ISSN 2326-3776 (Print) ISSN 2326-3806 (Online) Vol 4 No. 1, Spring 2014 Mission of JEE e mission of the JEE is to publish (double-blind, peer reviewed) interdisciplinary scholarly research (conceptual, theoretical, empirical) or teaching cases that connect entrepreneurship and ethics and appeal to both the academic and the practitioner. Disclaimer e views expressed in the Journal of Ethics and Entrepreneurship are the personal views of the author(s) of the individual articles and are not intended to reflect the views of the Editors, members of the Editorial Review Board, the Godbold School of Business or Gardner-Webb University. Journal of Ethics & Entrepreneurship EDitorial rEViEw BoarD Editor – Donald W. Caudill Godbold School of Business, Gardner-Webb University [email protected] Associate Editor – James E. Littlefield Pamplin College of Business, Virginia Tech [email protected] M. Jill Austin Maria Minniti Middle Tennessee State University Syracuse University Wendy Cukier Stephen Moore Ryerson University Central Piedmont Community College Robert S. D’Intino Michael H. Morris Rowan University University of Florida Alex F. DeNoble Erin Pleggenkuhle-Miles San Diego State University University of Nebraska at Omaha Rodney D’Souza Nancy Rossiter Northern Kentucky University Jacksonville University Eugene Fregetto Mark T. Schenkel University of Illinois at Chicago Belmont University Jeffrey S. Hornsby Manisha Singal Kansas State University Virginia Tech Robert P. Lambert Dianne H. B. Welsh Belmont University e University of North Carolina Greensboro Fred H. Maidment Rebecca J. White Western Connecticut State University e University of Tampa Martha Mattare Densil A. Williams Frostburg State University e University of West Indies Michael D. Meeks Monica Zimmerman Treichel Louisiana State University in Shreveport West Chester University of Pennsylvania EDitorial Staff Copy Editor – Matthew R. Renfer Associate Director of Creative Services – Katie F. Lovelace Graphic Design – Kathy E. Martin Logo Design – Ryan Gunter Journal of Ethics & Entrepreneurship CoNtENtS VolumE 4, N umBEr 1SpriNg 2014 Editorial Review Board 2 From the Dean of the Godbold School of Business 4 From the Editors 4 artiClES Organizational Psychological Capital in Family-owned Franchise Firms and Corporate Social Responsibility 5 Esra Memili and Dianne H. B. Welsh Nepotism and Ethical Reasoning in Family Businesses 21 Mario J. Hayek Canine Conundrum: A Case Study in Technology, Ethics and Crisis Management Caroline Glackin, Jay Azriel, and Russell Porter 41 e Conflicting Drivers of Entrepreneurial Ethics 57 Robert Steinbauer, Nicholas D. Rhew, Eric Kinnamon, and Frances Fabian Doing the Right ing: Entrepreneurship, Ethics and Corporate Social Responsibility in Castro’s Cuba and Pinochet’s Chile 73 Joseph L. Scarpaci Invitation to Review Manuscripts 95 Subscription Form 96 About the Editors 97 Journal of Ethics & Entrepreneurship , Vol. 4, No. 1 (Spring 2014), pp. 73-94 73 ©Gardner-Webb University. All rights reserved. ISSN 2326-3776 (Print) ISSN 2326-3806 (Online) Doing the Right Thing: Entrepreneurship, Ethics, and Corporate Social Responsibility in Castro’s Cuba and Pinochet’s Chile Joseph L. Scarpaci aBStraCt Constrained political regimes from the right and le spur entrepreneurship in ways that have received little attention in the Americas, and when they do, they address macro-economic issues and large multinational firms. In so doing, this macro-scale approach ignores thousands of smaller firms that employ tens of thousands of workers. ese case studies from authoritarian Chile and communist Cuba redress this issue of scale by showing how entrepreneurial ethics and social responsibility drive small- business business plans in unexpected ways. Financial documents such as balance sheets and income statements, or reports in business journals, are uncommon at this level of entrepreneurship in these two countries. Accordingly, the cases draw on ethnographic field research from the 1980s, 1990s, and the 2010s. e striking change from ‘staying under the radar’ to reaching out to numerous stakeholders is telling, and implies that neither the size of the firms nor the magnitude of sales condition the acts of altruism described in this article. While formal-sector studies emphasize corporate social responsibility, in Latin America these reciprocal networks have long existed, but receive little attention in the business literature. KEY WORDS: Small-scale Entrepreneurs; Ethics, Reciprocity; Cuba; Chile JoSEpH l. SCarpaCi is the former chair of Marketing and Management and presently an Associate Professor of Marketing at West Liberty University in West Virginia. He serves as Executive Director of e Center for the Study of Cuban Culture + Economy, and is a partner in e