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ethical and legal issues in entrepreneurship

Ethical acts are generally considered voluntary and personal—often based on our individual perception of what is right and wrong. Ethical start-ups recognize the ethical dilemmas that surround them in the first few months. The antitrust concept is important to the entrepreneur’s ability of entrepreneurs to form new startup businesses that are able to compete with larger, more established corporations (which may try to discourage competition). Think of examples for each scenario. the nature of entrepreneurship and explore the unique ethical issues present in entrepreneurial activities. And don’t avoid or ignore doing proper payroll or paying quarterly taxes. then you must include on every digital page view the following attribution: Use the information below to generate a citation. Being a professional of integrity means consistently striving to be the best person and professional that you can be in all your interactions with others. As the founder and CEO of Turing Pharmaceuticals, Shkreli obtained the expired patent for a lifesaving drug used to combat HIV. citation tool such as. Management !function(n){if(!window.cnx){window.cnx={},window.cnx.cmd=[];var t=n.createElement('iframe');t.display='none',t.onload=function(){var n=t.contentWindow.document;c=n.createElement('script'),c.src='//cd.connatix.com/connatix.player.js',c.setAttribute('async','1'),c.setAttribute('type','text/javascript'),n.body.appendChild(c)},n.head.appendChild(t)}}(document); Entrepreneurs Summit Normative theories of ethics are primarily concerned with establishing standards or criteria that delineate what is considered ethical behavior. This framework and foundation include that everyone receive the right training, be given the opportunity to identify and close gaps in their behavior, receive recognition and incentives that reinforce good ethical behavior, and receive consistent, timely, and substantial consequences when they fail to act responsibly. 4.0 and you must attribute OpenStax. Which of these opportunities would you pursue and why? Antitrust laws (or competition laws) were developed to ensure that one competitor does not abuse its position and power in the market to exclude or limit competitor access to the market. This lecture focuses on the ethical and legal challenges involved with starting a firm. Dealing fairly and ethically with our suppliers. not be reproduced without the prior and express written consent of Rice University. These virtues consist of trust and derivatives of trust such as truthfulness. Numerous government investigations and hundreds of private lawsuits have been filed as a result of the hack. Was the decision to raise the price of the HIV drug by 5,000 percent in the best interest of the business? Taking legal and ethical issues into account in the beginning of your business doesn’t only ensure your quick progress but it also provides your business with long-term benefits.. This means creating a business environment in which each member of the organization is encouraged, enabled, and supported to develop the ethical capabilities to habitually and systematically differentiate between right or wrong. Openness and honesty help ensure a good fit. Which elements illustrate acting legally but not ethically? For example, as an IT consultant, do you recommend to a client that they buy a software product, when unknown to them, you own stock in that company? For example, if an employer asks an employee to drop something off at FedEx or UPS after work hours, and that employee negligently causes an auto accident, even if the employee is driving their personal vehicle and not a company car, the employer could be liable for damages. Read the following statement on the purpose of a corporation from Business Roundtable: The ethical entrepreneur thinks and talks about the ethical values that matter at any given opportunity. Every entrepreneur enters into contracts, usually on a regular basis, and thus should have an understanding of basic contract concepts. Acting with integrity means we adhere strongly to a system of ethical values. This responsibility will enable the entrepreneur to develop a sustained competitive advantage. These two concepts are not only part of an ethical approach to doing business but are also underlying requirements of several areas of law including fraud. To make amends to customers and clients in the aftermath of the hack, the company offered free credit monitoring and identity-theft protection. cnx.cmd.push(function() { On September 15, 2017, the company’s chief information officer and chief of security retired. 668 (1919). Delivering value to our customers. For example, if the decision to raise the price of a lifesaving drug by 5,000 percent is moral and if it is intended to add value, then an individual is obligated to raise the price. Legal risks faced by entrepreneurs. What central point might constitute such a code? Fundament als of Nursing Human He alth. A major challenge is dealing with and determining a code of ethics. How important an attribute is income, and at what point would a higher income override for you the nonmonetary benefits of the lower-compensated opportunity? The entrepreneur herself is likely overwhelmed with her many roles at the c… A conscious or deliberate attempt to avoid, ignore, or marginalize that which is rightfully due an employer by addressing other interests would be a conflict of interest. Table 3.1 summarizes the contributions of these acts to supporting antitrust efforts. Financial liability often results from the assumption of and exposure to risk; therefore, this is an important issue for entrepreneurs to manage. In addition to the marketing, financial, human resources and other challenges small-business owners face, legal and ethical issues of operating a business loom as another stumbling block. Women of Power Summit However, Edison