The “Moral” Entrepreneur

Every once in a while you get a chance to do something different. And so I was deeply fortunate last week to attend an executive education course at Harvard Business School’s Social Enterprise Initiative. The course – Governing for Nonprofit Excellence – propelled my cohort and me into the gnarly issues inherent in nonprofit governance: board leadership, performance management, financial oversight and strategic stewardship. It was enlivening and illuminating. A core question revealed in one of the case studies remains with me; Could an enterprise be profitable and socially impactful? In other words, can the drive to make money co-exist successfully with the goal of positive social citizenship?

Last week the answer was “yes” with the implicit understanding that balancing both was far from easy, necessitating not only external creativity but also internal moral rectitude.

This week, I’m told otherwise.

Martin Shkreli, infamous pharma “bro” recently jailed while awaiting sentencing for fraud, triggered The New York Times to call him and his ilk of young, high-flying entrepreneurs who crash and burn spectacularly, examples of Shkreli Syndrome. Syndrome membership is based on a few factors: high scores on aptitude tests, engagement in atypical illicit teenage behavior, high self-esteem and early entrepreneurial success. Throw in a tendency to come from financially secure and traditionally white backgrounds, and you have the making of an anthropological specimen of the successful deviant.

The syndrome type is based on research conducted by UC Berkeley economist Ross Levine and London School of Economics professor Yona Rubenstein. In 2013, the pair published their study on the entrepreneur type, Smart and Illicit: Who Becomes an Entrepreneur and Does It Pay? In it, they distinguish between incorporated and non-incorporated entrepreneurs (true entrepreneurs vs. the self-employed), and salaried workers (those working for someone else’s enterprise). They found “the incorporated are more educated and more likely to come from high-earning, two-parent families than salaried workers. Furthermore, even as teenagers, people that incorporate later in life tend to score higher on learning aptitude tests, exhibit greater self-esteem, indicate that they aspire to be managers/leaders later in life, and engage in more aggressive, illicit, and risky activities than other people…People who both engage in illicit activities as teenagers and scored highly on learning aptitude tests have a much higher tendency to become entrepreneurs than others without this particular mixture of traits.”

Reading this made me think of whispered gossip in a community about the neighbor kid who was found pulling the wings off a bat. Should we be worried about little Johnny when he grows up? Well, let the record show I am not assuming that budding entrepreneurs are inherently dangerous or that we should give up acknowledging those who disrupt the market. What I am wondering is how far to celebrate profitable disruption, particularly when a slew of its standard bearers are caught up in business practice and harassment scandals. Is it ethically sloppy of us to overlook such behavior until it can no longer be contained? Are we being asked to hold those who achieve to a comprehensive, human standard?

Essentially, we are reconciling the original question of this post: Can an enterprise/entrepreneur be profitable and socially impactful? Yes it can be, even if being socially impactful manifests only in the operating environment. Taken to another level, socially impactful entrepreneurship extends beyond internal environment to positive impact on markets, people and communities. This might mean investors, customers and the public demand the entrepreneur redirect inherently risky impulses toward mutually beneficial outcomes. In fact, celebrating profitable disruption that drives positive social change can redirect the current scourge of bad behavior in Silicon Valley. It can also serve as a way to expand the definition of successful entrepreneurship.

Moral entrepreneurship can be achieved, with attractive profits to boot. What it takes is a willingness to press beyond bro culture and illicit youthful patterns to marry disruptive drive with positive social impact. What it takes is celebration of an entrepreneurial model with social morality at its core.

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