Ethics

• Responsibility


  Duty or obligation to satisfactorily perform or complete a task that one must fulfill and which has a consequent penalty for failure
• Accountability


  Obligation to account for its activities, accept responsibility for them, & to disclose the results in a transparent manner
• Responsibility


  Can be shared
• Accountability


  Cannot be shared
• Responsibility


  Does not necessarily owe an explanation
• Accountability


  Owes an explanation
• Social responsibilities & accountabilities of entrepreneurs
• 8 basic rights of customers


  • Right to basic needs
  • Right to safety
  • Right to information
  • Right to choose
  • Right to representation
  • Right to redress
  • Right to education
  • Right to healthy environment
• Responsibilities of business towards employees


  • Training
  • Promotion
  • Proper selection
  • Fair wages
  • Safety
  • Health
  • Worker's education
  • Comfortable working conditions
  • Participation management
• Due process

  Employee's right to be heard before a decision for termination is made
• Responsibilities of business towards government


  • Observe laws, rules, and regulation
  • Pay taxes
  • Follow environmental regulations
  • Abide by the labor laws
  • Avoid restrictive trade practices
  • Disclose financial statements
  • Avoid corruption
  • Assist in implementing socio-economic policies
  • Help earn foreign exchange
  • Advise the government
  • Complete promptly government contracts
  • Contribute to government treasury
  • Contribute to political stability
• Taxation


  Orderly & compulsory manner of raising money to finance government projects for better delivery of services to the people
• Responsibilities of business towards creditors


  • Give correct information
  • Provide fair return of investment (ROI)
  • Strengthen share prices
  • Honor fiduciary duties
• Responsibilities of business towards suppliers


  • Practice fair pricing and licensing
  • Avoid coercion and litigation
  • Maintain stability
  • Maintain confidentiality
  • Pay on time
  • Select suppliers with discernment
• 3 fundamental requirements for suppliers: legal compliance, quality control, environmental conservation
• Bribery


  Giving of gifts/favors to influence decision
• Responsibilities of business towards consumers


  • Ensure quality of products and services
  • Ensure consumer's health and safety
  • Provide easy-to-use products
  • Provide free training
  • Be fair with prices
  • Be honest in advertising and marketing
  • Be honest in dealings
  • Attend to complaints
  • Service even after sales
  • Respect customers' time
  • Treat customers well
  • Ensure regular supply
  • Research and develop to increase customer satisfaction
  • Avoid monopolistic competition
• Responsibilities of business towards the general public


  • Be fiscally responsible
  • Consider public input
  • Take care of the community
• Responsibilities of business towards the environment


  • Comply with environmental legislation
  • Dispose waste properly
  • Recycle
  • Conserve and protect biodiversity
  • Prevent and remedy damages to environment
  • Report and incident
  • Use scarce natural resources sparingly
• Ethical issue


  Situation or problem when there is a conflict with society's moral principles
• Ethical dilemma


  Arises when a conflict or situation & a difficult choice has to be made between what is morally right or wrong
• Major ethical issues in entrepreneurship


  • Basic fairness
  • Personnel & customer relations
  • Distribution dilemmas
  • Fraud
  • Unfair competition
  • Unfair communication
  • Non-respect of agreements
  • Environmental degradation
• Corporate social responsibility (CSR) is a broad concept understood & implemented differently by each firm

  
• The underlying idea of CSR is to operate in an economically, socially, & environmentally sustainable manner
• There are different models & frameworks of social responsibility
• Unethical business practices


  • Predatory pricing
  • Exclusive dealing
  • Dividing territories
  • Unfair communication
  • Non-respect of agreements
  • Environmental degradation
• Predatory pricing


  Deliberately setting prices low to drive competitors out of the market
• Exclusive dealing


  Requiring a customer to deal only with one supplier
• Dividing territories


  Two companies agreed to stay out of each other's way to reduce competition in agreed-upon territories
• Unfair communication


  • Spreading rumors
  • Discussing customer's financial or personal information with someone outside the company
  • Relaying information given in confidence
• Non-respect of agreements


  Breach of contract - a legally binding agreement is violated by one or more parties in the contract by non-performance or interference with other's performance
• Environmental degradation


  Deterioration of the environment through depletion of resources, destruction of ecosystems, and extinction of wildlife
• Corporate Social Responsibility (CSR) is a broad concept understood and implemented differently by each firm

  
• The underlying idea of CSR is to operate in an economically, socially, and environmentally sustainable manner
• Different models and frameworks of social responsibility give a view of how businesses adopt and are perceived by each model
• Economic responsibility


  Improving the firm's business operations while participating in sustainable practices (e.g. using new manufacturing processes to minimize wastage)
• Legal responsibility


  Businesses are entities that follow laws and rules, and have a responsibility to operate within the boundaries set by commissions and agencies at every government level
• Ethical responsibility


  Behavior of a firm expected by society but not codified in law, such as being environmentally friendly and aware of how their activities affect the environment
• Philanthropic responsibility


  Businesses should support and improve society through activities such as donating funds or goods and services, funding educational programs, supporting health initiatives, donating to causes, and supporting community beautification projects
• Carroll's Pyramid CSR Model


  • One of the leading CSR models, formally known as the model of Carroll's four-part pyramid, with a major focus on embracing the complete spectrum of expectations that society has from businesses