ETHICS AND ENTREPRENEURSHIP: THE EFFECT OF VENTURE AGE AND ENTREPRENUERIAL ORIENTATION ON ETHICAL CLIMATES
Donald
O. Neubaum, University of Central Florida
Marie S. Mitchell, University of Central Florida
Principal Topic
Entrepreneurs and the new ventures they create confront ethical decisions on a daily basis. Faced with the liability of newness, a scarcity of resources and concerns over survival, venture managers and employees might be pressured to make decisions that run counter to the tenets of mature ethical and moral reasoning. Organizational norms and culture, which are influenced by the venture’s leaders, are in their infancy and becoming institutionalized (Kimberly & Miles, 1980). The venture’s ethical climate, which is the socially constructed normative system that influences its decision making process (Victor & Cullen, 1988), may evolve as the venture matures. Also, a venture’s ethical climate may vary based upon as its competitive strategy. While considerable research has examined the personality and characteristic traits of entrepreneurs, little research has examined their ethics or the ethical climates of the ventures they oversee.
Some theorists claim entrepreneurs’ higher levels of independence and individualism would direct their ethical decision-making process more towards ethical individualism and egoism (Longnecker, McKinney, & Moore, 1988). Others suggest entrepreneurs’ need for achievement might foster higher levels of moral reasoning (Teal & Carroll, 1999). How ethical climates vary across different types of ventures, however, remains an unresolved question. This study, therefore, asks the following questions: 1) Do new ventures possess different ethical climates than more mature ventures; and 2) Do ventures with a more aggressive entrepreneurial orientation possess a different ethical climate than less-aggressive ventures.
Method
Two-hundred and seventy-one individuals from 53 firm participated in the study. At least three responses were collected from each firm and these individuals judged their venture’s ethical climate (Cullen & Victor 1988) and entrepreneurial orientation (Knight 1997).
Results and Implications
New ventures possessed less mature ethical climates than their more established counterparts. Entrepreneurial orientation, however, was not associated with the venture’s ethical climates. Thus, fears that an aggressive entrepreneurial posture might lead to less ethical behavior are not warranted. The results do, however, suggest that entrepreneurs might consider introducing ethical training or formalized codes of conduct and policies to build an ethical climate within their ventures which more closely aligns with the ethical expectations of society.
CONTACT: Donald Neubaum, University of Central Florida, Management Department, Orlando FL, 32861-1400; (T) 407-823-5685; (F) 407-823-3725; dneubaum@bus.ucf.edu
2002 Babson College. All Rights Reserved. Last Updated March 2003.