MODULE – 5
Process of Company
Incorporation
Prof. Udaya S
Dept of MBA @ SVIT
Process of Company Incorporation
Introduction:
Incorporation is the legal process through which a business entity becomes a
recognized company under the laws of a particular jurisdiction. It marks the
birth of a company as a separate legal entity, distinct from its owners. This
process grants the company certain rights such as perpetual succession,
limited liability, and the ability to enter contracts, own assets, and sue or be
sued in its own name. In India, the incorporation of companies is governed by
the Companies Act, 2013, and regulated by the Ministry of Corporate Affairs
(MCA). The incorporation process involves several key steps, including
choosing a company name, preparing essential documents, filing applications
through the MCA portal, and obtaining the Certificate of Incorporation.
Understanding this process is crucial for entrepreneurs and business
professionals, as it lays the foundation for legal and smooth business
operations.
Process of registration of a private limited company :
1. Obtain Digital Signature Certificate (DSC):
To begin with, the proposed directors and shareholders of the company must
obtain a Digital Signature Certificate (DSC). This is required for signing
electronic documents during the registration process. It can be procured from
government-recognized certifying authorities.
2. Apply for Director Identification Number (DIN):
A Director Identification Number (DIN) is a unique number required for
anyone who wishes to be a director in a company. It can be applied for while
filing the SPICe+ (Part B) form for incorporation.
3. Name Approval – SPICe+ Part A:
A suitable and unique name must be selected for the company. This name is
submitted for approval through SPICe+ Part A form on the MCA portal. The
name should not resemble any existing company or trademark.
4. Preparation of Incorporation Documents:
Prof. Udaya S
Dept of MBA @ SVIT
The following key documents must be prepared and signed:
• MOA (Memorandum of Association): Outlines the company’s main
objectives.
• AOA (Articles of Association): Contains the rules and regulations for the
company’s internal management.
• Form INC-9: Declaration by the subscribers and directors.
• Form DIR-2: Consent to act as a director.
• Identity proof, address proof, and photographs of directors and
shareholders are also needed.
5. Filing SPICe+ (Part B) with AGILE-PRO-S:
After name approval, SPICe+ Part B must be filled with details of directors,
subscribers, share capital, registered office, etc.
It must be submitted along with:
• AGILE-PRO-S form for GST, EPFO, ESIC, bank account, and professional
tax registration (as applicable).
• Attach all necessary documents in the correct format.
6. Payment of Fees:
Government registration fees and stamp duty must be paid online. The fees
depend on the authorised share capital and the state in which the company is
being registered.
7. Verification by RoC:
The Registrar of Companies (RoC) examines the application and documents
submitted. If all details are correct and complete, the application is approved.
8. Certificate of Incorporation (COI):
Once approved, the RoC issues the Certificate of Incorporation. This certificate
contains:
• The Company Identification Number (CIN)
• Date of incorporation
• PAN and TAN of the company
This legally establishes the company as a registered private limited entity.
Prof. Udaya S
Dept of MBA @ SVIT
9. Declaration for Commencement of Business:
The company must file Form INC-20A within 180 days of incorporation. This is
a declaration stating that the company has received the agreed capital from
subscribers and is ready to begin business operations.
Process of registration of a public limited company
1. Obtain Digital Signature Certificate (DSC):
Every proposed director and subscriber (shareholder) of the company must
obtain a Digital Signature Certificate (DSC).
This is required to sign electronic forms and documents during the registration
process.
2. Apply for Director Identification Number (DIN):
A Director Identification Number (DIN) must be obtained for all individuals
proposed to act as directors in the company.
DIN can be applied while filing the SPICe+ Part B form.
3. Name Approval through SPICe+ Part A:
Choose a unique name for the public company and apply for name reservation
using SPICe+ Part A on the MCA portal.
The name must follow the naming guidelines and should include the word
"Limited" at the end.
4. Preparation of Documents:
Key incorporation documents include:
• Memorandum of Association (MOA): Defines the scope and objectives
of the company.
• Articles of Association (AOA): Defines internal rules and governance.
• Form DIR-2: Consent from each director.
• Form INC-9: Declaration from directors and subscribers.
• Address proof of registered office.
• Identity and address proof of all directors and shareholders.
5. File SPICe+ (Part B) along with Other Forms:
Prof. Udaya S
Dept of MBA @ SVIT
Fill SPICe+ Part B with the following:
• Details of directors, capital structure, registered office, and subscribers.
