Ethical entrepreneurship does not have to be an oxymoron
Considering our experiences with tenderpreneurs, one could be forgiven for adopting a cynical attitude towards the notion of ethical entrepreneurship.
The practice and discipline of ethical entrepreneurship is based on the principles of transparency, honesty and integrity. By adopting ethical practices, South African start-ups and SMEs can build trust with their stakeholders, including customers, suppliers, employees and prospective funders.
Building trust is crucial for the long-term sustainability of SMEs as it helps to attract and retain customers and investors, and fosters positive relationships with suppliers and employees.
It is trite that SMEs face a range of risks, including financial, operational, legal, skills and reputational risks. Ethical entrepreneurship can help SMEs mitigate these risks by promoting good governance practices, ensuring compliance with laws and regulations, and fostering a culture of ethical behaviour.
By mitigating risks, SMEs can reduce the likelihood of financial losses and reputational damage, which can be particularly devastating for start-ups.
Logically, and in the context of international trade, ethically aware SMEs and entrepreneurs are likely to benefit more from intertrade flowing from initiatives such as the African Continental Free Trade Agreement due to their enhanced trust factor.
A critical aspect of ethical entrepreneurship is its potential to help SMEs build a positive reputation in the marketplace. A good reputation can be a competitive advantage, as supply chain managers are more likely to do business with companies they trust and respect.
In addition, a positive reputation can help SMEs attract and retain talented employees and access financing from business funders who value ethical business practices.
However, the discipline and practice of ethical entrepreneurship invite cynicism in certain sections of academia. Despite evidence to the contrary, some scholars assert that ethical entrepreneurship is an oxymoron.
To my astonishment, I discovered that this cynical view is shared by my former university professor – who lectures on ethics – when I engaged him recently on the subject of ethical entrepreneurship in the context of corporate greed and sustainability.
The argument that the said professor advances, based on his Marxist leanings, is that ethical entrepreneurship is inherently contradictory. This argument is predicated on a Marxist analysis of capitalism and entrepreneurship which sees all entrepreneurial activities as inherently exploitative and leading to negative social consequences.
Considering our experiences with tenderpreneurs whose greed and ill-gotten gains sustain their ostentatious lifestyles at the expense of public service delivery, one could be forgiven for adopting a cynical attitude toward the notion of ethical entrepreneurship.
However, this view ignores the fact that entrepreneurship can be pursued in a way that is socially responsible and environmentally sustainable, and that can contribute to the overall wellbeing of society.
Social responsibility, sustainability and the greater good
First, it is important to note that entrepreneurship can be pursued with ethical considerations at its core. Ethical entrepreneurship involves business activities that are driven by a commitment to social responsibility, sustainability and the greater good of society.
This type of entrepreneurship aims to create value for all stakeholders, not just shareholders, and operates in a manner that is transparent, accountable and socially responsible.
Second, ethical entrepreneurship can contribute to sustainable development by promoting innovation and creating new business models that are more community-driven and sustainable. Entrepreneurs can develop new technologies, products and services that can reduce environmental impact and promote sustainable practices.
Additionally, entrepreneurship can create jobs and economic opportunities that can contribute to poverty reduction, especially at community level.
Third, it is important to note that not all entrepreneurship is created equal. There are different types of entrepreneurship, and some may be more exploitative or have more negative social consequences than others.
However, this does not mean that entrepreneurship as a whole is inherently problematic. It is possible to promote and support ethical entrepreneurship that – as stated above – is socially responsible, environmentally sustainable and contributes to the overall wellbeing of society. Ethical entrepreneurship is not antithetical to environmental sustainability. In fact, the opposite holds true.
While Marxist analysis, predicated on group mentality and political dogma, may view all entrepreneurship as inherently exploitative and leading to negative social consequences, there is ample evidence to the contrary.
While some also hold the opposite, it is not accurate to refer to ethical entrepreneurship as an orthodox business ethics perspective. Orthodox business ethics is a broad term that refers to the traditional approach to business ethics, which focuses on the ethical responsibilities of businesses to their shareholders, customers, employees and other stakeholders.
Value for all
Ethical entrepreneurship, on the other hand, is a specific approach to entrepreneurship that emphasises ethical values, social responsibility and sustainability. Ethical entrepreneurship goes beyond the traditional focus on profits and shareholder value and seeks to create value for all stakeholders, including employees, customers, communities and the environment.
Ethical entrepreneurship is a departure from the orthodox business ethics perspective, which has been criticised for being too narrow in its focus and too focused on the interests of shareholders.
As they race to attain their environmental, social and governance goals, South African corporates have a unique opportunity to simultaneously realise impactful enterprise development goals by aligning with initiatives that inculcate ethical entrepreneurship in their enterprise supplier development ecosystems.
Ethical entrepreneurship could be the Holy Grail needed to address the socioeconomic zeitgeist of this era, driving impactful enterprise development. It should not be viewed from an orthodox business ethics perspective, nor is it inimical to contributing towards social good.
It is a specific approach to entrepreneurship that emphasises ethical values, social responsibility and sustainability, and goes beyond the traditional focus on profits and shareholder value. DM
Tebogo Khaas is global chief entrepreneur at the Institute of Chartered Entrepreneurs, and former chair of the Massmart-Walmart supplier development advisory board.