<p>All entrepreneurs aspire to successful enterprise.&nbsp; We wish to supply our services and products to ever-widening markets and use whatever is economically feasible at our disposal to penetrate those markets.&nbsp; We speak the language of entrepreneurship and economics.&nbsp; These comprise our nature as risk takers, business owners, managers, and suppliers.&nbsp; We negotiate around price, performance, and customer satisfaction.&nbsp; These are the components of entrepreneurship.&nbsp; One basic link often ignored in the equation of the economics of entrepreneurship is ethics.&nbsp; Therefore, it is important that we speak the language of ethics.</p> <p>Self-interest and self-preservation at times tend to compromise ethics.&nbsp; Today's economic environment thrusts the entrepreneur into a survival mentality.&nbsp; Economic conditions catch businesses in the throes of retrenchment due to cutbacks from customers and limited financing.&nbsp; What does the business owner do in such times?&nbsp; Pressure mounts on sales organizations to make revenue numbers while facing cutbacks in spending on sales and marketing ventures for gaining more clients.&nbsp; These cut at both ends of business expansion: revenues to expand the business and funds to capitalize it.&nbsp; With net margins trimmed and the desire to look good, businesses face another option: compromise in ethics.</p> <p>Ethics stand as a vital bridge between entrepreneurship and economics.&nbsp; Economics does not consist of just a larger framework of a host of businesses working within the marketplace buying and selling goods and services.&nbsp; However, due to the emphasis placed on international markets, gross domestic product, and Dow-Jones averages, the business environment becomes consumed with stock prices, credit, bonds, mutual funds, and so on.&nbsp; Although these are some of the drivers of the economic engine in the free market, they often distract businesses from the economics within their own firms.&nbsp; </p> <p>Economics has its root in the Greek language that signified "house management."&nbsp; Large or small, proprietorship or corporation, the business or firm is the economic house of the entrepreneur.&nbsp; The real engine that drives the management of that house is ethics and not capital.&nbsp; Capital depreciates through use but firmly planted ethics remain and flourish. &nbsp;</p> <p>If ethics do not stand as the primary pillar of the house, it will fall under a weight of corruption.&nbsp; Scores of failed companies and political leaders alike attest to this fact.&nbsp; Ethics are self-limits entrepreneurs place on themselves for the vitality and well-being of their firms.&nbsp; They must deal ethically with other businesses for successfully promoting their products and services.&nbsp; Trust is the linchpin of the free market.&nbsp; If not, the heavy hand of the legal system becomes onerous.&nbsp; P. J. O'Rourke writes, "Freedom cannot exist without limitations" (P. J. O'Rourke on the Wealth of Nations, [paperback] Grove Press, 2007, p. 63).</p> <p>The question is, "What are self-limits as opposed to external limits imposed on the business?"&nbsp; This is a key question for the entrepreneur to answer.&nbsp; The ever-expanding pages of the IRS code confirm that the government stands ready to penalize violators of tax law.&nbsp; Whether we like it or not, Sarbanes-Oxley serves as a watchdog over financial statements.&nbsp; These remind businesses that compromise has a price to pay.&nbsp; Limits imposed from an external source do not necessarily tend toward ownership of ethics. &nbsp;A society can have an increasing set of laws, but they do not curb all crime nor change inward character.&nbsp; Just as the business owner is most apt to have a greater interest in the business, so also do internally imposed limits work better than external ones.&nbsp; Employees tend to look for carrots and incentives, whereas the entrepreneur receives the greater motivation from ownership.&nbsp; This is not to say that employees have lesser motivation in managing or working the business.&nbsp; They also have internal driving forces that provoke them to excel.&nbsp; This internal force, I contend, is the freedom to pursue their dreams and own successes. They also work from a sense of ownership that comes from exercising responsibility. &nbsp;</p> <p>These forces alone are insufficient for successful business management.&nbsp; They must impose ethical limits on themselves for success.&nbsp; However, material success does not equate to moral success.&nbsp; Examples flourish throughout modern societies illustrating that ethical lapses in business lead down a slippery slope toward corruption and lack, bruising others on the way down.</p> <p>John C. Maxwell writes that business ethics do not really exists (There's No Such Thing as Business Ethics, Warner Business Books, 2003).&nbsp; He is correct.&nbsp; Businesses are not personal entities.&nbsp; Rather they are comprised of decision makers who place their ethical stamp on the business through their actions and behaviors.&nbsp; He cites three reasons for ethical lapses: convenience, a must win attitude, and relativism (pp. 5-9).&nbsp; Expediency is a close kin of these three.&nbsp; Expediency can pave the path to ethical compromise.&nbsp; Expediency can lead to manipulating numbers for attractive financial statements or covering up product or service deficiencies for the sake of gain.</p> <p>Therefore, ethics are internally self-imposed limitations for entrepreneurial success.&nbsp; Ethics do not guarantee material success, but they carve a straight path.&nbsp; No one can force a person to be honest and upright in dealing with others.&nbsp; These internal traits comprise a person's character.&nbsp; Government and bosses can impose laws and a code of conduct to govern and rightfully so.&nbsp; However, codes and laws are not intended for persons who do right according to a character of integrity.&nbsp; Rather, they are intended for those who tend to violate them.&nbsp; Adam Smith rightfully wrote, "When the law does not enforce the performance of contracts, it puts all borrowers near upon the same footing with bankrupts or people of doubtful credit" (Wealth of Nations).&nbsp; That is, those who tend toward cutting corners in their business drag others down with them if legal code does not prevent it.&nbsp; This, in turn, leads to the disintegration of the free markets.</p> <p>What does this look like in daily business affairs?&nbsp; The entrepreneur must lead by example in upholding the highest regard for ethics in the company.&nbsp; A leader is a service provider to all constituents within and to the company.&nbsp; Sound leadership holds ethics in high regard and exhibits integrity.&nbsp; This regard is an internal quality that says, "I value the governing principles that apply to all persons for the good of society, because such value is ingrained in my person.&nbsp; I also value my fellow human because he or she is my equal."&nbsp; </p> <p>Attempting to cut corners in business under pressure to meet the numbers or failure to deliver according to agreements lead only to hurt the entrepreneur and those served.&nbsp; As these practices work their way out among all businesses, they cause great harm to the free market and lead to greater external imposition on all businesses.&nbsp; An internal set of ethics promote greater freedom, enhance the entrepreneurial spirit, grant success, and lead to greater house management (economics).&nbsp; </p> <p>Doing the right thing works from an internal core and forms an upright character.&nbsp; External codes and laws can force people to do right but fail to change the internal core of one's character.&nbsp; </p> <p>However, exactly what is the right thing? &nbsp;All of us know about integrity, promise keeping, commitment, and truthfulness.&nbsp; We learned these traits from childhood.&nbsp; All of us know the difference between truth and falsehood.&nbsp; From that point, it is simply a matter of practice.&nbsp; An important question arises for us personally and in the business world - do we practice integrity or do we have it imposed on us from an external source?&nbsp; The capital we use to build our business becomes consumed through production, but the capital of our character outlasts all material resources.</p> 2008-10-18T22:56:42Z -16.2742 590 1990 true 17 10138 the-entrepreneur-economics-and-ethics 0 2008-10-20T14:15:19Z 2008-10-20T14:15:19Z

Entrepreneurs aspire to success and speak the language of entrepreneurship and economics. It is important that we speak of ethics. The capital we use to build our business depletes, but the capital of our character outlasts material resources.

0 2009-02-24T09:46:38Z