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Int. j. econ. manag. soc. sci., Vol(4), No (1), January, 2015. pp.

109-116

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International Journal of Economy, Management and Social Sciences


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ISSN:
2306-7276

Copyright 2015. All rights reserved for TI Journals.

Ethical Issues and Obligations in Knowledge-based Entrepreneurship in Iran


Mahdi Fateh Rad
Assistant Professor, Sharif University of Technology, Tehran, Iran.

Masoume Rahmani *
MS of Entrepreneurship, Faculty of Entrepreneurship, University of Tehran, Tehran, Iran.
*Corresponding author: masoumerahmani@gmail.com

Keywords

Abstract

Entrepreneurship ethics
Knowledge-based entrepreneurship
Ethical issues and obligations
Event-based interview
5W1H model
STAR model

Since attending to the knowledge based economy provide the country with the more obvious and accessible
sustainable development and supreme achievement horizon, it needs to a strong support to be drawn. Due to the
impact of professional ethics in this field, it is a strong support for the achievement of national economic
advantage. A comprehensive review found that previous research in this area is scarce. Therefore, this research
can be considered as the first step to achieve that strong support and seeks to explain the ethical issues and
obligations that should be imagined for knowledge based entrepreneurship in Iran. By identifying them, we can
strengthen the foundations of professional ethics in the beginning step of the process. Further, prior research in the
field of entrepreneurship ethic has mainly focused on overall and absolute concept of professional ethics in
entrepreneurship but this research can be viewed as a sample for investigating entrepreneurship ethic especially in
knowledge based entrepreneurship. The purpose is tracked by a qualitative research using event-driven interview.
Interview questions were carefully designed and selected to consider all aspects and not to leave out any research
question that its answer will help to the study. Interview questions were based on both Star and 5W1H models;
additionally, matrix multiplication of questions related to each dimension was designated and then was revised
according to the expert opinion. 20 knowledge based entrepreneurs were asked to answer these questions. Firstly,
in addition to seven dimensions of primary conceptual model, three new dimensions were identified that
knowledge based entrepreneurs should determine their ethical policies towards them in which it changed a sevendimension model to a ten-dimension model for knowledge based entrepreneurs. These three new dimensions
include intellectual ownership, academic partners and corporate researchers. The issues and obligations of each of
ten dimensions were then extracted and categorized based on ethical issues and challenges of entrepreneurs.

1.

Introduction

As the organizations and corporations become more complex, managing them becomes more complicated, too. Today, in analyzing the behavior of
organizations it is necessary to pay attention to ethics and ethical issues and obligations. The external symbol of organizations is comprised of their
ethical behavior which is in turn the sum total of various ethical values appearing and evolving in those organizations (Faramarz Qara Maleki, 2009).
The strategic role of professional ethics in an organization, has led to the allocation of a separate entity under the name of ethics management in some
organizations and the experience of ethical organizations confirms this strategic role (Faramarz Qara Maleki, Professional Ethics, 2007).
Organizations have moral responsibilities for preserving the rights of their internal and external environmental elements. This responsibility is
defined and specified under professional ethics (Faramarz Qara Maleki, Professional Ethics, 2007). Being pioneer in making changes,
Entrepreneurial businesses, especially knowledge-based entrepreneurial businesses have more ethical responsibilities toward their internal and
external environments in comparison with other organizations. On the other hand, some scholars believe entrepreneurial success, besides efficient use
of a series of business strategies, depends on having moral imagination (Dunham, McVea, & Freeman, 2008). Despite the significance of the issue,
no serious and notable study has been conducted in this field to be a reference for entrepreneur enterprises (especially knowledge-based entrepreneur
enterprises). During the past several decades, the significant and growing scholarly interest in entrepreneurs and new venture creation has resulted in
the shaping of entrepreneurship as a rigorous academic field of study, including the creation of several dedicated scholarly journals, modification of
business school curricula, and rise of entrepreneurship-specific research conferences. In a similar manner, the field of business ethics including the
study of both the ethical behavior and societal impact of profit-seeking firms has during the last 20 years also achieved recognition and legitimacy
as a rigorous and important field of study. Yet the intersection of entrepreneurship and ethics, though receiving more recent research attention,
remains relatively embryonic. (Harris, Sapienza, & Bowie, 2009).
This study attempts to track down and specify the ethical issues and obligations of knowledge-based entrepreneur enterprises in Iran. The scope of
ethical review in this paper is beyond individual behaviors and covers the behavior of social institutions (namely knowledge-based entrepreneurial
organizations) and the topic is viewed from corporate ethics perspective.