• Attach all required documents.
Also, submit linked forms:
• AGILE-PRO-S for GST, EPFO, ESIC, and bank account registration.
• e-MOA (INC-33) and e-AOA (INC-34) if using standard templates.
6. Payment of Fees and Stamp Duty:
Pay the required registration fees and stamp duty online.
Charges depend on the authorised capital and the state in which the company
is being incorporated.
7. Scrutiny by Registrar of Companies (RoC):
The RoC verifies all submitted forms and documents.
If everything is in order, the incorporation application is approved.
8. Certificate of Incorporation (COI):
Upon approval, the RoC issues the Certificate of Incorporation, which includes:
• Company Identification Number (CIN)
• Date of incorporation
• PAN and TAN details
The company is now legally registered as a Public Limited Company.
9. Minimum Requirements to be Fulfilled:
To be registered as a Public Ltd Company, it must:
• Have at least 3 directors
• Have at least 7 shareholders
• Have a minimum paid-up capital as per Companies Act (currently no
specific minimum, but should be sufficient to meet objectives)
10. File Declaration for Commencement of Business:
After incorporation, Form INC-20A must be filed within 180 days to declare
that the company has received the subscribed capital and is ready to start
business.
Prof. Udaya S
Dept of MBA @ SVIT
Process of registration of a partnership firm :
1. Choose the Partnership Firm Name:
• Select a suitable name for the partnership firm.
• The name should not be identical to an existing firm and must not
contain words like "Crown", "Emperor", "Government", etc., without
proper approval.
2. Draft a Partnership Deed:
• The Partnership Deed is a legal document that outlines the rights,
duties, profit-sharing ratios, and obligations of all partners.
• It includes details like:
o Name and address of the firm
o Names and addresses of all partners
o Capital contribution by each partner
o Profit and loss sharing ratio
o Rules for admission, retirement, or death of a partner
3. Get the Partnership Deed Notarized:
• The deed must be prepared on stamp paper of appropriate value (as per
the state laws) and signed by all partners.
• It should then be notarized to make it legally valid.
4. Apply for PAN Card of the Firm:
• Apply for a Permanent Account Number (PAN) for the partnership firm
through the Income Tax Department.
5. Open a Bank Account:
• Use the PAN and notarized partnership deed to open a current account
in the firm’s name for business transactions.
6. Optional: Register the Firm with Registrar of Firms (RoF):
• Partnership registration is optional in India, but registration gives legal
benefits (like suing a partner or third party in court).
Prof. Udaya S
Dept of MBA @ SVIT
• To register the firm, submit the application to the Registrar of Firms in
the respective state with:
o Application form (Form 1)
o Notarized Partnership Deed
o Affidavit declaring the correctness of information
o Ownership or rental proof of business place
o Prescribed registration fee
7. Receive Certificate of Registration (if registered):
• Once verified, the Registrar of Firms issues a Certificate of Registration,
and the firm’s name is entered in the Register of Firms.
8. Apply for Other Registrations (if required):
• Depending on the nature of the business, the firm may need to obtain:
o GST Registration
o Shop and Establishment License
o Professional Tax Registration
o Import Export Code (IEC) for international trade
Characteristics of a limited liability partnership
1. Separate Legal Entity:
• An LLP is a distinct legal entity, separate from its partners.
• It can own property, incur debts, sue, and be sued in its own name.
2. Limited Liability of Partners:
• The liability of each partner is limited to the extent of their agreed
contribution.
• Partners are not personally liable for the debts of the LLP or for the
actions of other partners.
3. Perpetual Succession:
• LLP continues to exist irrespective of changes in partners.
• Death, retirement, or insolvency of a partner does not affect the LLP's
existence.
Prof. Udaya S
Dept of MBA @ SVIT
4. Minimum Two Partners Required:
• An LLP must have at least two partners to be formed.
• However, there is no maximum limit on the number of partners.
5. At Least Two Designated Partners:
• Out of all the partners, at least two must be designated partners, and
one must be a resident of India.
• Designated partners are responsible for compliance with legal and
regulatory requirements.
6. No Requirement of Minimum Capital:
• There is no minimum capital requirement to form an LLP.
• Contribution can be in the form of tangible, intangible, movable, or
immovable property.
7. Flexible Internal Management:
• The internal structure and operational rules are governed by the LLP
Agreement, giving flexibility to partners.
8. Less Compliance Compared to Companies:
• LLPs have fewer compliance requirements than private or public limited
companies.
