Entrepreneurial Integrity Part 1 Entrepreneurship A World of

Entrepreneurial Integrity Part 1 Entrepreneurship: A World of Opportunity Power. Point Presentation by Charlie Cook The University of West Alabama Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.

Looking Ahead After studying this chapter, you should be able to: 1. Define integrity and understand its importance to small businesses. 2. Explain how integrity applies to various stakeholder groups, including owners, customers, employees, and the community. 3. Identify challenges to integrity that arise in small businesses and explain the benefits of integrity to small firms. 4. Explain the impact of the Internet and globalization on the integrity of small businesses. 5. Describe practical approaches for building a business with integrity. 6. Describe the costs and opportunities of environmentalism to small businesses. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. 2

Integrity and Small Business • Integrity is an uncompromising adherence to doing what is right and proper. • Integrity is as much about what the entrepreneur should do as it is about what he or she should be. • Closely tied to integrity are ethical issues, which go beyond what is legal or illegal to include more general questions of right and wrong. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. 3

Ethical Issues • The most troublesome ethical issues for small businesses involve relationships with customers, clients, and competitors; human resource decisions; and employees’ obligations to their employers. • When they make business decisions, entrepreneurs must consider the interests of all stakeholder groups. • Research shows that about one-fourth of the employees in small businesses experience some degree of pressure to act unethically in their jobs. • Most people consider an ethical business to be one that acts as a good citizen in its community. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. 4

Challenges to Ethical Behavior • The limited resources of small firms make them especially vulnerable to allowing or engaging in unethical practices. • Research suggests that most entrepreneurs exercise great integrity, but some are likely to cut ethical corners when it comes to issues that directly affect profits. • Exhibiting integrity in business may actually boost a firm’s performance. • The greatest benefit of integrity is the trust it generates. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. 5

Values, Integrity, and Ethics • The underlying values of business leaders and the behavioral examples of those leaders are powerful forces that affect ethical performance. • An organizational culture that supports integrity is key to achieving appropriate behavior among a firm’s employees. • Small firms should develop codes of ethics to provide guidance for their employees. • Many small businesses join Better Business Bureaus to promote integrity throughout the business community. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. 6

Ethics and the Environment • Many small businesses help protect the environment, and some contribute positively by providing environmental services. • Some small firms, such as pet-food processors, are adversely affected by costly environmental regulations. • Small companies, such as those in the tire-recycling business, are sometimes launched precisely to take advantage of opportunities created by environmental concerns. • Creating environmentally friendly products requires creativity and flexibility, areas in which small businesses tend to excel. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. 7

Key Terms integrity ethical issues stakeholders social responsibilities intellectual property ethical imperialism ethical relativism underlying values code of ethics bait advertising environmentalism Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. 8