CHAPTER 11
Incorporating Ethics and Social Responsibility
into the Business
SUMMARY AND AUTHOR’S NOTE
In an ideal world, the topic of ethics and social responsibility would not be a separate chapter
in the book but, rather, would be infused throughout the book. This chapter has been positioned
after a discussion of the business plan and the legal organization of the business. At this point
At no previous time in history have ethics and social responsibility been more vital topics of
discussion. In a global economy that juxtaposes multiple cultures, each based on a different
value system, ethics and social responsibility issues are never far from anything we do as
business people. With so many large corporations in the news for unethical and illegal
behavior on the part of their CEOs, this chapter is that much more relevant. In our multicultural
classrooms, we have a unique opportunity to play out many business scenarios and deal
directly with all these issues.
CHAPTER OBJECTIVES
After reading this chapter, students will be able to:
• Explain the role of ethics in entrepreneurship.
48 Chapter 121: Incorporating Ethics and Social Responsibility into the Business
CHAPTER OUTLINE
OPENING CASE: Encouraging Women Entrepreneurs in Bangladesh
I. Ethics—ethical issues and decision making in entrepreneurship
• Figure 11.1—The Elements of Ethical Action
a. Conflicts of Interest—ethics when personal interests clash with professional
obligations
f. The Importance of Developing a Code of Ethics—influencing employee behavior
with a code of ethics
i. The Process of Developing a Code of Ethics
• Table 11.1—Character Counts Inventory
ii. Characteristics of an Effective Code
AN ETHICAL DILEMMA
II. Social Responsibility—giving back to communities and society
RELEVANT CASE STUDIES
Case 2 MySpace
Case 7 1-800-Autopsy
ANSWERS TO QUESTIONS ON KEY ISSUES
1. Do you believe that your code of ethics should remain firm in any situation? Why or why
not?
This is a question that should stimulate a provocative discussion in class and easily
2. Suppose you are doing business in a country where paying fees (bribes) to get through
the process more quickly is standard practice. In the United States, bribery is against the
Chapter 121: Incorporating Ethics and Social Responsibility into the Business 49
law. How will you deal with this conflict taking into account your ethical standards when
you’re doing business in that country?
Again, this question will provoke a variety of different responses. Try to relate the
3. In addition to the suggestions given in the chapter, name two ways your company can
demonstrate its social responsibility.
Students will come up with a variety of ways, and their responses will reveal their
4. Would you require your employees to give back to the community as part of their work
contract with your company? Why or why not? If yes, how could you implement this
policy?
This question raises the issue of whether social responsibility can and should be required
5. How do you define your personal success? How can your definition be applied to your
business?
The answers to this question will be very personal. You might want to create a spectrum
SUGGESTIONS FOR EXPERIENCING ENTREPRENEURSHIP
1. Choose an industry that interests you and interview a manufacturer, a distributor, and a
retailer about the code of ethics in that industry. In a two-page report, discuss whether the
industry has ethical problems. If so, what are they and how are people responding? If not,
how are they avoided?
Have students categorize their findings to see if they can create a code of ethics for a
2. Choose two companies in different industries. Interview a manager in each company
about how the company practices social responsibility. In a two-page paper, compare
these managers’ answers and account for any basic differences.
50 Chapter 121: Incorporating Ethics and Social Responsibility into the Business
SUPPLEMENTARY LECTURE MATERIAL
Some Great Examples of Ethics and Social Responsibility
It’s always easier to learn from great examples. Here are two companies that are living proof
that being ethical and socially responsible pays off in a more successful business.
Chroma Technology Corp.
Arguably, the fastest growing technology company in Vermont is also the most socially
responsible and ethical. The company is known for its quality products, which it sells to
worldwide leaders such as Nikon, Leica, and Zeiss. Chroma Technology, a leading
manufacturer of optical filters for microscopes and based in Rockingham, Vermont, is an
Clif Bar Inc.
Sometimes sticking to your principles takes a lot of courage. That’s what Gary Erickson,
founder of Clif Bar Inc., realized when he turned down an offer for $120 million for the energy
bar company that he had started with $1,000 in his garage. The potential buyer intended to
move the company to another state and fire all the employees. Erickson saw this as a matter of