Entrepreneurship Chapter 14: Ethics and Social Responsibility

Ethics, Professionalism, and Social Responsibility

• Ethics involves personal beliefs, values, and good practices such as being disciplined, honest, responsible, and trustworthy.
• Professionalism means being competent and qualified to do a specific task, and acting with due care, skill, diligence, and complying with rules, regulations, and code of practice.

Importance of Ethics and Code of Good Professional Conduct

• Fundamentally, entrepreneurs operate their businesses to offer products and services to customers and make a profit, while contributing benefits to society and not posing harmful impacts to society or the environment.
• Success in the long term depends on skill and character; a person's character is a crucial ingredient for success in life.
• Ethics encompasses honesty, forthrightness, reciprocity, fair play, keeping commitments, and kindness.

The Cost of Non-Ethical, Non-Professional, and Socially Irresponsible Behavior

• Success based on material achievement alone is only success waiting to crumble.
• Achievement void of ethical principle and good conduct is only an outward appearance of success, but internally, it is often full of worry, anxiety, and self-doubt that may cause a person self-destructive process.
• Money obtained through illegal means is supposed to bring prosperity and happiness but often becomes a source of misery and shame to the person and their family.

Factors Influencing Individual Ethical Values and Practices

• Family influences
• Life experiences
• Peer influences
• Religious beliefs
• Situational factors or conflict of interest

Islamic Ethical Values

• A Muslim should find it easy to resolve any Islamic ethical issues, as the moral, behavioral, and ethical guidance provided on business dealings in Islam are comprehensive and detailed.
• Key Islamic principles that influence a Muslim's way of life, including moral and behavioral practices in doing business, are:
  • Belief in the oneness of God and the role of being an obedient servant who follows all prescribed teachings of Islam.
  • Belief in life after death, where every act in this world will be examined and given rewards and punishment accordingly.
  • Ensuring earnings are 'halal' (permissible by Islam) and contributing to charity (Zakat) and donations (Sadaqah).
  • Avoiding being greedy or acting like a miser, as a smaller earning can be superior to a bigger earning if it is earned through ethical and legal means.

Corporate Social Responsibility (CSR)

• CSR refers to the practices of assuming responsible acts by corporate organizations to create positive impacts on the environment, consumers, employees, communities, stakeholders, and all other members of the public sphere.
• Social responsibility means organizations or individuals practice good ethical principles and act as good corporate or individual citizens of the country.

Views on Social Responsibility

• The general view on business is that entrepreneurs are willing to sacrifice anything to get their profit.
• Examples of poor quality products, imitation products, and irresponsible acts of throwing poisonous materials into rivers highlight corporate irresponsibility.

Benefits of Social Responsibility

• Balance consideration to all stakeholders' interest
• Protecting the needs of stakeholders
• Achieving social responsibility goals