Innovation Ethics And Entrepreneurship

Innovation, Ethics, and Entrepreneurship

Morgan P. Miles Linda S. Munilla Jeffrey G. Covin

ABSTRACT. This paper is a response to Ray’s (2004) recent proposal that the intellectual property rights (IPR) attached to potentially life saving/life sustaining innovations should become public goods in cases where markets are either unable or unwilling to pay for the creation of the intellectualproperty. Using a free market approach to innovation based on Western moral philosophy, we suggest that treating intellectually protected life saving/life sustaining innovations as public goods will likely reduce social welfare over the long term. KEY WORDS: entrepreneurship, ethics, innovation, intellectual property rights, policy

‘‘For the Scripture says, ‘Do not muzzle the ox while it istreading out the grain,’ and ‘The worker deserves his wages’ ’’ 1 Timothy 5:18. Ray (2004), in a recent critique of Miles et al. (2002), proposes that the intellectual property rights (IPR) generated from any life saving/life sustaining entrepreneurial initiatives should be transferred to the public domain whenever potential users of these innovations are unable or unwilling to enter into mutuallybeneficial exchange relationships with the creators of the IPR. This reply offers a perspective on why Ray’s (2004) imperative does not maximize social welfare and, in fact, will tend to diminish social welfare over the long-term as a result of lower economic incentives for innovation.

Introduction
‘‘Few trends would so thoroughly undermine the very foundations of our free society as the acceptanceby corporate officials of a social responsibility other than to make as much money for their stockholders as they possible can. This is a fundamentally subversive doctrine’’ (Friedman, l962, p. 133).

Morgan P. Miles is Professor of Marketing, Georgia Southern University. His research interests include the interface between marketing and corporate entrepreneurship. Linda S. Munilla is Professor ofMarketing, Georgia Southern University. Her research interests include marketing and environmental ethics. Jeffery G. Covin is a Professor of Strategic Management and the Samuel and Pauline Glaubinger Professor of Entrepreneurship at Kelly School of Business, Indiana University. His research interests include corporate entrepreneurship, strategic processes, and managing in technology intensivecompetitive environments.

The premise of Miles et al.(2002) was, and as expanded and clarified in this paper, that the entrepreneurial process of entrepreneurial opportunity creation/discovery, evaluation, and exploitation is most effective in generating need satisfying innovations (in the context of capitalist economies, where innovations are funded through the mechanism of public equity markets)when the entities that accept the economic and social risks of discovery, evaluation, and exploitation of entrepreneurial opportunities are also allowed to economically benefit from these risky investments (see Becker, 2001; Kirzner, 1997; Schumpeter, 1934; Shane and Venkataraman, 2000; Venkataraman, 1997). While our free-market position that the entity that creates/ discovers, evaluates, andexploits an entrepreneurial opportunity should profit from it is well grounded in both Western and Christian moral philosophy, we fully acknowledge that not all scholars will agree with our position and we encourage debate. In fact, we greatly appreciate the opportunity for further discourse that Ray (2004) provides through his comments. In this reply we will not address Ray’s (2004, p. 1) discussionof ‘‘persuasive techniques’’, his bizarre and highly personal, unfounded attacks on the authors, nor Ray’s incorrect assumption that our

Journal of Business Ethics 54: 97–101, 2004. Ó 2004 Kluwer Academic Publishers. Printed in the Netherlands.

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Morgan P. Miles et al.
Unlike the beast, man has on earth not only the right of use, but a permanent right of ownership; and this is true...