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Business Ethics and Entrepreneurship Education1

Dr. Mohd Fuad Mohd Salleh 2
Universiti Selangor

Abstract
Ethical scandals and ethical misconduct caused millions of dollars in losses, left behind damaged organizations,
forced them to close their business and left thousands employees jobless without any future guarantee or security.
This incident has left scholars and business schools managers asking what role they might have played in these
ethical scandals and what role they can play in the solutions. Scholar and managers collectively have responded to
the ethical challenges that we face in organizational life. Some scholarship assesses the current state of ethics in
management education, helping us to diagnose and tackle the realities of unethical behavior. Part of the solution
to this problem is to design and develop courses and programs in a better way, integrate business and
entrepreneurship learning with ethical conduct. Scholars should focus on which standards should be advanced.
Indeed, what connects these diverse discussion is a clear recognition that educational components designed to
solve the ethical quandaries we face will require a multifaceted and comprehensive approach.

Key words: Ethics, misconduct, education, quality.

Introduction
Arthur Andersen was founded in 1913 (Gupta, 2013) and continues to rise until it achieved
Big Five status. But this Big Five, shredded Enron audit documents amid an investigation
into covering up billions in losses at the energy firm. Because of that, Arthur Andersens
accountant was subsequently found guilty of obstructing justice, effectively putting an end to
all its audit activities in 2002, 90 years in audit and accounting history. Enron saga ranks as one
of the biggest corporate scandals of all time, and led to substantial losses for shareholders and
many thousands being jobless.
"Many individuals and organisations were deeply affected by what happened at Enron. But
Arthur Andersen, at its best, was a firm that was founded and managed on the basis of quality
and objectivity by world-class people with world-class training. As a former partner at Arthur
Andersen, it was devastating to see nearly 100,000 professionalspeople who started each day

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2

Paper presented at 3rd. ICBESS 10th. 11th. August 2016, Kartika Plaza Hotel, Bali.
Associate Professor at Faculty of Business, Universiti Selangor.

with Clients First as their top prioritylose their jobs, a remark from Mark Vorsatz, a former
partner of Arthur Andersen.
In the year 2002 WorldComs internal audit department uncover $US3.8b irregularities in its
accounting record (Gupta, 2013). Cynthia Cooper, the internal auditor, revealed a further
$US3.3b in accounting errors, doubling the size of the accounting scandal at America's second
largest long distance phone company to more than $US7b (Tran, 2002). WorldCom's
accountants at the time were Arthur Andersen, the same people that looked after Enron's books
as well as other companies hit by accounting issues - Tyco, Global Crossing and Adelphia.
Andersen accused Scott Sullivan, the CFO, of withholding information from them. The deputy
US attorney general, Larry Thompson, said: "We have to ask where the professionals were, the
accountants and the lawyers." WorldCom filed Chapter 11 United States Bancruptcy Code that
permits reorganization under the bancruptcy law of the United States. Fifty seven thousand
employees lost their jobs.
A seemingly revolving door of ethics scandals has left behind damaged organizations, broken
lives mired in financial and personal ruin, and a society skeptical of its business institutions. It
has also left business schools asking what role they might have played in these ethical scandals
and what role they can play in the solutions.
This article will discuss how management education and scholarship collectively have
responded to the ethical challenges we face in organizational life. Some scholars assesses the
current state of ethics in management education, which then would help to diagnose and tackle
the realities of unethical behavior by business person as well as professionals. Other work
wrestles with how courses and programs could be better developed, as well as which standards
should be advanced. These diverse discussion is a clear recognition that educational
components designed to solve the ethical quandaries we face currently will require a
multifaceted and comprehensive approach from multiple discipline.
Discussion will also focus on how management education and scholarship collectively have
responded to the ethical challenges we face in organizational life. Listing down treatises that
confront the ethical imbroglios in varied ways. A number of provocative critiques of what is
supposed to be taught in our business schools are presented, along with perspectives from
thought leaders (in both organizations and the Academy) on the causes of these ethical debacles
and the potential path toward a more ethical future.

Some scholar assesses the current state of ethics in management education. This will help to
diagnose and tackle the realities of unethical behavior that we are facing currently which
deteriorate the public trust on organizations and professionals. Other work wrestles with how
courses and programs could be better developed, as well as which standards should be
advanced. Indeed, what connects these diverse articles is a clear recognition that educational
components designed to solve the ethical quandaries we face will require a multifaceted and
comprehensive approach.
Business Ethics
Business ethics (also corporate ethics) is a study and examination of moral and social
responsibility in relation to business practices and decision-making in business. It is a set of
moral principles that guide the way a business behaves. Business ethics is a form of
applied ethics or

professional ethics that

examines ethical principles

and

moral

or

ethical problems that arise in business environment. It applies to all aspects of business conduct
and is relevant to the conduct of individuals and entire organizations. Some called it Code of
Conduct.