• Audit is mandatory only if turnover exceeds ₹40 lakhs or capital
contribution exceeds ₹25 lakhs.
9. Taxation:
• LLPs are taxed like partnership firms, not as companies.
• No dividend distribution tax is applicable.
10. Governed by LLP Act, 2008:
• LLPs in India are governed by the Limited Liability Partnership Act, 2008
and regulated by the Ministry of Corporate Affairs (MCA).
Prof. Udaya S
Dept of MBA @ SVIT
Four stages of Start Up
1. Ideation Stage (Concept Stage):
This is the first and most crucial stage in the startup journey. At this point, the
entrepreneur identifies a problem or gap in the market and generates
innovative ideas to solve it. Market research is conducted to analyze the target
audience, competitors, and feasibility of the idea. A business model is roughly
planned during this stage. The main objective here is to evaluate whether the
idea is worth pursuing.
Activities include:
• Identifying a problem or need in the market
• Generating innovative ideas and potential solutions
• Conducting market research
• Creating a business model or concept note
Focus: Feasibility of idea and understanding the target audience
2. Validation Stage (Seed Stage):
In this stage, the startup idea begins to take shape through the development of
a prototype or Minimum Viable Product (MVP). The product or service is
introduced to a small group of users to get feedback. Based on the feedback,
improvements are made. The startup may also look for seed funding from
investors, incubators, or use personal funds. This stage helps confirm if there is
a real demand for the product in the market.
Key activities:
• Testing the product/service with early users
• Gathering feedback for improvement
• Building a founding team
• Searching for seed funding or bootstrapping
Focus: Validating the business idea and proving its market fit
3. Growth Stage (Early Traction Stage):
Prof. Udaya S
Dept of MBA @ SVIT
Once the product is validated and launched, the startup focuses on growth and
scaling. Marketing strategies are implemented to reach more customers. The
startup refines its operations, adds new features, and hires staff to support
expansion. Early-stage funding (like Series A or B) may be raised to support
operations and marketing. The goal of this stage is to grow the customer base
and start generating consistent revenue.
• Activities include:
o Customer acquisition
o Marketing and branding
o Enhancing the product based on feedback
o Scaling operations and hiring staff
• Funding rounds like Series A or B may take place.
• Focus: Market expansion, revenue generation, and improving
operational efficiency
4. Expansion and Maturity Stage:
At this final stage, the startup becomes an established business. It looks for
opportunities to expand into new geographical regions or introduce new
products and services. The focus is on building strategic partnerships,
sustaining profits, and long-term planning. The company may also consider
merging with other companies, acquiring others, or going public through an
IPO. The goal is to create a sustainable and scalable business model.
Key activities:
• Diversifying product lines
• Exploring international markets
• Building strategic partnerships
• Preparing for mergers, acquisitions, or IPO
Focus: Sustainable growth, profitability, and long-term vision
Intellectual property protection and Ethics
In the knowledge-driven and innovation-centric business world, Intellectual
Property (IP) has become one of the most valuable assets of individuals,
startups, and organizations. Intellectual Property refers to creations of the
human mind such as inventions, literary and artistic works, symbols, names,
Prof. Udaya S
Dept of MBA @ SVIT
images, and designs used in commerce. To safeguard these creative works and
ideas from unauthorized use, duplication, or exploitation, legal Intellectual
Property Rights (IPRs) such as patents, copyrights, trademarks, and trade
secrets are granted.
The protection of intellectual property not only encourages innovation and
creativity but also provides a competitive edge and commercial value to
businesses. Proper IP protection ensures that creators can benefit from their
work and prevents misuse by others.
Alongside legal protection, the ethical dimension of intellectual property is
equally important. IP ethics involve fair practices in recognizing, using, and
respecting others' intellectual contributions. Ethical issues may arise in cases of
plagiarism, counterfeiting, piracy, unauthorized use of ideas, or failure to give
credit to rightful creators. Upholding ethical standards in IP usage promotes
trust, fairness, and respect within academic, professional, and business
environments.
In today's digital age, where content and ideas can be easily shared and
copied, both legal protection and ethical responsibility are essential to
maintain the integrity and value of intellectual property.
1. Intellectual Property (IP):
Intellectual Property refers to creations of the human mind such as:
• Inventions
• Literary and artistic works
• Symbols, names, and logos
• Software, designs, and trade secrets
These creations can be legally protected, allowing the creator or owner to
benefit from their use or commercialization.
