MGT602 Entrepreneurship GDB Solution Spring 2014


Ethics and social responsibility of entrepreneurs

Learning objectives:

  • To make the students learn to use the critical thinking skills while shouldering the ethical liability towards the society

Learning outcome:

  • Students will be able to incorporate critical thinking skills in business situations.
  • Students will understand how to handle and react while encountering the ethnical situation

The Case:

David Jack is a scientist and an entrepreneur from United States. He is running his own pharmaceutical company.  He has invested a lot of money and seven years of his life into developing a drug. During these years he faced failures at times but never gave up. Finally after a lot of struggle and hard work, he became able to make the invention. This drug substantially eases the pain associated with tuberculosis. It is a breakthrough invention for the patients. The investors has injected a lot of capital and taken a substantial risk. All of them deserve a good return on their money. He is confused. He is facing a dilemma. If he licenses the drug solely to a drug company than he will receive a big “pay day.”  He thinks he is entitled to maximize the profits from the investment and years of efforts he has exerted. He also intends to use the money from this licensing to start new research and development program that could help to invent another new drug.  On the other hand, it seems to him that it would be ethically wrong not to make this life saving drug available to the masses at large. He believes that ethically he should involve in a series of licensing (means giving the right to sell the drug to many sellers/ companies) which allows the drug to be sold in third and forth world countries.


Mr. David would like to seek your advice. Being an entrepreneurship student, do you think he should maximize his return or not? Give four logical reasons to support your answer in each case.
An entrepreneur is actually running his own business and being a businessman he has some obligation of a business to meet his economic and legal responsibilities. Social responsibility is basically a business intention, beyond its legal and economic obligation to do the right things and act in ways that are good for society.
While we are talking about the business ethics, there are three things that need consideration:

(1)    Avoid breaking criminal law in one’s work related activity

(2)    Avoid action that may result in civil law suits against the company

(3)    Avoid actions that are bad for the company image.

For example, an entrepreneur made a chemical that looks like a pesticide and he started selling it like a pesticide in the market and earns the profit, this act is against the law.