Ethics Case Final

8/7/2019 Ethics Case Final

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Table of Contents

Code of Ethics .........................................................................................................2

y A Code of Ethics isy A Code of ethics is NOTy What Belongs in Code of Ethics

Benchmark .............................................................................................................4

Ethics and Entrepreneurs .......................................................................................6

y The Importance of Ethicsy Laboury Customery Environment

Business Ethics for Entrepreneurs..........................................................................8

Non Entrepreneurs and Ethical Decisions ............................................................10

Other Considerations ...........................................................................................12

Entrepreneurs and Social Welfare ......................................................................13

Macroeconomic Development.............................................................................14

Implementation ...................................................................................................15

References............................................................................................................17


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Code of Ethics

A code of ethics is a set of guidelines which are designed to set out acceptable behaviors for

members of a particular group, association, or profession. Many organizations govern themselves

with a code of ethics, especially when they handle sensitive issues like investments, health care,

or interactions with other cultures. In addition to setting a professional standard, a code of ethics

can also increase confidence in an organization by showing outsiders that members of the

organization are committed to following basic ethical guidelines in the course of doing their

work.

A Code of Ethics is:

y A statement of the values adopted by the company, its employees and its directors. It setsthe official "tone at the top" regarding expected behavior.

y A living document that can be disseminated to consumers, the media, and others, such asby being placed on the co-op's web site.

y Part of a broader, on-going program to provide guidance for ethical decision-making andto prevent misconduct. This broader program must be actively managed and should

include periodic training for employees and directors, monitoring of compliance, and

regular reports to the board.

y A valuable communication tool that the cooperative can use to articulate its commitmentto ethical and legal compliance.

A Code of Ethics is NOT:

y The same as a Mission Statement. A Mission Statement is usually brief (under one pagein length) and expresses why the company exists, in contrast, a Code of Ethics is a longer

document (approximately 3-10 pages) intended to serve as a guide for day-to-day

decision making. Rather than stating why the company exists, it guides employees and

directors on how to act in certain situations.

y A detailed statement of how personnel issues will be handled. Co-ops usually have anEmployee Handbook or similar document that addresses such issues as discrimination,

sexual harassment, and employee discipline. The Code of Ethics references the Employee

Handbook.

y A board policy. Boards have policies that address specific issues such as conflict ofinterest or standards of conduct for directors. Those policies are important and should be

maintained. The Code of Ethics is a broader "umbrella" statement that applies to the


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entire company. The Code may make reference to specific board policies that provide

additional details.

y Complete or exhaustive. It provides guidance to employees and directors for carrying outtheir responsibilities. But no document can address every possible situation. The Code

should specify that employees and directors must use good judgment and be prepared to

raise questions when in doubt.

WHAT BELONGS IN A CODE OF ETHICS?

There are many approaches and formats. There is no "one size fits all." Deciding what goes into

the code will first take an examination of what key purposes you want your code to serve--

whether you want it to focus on specific types of individual conduct or more general standards--

and how the code will operate with existing policies for staff and board members. You'll also

need to determine who will be involved in drafting the code. One approach to consider is to form

an "ethics task force" or committee that includes key staff representatives. Not only does such a

process help to ensure a thorough document, it also helps to make the code meaningful for

employees.

Although there is no "one size" for codes of ethics, we can report on the consensus opinion of

approximately 200 cooperative directors, managers and attorneys who attended recent

workshops on Ethics and Governance. They emphasized the following guidelines to keep in

mind when developing a code:

y It should be positive.y It should be brief.y It should make reference to relevant board policies and other documents.y It should be "aspirational" in tone rather than compliance oriented.y It should help reinforce the fact that as cooperatives, we are different.


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Benchmark

The entrepreneur faces many potentially ethically challenging decisions on a day-to-day basis,

and its always a good idea to have a protocol in place from which to make those decisions. That

protocol is like a fail-safe something to rely on when an ethically challenging situation is

difficult to work through. Think of the framework as a guideline that seeks to impede unethical

behaviors in the pursuit of entrepreneurial activities. This framework can help entrepreneurs

become conscious of the wide-ranging impact that their decisions can have and envisioning the

ethical dimension can clarify the impact on cost, revenue, and profit margin.

Step 1

Recognize that a dilemma exists, and has a potential long-term impact. Systematically recognize

as many ethical dimensions of the dilemma as possible. Before you make an informed decision,

you must understand that the dilemma exists, and try to determine the various angles of approachfor problem solving. Once you define the specific ethical issues involved in a dilemma, you can

determine what elements of your business will be affected by the decision. Too often business

owners fail to adequately assess the long-term impact of ethics based decisions.