2.

Methodology

2.1 Type of research


This study is qualitative taking into account its practical objective and strategy.
2.2 Method of data collection
Method of data collection in this study is interview. In designing the questions two models of event-based interview have been utilized (5W1H &
STAR). In the operational phase of designing the questions it was confirmed that these two models are complementary and should be used together to
bring about the expected results of the study. From among the common approaches, the STAR approach (Kessler, 2006) and 5W1H approach (Jang

Mahdi Fateh Rad, Masoume Rahmani *

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International Journal of Economy, Management and Social Sciences Vol(4), No (1), January, 2015.

& Woo, 2005) for describing a situation or an event are more practical and cover all aspects. As previously mentioned, in designing the
questionnaire the combination of both approaches has been used. Besides using each of these models and their combination, questions were designed
in a different way. To do so, aspects of these two models were multiplied in a matrix and the corresponding questions with each column in the matrix
were designed.

Figure 1. STAR approach (Kessler, 2006)

Figure 2. 5W1H approach (Jang & Woo, 2005)

In the process of questions designation based on four main ethical theories (Utilitarianism, duty-oriented ethical, law based ethic, and virtue ethicsoriented)- that the scientific context of the world agreed on it- STAR model was estimated was estimated as the closer model; hence this model was
employed to ask the questions.
Table 1. Interview Questions based on STAR model
No

STAR

Item

2
3
4

T
A
R

Have you been in a position that contradiction between your interests and the rights of others is emerged? Please explain that position. (This question
can be posed as follows: explain the situations in which you encounter with an ethical problem in your work).
What was your position in the problem and whether other people were involved in the problem? You think that what was your job in that position?
What was your reaction towards the problem?
What was your reaction result in the short term and long term?

After these questions, there were found several gaps that should be addressed. The gaps in some aspects of 5W1H model are answered.

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Ethical Issues and Obligations in Knowledge-based Entrepreneurship in Iran


International Journal of Economy, Management and Social Sciences Vol(4), No (1), January, 2015.

Table 2. Interview questions based on 5W1H model


No

5W1H

Item

1
2

What
Where

Who

How

Why

When

What are the ethical issues for your company? Please explain what was happened, what did you do and what have been?
Awareness of this aspect would not help to the research result and is not necessary. If required in the analysis, the city where the entrepreneur is
working would be mentioned.
Who were engaged in the issue? Has occurred the conflict between your interests and which of the following? Consumers and customers, staff and
administrators, community, citizens and national interests, environment and the global community, suppliers and regulatory agencies, competitors,
and shareholders? If there are none of these aspects, explain the other aspects (such cases can be considered as guidelines: the owners of patents, the
former employer that his/her work is associated with your work and you have committed to the information achieved in that situation or ).
How and in what circumstances lead to this problem?
What were the reasons for its existence? (As a guideline: cultural and theological problems, structural problems in your company or others, legal
controversies).
Why or on the what basis (ethical system that you believe: religious doctrines, Iranian-Islamic culture, Iranian heritage and ancient civilization,
Islamic Republic of Iran's constitution, Declarations of Global Ethics, Knowledge of professional ethics, organizational commitment or regulations
of knowledge based firms) you think that your job has not been what you have described? Depending on the situation that respondents answer: Why
could/or did not can you act on ethically regarding the issue?
In which stage of your job the problem has been occurred? (As a guideline: opportunity identification, opportunity assessment, innovation,
development of business plan, financing obligations, establishment and opening, growth and consolidation, and ...) When the issue has happened in
your career? These issues have to do with the age of your firm? (If you have been in another position - such ten years old firm- is it possible not to
occur the issues or you face with the lighter issues?

