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What business ethics can learn from entrepreneurship.

Article Excerpt
I. Three Character Types: Carly, Tonya, and Jane

Entrepreneurship is increasingly studied as a fundamental and foundational economic phenomenon. Schumpeter (1950) and Kirzner (1978) were pioneers, and their successors have generated a sizeable literature. Yet entrepreneurship has received less attention as a moral phenomenon and, correspondingly, less attention in the business ethics literature.

Consider the moral status of the entrepreneur by contrast to two other types.

1. Carly: As a student, Carly worked hard and received good grades. Upon graduation she took a job, but at the same time saved money and worked on her business plan. When she was ready, she took the entrepreneurial plunge and started her own business, which she developed successfully, and then, a few years later, sold for $10 million. She is now living the good life of travel, building her dream home, raising her family, and managing her portfolio of investments.

2. Tonya: Tonya also worked hard in college and, upon graduation, took a job in a financial institution. She discovered a flaw in its funds-routing procedures, which enabled her anonymously to divert $10 million to an offshore bank, from which it was quickly rerouted through several Caribbean and Swiss banks, ending up in account known only to Tonya. One year later, Tonya resigned her position at the financial institution and is now living in discreet luxury somewhere in Europe.

3. Jane. While in college, Jane studied liberal arts and graduated with a good degree. Unfortunately, the summer after her graduation Jane's parents died suddenly. Fortunately, they left her $10 million in their wills, of which Jane immediately donated $9.9 million to charities devoted to the homeless, to victims of floods, and to planting trees in the Brazilian rainforest. Jane invested the remaining $100,000 in a certificate of deposit earning 8% annually, the proceeds enabling her to live frugally and without too much discomfort.

Let us now ask the ethics question: Which of the three is the most moral? Whom should we uphold as the ideal? Should we teach our children and students to admire and strive to be like Carly, Tonya, or Jane? All three require strength: It is not easy to build a successful business. It is not easy to figure out a con and get away with it. And it is not easy to give away all of one's money.

Tonya is representative of a predatory ethic: She harms others and uses the proceeds to benefit herself. She is representative of the zero-sum, gain-at-the-expense-of-others practices widely condemned in the business ethics literature.

Jane is representative of an altruistic ethic: She is selfless, and she places what she has at the disposal of others in...

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