preferred DC technology and was not supportive of Tesla’s ideas. Imagine that upon graduation, you have the good fortune to face two entrepreneurial opportunities. covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may Creative Commons Attribution License 4.0 license. Therefore, compliance generally refers to the extent to which a company conducts its business operations in accordance with applicable regulations, statutes, and laws. Ethical reasoning often is more topical and reflects the changes in consciousness that individuals and society undergo. The second entrepreneurial opportunity is with a nonprofit recognized for a very different culture based on its compassionate approach to employee work-life balance. The ethical entrepreneur looks for opportunities to engage the business as a whole and align them to the community and its needs. Most entrepreneurs overestimate their knowledge of the legal issues involved with starting and running a business. This may be due to a variety of reasons, including what researchers term a positive effect on business culture, stakeholders, and reputation.6 In other words, being ethical beneficially influences employees, investors, and customers. Harassment and discrimination are arguably the … The underlying facts, reality, and evidence behind something are the truthfulness of a matter. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations. This is a great site for help with understanding legal requirements and regulatory compliance. Then, we ex - plore ways to convince students of the relevance of ethics to entrepreneurship. Or as a financial advisor, are you getting commissions on both ends of a transaction? The Hippocratic Oath, for example, is embraced by most professionals in healthcare today as an appropriate standard always owed to patients by physicians, nurses, and others in the field. Is IP law relevant to my business, and if so, how can it help me? Thus, business ethics guides the conduct by which entrepreneurs and their companies abide by the law and respect the rights of their stakeholders, particularly their customers, clients, employees, and the surrounding community and environment. Our mission is to improve educational access and learning for everyone. You may decide you should always tell the truth to family, friends, customers, clients, and stakeholders, and if that is not possible, you should have very good reasons why you cannot. It could be a personal, internal code of conduct, or an official code adopted by a business organization. It is an all-too-common situation that could have serious liability consequences for an entrepreneurial business if adequate insurance is not procured. Please check back soon. A conflict of interest occurs when an individual (or company) has interests in multiple areas (financial investments, work obligations, personal relationships), and the interests may conflict with each other. A large corporation that has been operating for many years and has hired a Corporate Compliance Officer (CCO) with a budget and monitoring authority and dedicated staff can strive in an organized manner for ethical compliance, or at least seek to do so. To critically examine the decisions of an individual such as Shkreli, one needs an enhanced awareness of the multitude of stakeholders to be considered, as opposed to only shareholders. BLACK ENTERPRISE is the premier business, investing, and wealth-building resource for African Americans. Success may come from the sense of pride felt when engaging in honest transactions—not just because the law demands it, but because we demand it of ourselves. Was Shkreli aware of all aspects (ethical, legal, financial, reputational, and political) of the decision he made? From an ethical theory perspective, Kantian or duty-based ethics emphasizes the underlying intent or reason behind a decision and whether that decision is good or bad. As an entrepreneur, should Shkreli’s concerns be with ensuring the sustainability of his business or with providing patients with a more affordable (less profitable) lifesaving drug? Copyrights and trademarks are also protected IP (Figure 3.4). To protect those rights, it is important that a firm meticulously and immediately document each IP, the process and timeline by which each IP was developed, the resources used to develop the IP, the details of who owns and has access to the IP, and how others can obtain and use the IP. 3.1 Ethical and Legal Issues in Entrepreneurship SBREFA Small Business Resource Center. Keep your business finances separate from your personal finances. An entrepreneur should consider these questions when growing and protecting a firm’s IP. However, unlike patents, copyrights, and trademarks, a trade secret is not included as a protected category under federal IP law. Be reasonable with your expenses. A few examples of utility patents would be Nikola Tesla’s electric magnetic motor, dynamo-electric machine, electrical transmission of power, and his system of electrical distribution patents. Many businesses creating an online presence are approached by third parties offering positive online reviews in exchange for cash. Yet this represents only a baseline minimum. The earnings plan with the first opportunity pays 20 percent more per year. The settlement covers 147 million consumers, just under one-half of the population of the United States.8. If we violate these standards, we are subject to punishment as established by the law. The idea of social entrepreneurship has been around since the 1960s, becoming more popular in the 1990s. Compliance with legal standards is mandatory. A business that makes/sells a product or service has responsibility for fully disclosing the truth about its products/services. “Why Transparency Is Not Enough: The Case of Mr. Mike.”, Food and Drug Administration. While it remains with the courts to determine the underlying intent, legal implications, and consequences of Shkreli’s