💡Intrapreneurship Unit 11 – Legal and Ethical Aspects of Intrapreneurship

Key Legal Concepts

• Contract law governs the formation, performance, and enforcement of agreements between parties
  • Includes elements of offer, acceptance, consideration, and intention to create legal relations
• Tort law deals with civil wrongs and injuries caused by one party to another
  • Encompasses negligence, strict liability, and intentional torts (battery, assault, false imprisonment)
• Agency law regulates the relationship between principals and their agents who act on their behalf
  • Agents have fiduciary duties to act in the best interest of the principal
• Employment law covers the rights and obligations of employers and employees
  • Includes discrimination, harassment, wage and hour regulations, and workplace safety
• Consumer protection laws safeguard the interests of consumers against unfair or deceptive business practices
  • Encompasses false advertising, product liability, and warranty issues
• Antitrust laws promote fair competition and prevent monopolies or restraints on trade
  • Prohibits price fixing, market allocation, and other anti-competitive practices
• Environmental law regulates the impact of business activities on the environment
  • Covers pollution control, waste management, and conservation of natural resources

Ethical Frameworks in Business

• Utilitarianism focuses on maximizing overall happiness or well-being for the greatest number of people
  • Decisions are evaluated based on their consequences and the net benefit they produce
• Deontology emphasizes the inherent rightness or wrongness of actions based on moral duties and obligations
  • Adheres to universal principles (honesty, respect for autonomy, justice) regardless of outcomes
• Virtue ethics stresses the importance of moral character and the cultivation of virtues (courage, temperance, justice, prudence)
  • Encourages individuals to embody and act in accordance with these virtues
• Care ethics prioritizes empathy, compassion, and the maintenance of relationships
  • Considers the context and unique needs of individuals affected by decisions
• Rights-based ethics asserts that individuals have fundamental rights that should be respected and protected
  • Includes the right to life, liberty, property, and privacy
• Justice-based ethics seeks to ensure fair and equitable treatment for all stakeholders
  • Encompasses distributive justice (allocation of benefits and burdens) and procedural justice (fair decision-making processes)
• Pragmatic ethics takes a practical approach, balancing ethical considerations with the realities of business
  • Seeks to find workable solutions that satisfy multiple stakeholders and objectives

Intellectual Property Rights

• Patents protect inventions and grant exclusive rights to make, use, or sell the invention for a limited time
  • Requires novelty, non-obviousness, and utility
• Copyrights protect original works of authorship (literary, musical, artistic, software) and give creators exclusive rights to reproduce, distribute, and adapt their works
  • Exists automatically upon creation and lasts for the life of the author plus 70 years
• Trademarks protect distinctive words, phrases, symbols, or designs that identify the source of goods or services
  • Prevents consumer confusion and unfair competition
• Trade secrets protect confidential business information that provides a competitive advantage
  • Includes formulas, processes, customer lists, and marketing strategies
• Licensing allows IP owners to grant others the right to use their IP in exchange for royalties or other compensation
  • Can be exclusive (single licensee) or non-exclusive (multiple licensees)
• IP infringement occurs when someone uses IP without permission or exceeds the scope of a license
  • Remedies include injunctions, damages, and attorney's fees
• International IP treaties (Berne Convention, Paris Convention, TRIPS Agreement) harmonize IP protection across borders
  • Ensures minimum standards of protection and national treatment for foreign IP owners

Corporate Governance and Compliance

• Board of directors oversees the management of the company and represents the interests of shareholders
  • Sets strategic direction, approves major decisions, and monitors performance
• Executive compensation aligns the incentives of top managers with the long-term interests of the company
  • Includes salary, bonuses, stock options, and performance-based pay
• Shareholder rights include the right to vote on key issues (election of directors, mergers, amendments), receive dividends, and access company information
  • Activist shareholders may push for changes in corporate governance or strategy
• Auditing and financial reporting ensure the accuracy and transparency of a company's financial statements
  • Internal controls prevent fraud and ensure compliance with accounting standards
• Regulatory compliance requires companies to adhere to laws and regulations in their industry or jurisdiction
  • Includes environmental, health and safety, labor, and securities regulations
• Whistleblower protections encourage employees to report illegal or unethical conduct without fear of retaliation
  • Sarbanes-Oxley Act provides specific protections for corporate whistleblowers
• Corporate social responsibility (CSR) involves the integration of social and environmental concerns into business operations
  • Encompasses sustainability, ethical sourcing, philanthropy, and community engagement

