Notes- Ethics and Social Responsibility of Entrepreneurs

Ethics and Social Responsibility of Entrepreneurs

Business Ethics: A Brief Definition

Ethics is the branch of philosophy concerned with the meaning of all aspects
of human behavior. Theoretical ethics, sometimes called normative ethics, is
about discovering and delineating right from wrong. It is the consideration of
how we develop the rules and principles (norms) by which to judge and guide
meaningful decision-making. Theoretical ethics is supremely intellectual in
character, and, being a branch of philosophy, is also rational in nature.
Theoretical ethics is the rational reflection on what is right, what is wrong,
what is just, what is unjust, what is good, and what is bad in terms of human
behavior. How we see 'ethical behavior' - in terms of what is right and wrong
- is guided by these definitions.

Business ethics (also corporate ethics) is a form of applied ethics or

professional ethics that examines ethical principles and moral or ethical
problems that arise in a business environment. It applies to all aspects of
business conduct and is relevant to the conduct of individuals and entire
organizations.

Business ethics can be defined as written and unwritten codes of principles

and values that govern decisions and actions within a company. In the
business world, the organizations culture sets standards for determining the
difference between good and bad decision making and behavior. In the most
basic terms, a definition for business ethics boils down to knowing the
difference between right and wrong and choosing to do what is right. The
phrase 'business ethics' can be used to describe the actions of individuals
within an organization, as well as the organization as a whole.

There are three parts to the discipline of business ethics: personal,

professional, and corporate. All three are intricately related. It is helpful to
distinguish between them because each rests on slightly different
assumptions and requires a slightly different focus in order to be understood.
We are looking at business ethics through a trifocal lens: close up and
personal, intermediate and professional, and on the grand scale (utilizing
both farsighted and peripheral vision) of the corporation. In spite of some
recent bad press, business executives are first and foremost human beings.
Like all persons, they seek meaning for their lives through relationships and
enterprise, and they want their lives to amount to something. Since ethics is
chiefly the discipline of meaning, the business executive, like all other human
beings, is engaged in this discipline all the time, whether cognizant of it or
not.
Social responsibility: A Brief Note
Social responsibility is an ethical ideology or theory that an entity, be it an
organization or individual, has an obligation to act to benefit society at large.
Social responsibility is a duty every individual or organization has to perform
so as to maintain a balance between the economy and the ecosystem. A
trade-off always exists between economic development, in the material
sense, and the welfare of society and the environment. Social responsibility
means sustaining the equilibrium between the two. It pertains not only to
business organizations but also to anyone whose action impacts the
environment. This responsibility can be passive, by avoiding engaging in
socially harmful acts, or active, by performing activities that directly advance
social goals. This shows the various ways that companies can invest in being
socially responsible and the value those actions can bring to the company.

A report suggests that social responsibility is a way of conducting business

through balancing the long-term objectives, decision-making, and behavior
of a company with the values, norms, and expectations of society. Social
responsibility can be a normative principle and a soft law principle engaged
in promoting universal ethical standards in relationship to private and public
corporations.

Companies can demonstrate social responsibility in a myriad of ways. They

can donate funds to education, arts and culture, underprivileged children,
animal welfare, or they can make commitments to reduce their
environmental footprint, implement fair hiring practices, sponsor events, and
work only with suppliers with similar values.

Social responsibility in business is also known as corporate social

responsibility, corporate responsibility, corporate citizenship, responsible
business, sustainable responsible business, or corporate social performance.
This term refers to a form of self-regulation that is integrated into different
disciplines, such as business, politics, economy, media, and communications
studies.

Entrepreneurship v/s Ethics and social responsibility

Ethics and social responsibility are very important values in entrepreneurship

ventures. This is particularly essential in decision making process. Ethical
conscience reminds entrepreneurs to make trustworthy and profitable
entrepreneurship decisions. Likewise, the social responsibility component
sought entrepreneurs to make entrepreneurial decisions that can enhance
benefits and repelling harms to the stakeholders.

The entrepreneur must establish a balance between ethical exigencies,

economic expediency, and social responsibility. A managers attitudes
concerning corporate responsibility tend to be supportive of laws and
professional codes of ethics. Entrepreneurs have few reference persons, role
models, and developed internal ethics codes. Entrepreneurs are sensitive to
peers pressure and social norms in the community as well as pressures from
their companies.

While ethics refers to the study of whatever is right and good for humans,
business ethics concerns itself with the investigation of business practices in
light of human values. The word ethics stems from the Greek ethos,
meaning custom and usage. Development of Our Ethical Concepts Socrates,
Plato, and Aristotle provide the earliest writings dealing with ethical
conceptions; earlier writings involving moral codes can be found in both
Judaism and Hinduism.

Ethics and social responsibilities of an entrepreneur is certainly an important

issue considering the role of social responsibility in society and ethics in
business. Social responsibility is beneficial for business community and at
the same time for global community. Social responsibility is significant owing
to the realism of globalization. The people of the universe are becoming
interconnected more owing to the advancement of technology,
transportation and communication. The world market economy is affecting
not only services and goods but values and ideas as well. Expansion on the
global front, enhancing regulatory omission and the factors which is
responsible for creating awareness regarding the significance of making for
sectored, macro and operational hazards to both an organizations and
entrepreneurs competitive position and reputation. As small business
owners and entrepreneurs, activities which harm the people and the planet,
will spoil the scope for your profits. For this reason there is great significance
for triple bottom line which is profits, planet and people.

The world economy requires innovators and entrepreneurs to both advance

and sustain global community. While ethics and social responsibilities of an
entrepreneur and businesses undertake the plan and consider social
responsibility a vital event in their activities, everybody benefits. The effect
could be noticed within local communities and ultimate profit making from
their business. With the extension of cooperation for businesses,
governments and NGOs, they encourage in the matter of corporate social
responsibility and entrepreneurship and take steps to improve the
mechanism for its potential growth. Therefore, in regards ethics and social
responsibilities, an entrepreneur has to become aware about his role and
strive to obey them in perfect manner which would be beneficial to him as
well as the community as a whole

An entrepreneur is actually running his own business and being a

businessman he has some obligation of a business to meet his economic and
legal responsibilities. Social responsibility is basically a business intention,
 beyond its legal and economic obligation to do the right things and act in
ways that are good for society.

While we are talking about the business ethics, there are three things that
need consideration:

(1) Avoid breaking criminal law in ones work related activity

(2) Avoid action that may result in civil law suits against the company

(3) Avoid actions that are bad for the company image.

For example, an entrepreneur made a chemical that looks like a pesticide

and he started selling it like a pesticide in the market and earns the profit,
this act is against the law.

Link between Ethics and Social Responsibility

You will probably note the link between business ethics and corporate social
responsibility (CSR). The two concepts are closely linked:

A socially responsible firm should be an ethical firm

An ethical firm should be socially responsible

However there is also a distinction between the two:

CSR is about responsibility to all stakeholders and not just shareholders

Ethics is about morally correct behavior

How do businesses ensure that its directors, managers and employees act
ethically?

A common approach is to implement a code of practice. Ethical codes are

increasingly popular particularly with larger businesses and cover areas
such as:

* Corporate social responsibility

* Dealings with customers and supply chain
* Environmental policy & actions
* Rules for personal and corporate integrity