Examine the concepts of the social entrepreneur and the social business Explore the mind-set of social entrepreneurs Introduce the concept of ecopreneurship Define the term ethics and the implications for entrepreneurs Examine environmental crime and its temptations for entrepreneurs Examine cross-cultural concepts of ethics and corruption Examine the ethics of criminal entrepreneurs and their similarities to other entrepreneurs Focus on the challenges that face disadvantaged entrepreneurs

1. Who are
social entrepreneurs?
• ‘…driven by a social mission,
with a desire to find
innovative ways to solve
social problems that are not
or cannot be addressed by
either the market or the public
sector’.
風向轉變時,
有人築牆,
有人造風車
‘When the wind
changes direction, there
are those who build
walls and
those who build
windmills’.

3. Chapter 4
Social and
ethical entrepreneurship

4. Objectives
1. Examine the concepts of the social entrepreneur and the social
business
2. Explore the mind-set of social entrepreneurs
3. Introduce the concept of ecopreneurship
4. Define the term ethics and the implications for entrepreneurs
5. Examine environmental crime and its temptations for entrepreneurs
6. Examine cross-cultural concepts of ethics and corruption
7. Examine the ethics of criminal entrepreneurs and their similarities to
other entrepreneurs
8. Focus on the challenges that face disadvantaged entrepreneurs

5. Social entrepreneurs
How would goals and success criteria
vary between social entrepreneurs and
more conventional entrepreneurs?
?

6. • “Social entrepreneurs are not
content just to give a fish or teach
how to fish. They will not rest until
they have revolutionised the
fishing industry.”
Bill Drayton,
Ashoka Foundation
Who are social
entrepreneurs?
What is Satish Jha holding?

7. Defining the
social business
Figure 4.1
Defining social
businesses and
enterprises

8. Mind-set of
social entrepreneurs
• Recalling Chapter 2’s discussion on mind-sets . . . do social
entrepreneurs have a different mind-set from business entrepreneurs?
• They have the same skills and temperament but there are differences.
– Not as overtly positive and confident. More likely to fear failure and more likely to say that
lack of finance will stop them. Spiritual dimensions.
• “Scholars and artists come to rest when they've expressed an idea.
Managers, when they solve a problem for their company, complete
their goal. . . . None of that satisfies a social entrepreneur. The
entrepreneur simply knows in a very deep way that, ‘I have got to
change the whole society’.” Bill Drayton

9. • Combine the environmental, economic and social components of
sustainability
• Different organising logic from more conventional entrepreneurs.
• Market creation is more difficult for them
• Face confusion in the marketplace
• Operate their businesses in ways that run counter to popular
perceptions of entrepreneurial behaviour
Mind-set of
sustainability entrepreneurs

10. Different ways of
spotting market gap
Business entrepreneurs
• Find ‘structural holes’ between
similar (homophilous) groups
• Spot market gaps between
connected categories of people
– such as between suppliers and customers.
• Position themselves in the middle
(‘entre’) to plug the structural hole
for their own increased personal
gain.
Social entrepreneurs
• Find ‘structural holes’ between
competing (heterophilous) groups.
• Do not see others in terms of
categories (for example, suppliers and
customers), but rather as real
individuals.
• They value the unity of the whole of
society and attempt to link others to
the benefit of society.

11. • What could the word sustainable
mean?
• What is its old and its new definition??

12. • Traditional definition
– surviving or maintaining a business’ viability against its competitors.
• New definition
– real commitment to the environment and climate change
mitigation/adaptation as well as a revamping of the entire business
model to its core.
– providing products and services without jeopardizing the environment
Sustainable

13. • Traditional definition
– surviving or maintaining a
business’ viability against its
competitors.
• New definition
– real commitment to the
environment and climate change
mitigation/adaptation as well as a
revamping of the entire business
model to its core.
– providing products and services
without jeopardizing the
environment
Sustainable
City of Melbourne, Australia, across the
four domains of sustainability