In addition to the designated questions separately for each model, there were questions that addressed in a matrix multiplication approach in order to
not leave out any aspect of the problem.
Table 3. Interview Questions based on matrix multiplication of STAR model and 5W1H model
STAR
Situation
5W1H
What
Where
Who
How
Why
When

Task

Action

What ethical position?

What was the task?

What was the reaction?

Where this situation happened?

Where did you do your task?

Where did you act?

Your task?
Your partner's task?
What was the task in that
circumstance?
Why do you know the task
as your duty?
When do you need to do
your job?

What was your reaction?


What was their reaction?
How was your reaction to
that situation?

Who were involved in?


How were the circumstances that
the situation was occurred?
What are the roots and the reasons
for this position?
Which stage of the business are
you in?

Result
What was the result?
Where the consequence did happen?
Where was the impact?
Who were affected by the results? Who
will benefit?
How this result was achieved?

Why do you react?

Why the result was achieved?

When were you action?


Was it on time?

Long-term effects?
Short-term effects?

It is obvious that we do not have to consider any question in each aspect of STAR model and 5W1H model and/or their matrix multiplication.
Utilization of each dimension depends on whether or not the answer to that question would contribute to the research objectives. Furthermore, the
questions in the first interview were reviewed and changed. According to the mentioned descriptions, the questions were combined and corrected; the
answers were then analyzed.
2.3 Data analysis method
2.3.1 Content analysis (coding and categorization)
The chosen method for analyzing the data is coding and categorization. One of the key steps in qualitative data analysis is determining the themes.
Here, before determining the themes resulted from coding and categorization, the transcriptions of the interviews were examined thoroughly for
several times. While revising and examining the transcriptions, the relevant parts were marked by annotation and note-making; then, each part was
given a certain code. Next, through revising the codes overlaps and redundancies were removed. After that, themes were determined by categorizing
and combining smaller categories with the bigger ones and by making links between categories. Finally, by establishing links between these themes,
the ultimate model was formed. In order to have precise and systematic coding, Atlas.ti software was used. So, in open coding from 20 interviews
997 codes were enumerated. After several reviews, in some cases several codes were combined into a single code; despite some similarities, some
other codes were not combined because of the significance of the existing differences. After another review, some codes which were not suitable for
this study were removed from the analysis. And finally, it decreased to 486 codes to be used in the second step.
2.4 Research questions
1- Identifying the ethical issues and obligations and issues regarding affiliates
Identifying the ethical issues and obligations and issues regarding customers
Identifying the ethical issues and obligations and issues regarding employees and managers
Identifying the ethical issues and obligations and issues regarding beneficiaries, suppliers, contractors, and regulatory agencies
Identifying the ethical issues and obligations and issues regarding the environment and international community
Identifying the ethical issues and obligations and issues regarding the rivals
Identifying the ethical issues and obligations and issues regarding the stakeholders
Identifying the ethical issues and obligations and issues regarding the society, citizens, and national interest
2- Identifying new aspects
3- Identifying the ethical issues and obligations and issues regarding new aspects

Mahdi Fateh Rad, Masoume Rahmani *

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International Journal of Economy, Management and Social Sciences Vol(4), No (1), January, 2015.

2.5 Data
The data comprises of these two groups:
1- The scholars of professional ethics
2- entrepreneurs who work in knowledge-based entrepreneurship
2.6 Sample size
The best sample size is the largest one. It means that, if possible, it should include the whole population. Considering that the whole population
cannot be used in the specified range, a sample was chosen. According to sample adequacy calculations, sampling was conducted up to the point that
during the survey and based on adequacy or data/theoretical saturation, the sample size was determined. It is to say that size of none of the samples
was predetermined and regarding each of the surveyed populations, the sampling continues to the point that new subjects provide no new information
or have no impact in developing the model or the theory of the study. In other words, their impact in the ultimate or marginal development and
improvement of the theory or the data is null. To do the study, 20 people were interviewed who included two groups of professional ethics scholars
and knowledge-based entrepreneurs. This combination consists of 5 scholars and 15 entrepreneurs. After 18 interviews, theoretical saturation was
achieved but for greater certainty, it continued to 20 interviews. After coding the raw data, merging and removing, it was time for categorizing and
naming the produced codes. Put together based on similarities and significance, the codes were divided into ten categories in one level. Out of these
ten categories, seven are the aspects of the initial conceptual model, and three new categories are aspects achieved in this study. Together, these ten
aspects form the aspects of the axial floor. In another level other panels of data-based model were extracted from groupings of the relevant codes.

