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Is Ethics a Luxury or Necessity for a Startup?

DILEMMA

I understand the virtue of acting ethically in business when you have a reasonable profit and are at a reasonable size. But what about a business that is just starting up? I am a struggling entrepreneur, and right now our sole effort is trying to survive as a business. Ethics is a luxury we cannot afford. Don’t we need to put our efforts in survival now—and think about ethics after we get more successful?

A Struggling Entrepreneur
Beijing, China

RESPONSE

This is a common tension entrepreneurs face while “bootstrapping” to get an operation off the ground. In fact, stories of entrepreneurs who succeeded by getting around the rules are often told in endearing terms. Such thinking is often couched as, “there will be no long-term unless we survive the short-term, therefore ethics is something we can’t afford.”

I strongly caution you to refrain from thinking of ethics as a mere “luxury.” Consider the possible tangible costs of starting a business on anything but a sound ethical footing: damage to your reputation, broken relationships, guilt/paranoia (that your past will catch up with you), a higher cost of doing business (since some people may no longer trust you and/or you may encounter legal problems), a hampered ability to develop an ethical corporate culture later (“the founder(s) paid little attention to ethics, why should we?”), a lingering illusion that the “rules” don’t apply to you (since you were successful without paying attention to them). I could go on, but you get the point.

Then, consider the most important cost, though it is an intangible one, the fact that you have to live with your own deeds. I can understand the tensions, but instead of seeing ethics as a needless expense, you must view it as the most important investment you will ever make. Doing anything less is an act of building your house (or business) on a foundation of sand.

Kenman Wong
Professor of Ethics, School of Business and Economics
Seattle Pacific University

If you have an ethical dilemma at your workplace,
email Ethics at Work (eaw@ethix.org).
We will publish some of these in
Ethix along with our diagnosis.

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