Step 2

Identify your key stakeholders and determine how they will be affected by the decision.

Sometimes the stakeholders values are not in line with the values of the entrepreneur or the

business as a whole. They can make conflicting demands, forcing the entrepreneur to play King

Solomon, having to chose which groups to satisfy, and which groups will have their demands put

off, temporarily or permanently. Sort out the conflicting interests of the stakeholders, and triage

their demands. Which demands are the most important to attend to immediately? Which

demands are crucial to the functioning of the business? The determination of who is most

important in the equation will not resolve conflict, but it will help the entrepreneur continue to

function, and can help the business owner determine all the groups that are to be affected by

major decisions.

Step 3

Understand all alternative choices. Separate those choices in terms of their ethical viability.

Some of those choices wont be very ethical, and some wont even be legal but its importantto lay everything out on the table to make an informed decision. Evaluate the positive and

negative consequences associated with each choice and consider the following questions:

Does this decision meet my personal ethical standards and moral values?

What are my true motives?

Can I sleep at night if I make this decision?

Would I agree with someone else if they made this decision?


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Do we have a rule or policy regarding this contingency? Should we?

Does this decision affect the rights or dignity of others my stakeholders, managers, employees,

or customers?

Do I have to deceive anyone to make this choice?

Would this choice distribute both benefits and burdens equally?

What are the short- and long-term consequences of this decision? Include both benefits and

drawbacks.

Would I be comfortable if this decision became public knowledge?

Can I explain my actions simply?

Have I covered all my bases and understood my range of options? Have I considered all points of

view?

What does my gut say?

Step 4

Choose the best option and implement it dont vacillate, be confident in your choice. At this point there will likely be a lot of options regarding this decision. The final choice should be

consistent with the companys procedural ethical code, as well as with the individual decision

maker(s) values. Making ethically sound decisions is no easy task, nor should it be. The options

should be considered with the gravity that they are due. The more people are affected by a

decision, the more important it becomes to make that decision from an ethically informed

standpoint.


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Ethics and Entrepreneurs

Being a good entrepreneur takes more than a creative idea and a superior work ethic. It also

requires understanding the importance of ethical business practices, giving back to your

community and running your business in a way that minimizes harm to others and the

environment.

The Importance of Ethics

Some business people get caught up in moneymaking and lose sight of the importance of

doing the right thing. Companies like Enron and individuals like Bernard Madoff are two of

the more spectacular "crash and burn" stories that represent where this train of thought can

take you. Engaging in business with the intention of ripping people off or seeing what you

can get away with creates a business environment of distrust and hostility. When you take onbusiness with an attitude of service and the intention of making a living by providing your

community with needed goods and services, you add to, rather than detract from, the general

good.

Labor

How a company treats its workers is the first test of its ethical soundness. An entrepreneur

who attempts to cheat or underpay his employees will probably find his company

experiencing low morale, high staff turnover and possibly even problems with theft or

sabotage. Treating your employees well is the right thing to do, but it will also benefit you

because most people will respond in kind, developing good work habits and a loyalty to the

company. Maintaining open lines of communication with workers is necessary to know how

they are feeling about things and to be sure that everyone is benefiting from their association

with your company.

Customers

If you run a retail operation, it is obvious how dependent your business is on customers.

Working in retail gives you the opportunity to personally treat customers well and express

your appreciation when they support your business. The best way to do this is to make a

point of always providing goods and services that are as good as you can make them. Anentrepreneur with a healthy ethical sense realizes that doing your best every day is not only a

good business decision but an ethical choice as well. Offering customers superior goods at a

fair price allows them to benefit from your business.


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Environment

It is difficult, and perhaps impossible, to engage in business while having no impact on the

environment. There are many ways that a business can minimize its impact on the natural

world, including recycling, carpooling, minimizing packaging and reducing wasteful

business practices such as junk mail. A business also has a public profile that entrepreneurscan effectively use to promote environmentally sound practices. While all of these activities

have a practical basis in that they increase the cleanliness of your environment and the public

reputation of your business, they also have a basis in the ethical challenge of treating the

natural world with the respect and gratitude that it deserves.


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Business Ethics for Entrepreneurs

In light of recent business scandals there is a growing awareness of the importance of business

ethics. In general, a business known for its high ethical standards will be more profitable than acompany with a poor ethical reputation. For businesses, practicing good ethical behaviour

contributes positively to the bottom line because it builds trust in both customer and employee

relations.