3.

Materials

3.1 Ethics
Ethics has to do with what are right and good and what are wrong and evil. Morality refers to temperaments and ethics is the knowledge of
right and wrong and human contrivance to manage their own or others affairs. (Mehr Ara, 2009)
Ethics in Islamic texts is a part of practical knowledge. Topics of practical knowledge are limited to fields which first include human beings, second
voluntary activities of human beings, and third, are related to the obligations of human life which in this respect are related to the faculty of reason
in human beings. There are two kinds of issues and obligations for human beings. The first kind includes individual and relative obligations, and the
second are absolute and general obligations. (Motahari, 2006).
3.2 Professional ethics
Professional ethics is a set of principles in doing professional work which individuals observe voluntarily and based on the call of conscience and
nature; there is no external obligation and no legal punishment in case of violation. Individual ethics is personal accountability for personal behavior
and as an individual and vocational ethics is personal accountability for professional and vocational behavior as a person holding an organizational
position or having a profession (Moberg & Seabright).
Different definitions have been developed for professional ethics;
a)
b)
c)

Vocational ethics is the pledge of mental, psychological and physical energy of an individual or a group to the collective idea in order to
obtain power and inner talent for the individual or the group to develop in any sense (Cadozier, 2002).
Professional ethics is a new branch of ethics which attempts to respond to different professional ethical issues and which imagines certain
principles for that (Hartog & Winstanley, 2007).
Professional ethics as a branch of the ethics examines moral obligations and ethical matters in a profession. It defines a profession as a
specific activity which guides a person toward a designated situation with certain ethics (Faramarz Qara Maleki, Professional Ethics, 2007).

3.3 Ethics and entrepreneur enterprises


As the entrepreneur enterprises studies and business ethics studies grow, commonalities of ethics and entrepreneur enterprise increasingly draw the
attention of academic studies to itself. Regarding the studies done so far, the relation between ethics and entrepreneur enterprise is divided into three
general categories: entrepreneurial ethics, social entrepreneur enterprise, and entrepreneur enterprise and society. A recent series of studies which are
defined in the third category, however, are examining the relation between ethics and the most important part of entrepreneur enterprise which is
opportunity (Harris, Sapienza, & Bowie, 2009). Each of these categories tries to answer certain questions which will be addressed in the following.
3.4 Ethics of opportunity exploitation
Another category of studies which are rather new and which have been recently focused on, try to answer this question: what is the ethics of
opportunity exploitation? According to Kirzner opportunities exist in the environment as a result of economic imbalance. Therefore, entrepreneur
should explore these opportunities and invest on them to improve the economy (Shane & Venkataraman, 2000).
The most important ethical considerations exist in this category because it determines the entrepreneurial opportunity. In this part, entrepreneurs
should look for opportunities which are rooted in the real needs of human beings. Gain profit opportunities in which no need is met and in which
profit is gained through satisfying some demands, are unethical and should be eliminated.
3.5 Conceptual framework of the study
The main objective of this study is to enumerate the issues and obligations of knowledge-based entrepreneur enterprise ethics. Since there is no
conceptual model available to categorize different aspects of ethical issues and obligations, the researcher has attempted to categorize and prioritize
these issues and obligations by using scholars opinions besides other sources.
Although the following model is the most comprehensive model available in the ethical policy of organization and it can be helpful, there are
significant differences between entrepreneurial issues and obligations with ordinary organizations. Therefore this model cannot be accepted as the
basis of the study.
This model is used as a start point based on which, deep interviews with scholars are conducted, ethics issues and obligations of each policy are
extracted, and most importantly, ethics obligations of knowledge-based entrepreneur enterprise are enumerated. Since this model presents corporate
ethic policies in a general way, other items should be extracted. Based on the extracted items a questionnaire will be designed.