Business ethics also is a study of proper business policies and practices regarding potentially
controversial issues, such as corporate governance, insider trading, bribery, discrimination,
corporate social responsibility and fiduciary responsibilities. Business ethics are often guided
by law, while other times provide a basic framework that businesses may choose to follow in
order to gain public acceptance.
The same principles that determine an individuals actions also apply to business. Acting in an
ethical way involves distinguishing between right and wrong and then making the right
choice. It is relatively easy to identify unethical business practices. For example, companies
should not use child labor. They should not unlawfully use copyrighted materials and processes.
They should not engage in bribery.

A business should also follow relevant codes of practice that cover its sector. Many companies
have created voluntary codes of practice that regulate practices in their industrial sector. These
are often drawn up in consultation with governments, employees, local communities and other
stakeholders. Business ethics are implemented in order to ensure that a certain required level of
trust exists between consumers and various forms of market participants with businesses. For

example, a portfolio manager must give the same consideration to the portfolios of family
members and small individual investors. Such practices ensure that the public is treated fairly.

Having Good Business Ethics Provides Competitive Edge

A research conducted by National University of Singapore (NUS) found out that 65 per cent of
companies researched agreed that adherence to the Code of Conduct provided a competitive
advantage, with only 12 per cent disagreeing while 23 per cent were neutral.
Acting in an ethical way involves distinguishing between right and wrong and then making
the right choice. It is relatively easy to identify unethical business practices. For example,
companies should not use child labour, should not unlawfully use copyrighted materials and
processes, should not engage in bribery or other form of wrongful act as perceived by the public.

However, it is not always easy to create similar hard-and-fast definitions of good ethical
practice. A company must make a competitive return for its shareholders and treat its employees
fairly. A company also has wider responsibilities. It should minimise any harm to the
environment and work in ways that do not damage the communities in which it operates. This
is known as corporate social responsibility, which is also will improve ethical conduct in the
organization.

Sanlu Group is one of the examples of the most competitive company when it practice good
ethical conduct. Sanlu Group led the Chinese dairy market in quality standards and market share
in 2006. The Group was praised and rewarded for its consistency and lack of scandal. But, when
quality regulations were relaxed as a reward for Sanlus achievements, the companys
management was tested, and ethical decision-making was forgotten. Rules control our tendency
to act only in our self-interest (Michael 2006). People will tend to break from their normal
practice in order to fulfill the interest when regulation or rules is being relaxed.
In 2008, Sanlu admitted to selling milk tainted with melamine, which resulted in four infant
deaths and thousands of poisoning cases. The tainted milk affected about 53,000 children within
the country. Infants were reported to develop kidney stones after consuming the milk for few
days. The babies were in a bad shape with most of them having high fever with trouble in their
urinary tract. (Essays, UK 2013).

When ethic is being compromised then it can lead to death, and the downfall of an organization.
The actions of senior members of Sanlu Group illustrate the moral issues involved in corruption,
as well as relations with its joint venture partner. Questions regarding the ethics of public
relations, corruption, and social responsibility are highlighted by this case that provoked
worldwide concern about product safety issues in China.
A business' approach to ethics depends on the tone set at the top by its chief executive and board
of directors. By tone I mean the qualities and style that characterize the organization's behavior,
from greeting you at the reception to honoring your invoices on time. All of these feed through
to the tone that the company, through its employees, displays towards all its stakeholders and
manifests itself in how it conducts its business. Does it always endeavor to do the right thing or
does it routinely cut corners to secure that deal? There is a growing recognition that an ethically
bankrupt business risks becoming a financially bankrupt one. Ethics matter.
This underlines the importance of leadership to guide growth. Leadership is not only about the
person at the top; it manifests itself at many levels - the team leader, the project manager, the
regional director and so on. It's important that they also recognize the example they're setting.
It's human nature to emulate one's leader; so, if employees see that their boss is brusque and
bullying in his dealings with people, they might copy him in the belief that such behavior is the
way to advance in the organization.

How can this risk be managed? The simple way to do it is to write a code of business ethics
(business principles, statement of how we do business - call it what you will). People work best
when they are provided with a non-prescriptive framework within which they can operate. The
code sets down how business is to be conducted. Implementation, of course, is still up to
individuals, but they need to know that by following the code they will be supported.

