Ethical Theories
Ethical Theories in Entrepreneurship
While many theories focus on the mechanics of starting a business, ethical theories explore the moral dimensions of venturing. Below are the key frameworks regarding entrepreneurial ethics and social responsibility.
1. Feminist Theory
Feminist theory critiques the traditional definitions of success in business. It suggests that mainstream entrepreneurship theories are often gender-biased, valuing aggression and competition while undervaluing collaboration and social impact often found in female-led ventures.
2. Machiavellian Theory
Often cited as a counter-example to ethical behavior, this theory suggests that entrepreneurs must be willing to use manipulation and ruthless pragmatism. It posits that "the ends justify the means" in the pursuit of survival and market dominance.
3. Procedural Justice Theory
Procedural justice posits that the fairness of the process is just as important as the outcome. It suggests that entrepreneurs succeed by establishing transparent and fair decision-making protocols, which builds trust with investors and employees.
4. Social Entrepreneurship Theory
This theory distinguishes "social enterprises" from traditional firms. It argues that for these entrepreneurs, the creation of social value (impact) is the primary objective, with economic value (profit) serving merely as a means to sustain the mission.
5. Stewardship Theory
Stewardship theory presents the founder as a caretaker rather than an agent. Using the metaphor of a shepherd, it suggests that founders are intrinsically motivated to protect and grow the organization for the benefit of all, rather than acting out of self-interest.
6. Stakeholder Theory
This theory argues that successful entrepreneurship requires managing the interests of all parties involved—not just shareholders. It views the failure of incumbents to serve their communities or employees as an opportunity for ethical entrepreneurs to enter the market.
7. Utility Theory
Based on economic utility, this posits that entrepreneurs make rational decisions to maximize satisfaction. In ethical debates, this theory is often used to analyze the trade-offs founders make between personal profit and the wider social good.