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Ethical Issues and Obligations in Knowledge-based Entrepreneurship in Iran


International Journal of Economy, Management and Social Sciences Vol(4), No (1), January, 2015.

Table 4. ethics and entrepreneurship: three themes (Harris, Sapienza, & Bowie, 2009)

Ethical
Frame work

Opportunities
rooted form
the real needs
of society, not
from demands
having no root
in real needs

Ways to
discover
opportunities
for
determining
need-based
and right
opportunities

Measuring
opportunities
or
using
methods
in
which moral
principles are
also
considered

Exploiting
opportunities
or ethic-based
and right
methods

Creating real
and long-term
value for the
society

Figure 3. Ethics and entrepreneurship: process theme (Fateh Rad & Baradaran, 2011)

4.

Findings

As previously mentioned, in the base model seven aspects are given for general beneficiaries of all organizations. These seven aspects include: 1consumer and customer, 2-stakeholders, 3-rivals, 4-beneficiaries suppliers contractors and regulatory agencies, 5-environment and international
community, 6-society citizens national interest, 7- employees and managers. Moreover, three other aspects were enumerated as new items because of
specialization and increasing encounter of knowledge-based entrepreneurs with these aspects. These are researchers and investigators, scholarly
partners, and intellectual property.

Mahdi Fateh Rad, Masoume Rahmani *


International Journal of Economy, Management and Social Sciences Vol(4), No (1), January, 2015.

Figure 4. conceptual model of the study (Faramarz Qara Maleki, Organizational Ethics, 2009)

Figure 5. New aspects

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International Journal of Economy, Management and Social Sciences Vol(4), No (1), January, 2015.

Each of these aspects is the vector sum of some other categories which will be presented in Table 5.
Table 5. Obligations and ethical issues in knowledge-based ethics in all aspects

Obligations and issues


regarding customer

Obligations and issues


regarding employees and
managers

Obligations and issues


regarding beneficiaries,
suppliers, contractors,
and regulatory agencies

Obligations and issues


in knowledge-based
entrepreneurship

Obligations and issues


regarding the society,
citizens, and national
interest
Obligations and issues
regarding the
stakeholders

Obligations and issues


regarding the rivals

Obligations and issues


regarding the
environment and
international community
Obligations and issues
regarding the new aspect
enumerated,
investigators and
researchers
Obligations and issues
regarding the new aspect
enumerated, rights of
intellectual property

