Why and how we should add ethics to entrepreneurship education

Jana Thiel , Associate Professor

In this article, Jana Thiel, EDHEC Associate Professor, outlines an intervention in class that picks up on recent research and fosters personal reflection on the social implications of managing ethical intricacies in building novel businesses.

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18 Sep 2024

In recent years, integrity and ethics have become an important part of modern management education, with business schools around the world emphasizing these values to prepare the next generation of responsible leaders. At EDHEC, the concept of responsibility for the future is a keystone in our mission (1).

When it comes to entrepreneurship, emphasizing responsibility is a multi-faceted educational challenge. Our approach to teaching often prioritizes idea generation and validation, and how to deliver compelling pitches to resource new ventures. Only recently, themes such as sustainability in business design have entered the classroom. EDHEC has taken a pioneering role. Its Responsible Entrepreneurship by Design (RED) framework was created by the Centre for Responsible Entrepreneurship to push entrepreneurs to consider global performance goals (economic, environmental, and social) from the start (2).

Many responsible design decisions present themselves as potential trade-offs challenging the moral compass of an entrepreneur. Yet, problematizing students’ ethical behavior is a great challenge for effective class design. In this article, I am outlining an intervention that picks up on recent research and fosters personal reflection on the social implications of managing ethical intricacies in building novel businesses.

Entrepreneurship as a magnet for ethical and moral dilemmas

High-profile startup failures like Theranos, WeWork, and FTX have dominated the public news over the past few years and serve as a potent reminder that ethical decision-making in startups can have far-reaching consequences. They highlight how entrepreneurship is a complex and volatile space where ethics can easily be compromised. Yet, these flameouts are not just individual failings but show a systemic problem with the ethical grounding in entrepreneurial culture—an issue that business schools need to address.

Research shows that entrepreneurship is sometimes seen as a rewarding activity by individuals who rank higher than average on personality traits with power-seeking motives (3). For example, research on entrepreneurial intentions in students found that especially undergrads with higher than average tendency toward narcissism seem to be more drawn into venturing. At the same time, these students also exhibit more exploitative tendencies toward profit maximization, even if it comes at the cost of employee well-being, product quality, or societal goals (4). This further emphasizes the importance of bringing ethics into today’s classroom and engaging students in the conversation. Business and ethics should not be seen as an either/or choice, but as something that goes together (5).

However, if the story just ended with personality, educators would have little left to do. What is crucial to note is that this is not just a problem associated with a select group of individuals. The nature of entrepreneurship itself, with its speed, uncertainty, and "fake it until you make it" mentality, challenges even well-intentioned people to bend the rules. In fact, one might argue, without a bit of rule bending entrepreneurs would not be getting anywhere. Or would they?

Exploring these types of questions is an important element in developing future leaders who will play important roles in the entrepreneurial ecosystem. It also offers a great opportunity to enhance the entrepreneurship curriculum through dialectic and collaborative inquiry to activate empathy for self and others (6).

Turning an intellectual exercise into personal take-away

For effective learning, it is key to foster cognitive and emotional involvement. Therefore, my class starts with a debate on high-profile perpetrators of the tech startup scene, contrasting this with what research has to say on entrepreneurial motives that may sway toward the darker ends. However, it is important to not stop there. In addition to the intellectual exercise, I encourage students to approach the topic with a more critical and human mindset.

To appreciate the complexity of the challenge and their own risk of becoming morally compromised, I have designed an interactive scenario game that places students at the heart of several ethical dilemmas borrowed from practice (see box below). In building the scenarios and potential courses of action students are asked to select from, I rely on my own founding experience as well as situations observed throughout my career as a venture coach. And as is common in life, none of the options students can choose from is perfect.

This class regularly turns out as one of the most controversially debated sessions. Students are faced with difficult situations where in the end there is no “clean” solution. Many scenarios spark heated debate, fostering personal insights into just how differently people view what constitutes acceptable "rule-bending." As an educator, I can provide examples of how I have observed entrepreneurs act and I can share my own views. Yet, I encourage students to disagree and form their own conclusions.

The feedback I regularly get is that this is one of the most memorable sessions for students.

Key learnings

Beyond the immediate lessons around the ethical complexity of building novel businesses and how individuals may differ in their approaches to morality, the discussions in my class also serve as a springboard for deeper conversations on how students, as future entrepreneurs, wish to act. The class delves into what it means to display integrity and responsible leadership in high-pressure environments and the impact of their actions on the lives of others.

Importantly, this exercise also offers the opportunity to move away from just blaming individuals but to explore the organizational and industry structures that enable and reward questionable behaviors. In finance, this tension between individual failings and structural enablement and control has already become an important conversation (7). EDHEC professors have made strong contributions to research and to integrating insights in the classroom. The scholarship and education of entrepreneurship will benefit from following suit.

If we believe that our job is to prepare responsible entrepreneurial leaders, ethics and integrity must find a steady place in the curriculum. Educators are tasked to build engaging content and interventions that help students and future entrepreneurs understand that while innovation and disruption are key to success, they must be built on a foundation of ethical decision-making.

A stylized example scenario

You are the CEO of a materials science startup that has developed a proprietary technology to recycle textile fiber for reuse. You’re on a call with a major potential client in the fashion industry, negotiating a contract to become their supplier. This deal would be your first significant success, a breakthrough that could open many other doors and mark a key milestone for your investors. The client is interested in integrating your materials into their new product line, which is set to begin full-scale production in four months. However, they are also in discussions with some of your competitors.

Earlier today, your R&D lead informed you that while your materials performed well in initial tests with this client, those results were based on lab-scale batches. In recent attempts to scale up production, significant quality issues have arisen. Your R&D lead estimates that resolving these issues will require 6 to 12 months of further research and testing.

Despite this, the client needs an update now about the status of your materials. How would you respond if you were the CEO in such a scenario?