Ethics and Entrepreneurship

Not a new topic, figured prominently in

philosophical taught since the time of Socrates,
Plato and Aristotle.
Ethics derived from the Greek word ethos,
meaning custom or mode of conduct.

Defining Ethics
Ethics provide the basic rules or parameter for
conducting any activity in an acceptable manner.
It represents a set of principles prescribing a
behavioral code that explains what is good and
right or bad and wrong.
Outline moral duty and obligation.

Business Ethics
Defined as written and unwritten codes of principles and
values that govern decisions and action within company.
The organizations culture sets standard for determining the
difference between good and bad decision making and
behavior.
Can be used to describe the actions of individuals within an
organization, as well as a whole.

Shareholder Versus Stakeholder

Shareholder Perspective
Focus on making decision that
are in the owners best
interest.
Maximize ROI
Individuals who approach
ethics from this perspective
feel that ethical business
practices is the ones that make
the most money

Stakeholder Perspective
CSR Corporate Social
responsibility i.e the belief that
companies should consider the
needs and interests of multiple
stakeholders groups, not just
those with a direct financial
stake in the organization P&L
How decisions made impact
those outside the organization

Internal and External

Stakeholders

Internal
Investors
Management People
Board of Directors
Employees

External
Customer
Union
Government
Creditors
General Public
Suppliers
Special Interest Group

Ethical Behavior

Is my decision a truthful one?

Is my decision fair to everyone affected?
Will it build goodwill for the organization?
Is the decision beneficial to all parties who have a
vested interest in the outcome?
When these questions can truthfully be answered with a yes , it is
likely that the decision is an ethical one.

Reasons to Run Business Ethically

Protect brand and company reputation

It is the right thing to do
Maintain customers trust and loyalty
Maintain investors confidence
Earn public acceptance and recognition

 In business, refers to the production of new and useful

ideas. It is the point of origination for innovation and
entrepreneurship.
A process through which invention occurs.
Innovation begins with creative ideas.
It is also referred to a mental process involving the
generation of new ideas or concepts, or new associations
of the creative mind between existing ideas or concepts.

 Kuratko and Hodgetts(2001) the generation of ideas that result in

the improved efficiency or effectiveness of a system. Two important
aspects of creativity are process and people.
Baron and Shane (2008) the generation of ideas that are both novel
(original, unexpected) and appropriate or useful which they meet
relevant constraints.
Zimmerer and Scarborough (2008) the ability to develop new ideas
and to discover new ways of looking at problems and opportunities.
Innovation refers to the ability to apply creative solutions to
problems and opportunities to enhance or enrich peoples lives.

Phase 1: Background or Knowledge

Phase 2: Incubation
Phase 3: The idea experience
Phase 4: Evaluation and implementation

Phase 1: Background or Knowledge

Getting mind ready for creative thinking

Formal education, working experience

Blend ideas from different fields
Discuss with other people
Read magazines, journals newspapers

Require entrepreneur to understand

problem/situation
View similarities and differences on info collected

Phase 2: Incubation
Do nothing with the situation/problem
Do unrelated thing
Get away with the problem and let your
subconscious mind work on it.

Phase 3: The idea experience

Most exciting phase
When idea/solution is discovered ideas emerge
when entrepreneur busy doing unrelated things
In most cases, ideas come incrementally when the
person begins to formulate the solution.

Phase 4: Evaluation and

implementation
Most difficult step
Skills needed to execute ideas
Phase when person ready to face the challenges

Barriers to Creativity

Searching for the one right answer

Focusing on being logical
Blindly following the rules
Constantly being practical
Becoming overly specialized
Avoiding ambiguity
Fearing looking foolish
Fearing mistakes and failure
Believe that I'm not creative

Enhancing creativity in an
Organization

Include creativity as a core company value

Embracing diversity
Expecting creativity
Expecting and tolerating failure
Encouraging curiosity
Creating a change
Viewing problems as challenges
Providing creativity training
Providing support
Developing a procedure for capturing ideas
Talking with customers
Looking for uses for your companys products or services in other markets
Rewarding creativity
Modeling creative behavior

Enhancing creativity in an Individual

Allow yourself to be creative
Give your mind fresh input everyday
Observe the product/services of other companies especially
those in completely different markets
Recognize the creative power of mistakes
Keep a journal handy to record your thoughts and ideas
Listen to other people
Listen to customers
Talk to a child
Keep a toy box in your office
Read books on stimulating creativity or taking class in creativity
Take some time off

Techniques for Creative Thinking

Brainstorming
Forced Analogy
Storyboarding
Imitation
Mind Mapping

Brainstorming
A group creativity technique designed to generate a large
number of ideas or solutions.
Small group of people (6-8) interact with very little
structure.
Work best when they follow these rules:
Suspend judgment no critical comments are allowed
Think freely every idea is accepted and recorded
Encourage ideas to build on the ideas of others improve,
modify others ideas
Quantity of ideas is important generate more (20-30 per
session)

Forced Analogy
The action of making an association between two unlike things in
order to obtain new insights.
It takes a fixed element (product) and forces it to take on the
attributes of another unrelated element
Choose an object at random and see what relationship you can
force
Then record the attributes and explore the problems
Eg; Forced analogy between a matchbox and a corporation
Six sides six essential organizational divisions
Sliding centre section The heart of the organization should be slidable
or flexible
Made of cupboard Inexpensive method of structure, disposable

Storyboarding
Put all thoughts on a wall and spreading them out
when doing a project or solving a problem.
You will begin to see the interconnections and
become immerse/absorb in the problem

Mind Mapping
Encourage thinking using both sides of the brain.
Visually displays the various relationship among
ideas and improve the ability to view a problem
from many sides.

 Zimmerer and Scarborough (2008) defined innovation

as the ability to apply creative solutions to problems
and opportunities to enhance peoples lives.
It is a process of creation and execution of new idea
(Heilriegal, Jackson and Slocum,2002)
It is also defined as a transformation of creative ideas
into useful application, which is something that
marketable.

Types of Innovation
Invention
Extension
Duplication
Synthesis

 Introduce a new form of product, devise, service,

process.
Some inventions are based on pre-existing forms,
compositions, processes and ideas.

 Improvement or new use of existing

product/service/process
Eg; Mainframe

desktop

notebook

 Creative replication or adaptation of an existing

product/service/concept.
It can take place across different market or
industries.
Eg; fast food chicken outlets such as Chicken
Rice Shop and Ayamas were adapted from the
KFC in USA

 Combination of an existing product, service,

process into a new formulation .
Eg; fax machine=(telephone+ photocopier)
multipurpose mobile phone =(telephone +
camera+ organizer + music player)

 Unexpected occurrence event/situation

unexpected success or failure
Eg; Antibacterial effect on penicillin was discovered accidentally in 1928.

Incongruities
occur when a gap exists between expectations and reality
Eg; Federal Express the worlds first overnight courier

Process needs
When demand arises when it is needed
Eg; preserve enzyme for cataract surgery

Industry and market changes

Changes in consumer attitudes, advances in technology, industry growth
Eg; Private medical centre imitates five-star hotels to win a share of wealthy
sick customers

 Demographical changes
age, education, geographical location bring a lot of useful ideas

Perceptual changes
Members of a community can change their interpretation of
facts and concepts thereby open up new opportunities
Eg; people living in big cities perceive 50km/1hour journey to
workplace as acceptable whereas residents in small towns
would not.

 Development and improvement of an invention

The use of natural resources
Open up new markets.