personal personal ethics and the entrepreneur ethics and the entrepreneur

7/28/2019 Personal Personal Ethics and the Entrepreneur Ethics and the Entrepreneur

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Personal Ethics & the

Entrepreneur


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Personal Ethics & The Entrepreneur

What is ethicaland what is not

often is notobvious.

Situations

regarding ethicalissues are oftenambiguous.


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Ethical behavior is at thecore of long-termsuccess, because itprovides the glue thatbinds enduring successful

business and personalrelationships together.


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Entrepreneurial Ethics

Ethics: the guidelines or rules ofconduct we aim to live by; asystem or set of moral principles.

Most business decisions involvesome degree of ethicaljudgement. The ethical standards

of a new venture founder or abusiness are judged by actions,not by pious statements of intent.


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Why do normally honest, intelligent,

compassionate business founders andentrepreneurial managers act in unethical

ways that are dishonest, wrongheaded,and often illegal?

Unethical Behavior


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Lessons from the Sadhu

Real ethical dilemmas are ambiguous, andmany of us are likely to hike right through them,unaware that they exist. When, usually after

the fact, someone makes an issue of one, wetend to resent his or her bringing it up. Often,when the full import of what we have done (ornot done) hits us, we dig into a defensive

position from which it is very difficult to emerge.In rare circumstances, we may contemplatewhat we have done From The Parable of theSadhu


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A belief that the activity is withinreasonable ethical and legal limits - thatis, that it is not really unethical or illegal.

Where is the line between profit maximizationand unethical/illegal conduct?

Founders/entrepreneurial managers

sometimes leave the impression that thereare things that they dont want to knowabout.

Rationalization #1


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The difference between becoming asuccess and becoming a statistic lies inknowing where the ethical line is.

Successful venture founders know thatthere is a difference between taking risks,and knowing which risks to take.

Maximizing profits is a new venturessecond priority, not its first. The first isensuring its survival.

Rationalization #1


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The smartest venture managers know thatthe best answer to the question, How faris too far? is dont try to find out !!!

Rationalization #1


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A belief that the activity is in theindividuals or ventures best interests -that the individual would somehow be

expected to undertake the activity.

All new ventures need to do whatever isexpedient to survive.

I have the right to do this, after all, I am thefounder of this venture.

Rationalization #2


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This ethical dilemma nearly always resultsfrom a limited, narrow-minded view ofwhat those interests (individual or

venture) are. The real interests of theventure (and its founders) are served byethical, honest conduct in the first place.

Venture managers need to be concernedwith more than just results, they need tolook hard at how these results areobtained.

Rationalization #2


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A belief that the activity is safe becauseit will never be found out or publicized;the classic crime-and-punishment issue of

discovery.

Why do venture managers/employees believethat they wont get caught?

What is the role of investors, professionaladvisors, and boards of advisors in guiding aventures ethical conduct?

Rationalization #3


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Discovery- the process in which aplaintiffs attorneys can comb through acompanys records to look for

incriminating evidence.

The most effective deterrent is to heightenthe perceived probability of being caught

in the first place.

The point is to prevent misconduct, notjust catch it.

Rationalization #3


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As the main deterrent to unethicalbehavior or illegal conduct is the perceivedprobability of detection, venture managers

should announce any misconduct and howthe individuals were punished (within legalHR limits).

Rationalization #3


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A belief that because the activity helps theventure, the venture (and its managers)will condone it, and even protect the

person who engages in it. How do founders/venture managers keep

loyalty from going berserk?

How does a venture founder harness thepassion to succeed short of unethical/illegalbehavior?

Rationalization #4


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Venture founders have the right and theresponsibility to exert a moral force withinthe business.

Venture founders/managers areresponsible for clearly delineating betweenpassion and loyalty, and actions that are

unethical and illegal. This has to be donewell in advance, ideally as part of thefounding principles of the venture.

Rationalization #4


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As this line can become obscured in theheat of the moment, the ethical line needsto be drawn well short of where

reasonable men and women could evenbegin to wonder about the ethical andlegal consequences of their actions.

Rationalization #4


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Believing that the activity is not reallyillegal or unethical.

Believing it is in the individuals or newventures best interest.

Believing that the activity or behavior willnever be found out.

Believing that because it helps theventure, the company and its seniormanagers will condone it.

From: Why Good Managers Make Bad Ethical Choices

4 Rationalizations Summary


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Dilemmas of entrepreneurialmanagement

Promoter:

Entrepreneurial euphoria

Impression management Pragmatic vs. moral considerations


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Innovator:

New types of ethical problems

Ethic of change


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Relationships:

Conflicts of interest and roles

Transactional ethics Guerilla tactics


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Other dilemmas:

Finders-keepers ethic

Conflict between personal valuesand business goals

Unsavory industry practices


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Differences among partners notions ofwhat constitutes ethical and unethicalbehavior can be a major source of

venture divorce.

Unfortunately, it usually takes the test ofbattle during the actual heat of start-up

to discover the real ethics of partners.

Chapter 10 - Key Points


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This argues to know whom you aredealing with! Try to work under realworld conditions with potential venture

partners. Get reliable references fromsources who have observed theirperformance in situations that would testtheir integrity.

Investors and high quality prospects forthe venture team will not settle forquestionable standards of integrity andethics.



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Financial success at the expense of yourintegrity is not success at all.


personal personal ethics and the entrepreneur ethics and the entrepreneur

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