Business ethics: Can small entrepreneurs afford to be ethical?


Can a company be too small to afford to practice good business ethics?

In their early start-up stage, some small companies may try to cut corners by ignoring established ethical practices, thinking these could be handled later when their business shall have stabilized.   The premise here is that complying with a high standard of business ethics is expensive or even wasteful or unnecessary.  Another premise is that new and struggling businesses are exempt from strict standards and rules while they are trying to get established.

Ethics is not a “sometime” thing, but an “all the time” imperative, according to George May International.  There is no aspect or stage in the business to which fairness, honesty and integrity do not apply. 

Being good”  is good for business.  It is not expensive over the long run.  Why? Because ethical products made by ethical companies are more appealing  to the local and export markets.  They are also more attractive to  joint-venture partnerships and strategic business alliances.

Principled leadership as key

Personal ethics is a foundation for running an ethical business.  An entrepreneur with high ethical standards in his personal life will run a shop or a factory with the same principled leadership. 

Basic business ethics should flow down from the top to the rank and file.  These will also influence how the company deals with customers, suppliers, and other stakeholders. 

It is sometimes tough to follow one’s own ethical guidelines.  Competitors may seem to be doing everything – by hook or by crook — just to get the business. Employees do whatever they think is necessary to protect their job.

Business proprietors and CEOs  will do well to remember they are their own best change agent.   Their people – from the managers and supervisors to the humblest clerk  – look up to them for cues.  If they see their leader cutting  ethical corners, they will think that it is okay to be similarly  lax and compromising.

Expectations of the entrepreneur must be made clear and in writing.  If the company doesn’t have a code of conduct yet, these expectations in terms of ethical behavior and decision-making must be included in an employee handbook that everyone in the company is  expected to read and take to heart.  

Policies must be enforced indiscriminately.  Ethical breaches must be noted and penalized, regardless who does it – a top performer or an ordinary worker.  Unethical behavior will likely be repeated and multiplied when others see that it is tolerated or ignored. 

Note:  Excerpted from “Ethics in Entrepreneurship” by Myrna R. Co in Windows to Entrepreneurship, A Teaching Guide, SERDEF 2013.

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