Complexity, novelty, and ethical judgement by entrepreneurs Online publication date: Thu, 07-Jul-2016
by Harvey S. James
International Journal of Entrepreneurial Venturing (IJEV), Vol. 8, No. 2, 2016
Abstract: How do individual characteristics and the business environment affect the ethical judgement of entrepreneurs? We build on literatures in stakeholder and cognitive theory to examine the effects of situational complexity and novelty on an entrepreneur's ethical judgement. Our conceptual framework shows how confirmation biases and inward biases affect the ethical judgement of entrepreneurs. We test our theory using cross country data from the World Values Survey. We find that the ethical judgement of self-employed individuals is lower than that of non-entrepreneurs and that differences are moderated by the complexity and novelty of their decision setting. We also find that the ethical judgement of entrepreneurs with low levels of entrepreneurial initiative is the lowest, especially in moderately complex and novel decision settings. We argue that these findings have important implications for stakeholder approaches to entrepreneurial ethics.
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