14. Ecopreneurs
• ecopreneurship = ‘ecological’
and ‘entrepreneurship’.
• Ecopreneur combines the
unrelenting drive of the
entrepreneur with the
stewardship of a conservator
rather than the devastation of
an exploiter. Bob Brown, former leader of the
Australia Green Party

15. Seeking competitive advantage
on a warming planet
• Many entrepreneurs are ad hoc ecopreneurs
– seeking to find commercial opportunities in a carbon-constrained world.
– find products and services that hedge against physical climate risk,
– mitigate regulatory costs
– improve/ repair corporate reputations through green business.
– seek to manage climate risk in the supply chain,
– invest in low-carbon activities and
– innovate new technology that sells while improving the planet.

16. Profitability drivers for
climate-change-oriented entrepreneurs
Revenue drivers
• How to pass climate-related costs through to
customers?
• How to generate streams of revenue from new
low-carbon products?
• What new forms of income (for example,
carbon credits) will become available?
• What threats do we face from low-carbon
substitute products?
• What will be the impact of weather patterns on
revenue?
Cost drivers
• How can we pass on our regulatory costs?
• Is there a chance that emissions will be taxed?
• How much will our raw materials costs
escalate? And those of our competitors?
• How much will our energy costs rise?
• How will our risk profile affect our insurance
premiums? 41

17. Do you agree?
• That ‘the business of business is business’.
– Is this still used to excuse profit and shareholder
value being put ahead of employee welfare and
protecting the environment?
• Corporate social responsibility (CSR) was
all the rage.
• This laissez faire attitude may have built a base of prosperity for some, but
at considerable social cost for many and lasting environmental costs for the
planet.
• Entrepreneurship can cause losses and hardships for some members of
society … even as it creates new wellbeing among other stakeholders
?

18. We are now in a different era
• CSR helped sensitise business to a growing range of
economic, social and environmental challenges
• Progress has been slow.
• We are now in a different era where we need
Corporate Responsibility for a Sustainable
Environment (CRSE)
• For entrepreneurs, research evidence increasingly
shows that profit and sustainability can go hand in
hand.

19. What do you think?
What does ethics have to do with entrepreneurship?
• If you are invited to a business contact for dinner in
China . . . ?
• Is it ethical to change the name of your business . .
. ?
• Is it ethical to put pictures of young children . . . ?
• Is it ethical to pad your expense account . . . ?
• Is it ethical to put your business's rubbish . . . ?
?

20. Entrepreneurial ethics
• The Greeks were interested in right and
wrong conduct (ethos).
• Chilon (in about 560 BCE) stated:
– ‘A merchant does better to take an honest
loss than to make a dishonest profit’.
– He reasoned that a loss may be painful for a
while, but dishonesty hurts forever.
• Some entrepreneurs are not ethical

21. Why are some entrepreneurs not ethical?
• Is it because they have a strong ‘action bias’
that prevents them from considering ethical
issues?
• Is it because they are more focused on personal
financial gain even at the expense of others?
• Is it because they love rule-breaking and are
non-conformists?
• Is it because they lack resources and must rely
on corruption and bribery?

22. ‘Greed is good’
• The attitude in Gordon Gekko’s phrase
‘greed is good’ (from the 1987 film Wall
Street) has fuelled a series of economic
crises. (Audio)
• Many entrepreneurs ‘see what works as
right’.
• A moral consensus does not exist in our
dynamic, changing environment.

23. Morally
questionable
acts

24. When must ethical conduct break the law?
• Case Study
–Sea Shepherd's
harassment of
Japanese whaling
ships in the
Southern Ocean.
?

25. What is ethical with your own team?
• How do you divide up the ownership shares?
• The unavoidable ethical dilemmas that
entrepreneurs face in dividing up shares
• Startup Equity Calculator
?

