Ch# 4 - Chapter 4 Social Entrepreneurship Ethics 41 42 Social Entrepreneurs Social Entrepreneur A person or small group of individuals who founds and\/or

Ch# 4 - Chapter 4 Social Entrepreneurship Ethics 41 42...

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Unformatted text preview: Chapter 4 Social Entrepreneurship & Ethics 4–1 4–2 Social Entrepreneurs • Social Entrepreneur A person or small group of individuals who founds and/or leads an organization or initiative engaged in social entrepreneurship. Also referred to as “public entrepreneurs,” “civic entrepreneurs,” or “social innovators. 4–3 The Social Entrepreneurship Movement • Social Entrepreneurship A new form of entrepreneurship applies to social problem solving, private-sector entrepreneurship’s focus on innovation, risk-taking, and large scale transformation. • Social Entrepreneurship Process Recognition of a perceived social opportunity Translation of the social opportunity into an enterprise concept Identification and acquisition of resources required to execute the enterprise’s goals. 4–4 4–5 Social Entrepreneurs • Characteristics of Social Entrepreneurs as Change Agents Adoption of a mission to create and sustain social value (beyond personal value) Recognition and persistent recreation of opportunities for social value Engagement in continuous innovation and learning Action beyond the limited resources at hand sharp sense of accountability 4–6 The Social Enterprise Challenge • Social Obligation Firms that simply react to social issues through obedience to the laws. • Social Responsibility Firm that respond more actively to social issues; accepting responsibility for various programs. • Social Responsiveness Firms that are highly proactive and are even willing to be evaluated by the public for various activities. 4–7 What Is the Nature of Social Enterprise? Environment Pollution control Restoration or protection of environment Conservation of natural resources Recycling efforts Energy Conservation of energy in production and marketing operations Efforts to increase the energy efficiency of products Other energy-saving programs (for example, company-sponsored car pools) Fair Business Practices Employment and advancement of women and minorities Employment and advancement of disadvantaged individuals (disabled, Vietnam veterans, exoffenders, former drug addicts, mentally retarded, and hardcore unemployed) Support for minority-owned businesses Human Resources Promotion of employee health and safety Employee training and development Remedial education programs for disadvantaged employees Alcohol and drug counseling programs Career counseling Child day-care facilities for working parents Employee physical fitness and stress management programs Community Involvement Donations of cash, products, services, or employee time Sponsorship of public health projects Support of education and the arts Support of community recreation programs Cooperation in community projects (recycling centers, disaster assistance, and urban renewal) Products Enhancement of product safety Sponsorship of product safety education programs Reduction of polluting potential of products Improvement in nutritional value of products Improvement in packaging and labeling 4–8 Classifying Social Enterprise Behavior DIMENSION OF BEHAVIOR STAGE ONE: SOCIAL OBLIGATION STAGE TWO: SOCIAL RESPONSIBILITY STAGE THREE: SOCIAL RESPONSIVENESS Response to social pressures Maintains low public profile, but if attacked, uses PR methods to upgrade its public image; denies any deficiencies; blames public dissatisfaction on ignorance or failure to understand corporate functions; discloses information only where legally required Accepts responsibility for solving current problems; will admit deficiencies in former practices and attempt to persuade public that its current practices meet social norms; attitude toward critics conciliatory; freer information disclosures than stage one Willingly discusses activities with outside groups; makes information freely available to the public; accepts formal and informal inputs from outside groups in decision making; is willing to be publicly evaluated for its various activities Philanthropy Contributes only when direct benefit to it clearly shown; otherwise, views contributions as responsibility of individual employees Contributes to noncontroversial and established causes; matches employee contributions Activities of stage two, plus support and contributions to new, controversial groups whose needs it sees as unfulfilled and increasingly important 4–9 Environmental Awareness • Ecovision A leadership style that encourages open and flexible structures that encompass the employees, the organization, and the environment, with attention to evolving social demands. 4–10 Environmental Awareness • Key Steps in an Environmental Strategy 1. Eliminate the concept of waste. 2. Restore accountability. 3. Make prices reflect costs. 4. Promote diversity. 5. Make conservation profitable. 6. Insist on accountability of nations. 4–11 The Ethical Side of Entrepreneurship • Why are ethics important for Entrepreneurs? • What exactly represents right or wrong conduct? • How do we develop our own codes of conduct? • What impact does integrity and ethical conduct have on creating a successful venture? 4–12 Defining Ethics • Ethics A set of principles prescribing a behavioral code that explains what is good and right or bad and wrong; ethics may outline moral duty and obligations. Provide the basic rules or parameters for conducting any activity in an “acceptable” manner. • Reasons for Ethical Conflicts The many interests that confront business enterprises both inside and outside the organization Changes in values and societal norms Reliance on fixed ethical principles rather than an ethical process 4–13 Classifying Decisions Using a Conceptual Framework 4–14 Ethics and Laws • Managerial Rationalizations Justifications in defense of unethical acts are believing that an activity: 1. Is not “really” illegal or immoral. 