2. Types of Intellectual Property Rights (IPRs):
• Patent: Protection for inventions, granting exclusive rights to the
inventor.
• Copyright: Protection for original literary, musical, artistic, or software
works.
Prof. Udaya S
Dept of MBA @ SVIT
• Trademark: Protects brand names, logos, slogans, and symbols.
• Designs: Protects the visual appearance of products.
• Trade Secrets: Protection for confidential business information like
formulas or processes.
3. Importance of IP Protection:
• Encourages innovation and creativity.
• Protects the financial interests of creators and businesses.
• Prevents unauthorized use or duplication.
• Enhances brand value and competitive advantage.
• Helps in commercialization through licensing, franchising, or selling IP.
4. Ethical Aspects of Intellectual Property:
Ethics in IP refers to fair and respectful use of someone else’s intellectual
work. Ethical considerations include:
• Avoiding plagiarism (using others’ work without permission or credit)
• Respecting copyrights and patents
• Proper citation of sources in academic and research work
• Not using pirated software, music, or videos
• Maintaining confidentiality of trade secrets or proprietary data
5. Common Ethical Issues:
• Copying software, books, or creative work without a license
• Failing to credit the original creator
• Misusing patented or trademarked products
• Selling counterfeit goods or fake brands
6. Need for Ethical Behavior in IP Use:
• Builds a culture of honesty and integrity
Prof. Udaya S
Dept of MBA @ SVIT
• Encourages original thinking and innovation
• Prevents legal consequences and penalties
• Ensures fair competition in the market
• Maintains trust and reputation of businesses and institutions
PATENTS
Definition:
A patent is an exclusive legal right granted by the government to an inventor
for a new, useful, and non-obvious invention—whether it is a product,
process, or method.
This right allows the inventor to exclude others from making, using, selling, or
distributing the invention without their permission for a specific period.
Purpose of Patents:
• To encourage innovation by rewarding inventors.
• To protect intellectual efforts and investments in research and
development.
• To allow inventors to commercialize their invention.
• To contribute to technological progress by making inventions publicly
available after expiry.
Features of a Patent:
• Exclusive Rights: Only the patent holder can make or license the
invention.
• Territorial Rights: A patent is valid only in the country where it is
granted.
• Time-Bound Protection: Generally valid for 20 years from the filing date.
• Disclosure Requirement: The invention must be publicly disclosed in the
patent document.
Types of Patents:
• Utility Patent: For new inventions or functional improvements (most
common).
Prof. Udaya S
Dept of MBA @ SVIT
• Design Patent: For new and original ornamental designs.
• Plant Patent: For the invention or discovery of a new variety of plant.
Process of Obtaining a Patent (India):
1. Patent Search – To check if a similar invention already exists.
2. Filing Patent Application – Provisional or complete specification filed
with the Patent Office.
3. Publication – Application is published after 18 months (early publication
possible).
4. Request for Examination (RFE) – Within 48 months from the filing date.
5. Examination and Objections – Patent Office examines the application;
responses must be filed.
6. Grant of Patent – If accepted, the patent is granted and published in the
official journal.
Rights of a Patent Holder:
• Right to exclude others from making, using, or selling the invention.
• Right to license or sell the patent to others.
• Right to take legal action against infringement.
Examples of Patents:
• Edison’s light bulb
• Google’s PageRank algorithm
• New pharmaceutical drugs
• Smartphone touchscreen technologies
Duration and Renewal:
• Patent is valid for 20 years from the date of filing.
• Requires payment of annual renewal fees to maintain validity.
Importance of Patents in Business:
Prof. Udaya S
Dept of MBA @ SVIT
• Helps in building market leadership and monopoly.
• Attracts investors and partnerships.
• Acts as a revenue source through licensing.
• Encourages technological advancement and R&D investment.
Copyright
1. Definition:
Copyright is a legal right that protects the original expression of ideas in the
form of creative works such as literary, musical, artistic, and digital content.
It gives the creator exclusive rights to use, reproduce, distribute, and adapt
their work.
2. Purpose of Copyright:
• To protect the rights of creators and prevent unauthorized use.
• To encourage creativity and innovation in literature, music, art, and
media.
• To ensure monetary benefits for creators by allowing them to license or
sell their work.