So what is business ethics? Business ethics is the fundamental moral values and behavioural

standards that form the foundation for the people of an organisation as they make decisions and

interact with stakeholders. The key stakeholders of any business are: employees, investors,

management, the general public, creditors, suppliers, and customers. Some examples of unethical

practices can include: providing false or misleading advertising, telling customers lies in order to

get the sale, manipulating data such as falsifying or misusing statistics, smaller amounts ofproduct in the same-size packages, or invasion of customer privacy.

There are a number of tools entrepreneurs can use to establish or reinforce high standards of

ethical behaviour in their business. One option is to consider a code of ethics which describes the

firms general value system, moral principles, and the ethical rules that apply to the organisation.

The advantage of having a code of ethics is that it provides specific guidance to managers and

employees regarding what is expected of them in terms of ethical behaviour. However, the

research on the effectiveness of codes of ethics is mixed, with some studies showing a strong

relationship between the presence of codes of ethics and ethical behaviours in businesses and

other studies showing weak relationships.

An important factor regarding whether a code of ethics is effective may be the extent to which it

is emphasized by top management and carefully continuously communicated to the firms

employees. Many businesses use ethics training programmes to promote ethical behaviour within

their organisation. Ethics training programmes teach business ethics to help employees deal with

ethical dilemmas since most employees confront ethical dilemmas as some point during their

career.

Many entrepreneurs support initiatives to improve or strengthen their organisations business

ethics. The question they struggle with is whether specific steps such as writing a code of ethics

or investing in ethics training sessions are really helpful. Its a quandary that all entrepreneurs

face as they try to make the best use of scarce resources, particularly in their ventures start-up

days.


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The following are some suggestions for entrepreneurs that can be adopted to set and maintain

ethical standards within their business:

y Perform periodic ethical auditsy Establish high standards of behaviour . Not just rules!y Set an impeccable ethical example at all timesy Create a culture that emphasizes two-way communicationy Involve employees in establishing ethical standards

The key point to remember when considering these suggestions is that the culture of a company

is driven from the top down. Unless you as owner-manager are leading the way, then you can

hardly expect your employees to react positively to the ethical standards identified for your

business!


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Non Entrepreneurs and Ethical

Decisions

One line of inquiry questions whether or not systematic trait differences between entrepreneurs

and non-entrepreneurs carry over into corresponding systematic differences in ethical perception

and action. While some research calls into question the existence of stable, systematic

differences between entrepreneurs and non-entrepreneurs on dimensions such as risk tolerance

argue that the qualities required for successful entrepreneurship imagination, creativity,

novelty, and sensibility are systematically and theoretically crucial to ethical decision-making,

suggesting that ethics and entrepreneurship are closely aligned. Similarly, others argue that

entrepreneurial success requires moral imagination, in addition to an effective handling of the

strategic dimensions of starting a new venture. Some research indicates that entrepreneurs may

indeed generally place a greater emphasis on ethical behavior and exhibit higher levels of moralreasoning. Other research shows fairness or procedural justice to be an important element in

managing the relationship between entrepreneurs and key investors, leading to a set of desirable

outcomes for the entrepreneur. Such a focus on ethics and fairness on the part of the entrepreneur

may bring its own risks, however; others have debated whether or not entrepreneurs tend to

over-trust, making them more vulnerable to others' opportunism. On the other hand, other

research finds that entrepreneurs possess a strong action bias that may prevent them from

adequately considering ethical issues suggest that entrepreneurs are more focused than large firm

managers on personal financial gain, even if it comes at others' expense or violates norms of

fairness. Although this effect has fluctuated over time, some scholars, caution about specific

negative factors that could permeate the personality of entrepreneurs and dominate theirbehavior .

How do entrepreneurs make ethical decisions?

Variety of dimensions can impact the decisions and actions of entrepreneurs with respect to

notions of ethics. Ultimately, proposed theoretical models of ethical decision making in new

ventures attempt to capture many of these dimensions. Furthermore, consistent with assertion

that differences among entrepreneurs may be greater than differences between them and non-

entrepreneurs, research shows that small business owners exhibit heterogeneity with respect to

both their ethical values held, and the demographic factors presumed to influence those values.In addition, entrepreneurs exhibit cognitive heterogeneity; for example, individuals vary in their

sensitivity to moral issues, or their moral awareness. Some cognitive differences among

entrepreneurs may be due to socio-cultural influences. In a mixed methods study, investigates the

influence of cognitive factors on entrepreneurs' moral awareness, finding a complex relationship

between social cognitive dynamics and sensitivity to moral issues. His theoretical framing and

empirical results point the way to further research aimed at delivering deeper understanding of


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the ethical cognition of entrepreneurs. For example, the work suggests that studying the role

other cognitive factors play in entrepreneurial ethical decision making would be an important

avenue to explore.


