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Ethics in Family Businesses and Venture Capital Firms

How Managers Manage Ethical Considerations and Steer Behavior

Written by Jimmy Antonsson, Niels de Groot

Paper category

Master Thesis


Business Administration>Management




Master Thesis: The basic aspects of ethical considerations The focus of this research is on the ethical awareness and ethical behavior of companies and managers. Therefore, it is necessary to define these terms and how researchers interpret them to establish the proposed research. 3.1.1 The definition of ethics Ethics involves many concepts. In this research, we do not intend to divide or distinguish ethics. Instead, our goal is to understand how family businesses and venture capital companies interpret and manage ethical reasons and situations, no matter what type they face. We found that by reducing ethics to one or two aspects, it did not contribute to the results of this research, and it has nothing to do with the research question. To clarify, what we are interested in is the manager’s explanation of ethics and ethical behavior, and whether there is ethical space in the decision-making process and how it is formed. Due to the large variety, researchers in different fields and corresponding fields have been unable to make a general understanding or definition of ethics. However, in order to facilitate the understanding of the chosen research path, we would like to propose some common moral definitions. Examples of areas where ethical errors may be made can be divided into two categories: application areas and common general problems. The first area involves ethics in finance, marketing, and accounting, while the latter involves issues such as fraud, bribery, sexual harassment, and privacy (Geva, 2006, p. 133). Other examples of ethical considerations may be issues such as misrepresentation, tax evasion, misleading and inaccurate advertising, fraud, acceptance and payment of bribes, insider trading, abuse of power, environmental degradation, and lying. These are just a few of the unethical behaviors of members of society. Examples (Wimalasiri, 2001, p. 614). As we have seen, ethics is a broadly defined subject, which can have different combinations of people and companies or different meanings and interpretations. 3.1.2 Types of ethics By proposing several explanations of ethics or more precisely the definition of ethics, we have demonstrated the wide variety of ethics in a general theme. Gustafsson (1988) described four different types of ethics, trying to grasp the difference in such a broadly defined theme: 1. Reliability ethics: the ethics of regulating behavior related to promises and expectations (to be honest, keep promises). 2. Humanistic ethics: including the values ​​of human nature, integrity and equality between people. How the organization relates to its employees and external stakeholders. 3. Competence ethics: These types of ethics require organizations and employees to be obligated to create as much value as possible, and require diligent and economical behavior. 3.1.3 Ethics and profit maximization Regarding the role of ethics in a company's organizational environment, we have included the role of profit maximization. The author's work in this paragraph has determined that there is a tension between these two concepts. Since we are interested in gaining the broadest possible understanding of ethics, we have determined that we need to include the work of these scholars and explain their work in this article. “Ethics is essential to capitalism because there are not enough laws” (Venice et al., 2011, p. 26). Falkenberg (2004, p. 25) agrees with the above statement. However, many researchers believe that business profit maximization and capitalism cannot contain morality. There is no room for ethics because it does not encourage profit maximization. Reich (2007) went on to add that the company cannot afford social goals because it means costs on the supply side or the customer side, while Venezia et al. (2011) and Shaw (2008, p. 567) claim that there are not enough laws to control all The environment, and therefore ethics is essential for controlling capitalism within certain norms and values. Shaw (2008) continues to explain the importance of norms, which are the foundation of a business, without which an oral agreement cannot be reached. In addition, the new law must build on existing norms to create a suitable and efficient market. On the other hand, Vogel (2005) believes that ethics in the form of corporate social responsibility (CSR) cannot replace government governance and are not sufficient. Vogel (2005) and Venezia et al. (2011) Agree on the role of ethics in capitalism, but today’s situation is that companies generally do not prioritize ethics. This requires the government to take action to formulate and implement laws (Vogel, 2005; Reich, 2007). Obviously, these scholars position ethics and profit maximization as two fields with different priorities and difficult to integrate. Instead, they advocate the adoption of laws and regulations and power to reduce capitalism and encourage companies to pursue ethical behavior. We think it may be difficult to pursue profit maximization while observing ethics, especially from a short-term perspective, because ethics requires attitude changes and development over time, and profit maximization is usually to stimulate company growth. Therefore, we regard it as part of the company's sustainable development. However, there are also authors who claim that ethics and profit maximization have a good relationship, which should come from the company's intrinsic motivation. Burton and Goldsby (2009, p. 147) Read Less