Ethics in entrepreneurship: An understanding of how entrepreneurs solve dilemmas, their perception of ethical considerations and the structures used during the resolution process​.

Abstract: The speed of growth for startups has never been faster, and this growth comes with ethical challenges for society as the startups bring their innovation to the masses without considering the full implications of their business. With the aim to better understand the ethical decision making process of the entrepreneur and how to improve it, we identified two gaps in entrepreneurial ethics research that we would like to correct and contribute to. The first one is that many studies fail to consider the challenge of perception of the moral component of dilemmas, because of this studies inadvertently primed their interviewees to look at the situation from an ethical perspective, therefore making the situations and findings less realistic. The second gap we found is in the area of ethical structures, which has been highlighted by business ethics as a mechanism that aids ethical decision making, however so far we have not found any study on their use in small companies. With this said our study brings light on the decision making process of the entrepreneur, their ethical considerations and the structures used while solving dilemmas, without influencing the perception of the entrepreneur, therefore giving us a more realistic view of the situation. We found that in most cases the entrepreneur used an unstructured approach to solve dilemmas, with instincts or “common sense” as main drivers for decision making. This led the entrepreneurs to a resolution process focused on company survival, with little consideration placed on other parties, therefore unethical under stakeholder theory. We identified a few outlying entrepreneurs, who used values as a baseline to analyze the dilemmas and relied on structures to structure their thoughts more clearly. We therefore found evidence that when the entrepreneurs use some sort of structure or value baseline they did increase their stakeholder considerations and thus were more ethical. Our findings still need further research to compensate for our study’s limitations, however if our conclusions are confirmed this has important implications for entrepreneurs, as they were mostly unaware of the ethical consequences of their decision, and therefore could take actions to avoid this unintentional mistake; for lending institutions, as ethics has been related to future company revenues, they should be interested to minimize risk and help society at the same time; and 2 for educational programs, which are an important part of the entrepreneur’s formation, could implement the teaching of ethical structures within entrepreneurial programs.