Developing Authentic Leadership and Fostering Social Entrepreneurial Innovation

1. Introduction

It is not a stretch to suggest that contemporary businesses should include ethical considerations into their business practice. In the ‘Essendon Drug Saga’, an Australian national football club’s provision of illicit performance enhancing drugs had detrimental effects on their long-term organizational performance (Crawford et al., 2017). Flow-on effects of the financial sector’s corruption, notably the Global Financial Crisis, arguably demonstrate how unethical behaviors of contemporary business can accumulate into far larger issues (GFC: Liu, 2015). Lack of ethical consideration in contemporary business practices, along with misleading behavior and deception, are problematic notions (Greenwood, 2002). The greenwashing conducted under Volkswagen’s ‘dieselgate’ is just another instance in which contemporary social values are not being upheld by business leaders (Siano et al., 2017). The consequences of corporate and individual malpractice have forced business to evolve (Boddy, 2011). Mistrust of corporations has influenced corporate leaders to act responsibly and within the constraints of the relevant social values (Van Marrewijk, 2003).

There are numerous examples in ancient history of innovators that failed to adhere to normative ethics of their time. Take Thomas Edison the innovator as an example. Edison, despite his media persona as a creative has been cast by more recent historians as an “dodgy dealer, the media manipulator, the appropriator of other people’s work” (Morus, 2018, n.p.). Despite the entrepreneurial success, his ability to deceive enabled long-term romanticizing of his life. However, at some point such actions are exposed. In a digitally connected world, this is unlikely to take around 100 years to uncover, but rather a matter of years, if not months. For example, Josh Tetrick, Founder of Hampton Creek was found to have been buying his own products to inflate sales in a venture capital seeking cycle (Zaleski et al., 2016). The outcomes of his dishonesty are not completely known, but the entire Board resigned, excluding Tetrick (Zaleski, 2017). Founder of Zenefits, Parker Conrad lost over $2.5 billion worth of his enterprises value through the employment of unlicensed healthcare insurance salespeople (Tobak, 2017).

Contemporary entrepreneurs are expected and required to be ethical, and we argue, many have a desire for social impact. This social impact can be through adhering to minimal Corporate Social Responsibility (CSR) compliance or by establishing social enterprises. Consumers expect to see a certain level of CSR practice in organizations they purchase goods and services from (Mohr et al., 2001). Managers also have a general desire to engage in CSR activities (Jine & Preuss, 2009), so failure to engage in CSR could affect managerial motivation.

Genuine ethical consideration is sometimes an afterthought for leaders making decisions, and importantly entrepreneurs fall into the same category. Entrepreneurs lacking moral engagement with their mission have been found to engage in a significantly larger amount of unethical practices (Baron et al., 2015). With understanding that the entrepreneur may engage in unethical practice, educative practices have a role and obligation to embed ethics into their programs.

Entrepreneurs who act with poor ethics are likely to eventually fail in their enterprise. Social entrepreneurs are the same, although a social entrepreneur is more likely to begin with an ethical framework given their willingness to sacrifice profits for social innovation. Some social entrepreneurs are driven by an ethical obligation or desire to improve their society (Zahra et al., 2009). However, some may be motivated by egoism and the creation of social wealth for status, rather than for societal benefit (Longnecker et al., 1988). In this case, social entrepreneurs may undertake unethical practice to achieve social outcomes.