3. Works Protected by Copyright:
• Literary works – books, poems, articles, computer programs
• Dramatic works – scripts, plays
• Musical works – compositions, lyrics
• Artistic works – paintings, drawings, sculptures, photographs
• Cinematographic films – movies, videos
• Sound recordings – audio files, music albums
• Software and multimedia content
4. Key Features of Copyright:
• Automatic Protection: Copyright exists as soon as the work is created;
registration is not mandatory, but it strengthens legal rights.
• Exclusive Rights Include:
o Reproduction of the work
Prof. Udaya S
Dept of MBA @ SVIT
o Distribution and publication
o Public performance or display
o Translation or adaptation
5. Duration of Copyright:
• In India:
Valid for the lifetime of the author + 60 years after their death.
o For films, sound recordings, government works, etc.: 60 years
from the date of publication.
6. Ownership:
• Usually belongs to the creator or author of the work.
• Can be transferred or licensed to others (publishers, media companies,
etc.)
7. Infringement of Copyright:
Occurs when someone uses copyrighted material without permission.
Examples:
• Copying and distributing books or music
• Uploading movies without license
• Using others’ content in YouTube videos without credit or rights
Penalties: Can include fines, imprisonment, and seizure of unauthorized
copies.
8. Examples of Copyrighted Works:
• A novel by Chetan Bhagat
• A song composed by A.R. Rahman
• A film directed by Rajkumar Hirani
Prof. Udaya S
Dept of MBA @ SVIT
• A painting by M.F. Husain
• Software written by a company or individual
9. Importance of Copyright:
• Protects the economic and moral rights of creators
• Encourages original creation
• Prevents piracy and plagiarism
• Supports the growth of creative industries like publishing, music, film,
and software
Trademark
1. Definition:
A Trademark is a recognizable word, logo, name, symbol, slogan, design, or
combination of these elements that distinguishes the goods or services of one
business from those of others.
It acts as the brand identity of a business and helps consumers identify the
source of products or services.
2. Purpose of a Trademark:
• To protect brand identity in the marketplace.
• To prevent confusion among consumers.
• To help businesses build reputation and customer loyalty.
• To allow legal action against counterfeiters or unauthorized users.
3. Types of Trademarks:
• Word Mark: Brand name (e.g., Google, Pepsi)
• Logo Mark: Graphic design or symbol (e.g., Nike's ✓)
• Sound Mark: Unique sounds (e.g., Nokia tune)
• Shape Mark: Unique product shapes (e.g., Coca-Cola bottle)
Prof. Udaya S
Dept of MBA @ SVIT
• Tagline/Slogan: Short phrases (e.g., Just Do It)
4. Features of a Trademark:
• Must be distinctive, not generic or descriptive.
• Can be registered or used as an unregistered mark (™).
• A registered trademark (®) provides stronger legal protection.
• Can be transferred, licensed, or franchised.
• Protects only in the territory of registration (India, US, etc.)
5. Trademark Registration Process (India):
1. Search: Check for existing similar trademarks.
2. Filing Application: Submit Form TM-A to the Trademark Registry.
3. Examination: Registrar checks for uniqueness and legal validity.
4. Publication: Trademark is published in the Trademark Journal for
opposition.
5. Registration: If no objections, registration certificate is issued.
6. Symbol Use: You can now use the ® symbol.
6. Validity and Renewal:
• A trademark is valid for 10 years from the date of registration.
• It can be renewed every 10 years indefinitely.
7. Infringement of Trademark:
Trademark infringement occurs when a person or company uses a similar or
identical mark for similar goods or services, causing confusion among
consumers.
Legal actions can be taken in the form of:
• Injunctions (court orders to stop usage)
• Damages or fines
Prof. Udaya S
Dept of MBA @ SVIT
• Seizure of counterfeit goods
8. Examples of Famous Trademarks:
• Apple – the bitten apple logo
• McDonald’s – Golden Arches 'M'
• Amul – "The Taste of India"
• Cadbury Purple – Registered color trademark
• Tata – Brand name and logo
9. Importance of Trademarks:
• Establishes a unique brand identity
• Builds trust and recognition among customers
• Acts as an intangible asset that can increase business value
• Prevents brand imitation and misuse
• Enhances marketing and advertising impact
Geographical indications
1. Definition:
A Geographical Indication (GI) is a sign or label used on products that have a
specific geographical origin and possess qualities, reputation, or
characteristics inherent to that location.
It is typically used for agricultural, natural, or manufactured goods that reflect
the traditional knowledge or unique environment of a region.
2. Purpose of GI:
• To protect the identity and uniqueness of region-specific products.
• To preserve traditional knowledge and cultural heritage.