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Other Considerations

What particular ethical dilemmas arise from entrepreneurship?

Another stream of entrepreneurial ethics research addresses the peculiar or unique nature of the

ethical dilemmas faced by entrepreneurs that arise from a variety of organizational or

environmental factors that directly influence the new venture. It is well established in the

literature that entrepreneurial organizations face unique challenges; depending on the industry

setting and the specific nature of the business, new ventures often experience constant change

and limited financial resources. These pressures can have a profound effect upon ethical

decision-making processes, resulting in ethical situations for entrepreneurs that are fraught with

ambiguity. In such conditions, scarcity of resources as well as other sources of personal strain

can impact the ethical standards of entrepreneurs. In addition, specific ethical dilemmas that are

especially salient to entrepreneurs can arise with respect to the division of profits within the

organization, high risk associated with newness, and the tradeoff between impression

management, legitimation, and honesty. Furthermore, entrepreneurs tend to face ethical

dilemmas involving their own values, organizational culture, employee well-being, customer

satisfaction, and external accountability. What other ethical issues are particularly salient to the

new venture context? How does an increased understanding of these issues bolster our

theoretical grasp of the relationship between entrepreneurship and ethics?

How does technological innovation impact entrepreneurial ethics?

A related stream of inquiry involves the peculiar ethical dilemmas faced by entrepreneurs arising

from technological advancement. Because new ventures often emerge at the cutting edge of

innovation, sorting out the ethics involved can be particularly challenging, not only because

technology is of necessity always value laden , but also because technological advancement

as with other paradigm-shifting exogenous shocks often requires deep reflection in order to

decide how to apply ethical standards, and can even potentially lead to a revision of one's ethical

judgments qualitatively explores the decision making of entrepreneurs confronted with an

ethically pioneering situation, and shows that entrepreneurs reason through the attendant moral

challenges in an imaginative way. But what about the role of the entrepreneurial firm itself as the

moral change agent? Under what conditions might new ventures, in the context of technological

advancement and its inherent moral ambiguity, engage in destructive innovation, and what are

the moral implications that arise? Relatedly and turning this notion on its head others suggest

that ethical value tensions themselves can serve as a source of innovation and entrepreneurship.

Clearly, the relationship between ethics and innovation is an avenue ripe for further inquiry and

analysis.


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Entrepreneurship and Social Welfare

There is a tremendous clash in economic theory as to the social and moral role and impact of

entrepreneurship. Although scholars have convincingly argued that Smithian capitalism contains

a strong entrepreneurial and ethical focus, the mainstream neoclassical view is thatentrepreneurship is either an allocation mechanism or an aberration. As an alternative,suggests

that entrepreneurship is the driving market force for creative destruction, revolutionizing the

existing economic structure by destroying the old equilibrium and creating a new one, via

innovation a perspective inherently concerned with disequilibria, decision making,

uncertainty , and therefore focused on how the economic and its variables change

endogenously in a historical and political context argues that such entrepreneurial creative

destruction dramatically affects the evolution of ethical and societal elements, placing the

entrepreneur in a central position with respect to society's ethical demands. An explicit focus on

moral perspectives or approaches to ethics could potentially enrich our current economic theories

of entrepreneurship. For instance, provocatively suggests that the traditional economic

frameworks employed to discuss entrepreneurship are limited in their usefulness, and therefore

should be discarded in favor of a new, more imaginative economic framework that better

incorporates the ethical demands of entrepreneurship within society. What would this new

paradigm look like? Alternatively, how would the incorporation of a more explicit treatment of

ethical issues inform or modify our existing economic theories of entrepreneurship?


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Macroeconomic Development

Empirically, entrepreneurship is viewed as a primary mode of economic development; indeed

most job creation occurs in small, entrepreneurial firms. Going further, suggests thatentrepreneurship may be the wellspring of most economic growth. Researchers continue to

examine entrepreneurship's role in the growth and development of economic markets, and

although there is general consensus that entrepreneurial activity is of critical importance, there is

disagreement about the specific relationship between venturing and economic development.