Obligations and issues


regarding the new aspect
enumerated, scholarly
partners

Priority of the customers rights


Not abusing the customers ignorance
Employers and customers Expectations from the knowledge-bases corporation being ethical
After sales services and responsive support
Honest explanation of the product capabilities
considering the customer requirements and defining projects on this basis
Considering the distribution channel and advertising being ethical, in the phase of interacting with the customer
Avoiding dealing lightly and without due seriousness with the work
Determining fair prices for the product
Allowing the customer to chose freely from the rivals
Making sure the product works properly before sending it to the market
The impact of entrepreneurs ethical perspective on employees and managers
the manager being ethical reduces workplace issues
The possibility of low payment to the educated personnel
Implementing the comprehensive system of human resources management
Challenging the role and position of the personnel and managers
Disobedience from female managers
Rational problem solving with the personnel
Involving the personnel in decision making
Considering the personnel and the managers as the main asset and respecting their dignity
Presenting the thorough plan to the regulatory and patronizing organizations
Interacting with committed and fair suppliers
Holding targeted and systematic entrepreneurial festivals
Patronizing domestic product made by knowledge-based corporations
Arranging patronizing and regulatory organizations and institutions based on an appropriate pattern
On time and Targeted financial support based on transparent indices
Giving authority to corporations regarding distribution of privileges among people who have registered patents
Mutual observation of ethics between regulatory agencies and knowledge-based entrepreneurial corporations
Precise and appropriate supervising and control
Integrative rules and regulations among regulatory and patronizing institutions
Relevant organizations acting interactively
Observing rules and regulations
Least amount of challenges with society, citizens and the environment
Meeting the real requirements of society through knowledge-based entrepreneur enterprise
Patronizing the domestic products produced by knowledge-based corporations
Prioritizing values and beliefs over economy
Stakeholders only considering high profitability
Challenge over share proportions with the onset of profitability
Unlike entrepreneurs, shareholders dont favor risk taking
Shareholders Lack of sufficient information about the task
necessity of trust and attention of shareholders to the CEO
Knowledge-based entrepreneurs lack of familiarity with financing methods
Exaggerating the task in a tender to win over rivals
Destroying the work and plans of rivals
Tempting the rival corporations personnel to give away the formulas
Protecting the personnel and the patent against rivals unethical behavior
Disturbing the market, unhealthy competition, duplication and imitation
Competing inside the field while observing the rules of the game
Dumping is more dangerous in the knowledge-based area
Being socially responsible in knowledge-based economy at present and in the future
Observing the rules and regulations
Scholars attempt to reduce the damages caused by the product
Considering the environment as a part of organizational culture and as mentioned in the statute
Most of the chemical waste of knowledge-based products are dangerous
In IT knowledge-based entrepreneur enterprises dangerous waste is less than material knowledge based entrepreneur enterprises
Allowing experts to make unbiased judgments about the task
Fairness in registering the patent
The managers behaving ethically leads to the personnel and researchers behaving ethically
Leaving specializations to the pertinent experts
Determining how to treat researchers
Allowing others to use our achievements
Using others ideas and knowledge by their permission
The first challenge, how to register the idea
Legal authorities supporting the intellectual property right of knowledge-based corporations
Fairness in registering the patent
Recognizing rights for other researchers working on the field
Necessity of reformulation of and a more comprehensive support of intellectual property
Partners trusting each other
Paying attention to the choice of partners and personnel in starting a business
including all partners names in the corporations registration
Carefully adjusting the statute and determining share and interest proportions
Observing ethics and fairness while interacting with the partners
Necessity of consent over main issues from the beginning

Mahdi Fateh Rad, Masoume Rahmani *

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International Journal of Economy, Management and Social Sciences Vol(4), No (1), January, 2015.

It should be notified that the categorization in the third column includes minor categorizations. For example how to behave with the researchers
includes recognizing shares for researchers and investigators and reaching an agreement with the researcher to be employed. Other categories are
also like this, but it is not possible to mention all of them here.

5.

Discussion

This manuscript with the presented results is a new area of investigation in the context of ethics in knowledge based entrepreneurship; comparing the
results of this study with other studies reveals that previous studies have tried to prove the relationship between ethics and entrepreneurship and the
quality of this relationship. Prior to this study there has been no survey conducted on the knowledge-based entrepreneur enterprise ethics. Taking for
granted the existence of this relationship and using the findings of other studies, this paper investigated the obligations and issues of knowledge based
entrepreneurship as a pioneering member in economy. According to the findings of the study there are many overlaps between professional ethics
and ethics of various fields. Considering certain perspective of this study, the resulted combination mentioned cannot represent the appropriate results
of this investigation. We sought to identify ethical obligations of a knowledge based entrepreneur firm as a social institution. The kind of view such
as what is called engineering ethics and medical ethics is in fact ethic of an engineer or a doctor as the ethics of a job not the ethics of a social
institution. The result showed that this kind of view is applicable for identifying ethical issues and obligations in a knowledge based network of
entrepreneurs and national planning.

6.

Conclusion

As mentioned before, in this study several levels of results were extracted which was not expected from the beginning. In the first level, three new
ethical policies were achieved and totally ten aspects were gained. Then, in the second level, ethical issues and obligations of these ten aspects were
achieved through interviews with scholars in professional ethics and knowledge-based entrepreneurs.

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