Ethical and Social Responsibilities
of the Entrepreneur
What is Business Ethics?
 Ethics is the study of moral obligation involving the
distinction between right and wrong. As a
consequence, the study of ethics paved the way for
the adaption of the general rules of conduct in
society.
What is Business Ethics?
 The rules about how entrepreneurs ought to behave
are referred to as business ethics. The ethical
behavior required of entrepreneurs is determined by
the following:
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The public;
Interest groups (i.e. Philippine Animal Welfare Society)
Business organizations; and the individual’s personal morals
and values.
What is Business Ethics?
 Adherence to ethical standards contributes to the
smooth flow of business exchanges. It establishes
trust between buyers and sellers and between
lenders and borrowers.
Laws and regulations requiring ethical behavior
 Product safety and quality
 Fair employment practices
 Fair marketing and selling practices
 Use of confidential information for personal gain
 Community involvement
 Bribery
 Illegal payments to foreign governments to obtain
business
Factors Influencing Ethical Behavior
 Situational Context
 Ethics intensity or issue intensity indicates the degree to which
a situation is recognized to pose ethical challenges.
 The Person
 Ethical framework is a personal rule or strategy for making
ethical decisions.
 Family Influences
 Sometimes the way a person is nurtured also affects his or her
state of mind towards the community. When a child is brought
up in a very hostile way towards society he or she will find it
very difficult to behave positively ethical in that society.
Factors Influencing Ethical Behavior
 Internal environment and the organization
 Supervisory behavior, peer group norms and behavior, and
policy statements and written rules.
 External environment
 Government laws and regulations, societal norms and values,
and competitive climate in an industry.
 The norms of the community
 The rules of a community usually controls how one should
behave in a community in order to fit appropriately within the
community.
 Reward system
How Ethical Behavior is Encouraged
 Adaption of a code of ethics
 Institution of rewards and punishments concerning
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ethical behavior
Adaption of internal programs for resolving conflicts
Creation of ethics review committees
Provision of training in ethics for employees
Top management support
Ethical Issues Facing Entrepreneurs
 Between the company and the customers
 Between the company and its personnel and
employees
 Between the company and its business associates
 Between the company and the investors and the
financial community