasons for Unethical Behavior (contd)

4. 5. 6. 7. 8. 9.

Balancing work and family demands Poor leadership Work hours and work load Need to meet high targets No recognition given for achievements 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.

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 companys 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 products c) Compose a code of ethics for the business. Within the code, attempt to associate two example behaviors with each value d) 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.

Conclusion
Ethical 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. Environment 2. Energy 3. Fair business practices 4. Human resources 5. Community Involvement 6. 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 institutions Governments Society Corporations What other factors will contribute to the

development of the field of entrepreneurship?