• To prevent unauthorized use or imitation by producers outside the
geographical area.
• To promote rural and regional development.
Prof. Udaya S
Dept of MBA @ SVIT
3. Examples of Indian Geographical Indications:
Product Region
Darjeeling Tea West Bengal
Mysore Silk Karnataka
Banarasi Saree Uttar Pradesh
Pokkali Rice Kerala
Kullu Shawl Himachal Pradesh
Kanchipuram Silk Saree Tamil Nadu
4. Features of a Geographical Indication:
• Identifies goods as originating in a specific place.
• The product must derive its uniqueness from that location (climate, soil,
skill, etc.).
• Only producers in the designated region can legally use the GI tag.
• A GI does not belong to a single individual—it is a collective right.
5. Legal Framework (India):
• Governed by the Geographical Indications of Goods (Registration and
Protection) Act, 1999.
• Administered by the Geographical Indications Registry, Chennai (under
the Controller General of Patents, Designs, and Trademarks).
6. Registration Process:
1. Application filing by a producer group or association.
2. Examination by the GI Registry.
3. Publication in the GI Journal.
4. Opposition period (for objections).
5. Certificate of Registration is issued if no valid opposition.
Prof. Udaya S
Dept of MBA @ SVIT
7. Validity and Renewal:
• A GI is valid for 10 years.
• It can be renewed indefinitely for successive 10-year periods.
8. Benefits of GI Protection:
• Legal protection against misuse or imitation.
• Helps in branding and market recognition.
• Increases export potential and premium pricing.
• Promotes local employment and sustainable livelihoods.
Ethical and social responsibility and challenges.
1. Introduction
Entrepreneurs are not only responsible for profit-making but also for
upholding ethical standards and contributing positively to society. Their actions
should reflect values like honesty, fairness, respect, and responsibility towards
stakeholders and the environment.
2. Ethical Responsibilities of Entrepreneurs
Ethical responsibilities involve doing what is morally right in all aspects of
business. These are not legally enforced but are guided by personal values and
social expectations.
• Honesty and Transparency: Truthful communication in advertising,
contracts, and dealings.
• Fair Practices: Equal treatment to employees, suppliers, and customers.
• Product Integrity: Offering quality products without deception or
compromise.
• No Exploitation: Avoiding unfair labor practices, child labor, or unsafe
working conditions.
• Respect for Stakeholders: Ethical handling of employee data, customer
privacy, and investor trust.
Prof. Udaya S
Dept of MBA @ SVIT
• Corporate Governance: Adhering to codes of conduct, avoiding
corruption and bribery.
3. Social Responsibilities of Entrepreneurs
Social responsibility refers to actions taken to benefit society, beyond the
business’s financial interests.
• Job Creation: Offering employment opportunities and improving
livelihoods.
• Community Development: Supporting education, healthcare, and local
infrastructure.
• Environmental Protection: Using eco-friendly practices, reducing
pollution and waste.
• Sustainable Business Practices: Long-term thinking that balances profit
with environmental care.
• Corporate Social Responsibility (CSR): Voluntary initiatives like
donations, awareness programs, and social projects.
4. Challenges in Fulfilling Ethical and Social Responsibilities
Entrepreneurs may face several practical challenges in adopting and
maintaining ethical and socially responsible behavior.
• Conflict between Profit and Ethics: Sometimes ethical practices may
reduce short-term profits.
• Cost Involvement: Social initiatives or eco-friendly materials may
increase expenses.
• Lack of Awareness: Small or new entrepreneurs may not know the
ethical/legal standards.
• Cultural and Regional Barriers: What is ethical in one society may differ
in another.
• Corruption and Pressure: External pressures, bribes, or red tape can
hinder ethical practices.
• Short-Term Thinking: Focus on quick gains may ignore long-term ethical
responsibilities.
Prof. Udaya S
Dept of MBA @ SVIT
5. Importance of Ethical and Social Responsibility
• Builds brand reputation and public trust
• Attracts ethical investors and loyal customers
• Promotes employee motivation and retention
• Reduces risk of legal penalties and public backlash
• Contributes to a better society and sustainable environment
Conclusion
Entrepreneurs have a dual role — to generate wealth and to act responsibly.
Ethical behavior and social contribution are not just duties but essential for
long-term success. Despite challenges, maintaining ethical and social
responsibility strengthens the entrepreneur’s credibility and ensures value
creation for all stakeholders.
Prof. Udaya S
Dept of MBA @ SVIT