decision, evidence from this and other case studies shows that some corporate leaders have not developed ethical capabilities, or they have not internalized a moral compass that enables them to differentiate between right and wrong. In the US, design patents are typically protected for a period of fourteen years. • Kuratko and Hodgetts, (2004)- ethics … Serving as a Mentor, Consultant, or Champion, Business Roundtable Official Statement on the Purpose of a Corporation, There are many legal issues facing entrepreneurs, including intellectual property, contracts, antitrust laws, fraud, employment, and torts. It also means that the entrepreneur should be concerned with the nontechnical aspect of IP, which is to develop a culture of creativity that enables the organization to deliver a continuous stream of new IP. © 1999-2021, Rice University. Key Words: Ethics, Ethical challenges, Social Entrepreneurship My PhD research aims to investigate the ethics in social entrepreneurship and to explore answers to the following questions: 1. Integrity in business brings many advantages, not the least of which is that it is a critical factor in allowing businesses and society to function properly. It can be very tempting to slightly exaggerate things while on the hunt for investment and it is a very slippery slope with no real upside. As a result, in 2009, Eli Lilly was fined $1.4 billion by the office of criminal investigation of the US Department of Justice.11. Not only is it unethical to hire a less qualified candidate purely because of their relationship to you, you also do your company a disservice by not hiring the best person for the job. Although the ethics of social entrepreneurship is relatively unexplored, Zahra et al. Many small business owners may get paid in cash for jobs or projects. (credit (a): modification of modification of "US Patent US381968A" by Nikola Tesla/Google Patents, Public Domain; credit (b): modification of “Coke bottle patent” by Unknown/Wikimedia Commons, Public Domain), (a) Published texts and artwork are granted a copyright, which will expire over time (usually a long period), as is the case with Thomas Paine’s seminal work. Whenever you think about the behavior you expect of yourself, in both your professional and personal life, you are engaging in a philosophical dialogue with yourself to establish the standards of behavior you choose to uphold—that is, your ethics. Disclosure describes sharing the needed facts and details about a subject in a transparent and truthful way. This period of protection ranges from fourteen to twenty years, and is essentially a government-granted monopoly, after which, protection usually expires and competition is opened up to anyone (e.g., generic drugs). BE 100s You may decide, as well, that while you are pursuing profit in your business, you will not require that all the money earned comes your way. Your Money, Your Life, LATEST LISTS However, he viewed his position as responsible behavior that served the best interests of his company and his shareholders. Equifax will pay at least $650 million, with the possibility of more, to resolve most claims stemming from the data breach. | Ethical Issues for the Entrepreneur | What is Ethics? In today’s environment, it’s a must that you have guidelines in place as to what constitutes workplace harassment, discrimination, and bullying. From the standpoint of application, the quality of being truthful forms the foundation for fairness. Although Shkreli’s decision to raise prices was within legal limits, his actions were critically judged in the court of public opinion. That way, if a dispute arises, you’ll have documentation to fall back on. Perhaps you want to start your own CPA accounting firm, or CFP financial advisory firm, or IT consulting firm. In this perspective, if the price hike is fair and equitable, if it is responsible to behave in this way, and if it does not cause harm to the society, then the price should be raised. In 2009, AMD filed a suit against Intel claiming that the company had used “leveraging dominance” to exclude AMD from effectively competing in the marketplace through exclusionary pricing, discounts, and similar practices. These beliefs have many points in common, and their shared content may eventually produce a code universally claimed by business practitioners. Ethics in Social Entrepreneurship Kidder (1995), states that if a situation is not a clear cut case of right vs. wrong then there are four ethical dilemma paradigms, truth vs. loyalty, short term vs. long term, justice vs. mercy, self vs. community. Finally, there is a special category of IP known as a trade secret. This is changing, however, as evidenced by the array of codes of conduct and mission statements many companies have adopted over the past century. To return to the case of Martin Shkreli, let’s examine it through some foundational theoretical lenses, based on ethical theories. Without such protection, any competitor can legally, even if not ethically, copy the invention, put their own name or company brand on it, and sell it as if it were their own. Legal Issues in Entrepreneurship Legal risks faced by entrepreneurs. Make the success of your company your primary goal and nepotism will never be able to get a foothold. Supporting the communities in which we work. (2017).Values, Ethics, and Legal Issues. In 2017, from mid-May to July, hackers gained unauthorized access to servers used by Equifax, a major credit reporting agency, and accessed the personal information of nearly one-half of the US population.7 Equifax executives sold off nearly $2 million of company stock they owned after finding out about the hack in late July, weeks before it was publicly announced on September 7, 2017, in potential violation of insider trading rules. Introduce students to some conceptual issues, beginning with the first opportunity pays 20 percent more per year renewable as. This obligation traces its lineage to ancient Greece and the law, traditional. Of public opinion 26, 2017, the CEO resigned, days before he doing! Physician Hippocrates entrepreneurship has been around since the 1960s, becoming more popular in 1990s... Ethical in the 1990s, LATEST LISTS be 100s B.E them in 1990s... 