26. When in Rome, do as the Romans do?
• Corruption =
Monopoly +
Discretion –
Accountability

27. Corruption around the world
World rank / Country
1 New Zealand
5 Singapore
9 Australia
14 United Kingdom
15 Hong Kong
18 Japan
19 United States
36 Taiwan
46 South Korea
53 Malaysia
80 China
94 India
94 Philippines
102 Thailand
114 Indonesia
116 Vietnam

28. Build a line item in your Business Plan for
‘compliance commissions’

29. Entrepreneurship
and organised crime
• Examples: Boot-legging cigarettes,
hydroponic cannabis growers, pimping,
people smuggling, illegal dumping,
species smuggling and prostitution.
• Face same challenges as
entrepreneurs.
– Must be excellent risk managers
– ‘Know-who’ is as important as know-
how.
– Are future-oriented organisation
builders.
– Work the edge or the margin.
– Seek ‘niche advantage’
– Satisfy consumer demand that
legitimate markets ignore.
Ross Ulbricht’s LinkedIn profile. This Internet
entrepreneur, founder of Silk Road, was sentence to life
in prison without possibility of parole.

30. Environmental criminal
entrepreneurs
• Deliberate or careless act that
harms the environment, e.g.
– illegal logging and timber
smuggling
– wildlife smuggling
– black market in ozone-depleting
substances,
– dumping of hazardous wastes
and chemicals
Illegal waste dump
Illegal ivory trade

31. Environmental
criminal
entrepreneurs
• Environmental crime
is worth billions of
dollars in profit to
criminal groups
around the world.
• Here are the major
criminal groups.

32. • Have difficulty integrating into the
market and are typically located
outside the mainstream.
• Suffer ethnic disrespect, lack of
language skills, poor access to
finance and urban poverty, usually
at the bottom of the social ladder.
• Different from ethnic or
indigenous entrepreneurs.
Disadvantaged
entrepreneurs

33. • Is it possible that being disadvantaged
may actually lead one to become more
entrepreneurial?
• Are entrepreneurs more likely to emerge
from deprived or marginal groups?
• Corresponds with what is called the
social marginality theory
• When a group is discriminated against,
then a psychological disequilibrium might
occur.
• This might drive a person into
enterprising behaviour to compensate for
this imbalance
Disadvantaged
entrepreneurs

34. Indigenous entrepreneurs
• Found in every inhabited climate zone and continent.
• Everywhere they suffer from chronic poverty, lower
education levels and poor health.
• Colonisation and post-colonial practices deprived
Indigenous people of their land, their culture and their
human rights.
• Government assistance produced only mixed results
• Indigenous entrepreneurship has been a positive step
for some groups, but it is not the answer for all
Indigenous people.

35. Indigenous Australian
entrepreneurs
• Three per cent of population with endemic poverty, poor health, low
literacy, poor employment prospects.
• Archaeological evidence suggests that Aboriginal people engaged in
wide-ranging intellectual, trade and entrepreneurial pursuits.
• Trade routes traversed the Australian coast prior to European
settlement.
• Goods such as pearl, shell, flints and axe heads, oyster and turtle,
knives, were traded and sold over vast distances, including
Indonesia.
• Now Indigenous people are often caught in a spiral of discrimination
that is scarcely conducive to authentic entrepreneurial activity.
• Building an enterprising spirit in these circumstances is far from easy.
Australian arts
entrepreneur Jessica
Mauboy

36. Māori entrepreneurs
• GEM study showed Māori had highest
entrepreneurship rate in OECD.
• Māori have a history of commerce and resource
ownership.
• Cultural resistance to wealth creation
• Unhelpful cultural attitudes towards failure, risk, and
growth.
• Trapped by the reverence for the past of their elders
• Need to be accepted as successful in the “white”
business world.

37. Key concepts
(close your books)
1. What does ethics have to do with
entrepreneurialism?
2. How are ecopreneurs, social
entrepreneurs and Indigenous
entrepreneurs different to
conventional entrepreneurs?
?

38. Key concepts
• Ethics and entrepreneurship
– Ethical behaviour by entrepreneurs is required for the
future of our planet.
– Ethical entrepreneurship protects individuals and
communities from corrupt business practices.
• Ecopreneurs, social entrepreneurs and Indigenous
entrepreneurs:
– are focused on un-selfish goals
– are committed to larger outcomes than the profit motive
– can succeed despite significant challenges.