When implementing a code of ethics, it's important that the company gives its employees the
means to raise their concerns about any corporate behavior that they believe does not conform
with it. In the first instance they should be able to discuss any issue with their line managers,
but if they feel they can't do this, an alternative mechanism must be available to them. Every
call or e-mail to such a "speak-up" service should be treated confidentially in all cases.
Management Educations Role in Developing Ethical Society

Management education is an academic discipline by which students are taught to be business

leaders, managers and university professors in business education (Capella University 2015).
Management education focuses on training future business leaders. Through theory and
knowledge of management practice, students learn how to develop the leadership capabilities
necessary to run a team of workers. Part of the curriculum focuses on assessing and evaluating
teams in order to examine the role as a manager. People who specialize in management
education must be able to adapt to changes in laws, regulations and trends.

In order to sustain in business, organizations must maintain their competitive advantage and
one of the advantages is maintaining high ethical values and practices. Schools and universities
with the help from business organization can play their important role in developing ethical
society.

Entrepreneurship Education
Since the emergence of entrepreneurship as an academic field, entrepreneurship education has
grown in content and depth (Greene, Katz, & Johannison, 2004; Katz, 2003). Entrepreneurship
seeks

to

provide

students

with

the

knowledge,

skills

and

motivation

to

encourage entrepreneurial success in a variety of settings. Variations of entrepreneurship

education are offered in college and universities. Entrepreneurship is now being accepted as a
core concentration or major area of study at both graduate and undergraduate levels in many
business schools. In addition, other faculties such as engineering, natural sciences and other
applied social sciences have incorporated entrepreneurship as an elective and core course in
their curricula. This shows how academician view entrepreneurship as an important course to
be taught in higher education.
Business students often do not see ethics courses as being as relevant as other value-free
disciplines or core courses. There was a study being conducted to see the awareness level among
students and the study suggests otherwise. Sustainable economic development appears very
dependent on a constant, virtuous cycle that includes corruption fighting, and the maintenance
of trust and innovation, all reinforcing each other (Wilhelm 2002).

As a result, there has been an increased focus on ethical and social entrepreneurship in many
universities as well as in many profit and non-profit organizations (Carney, 2007). Although
many business schools have broadened the entrepreneurship teaching-learning process to
include ethical and social entrepreneurship, many of the textbooks in small business and
entrepreneurship seem to continue to narrowly focus on the doctrine of creating ventures for
purposes of wealth creation and market growth. This focus will undermines efforts made by
some business faculty to emphasize the vital role of entrepreneurship education in creating
economic values that are bounded by ethically and socially responsible business practice, and
not only focussing on the economic value.

Conclusion
To conclude, the poor business ethics, fails to take social responsibilities for consumers, under
regulation of food safety, government inconsistent inspection, poor supply chain management
etc. are the main reasons of this Milk incident. It is necessary to learn from the incident, improve
the inspection and supervision system and strengthen the management of the Chinese dairy
industry. It is onle affect milk business industry but other industry as well. In order to maintain
ethical conduct in business and management, all parties involved in business and education
must take an effort to fully observe the education and implementation of ethical conduct to
avoid economic and social catastrophe as well as lost of life as shown in the World.com, Enron,
and Sanlu Group tragedy.

References.

1.

Back, P. F. (2007). Importance of ethics in business. New Straits Times. Kuala Lumpur,
Malaysia.

2.

Capella University 2015. Management Education Specialization. Retrieve from

http://www.capella.edu/online-degrees/phd-management-education/ on 14th. August
2015.

3.

Carney, M. (2007). Institutional entrepreneurship and the transformation of the global air
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4.

Essays, UK. (November 2013). Business Ethics And Its Influences In The Food Industry
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on

10th.

August 2015.
5.

Faleh Salem al-Kahtani (2014). Corporate governance from the Islamic perspective. Arab
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6.

Greene, P.G., Katz, J.A, & Johannison, B. (2004). Entrepreneurship Education. Academy
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7.

Gupta,

(2013).

WorldCom:

As

it

turns

and

burns.

Retrieved

from

http://www.slideshare.net/shwetagupta796/worldcom-scandal. on 10th. August 2015.

8.

Hanson. O. K. Family Loyalty vs. Meritocracy. Markkula Center for Applied Ethics, Santa
Clara

university

(2015).

Retrieve

from

http://www.scu.edu/ethics/practicing/focusareas/ business/nepotism.html. on 14th.

August 2015.
9.

Michael, Michael L. 2006. Business Ethics: The Law of Rules. Corporate Social
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10. Theodore Eisenberg and Jonathan R. Macey (2004). Was Arthur Andersen Different?An
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on

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