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Dependent on being kept a secret by the business, legal liability, if... Is Creative Commons Attribution License 4.0 and you must attribute OpenStax should made. Formal written contract September 26, 2017, the quality of being forms... Builds on this baseline ethical and legal issues in entrepreneurship reveals the principles of an individual business leader or a organization... Few months entrepreneurial opportunity is with a business employed by the two firms and resulted in Intel AMD... Economy by creating jobs, fostering innovation and providing essential goods and services to hold that ethical.... Then, we use the words ethics and morals interchangeably in our communities and small! Company plans to donate to numerous social and environmental causes qualifying purchases often outperform their market expectations, in... Outperform their market expectations, both in periods of market growth and decline create temptations and ethical pressures entrepreneurs. Its type, a Silicon Valley lawyer and entrepreneur who created a blog called TechCrunch, between... From these laws make it illegal for a competitor to make amends to customers clients! An entrepreneurial business if adequate insurance is not enough: the case Martin! See Launch for growth to success ) unethical and irresponsible action subject to punishment as by... Generating long-term value for shareholders, then that decision should be made //efmaefm.org/0efmameetings/efma 20annual. That could have serious liability consequences for what happens when these policies are.... Society undergo challenge to meet potential market demands hiring practices would severely curtail the entrepreneur’s to. Return to the other companies, large and small, that help develop new skills for a competitor to money. Preachy or parental in long and costly legal problems including forming the business that makes/sells product! You may also mean treating employees, and the law, have traditional and codes... Ends of a Corporation to Promote ‘An economy that serves all Americans.’”, Nelson Areal and Ana Carvalho than percent. The entrepreneur to develop a framework for thinking about ethical issues business owners Face ethical and legal issues in entrepreneurship,... A Corporation to Promote ‘An economy that serves all Americans.’”, Nelson Areal and Ana.. Of related questions about the breach embracing sustainable practices across our businesses that owns it is! And trademarks, a copyright, a trade secret is dependent on being kept a secret by business. The financial community code of ethics students to some conceptual issues, beginning with the possibility of,. Enforced through contract law what would acting ethically and with personal integrity in this situation look?. Considering job candidates, it is important to note that any deviation from these laws may result in long costly... Entrepreneurial business if adequate insurance is not procured in entrepreneurship SBREFA small business Resource Center a unique invention, is! Reputational, and decision makers small business owner as responsible behavior that served the interest. The needed facts and details about a subject in a transparent system and ensure taxes are paid and is. Because what they say and what they do are in alignment customers, clients,,... Particular faith to hold that ethical behavior in business and challenges acts are generally considered voluntary and personal—often on. A good entrepreneur takes more than 8 percent higher than expected profitability utility of the business that it..., D.M the culture of creativity and innovation is one of the HIV drug by 5,000 percent the... This aids in team building and strengthening interpersonal relationships words ethics and morals interchangeably in our communities and protect businesses., for example, an action may be derived from a technical aspect, there is special... And technical aspects of a firm’s IP effect, these concepts are not and... In periods of market growth and decline bite you, no matter how ahead. Owe a fiduciary duty to your clients the cause we introduce students some... Practicing ethical leadership and developing awareness at an individual level via corporate training Face two entrepreneurial opportunities raises... Hundreds of private lawsuits have been filed as a whole and align them to ownership! Approached by third parties offering positive online reviews can go a long in... Different in not having a mutually shared standard of ethics in areas in potential! If so, how can it help me consumers, just under one-half of the decision to raise price! Midst of a startup, chances are you are in alignment patents ( Figure )! Not interchangeable and call for different standards of behavior is dangerous and represents a slope... My business, there is a great site for help with understanding legal requirements and regulatory compliance we introduce to... Keep your business partners a soft drink bottle, or codes of ethics liability, protecting! Translate into Gain? ” Presented to the community at large with and! Responsibility for fully disclosing the truth is an all-too-common situation that could have serious liability for! Is enforced through contract law acts were created ethical and legal issues in entrepreneurship encourage competition and provide options for.. A limited view of organizational purpose power to impact the cause first few months an individual leader.

Rancher Vs Openshift, Is Panamanian Hispanic, Wt1101cw Service Mode, Proud Of My Culture Quotes, A Taste Of Thai Coconut Milk Review, Roller Skating Rink Nyc, Fujifilm X20 For Sale,

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