Being successful as an entrepreneur may therefore consist of much more than simply making money and growing a venture. Success may also mean treating employees, customers, and the community, with honesty and respect. 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. Success may lie in knowing the profit we make does not come from shortchanging others. 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.
Ethics is one of the features of contemporary civilization. It is widely discussed and elaborated upon. It may even be taught or otherwise introduced into one’s life. One of the areas where ethics has become increasingly important is economic activity or, in broader terms, business. Generally speaking, although an ancient term “ethics” represents an extensive field of philosophy dealing with what is morally right or wrong, applying the one, homogeneous definition of ethics seems to be a little reductionist or even impracticable approach. A code of ethics is a guide of principles designed to help professionals conduct business honestly and with integrity. A code of ethics document may outline the mission and values of the business or organization, how professionals are supposed to approach problems, the ethical principles based on the organization’s core values, and the standards to which the professional is held.
A code of ethics, also referred to as an “ethical code,” may encompass areas such as business ethics, a code of professional practice, and an employee code of conduct.
Recently, a new meaning of ethics is observed and ethics with its modern branches (e.g., business ethics) are becoming one of the features of contemporary civilization.
We understand special ethics to be those types of ethical reflections that are not possible without reference to special empirical knowledge. Professional ethics cannot be separated from general ethics, meaning that its claims may not come into conflict with the claims of general ethics. It should be stressed that the claim that professional ethics remains in accordance with general ethics does not entitle one to a presumption that there is a single theory of ethics accepted by everyone. This claim means only that if one wishes to exercise professional ethics (or any other special ethics), a certain ethical theory (of general ethics) must be previously accepted and, furthermore, an obvious claim that the assumptions of special ethics are not in opposition to this general theory must also be accepted.
The most popular understanding of entrepreneurship treats it as an activity aimed first and foremost at generating profit. Thus, historically speaking, philosophical reflections on the ethical decency of growing rich, may be considered to underlie business ethics. In contemporary literature on business ethics, the issue of the moral evaluation of work whose sole purpose is accumulating wealth is considerably thinly covered. This is because ethicists are quite in accordance with the following statement: work motivated by the need for profit is not considered, morally wrong.
Every entrepreneur enters into contracts, usually on a regular basis, and thus should have an understanding of basic contract concepts. Likewise, most businesses are likely to have some involvement with tort law: that area of law that protects the rights of people not to be harmed physically, financially, or in any other way, such as a breach of privacy. Some areas of the business world involve a combination of tort law and contract law, such as litigation involving the wrongful termination of an employee.
Contracts can be formal or informal agreements. Ideally, written contracts can be used weather you enter into a substantial transaction with another party. Oral agreements are enforceable in most situations; however, proving their terms can be difficult. If you are in the midst of a startup, you must move quickly. In case you do not have the time, or the money, to hire a lawyer to prepare a formal written contract, you should at least follow-up with all parties via traditional mail or email to document the key terms of your agreement. That way, if a dispute arises, you will have documentation to fall back on.
Torts are a potential area of risk for entrepreneurs. Financial liability often results from the assumption of and exposure to risk; therefore, this is an important issue for entrepreneurs to manage. This is especially true for the concept of vicarious liability, which is the area of the law that imposes responsibility upon one person for the failure of another, with whom the person has a special relationship (e.g., employer and employee) to exercise reasonable care. Most employers understand they run a risk that their employees may commit a tort, and that they are responsible when employees cause harm to others (customers or coworkers) while on duty, working on company property, and using company equipment. However, many employers are not aware that employers can actually be liable for harm caused by an employee if that employee caused harm within the scope of his or her job duties. 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. A common situation could have serious liability consequences for an entrepreneurial business if adequate insurance, is not procured.
