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Small Business Management Launching and Growing Entrepreneurial Ventures, 15th Edition by Justin G

Small Business Management Launching and Growing Entrepreneurial Ventures, 15th Edition by Justin G

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Chapter 2 Entrepreneurial Integrity and Ethics CHAPTER OUTLINE Spotlight: Joseph’s Lite Cookies (http://www.josephslitecookies.com) 1 Integrity and Entrepreneurship Define integrity and understand its importance to small businesses What Is Integrity? An uncompromising adherence to the lofty values, beliefs, and principles that an individual claims to hold Acting with integrity means considering the welfare of others 2 Integrity and the Interests of Major Stakeholders Explain how integrity applies to various stakeholder groups, including owners, customers, employees, the community, and the government. Ethical Issues Questions of right and wrong Category One – related to customers and competitors Category Two – the way a company treats its employees Category Three – obligations of employees to their employers Stakeholders – those who either can affect or are affected by the performance of the company (see Exhibit 2-2_ Difficult Ethical Issues Facing Small Firms – Exhibit 2-1 Promoting the Owners’ Interests Business owners have an obligation to make choices that protect the financial investment that others have in the company Caring about Customers Customers are the most important stakeholder groups – without customers there is no business Valuing Employees Fairness, honesty and impartiality inherent in decisions and practices Fairness works both ways – FBI statistics indicate employees who steal supplies, merchandise, tools, or equipment from work may cost employers as much as $150 billion each year (figure doesn’t include embezzlement) Social Responsibility and Small Business Social Responsibilities – A company’s ethical obligations to the community Contribution starts with creating jobs and adding to local tax revenues causing goodwill in the community Examples of Citizenship in the community (see page 39-40 in text) Varying Views on Social Responsibility - Survival of small businesses may cause social responsibility to be looked at as a luxury they cannot afford – however the owners often spend their own money rather than corporate funds Governmental Laws and Regulations Entrepreneurs must comply with government laws and regulations 1
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Chapter 2 Entrepreneurial Integrity and Ethics Unethical behavior includes fraudulent reporting of income and expenses for income tax purposes Skimming Tax evasion Casual accounting systems 3 The Challenges and Benefits of Acting with Integrity Identify challenges to integrity that arise in small businesses and explain the benefits of integrity to small firms. The Vulnerability of Small Companies Small, privately held firms may face greater pressures to act unethically and to rationalize situations and actions Most entrepreneurs exercise great integrity, but some are vulnerable when ethical issues directly affect profits The Integrity Edge Price of integrity high, potential payoff incalculable
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