2. Is in the individual’s or the corporation’s best interest. 3. Will never be found out. 4. That helps the company will be condoned (over look, forgive). 4–15 Types of Morally Questionable Acts Type Direct Effect Examples Nonrole Against the firm Expense account cheating Embezzlement(fraudulent conversion) Stealing supplies Role failure Against the firm Superficial performance appraisal Not confronting expense account cheating Palming off a poor performer with inflated praise Role distortion For the firm Bribery Price fixing Manipulating suppliers Role assertion For the firm Investing in South Africa Using nuclear technology for energy generation Not withdrawing product line in face of initial allegations of inadequate safety 4–16 Overlap between Moral Standards and Legal Requirements 4–17 Reasons for Unethical Behavior • Greed • Distinctions between activities at work and activities at home • A lack of a foundation in ethics • Survival (bottom-line thinking) • Reliance on other social institutions to convey and reinforce ethics. 4–18 Avoiding Another Enron Disaster 1. Bring hidden liabilities back onto the balance 2. 3. 4. 5. sheet. Highlight the things that matter. List the risks and assumptions built into the numbers. Standardize operating income Provide aid in figuring free-cash flow 4–19 Approaches to Managerial Ethics Organizational Characteristics Immoral Management Amoral Management Moral Management Ethical norms Managerial decisions, actions, and behavior imply a positive and active opposition to what is moral (ethical). Decisions are discordant with accepted ethical principles. An active negation of what is moral is implied. Management is neither moral nor immoral, but decisions lie outside the sphere to which moral judgments apply. Managerial activity is outside or beyond the moral order of a particular code. A lack of ethical perception and moral awareness may be implied. Managerial activity conforms to a standard of ethical, or right, behavior. Managers conform to accepted professional standards of conduct. Ethical leadership is commonplace on the part of management. Motives Selfish: Management cares only about its or the company’s gains. Well-intentioned but selfish: The impact on others is not considered. Good: Management wants to succeed but only within the confines of sound ethical precepts (fairness, justice, due process). Goals Profitability and organizational success at any price. Profitability; other goals not considered. Profitability within the confines of legal obedience and ethical standards. Orientation toward law Legal standards are barriers management must overcome to accomplish what it wants. Law is the ethical guide, preferably the letter of the law. The central question is what managers can do legally. Obedience is toward the letter and spirit of the law. Law is a minimal ethical behavior. Managers prefer to operate well above what the law mandates. Strategy Exploit opportunities for corporate gain. Cut corners when it appears useful. Give managers free rein. Personal ethics may apply but only if managers choose. Respond to legal mandates if caught and required to do so. Live by sound ethical standards. Assume leadership position when ethical dilemmas arise. Enlightened self-interest prevails. 4–20 A Holistic Approach • Principle 1: Hire the right people • Principle 2: Set standards more than rules • Principle 3: Don’t let yourself get isolated • Principle 4: The most important principle is to let your ethical example at all times be absolutely impeccable (perfect) 4–21 Shaping an Ethical Strategy • The entrepreneur’s guiding values and commitments must make sense and be clearly communicated. • Entrepreneurs must be personally committed, credible, and willing to take action on the values they espouse. • The espoused values must be integrated into the normal channels of the organization’s critical activities. • The venture’s systems and structures must support and reinforce its values. • Employees throughout the company must have the decision-making skills, knowledge, and competencies needed to make ethically sound decisions every day. 4–22 Ethical Responsibility Ethical Ethical Consciousness Consciousness Ethical EthicalProcess Process and andStructure Structure Ethical Ethical Responsibility Responsibility Institutionalization Institutionalization 4–23 Four Main Themes of Ethical Dilemmas for Entrepreneurs 4–24 Questioning the Ethics of Business Decisions 1. Have you defined the problem accurately? 2. How would you define the problem if you stood on the other side of the fence? 3. How did this situation occur in the first place? 4. To whom and to what is your loyalty as a person and as a corporation member? 5. What is your intention in making this decision? 6. How does this intention compare with the probable results? 7. Whom could your decision or action injure? 8. Can you discuss the problem with the affected parties before making your decision? 9. Are you confident your position will be as valid over the long-term as it seems now? 10. Could you disclose without qualms(sickly feeling) your decision or action to your boss, your CEO, the board of directors, your family, and society as a whole? 11. What is the symbolic potential of your action if understood? If misunderstood? 12. Under what conditions would you allow exceptions to your stand? 4–25 Ethical Leadership by Entrepreneurs • The Opportunity for Ethical Leadership by Entrepreneurs An owner has the unique opportunity to display honesty, integrity, and ethics in all key decisions. The owner’s actions serve as a model for other employees to follow. An owner’s value system is a critical component of the ethical considerations that surround a business decision 4–26 Ethical Considerations in Corporate Entrepreneurship 4–27 ...
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