Havana Consulting Group. Telephone: 540.230.3143 Email: [email protected] 74 Journal of Ethics & Entrepreneurship iNtroDuCtioN Entrepreneurs are characterized by their innovation and risk-bearing actions. Pioneering work by Schumpeter (1942) and Liebenstein (1968) helped to establish that entrepreneurs differ from business owners and managers. ey helped to switch the locus of control in the small enterprise to the risk-taking actions of the single proprietor. Aer WW II, Drucker and others examined the work setting of entrepreneurs, nudging researchers to avoid the urge to laud them and focus more on specifying the empirical aspects of their work: Drucker observed “there continues to be an implicit assumption that the entrepreneur contributes disproportionately to the economy of a nation, yet little has been done to isolate this individual for further analysis” (1958: 255). Decades later, Hofstede (2001) and others gathered cultural evidence that workers reared in the market economies of the Global North enjoy a particular advantage in being successful entrepreneurs because of the broader cultural milieu in which they were raised. Namely, the values and beliefs associated with individualism, masculinity, time orientation, and power distance (among individuals), seemed to be associated with nations that might embrace unfettered markets. Hofstede’s typology expanded McClelland’s narrow view on the cultural construction of risk-taking as a necessary precursor for capitalist behavior (see McClelland and Teague, 1975). Simply put, non-Western agrarian societies may not adapt as well to the pressures and risks of industrial capitalism as their counterparts in the Global North. However, the surge of BRIC (Brazil, Russia, India, China) and other emerging economies suggest a need for reconsidering these ideas about risk and entrepreneurship (Smith and Scarpaci 2000), and for placing these cases in ethical and corporate social responsibility (CSR). A vast literature exists on CSR in the advanced capitalist nations of the North Atlantic and Australasia, and almost exclusively among medium to large firms. e concern among private businesses for societal welfare carries intrinsic and extrinsic rewards. Within a firm, we know that “doing the right thing” instills pride and confidence among employees who realize there are non-material rewards for working at a firm that addresses social problems in the course of business (Aguilera et al. 2007; Bhattacharya et al. 2008). External rewards for firms practicing CSR not only boost the image of the company in the eyes of the market, but can also garner goodwill among consumers and adhere them to a firm’s brand, product or service. In other words, CSR gives entrepreneurs useful social capital. While it is broadly accepted that doing the “right thing” in market economies displays a firm’s moral principles that govern the conduct of other business people or groups, less has been written about “emerging economies,” ethical comportment, and CSR. Murphy and Coombes (2009) review of nearly two decades of the social entrepreneurship literature made no references to a single paper concerning ethics and CSR. is paper presents two ethnographic case studies from Latin America taken at points in time when two nations—Pinochet’s Chile and Raúl Castro’s Cuba—that were encouraging private sector development. Our cases show that draconian measures from the far right and ideological rigidity of the extreme le were catalysts for the protagonists discussed in this paper to start their own businesses. I identify the stakeholders in economies that had recently begun promoting entrepreneurship despite a legacy of socialist economic planning. Fieldwork in Chile over 5 months between 1985-1989 and one month in 2008, and in Cuba for 6 months, between 1998 and 2013, capture the ethical and entrepreneurial challenges confronted by two enterprises. e Chilean case draws on a formal girl’s dress Scarpaci 75 couture operation that developed in the slums of Santiago—the nation’s capital—and developed B2B ties with high-end retail outlets in New York, London and Paris. e entrepreneur gained his experience in sewing and marketing from an unexpected realm: the human rights sector. Our Cuban example stems from a sole proprietor pizza maker working out of his home in the island’s capital city of Havana, who aer being downsized by the Ministry of Housing, sought a livelihood in the food industry; a sector in peril in the state-mandated food provision system. ese cases bring forward the contradictions and difficulties for individual entrepreneurs which, in turn, are modified by ethics and socially-defined moral values. I argue that corporate social responsibility at this level is part of networks of reciprocity that both Latinamericanist