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Ethics and Entrepreneurial Action

By Jon Fjeld, Director, Innovation & Entrepreneurship Initiative

An important objective is for students in the I&E program to develop an ethical lens for evaluating their entrepreneurial action. The core idea of I&E programming is:

Realizing innovation for social good (goal) by means of entrepreneurial action (means).

Ethics is practical discipline. It is concerned with human action in the broadest sense. It concerns the question of what we should do — how we should act and conduct our lives. The concept of action is central. Action is purposeful, deliberate and under one’s control.

Entrepreneurial Action

When we use the term entrepreneurial action (rather than entrepreneurship), we bring our subject squarely into the domain of ethics. Entrepreneurial action is action. It is the pursuit of goals and it is guided by principles. In this context, it is very important to develop a model of entrepreneurial action and think critically about it.

To see how ethics would inform entrepreneurial action, let’s consider the four dimensions of thinking or deliberation that inform action.

1. Goals: What purpose is the action aiming to achieve? Ethical action involves the critical evaluation of the goals.

An important element of reasoning about goals is the hierarchy of means and ends.

2. Principles: Here I mean rules or maxims (think the ten commandments).

When one thinks about principles in this sense, one is forced to characterize and evaluate action under some general concepts. One is thinking about the principle underlying an action.

Consider an example: The phone rings and I tell the person, falsely, that my daughter is not at home. What am I doing? Lying? Protecting? Controlling? Each characterization carries with it the judgment that I am acting according to or violating a principle. Evaluating an action involves characterizing honestly and accurately and considering the rules or maxims that may be involved.

3. Consequences: Actions have effects on other people and possibly the larger world (also on ourselves, to be considered shortly).

Evaluating action involves considering who is affected and how. Ethics involves being thoughtful in understanding and evaluating the consequences of our actions. We need a framework for making what are often difficult decisions.

A good example in the entrepreneurial context is how one deals with poor performance or team dysfunction. One needs to consider consequences for the individual and for the team, and there is usually the constraint of limited resources. This kind of problem is especially difficult in the case of needing to cut back — downsizing. People may lose their jobs not through poor performance on their part but due to miscalculation or poor planning on the part of the leadership — the very people who will be letting the employees go.

4. Character: Our word ‘ethics’ comes from the Greek word meaning habit.

One’s character is a product of one’s habitual actions. One develops character through the actions one performs repeatedly. In choosing actions, one is choosing what sort of person one will become.

The powerful idea put forward by Aristotle is that virtue, being a good person, is achieved by repeatedly doing the right thing, at first under guidance but eventually on one’s own and for the right reasons.

The critical question, of course, is how do I know whether my action is right (“ethical”)? The criteria or standards by which an action is judged are internal. Through action, observation of consequences, and critical reflection, we develop these standards for ourselves.

What does this have to do with entrepreneurial action?

  • The features described above are all present in entrepreneurial action. We can consider entrepreneurial action to fall under ethics as a practical discipline. Educational programs in entrepreneurial action should make these features explicit.
  • Entrepreneurial action has the added dimension that it is both for and with others. When one undertakes entrepreneurial action, one is taking on additional responsibilities and obligations 1) to the constituency being served and 2) to those with whom one is collaborating.

In the late nineteenth century, Frederick Taylor created Scientific Management. This was a theory about how to make a manufacturing operation as efficient as possible. The basic concept was to divide labor into very small, highly specialized tasks and to train workers to perform those tasks as quickly and uniformly as possible. (Interestingly, Karl Marx, decades earlier, connected increasing specialization with the alienation of labor from the products of labor.) The connection of specialization to increased efficiency found its way into education as well. Some people began to conceive of the goal of education as the production of workers (including managers) who are specialists. On this model of work, labor subcontracts its time and effort to others who bear the responsibility of decision-making (this is possibly an overstatement).

The goal of a liberal arts education is the opposite. Its goal is to develop empathetic critical thinkers. Liberal arts graduates will be contributors to society and effective members of a variety of organizations, including many that are unforeseen.

Experience in entrepreneurial action can be an integral and valuable component of liberal arts education. For this to be true, students must be brought to think about the deeper context of entrepreneurial action. The lens of ethical action must be front-of-mind in the evaluation of alternatives and decision-making.

Jon Fjeld headshot

Jon Fjeld is the Director of the Duke Innovation & Entrepreneurship Initiative, Professor of the Practice of Strategy at The Fuqua School of Business, and Professor of Philosophy.


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