Risk Management and Liability

• Identification and assessment of risks (financial, operational, reputational, legal) is the first step in risk management
  • Involves analyzing the likelihood and potential impact of risks
• Risk mitigation strategies aim to reduce the likelihood or impact of identified risks
  • Includes avoidance, reduction, sharing, and acceptance of risks
• Insurance transfers the financial risk of loss to an insurance company in exchange for premiums
  • Types of coverage include property, liability, workers' compensation, and business interruption
• Indemnification clauses in contracts allocate the risk of loss between parties
  • One party agrees to compensate the other for losses or damages arising from specified events
• Limited liability protects the personal assets of owners from the debts and obligations of the business
  • Applies to corporations, LLCs, and limited partnerships
• Product liability holds manufacturers, distributors, and sellers responsible for injuries caused by defective products
  • Theories of liability include negligence, strict liability, and breach of warranty
• Professional liability (malpractice) arises when professionals (doctors, lawyers, accountants) fail to meet the standard of care in their field
  • Requires proof of duty, breach, causation, and damages

Employee Rights and Responsibilities

• Discrimination in employment based on protected characteristics (race, gender, age, disability, religion) is prohibited by federal and state laws
  • Employers must provide equal opportunities in hiring, promotion, and compensation
• Harassment (sexual, racial, or other) creates a hostile work environment and is a form of discrimination
  • Employers are liable for harassment by supervisors and must take steps to prevent and address it
• Wage and hour laws (Fair Labor Standards Act) set minimum wage, overtime pay, and child labor standards
  • Exempt employees (executive, administrative, professional) are not entitled to overtime pay
• Occupational Safety and Health Administration (OSHA) sets and enforces workplace safety standards
  • Employers must provide a safe work environment and training on hazards
• National Labor Relations Act protects the rights of employees to organize, join unions, and engage in collective bargaining
  • Prohibits employers from interfering with or retaliating against union activities
• Employee privacy rights limit an employer's ability to monitor or search employee communications or belongings
  • Exceptions apply for legitimate business purposes or with employee consent
• Duty of loyalty requires employees to act in the best interests of their employer and avoid conflicts of interest
  • Includes protection of confidential information and non-competition after employment

Ethical Decision-Making in Intrapreneurship

• Identify and define the ethical issue or dilemma
  • Gather relevant facts and consider multiple perspectives
• Analyze the issue using ethical frameworks and principles
  • Consider the rights, duties, and consequences involved
• Generate alternative courses of action
  • Evaluate the ethical implications and feasibility of each option
• Make a decision and take responsibility for the outcome
  • Be prepared to justify the decision based on ethical reasoning
• Implement the decision with care and monitor the results
  • Make adjustments as needed and learn from the experience
• Foster an ethical culture that encourages open communication and reporting of ethical concerns
  • Provide training and resources to support ethical decision-making
• Lead by example and demonstrate a commitment to ethical behavior
  • Hold oneself and others accountable for upholding ethical standards

Case Studies and Real-World Applications

• Enron scandal highlights the importance of corporate governance, auditing, and ethical leadership
  • Executives engaged in fraud, conspiracy, and insider trading, leading to the company's collapse
• Volkswagen emissions scandal demonstrates the consequences of violating environmental regulations and deceiving consumers
  • Company installed software to cheat on emissions tests, resulting in fines and reputational damage
• Apple v. Samsung patent litigation illustrates the high stakes of intellectual property disputes in the technology industry
  • Companies sued each other for infringement of design and utility patents on smartphones and tablets
• Foxconn labor practices raise concerns about working conditions and employee rights in global supply chains
  • Apple supplier faced scrutiny over long hours, low wages, and underage workers in Chinese factories
• Facebook Cambridge Analytica data privacy scandal highlights the risks of collecting and sharing user data without consent
  • Political consulting firm accessed the data of millions of Facebook users to target ads and influence elections
• Patagonia sustainable business practices showcase the potential for aligning profit with purpose and environmental responsibility
  • Company uses recycled materials, donates to conservation causes, and advocates for climate action
• Johnson & Johnson talc powder lawsuits raise questions about product safety, disclosure, and corporate liability
  • Company faced claims that its talc-based products contained asbestos and caused cancer