chapter 02 revised
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Cha pter 2Cha pter 2
Cha pter 2Cha pter 2
PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie Cook
The University of West AlabamaThe University of West Alabama
CopyrightCopyright2006 Thomson Business & Professional Publishing.2006 Thomson Business & Professional Publishing.
All rights reserved.All rights reserved.
Part 1 Entrepreneurship:Part 1 Entrepreneurship:
A World of OpportunityA World of Opportunity
EntrepreneurialEntrepreneurial
Integrity: AIntegrity: A
Gateway to SmallGateway to Small
BusinessBusiness
OpportunityOpportunity
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Integrity and EntrepreneurshipIntegrity and Entrepreneurship
What Is Integrity?An uncompromising adherence to doing what is right
and proper
Honesty, reliability, and fairness in business practices
An essential element of successful businessrelationships
Integrity is as much about what to do and it is who tobe.
Doing the Right Thing
Ethical issuesquestions of right and wrong
Legal and ethical considerations
Conflicts of self-interestEntrepreneurs Are People Of Principle and Integrity ?Entrepreneurs Are People Of Principle and Integrity ?
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Difficult Ethical Issues Facing Small FirmsDifficult Ethical Issues Facing Small Firms
Ethical IssuesEthical IssuesAffectingAffecting
SmallSmall
BusinessesBusinesses
Human ResourceHuman Resource
DecisionsDecisions
EmployeeEmployee
ObligationsObligations
ManagerialManagerial
Processes andProcesses and
RelationshipsRelationships
RegulatoryRegulatory
ComplianceCompliance
Relationships withRelationships with
SuppliersSuppliers
EnvironmentalEnvironmental
and Socialand Social
ResponsibilitiesResponsibilities
CustomerCustomerRelationshipsRelationships
Source: Leslie E. Palich, Justin G. Longenecker, Carlos W. Moore, and J. William Petty, Integrity and Small Business: A Framework and Empirical
Analysis, Proceedings of the 49th World Conference of the International Council for Small Business, Johannesburg, South Africa, June 2004.
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A Framework for IntegrityA Framework for Integrity
Personal Integrity of the OwnerSocial responsibility for all stakeholders versus a
narrow focus on using the firms resources only for
honest profit making (Milton Friedman).
Respecting CustomersService orientation and respect in the treatment of
customers is both ethical and profitable.
Valuing Employees
Fair and honest treatment of employees is a sign of
managerial integrity.
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Kinds of Ethical IssuesKinds of Ethical Issues
Ethical Issues in Business OperationsIncome and expense reporting (income tax fraud)
Truth in advertisingpersuasion and deception
Bribing customers and rigging bidsDirect sellingpyramid schemes, bait-and-switch
selling
Effects of owners ethics on their employees
Accurately reporting financial information
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Kinds of Ethical Issues (contd.)Kinds of Ethical Issues (contd.)
Ethical Issues and EmployeesTo do an honest days work
Fraudulent workers compensation claims
Theft of company property and embezzlement offunds
Violation of personal ethics to make a sale
_ Temptations to act unethical , Big or Small Business ?_ Temptations to act unethical , Big or Small Business ?
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Social Responsibilities and Small BusinessSocial Responsibilities and Small Business
Social ResponsibilityThe role of a small business as a good citizen in its
community is meeting its ethical obligations to
customers, employees, and the general community.
Regarded as the price of freedom to operate in a freeeconomic system.
Frequently takes the form of personal contributions,volunteerism, and the contribution of services by thefirm and its employees.
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Social Responsibilities of Small FirmsSocial Responsibilities of Small Firms
SocialSocial
ResponsibilitiesResponsibilities
ConsumerismConsumerism
Support ofSupport of
EducationEducation
Compliance withCompliance with
GovernmentGovernment
RegulationsRegulations
Response toResponse to
Community NeedsCommunity Needs
Contributions toContributions to
CommunityCommunity
OrganizationsOrganizations
Obligations toObligations to
StakeholdersStakeholders
EnvironmentalEnvironmental
ProtectionProtection
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The Challenges and BenefitsThe Challenges and Benefits
of Acting Ethicallyof Acting Ethically
The Vulnerability of Small Companies
The limited resources of small firms tempt them to cut
ethical corners if an issue directly affects profits.
The Integrity Edge
Exhibiting integrity in business may actually boost a
firms performance.
The greatest benefit of integrity is the trust itgenerates.
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Ethics and Small Business (contd.)Ethics and Small Business (contd.)
Internet EthicsRisks of buying and selling on the Internet
Maintenance of personal privacy
The use of cookies to profile customers usage of theWeb
Monitoring employees e-mail and Internet access atwork
Protection of intellectual property rights Misappropriation of content providers original
intellectual creations, including inventions, literarycreations, and works of art, that are protected bypatents or copyrights
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Ethics and Small Business (contd.)Ethics and Small Business (contd.)
International Ethical PerspectivesIllegal immigrants and forced labor in sweatshops
Outsourcing into cheap labor markets
Application of Federal Corrupt Practices Act
Bribery versus customary local business practicesEthical imperialism
The belief that the ethical standards of ones owncountry are superior and can be applied universally
Ethical relativismThe belief that ethical standards are subject to localinterpretation
When in Rome, do as the Romans do
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Building a Business with IntegrityBuilding a Business with Integrity
A Strong FoundationUnderlying values: unarticulated ethical beliefs that
provide a foundation for ethical behavior in a firm
Are based on personal views of the universe and
mankind
Strongly held views can lead to tough choices
Ethics of the firm affect how outsiders view the firmand their decisions about the firm
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Building a Business with Integrity (contd.)Building a Business with Integrity (contd.)
Leading with IntegrityOwner/leaders and their ethics have more direct and
pronounced effects in small firms.
Owner/leaders can insist that ethical principles be
followed by employees.
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Building a Business with Integrity (contd.)Building a Business with Integrity (contd.)
A Supportive Organizational CultureBuilding an ethical culture requires:
Full commitment to ethical conduct by the firm
Strong, ethical managerial leadership
Code of ethics
Official standards of employee behavior set by thefirm
The foundation for ethical conduct by employees
Clarifies the rules and gives guidance to employees_ The Bake Principles ?_ The Bake Principles ?
_Religious Values ?_Religious Values ?
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Building a Business with Integrity (contd.)Building a Business with Integrity (contd.)
Better Business BureauProvides free buying guidelines and information about
companies to consumers
Attempts to resolve questions or disputes concerning
purchasesBait advertising
An insincere offer to sell a product or service at a verylow price, used to lure customers in so that they canbe switched later to a more expensive product
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EnvironmentalismEnvironmentalismCost or OpportunityCost or Opportunity
The Burden of EnvironmentalismEnvironmentalism is the effort to protect and preserve
the environment.
Potential of Environmentalism
Enhances firms image with customersImproves firms image in the community
Provides business opportunities (e.g., recycling)
Adverse impact of environmentalismCost of updating and modifying facilities
Government regulations and lawsuits