Much of the research builds upon the assumption that economic growth is driven by

entrepreneurial innovation; while the dominant view centers around product innovation as an

economic driver, other scholars argue for the importance of process innovation. Other work

suggests that entrepreneurship produces knowledge spillovers arising from agglomeration, which

in turn drive economic growth. Some researchers eschew this association between innovation

and economic growth, proposing instead that imitative entrepreneurship is a much more

powerful economic driver than the less-common innovative activities concurs, suggesting that

the need for imitative entrepreneurship is especially acute in emerging economies, where it has

also been shown to have the most impact on economic growthalso suggests that the mode of

entrepreneurship pursued by entrepreneurs depends heavily on the quality and extent of

supporting societal institutions already in place, a theory confirmed by other scholars. Yet

differential institutional environments whether in developed or transition economies have

very different effects on entrepreneurial activity. Within this scholarly discussion about

economic impact, there is a particular interest in the societal influence of entrepreneurial activity

on the emerging economies and societies of developing, transition, or third-world countries aswell as the benefits to the developing-world entrepreneurs themselves. Yet these environments

can be particularly challenging to entrepreneurs because of corruption, which represents the

breakdown of institutional ethics. As such, empirically explore the relationship between

corruption and entrepreneurial innovation, which has implications for the relationship between

entrepreneurship and economic development. All of this work highlights a number of related

questions for future research: From the standpoint of macroeconomic development, which modes

of entrepreneurship are most desirable, and under what conditions? How do entrepreneurs in a

corrupt environment deal with risks of expropriation? How does the relationship between

corruption and entrepreneurship factor into macroeconomic growth? What are the policy

implications?


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Implementation

As a leader, HR training can be useful in teaching you how to ensure ethical outcomes in the

workplace. This should begin with an agreement between leaders and all team members that pledges to act in an ethical manner at all times. The agreement should also mention the

importance of making sure team members always discuss issues as a group, rather than breaking

into factions and holding discussions separately. Team members should agree not to discuss

group items outside of the group. If a leader does not put this into the agreement, there is a

greater chance that the group will disintegrate. In cases where people don't follow the agreement

and will not adjust to more ethical practices, the leader should replace the person and take the

person off of the team. This will show the team the importance of the agreement, of ethical

behavior, and ensure an ethical workplace environment.

In HR training leaders learn how to set an example for team members by being the role modeland displaying ethical behavior at all times. However, in cases where the team leader is not

behaving ethically or with integrity, any team members who notice this should speak up. To

approach the issue in the best manner possible, the team member should pull the leader aside and

explain that they don't think the leader is operating or acting appropriately. It would be counter-

productive to bring it up in a meeting, it's best to speak privately if you have to approach a

leader.

If a team member needs to confront another team member for a similar issue there is a proper

way to go about it. As Human Resources Training explains, when a team member feels that

another team member is not acting in the most ethical fashion they should speak up. For

example, if you believe that someone is not operating in the most ethical fashion, you need to be

willing to talk about it in an appropriate manner. If you are upholding your end of the agreement

by behaving ethically as a role model at all times, you can change what you think is wrong.

When a team member isn't making the right decisions, isn't acting favorably, or says or does

something you think is unethical, you can make a difference by saying something in the group

meeting, respectfully. It's important to speak up, because by not speaking up about something

you think is wrong, for example a racial joke, you are participating in it as well.

Sometimes the most difficult aspect of ethical practices in the workplace is determining whetheran action or decision is ethical or not. According to Human Resources Training experts, there are

two tests that can help to determine this. First, experts say that if you have to ask yourself

whether or not a decision is ethical, there is a high likelihood that it is not ethical. HR

professionals believe that most likely if you aren't sure if something is right, you probably just

shouldn't do it. However, HR training suggests that employees check with the legal department

of the company or their attorney first before making the decision because there is a good chance


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that they may be missing some important information. However, it's important to remember that

even if an action is legal it still may not be ethical or fall within the ethical standards you agreed

to in the agreement with your company. Lastly, you need to ask yourself if a decision is

preventing you from sleeping at night. If it is, it does not pass the ethics test and you need to

change it


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References

http://www.entrepreneur.com/tradejournals/article/132085592.html

http://www.runningyourbusiness.ie/index.php?option=com_content&view=article&id=136:business-

ethics-for-entrepreneurs&catid=87:management&Itemid=53

http://www.submityourarticle.com/articles/David-Shoemaker-7122/human-resources-training-

93198.php

www.google.com

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Ethics Case Final