Ethics in Business Communication

List of Contributors

Ethics in Entrepreneurship and Business Management

José-Santiago Fernández-Vázquez and Ángel Sancho-Rodríguez

Ethical Appeals and Persuasion in the Entrepreneurial Pitch

Abstract: This chapter aims to determine the persuasive efficacy of the use of ethical appeals in the entrepreneurial pitch by examining the discursive interaction that takes place in a televised corpus, taken from the Spanish TV program Tu Oportunidad (“Your Chance”), the counterpart of the British Dragon’s Den and the American Shark Tank. Using information gathered in the discursive analysis of the corpus, we address how the use of ethical appeals may influence the decisions taken by the investors. The results show that ethical appeals are useful for attracting investors’ attention and passing an initial screening of the business venture, but that in the end they must always be accompanied by economic and financial arguments for the pitch to be successful. Ethical appeals do not possess persuasive force on their own.

Keywords: persuasion, entrepreneurial pitch, entrepreneurial ethics

Introduction

In a globalized world like today’s where the flow of information is almost instantaneous, ethical issues have risen to prominence among business organizations and actors. (On the concept of business ethics, including a synthetic definition, see Lewis 1985.) Recent scandals such as the so-called Dieselgate fraud, involving contaminating motor-vehicle emissions, which hit the Volkswagen group in 2015, or the suit against Bayer for using carcinogenic herbicides in 2019, are clear cases of how failure to fulfil ethical and legal obligations may have a negative impact on profit-and-loss accounts. Not for nothing are factors relating to reputation a key part of an organization’s goodwill, and that implies a certain correlation between economic profits and good standing in terms of ethics and social utility. The 2018 “Global Intangible Finance Tracker” study, for instance, showed that a 5 per cent improvement in a company’s reputation entailed a 6.4 per cent increase in intention to purchase (p. 5). Similarly, Verschoor (1998) and Fan (2005) point to the importance of ethical issues in brand definition and, thence, to financial profits. In view of this correlation, when setting up a company or developing a business project it seems a good idea, whenever possible, to attend to ethical issues as a means of maximizing chances of success and profits. This is the underlying rationale of what is known as “social enterprise”, whose business plans prioritize the achievement of a collective benefit that contributes ←17 | 18→to improving people’s living conditions (Dees, 2011, pp. 24–5; Martin & Osberg, 2007, p. 35; Peredo & McLean, 2006, p. 64). The “pro-social” stance adopted by this type of enterprise need not militate against other more utilitarian motivations such as a craving for personal gains or a vocation for innovation (Douglas & Prentice, 2019). As Douglas observes, in social entrepreneurship “it is the sum of the part-worths that is determining, not any particular attitude, salient-outcome, or part-worth, since that attitude, salient outcome, or part-worth may easily be outweighed by the combined effect of the others” (2013, p. 638). Of course, balancing utilitarian motivations with a pro-social stance is not tension-free and may in turn spark significant ethical dilemmas (Zahra et al., 2019).

The growth of social enterprise is one of the reasons why experts have turned their attention to the relationship between ethics and enterprise. Entrepreneurship scholars pay increasing attention to the ethical aspects of the field, as Vallaster et al. (2019) have demonstrated in their bibliometric study in which they analyze 719 contributions in business and economics research, including the 30 most influential publications in the field. By reviewing these articles, Vallaster et al. were able to identify three main “clusters” which articulate the discussion on business and ethics. The first cluster tries to determine to what extent the characteristics of ethic entrepreneurs differ from those of non-entrepreneurs. The second cluster stresses the importance of ethics at an organizational level and the third one explores the societal contexts of ethics and entrepreneurship, including the position of stakeholders and social change. If we look at the most recurrent keywords in studies on ethics and entrepreneurship, we will find issues related to performance, management, corporate social responsibility, innovation, sustainability and decision-making, among others (Vallaster et al., 2019, p. 228). In this paper we intend to concentrate on one of these issues: the relationship between ethical concerns and decision-making. Most scholars have dealt with this topic from the perspective of the entrepreneur, in order to explain how entrepreneurs’ choices are conditioned by their adherence to certain ethical values and by the tension this creates with their intention to obtain economic profit. Humphreys et al. (1993), for example, provided structured scenarios to determine how ethical or unethical the entrepreneurs thought a particular situation. Smith and Oakley (1994) argued that the size of the business community was a determining factor in the ethical decision-making process. Bucar and Hisrich (2001) compared the attitudes of entrepreneurs with those of business managers and found that the former are more prone to hold ethical attitudes. Payne and Joyner (2006) studied some of the ethical choices made by founding entrepreneurs during the creation and development of their ventures as a way of identifying the major categories of ethical values held by ←18 | 19→entrepreneurs. Colewaert and Fassin (2013) examined the impact of perceived unethical behavior as a source of conflict for entrepreneurs in their dealings with angel investors and venture capitalists. Baron, Zhao and Miao (2015) claimed that entrepreneurs’ motivations for financial gain are positively related to moral disengagement (disengaging self-regulatory processes), which in turns leads them to adopt unethical decisions.

Objectives and Methodology

Our approach is somewhat different. Rather than focusing on how entrepreneurs’ choices are conditioned by ethical values, we intend to analyse how the appeal to ethical concerns on the part of entrepreneurs may affect the possibilities of them receiving funding from investors. In other words, our intention is to determine to what extent the use of ethical references in the presentation of entrepreneurial projects has a positive effect from the perspective of persuasion. Following Pullman (2013, p. xx) we understand persuasion as “any process that creates a new belief or changes your level of commitment to an existing one” (2013, p. xx). To examine the persuasive force of ethical appeals in entrepreneurial contexts, we concentrate on the analysis of the “entrepreneurial pitch”: an oral presentation which provides “a brief description of the value proposition of an idea” to “potential business angels or venture capitalists” (Wheatcroft, 2016, p. 26). Entrepreneurial pitches build successively on a series of communicative functions, each of which is associated with particular linguistic structures (Daly & Davy, 2016, p. 125). As for persuasive strategies, Clark has divided them into purely financial aspects, aspects relating to human capital and issues of social competence (2008, pp. 258–9). For their part, Maxwell, Jeffrey and Lévesque (2011), have put persuasive strategies into eight categories, all linked to the financial aspects or the quality of the business plan as pitched, except for the description of the entrepreneurs’ own experience. They further suggest that in the first instance investors tend to reject projects which fail to pass muster under some or other of those criteria, and that one aspect’s quality cannot make up for another’s deficiency. Daly and Davy have applied a rhetorical framework to help distinguish between argumentative elements, elements relating to the speaker’s credibility and emotional factors (2016, p. 127). In none of these studies are ethical references considered on their own.

Our research investigates the presence of ethical appeals and their persuasive efficacy in a corpus of televised entrepreneurial pitches. These pitches have been subjected to a detailed analysis of the discursive interventions and exchanges on the part of the entrepreneurs and their conversational counterparts, according ←19 | 20→to content analysis methodology (Hsieh & Shannon, 2005; Mayring, 2014) and pragma-linguistic argumentative theories (Toulmin, 2003; van Eemeren & Grootendorst, 2004). Each pitch contains a monologue, where the entrepreneurs expose their arguments, a dialogical interaction, which adopts a question–answer form, and a final intervention on the part of the investors, where they explain their reasons for supporting or discarding the project. To conduct our analysis, we first identified the presence of ethical appeals in the entrepreneurs’ monologues, following the persuasive taxonomy developed by Fernández-Vázquez and Álvarez-Delgado (2019a). Then, to determine the persuasive efficacy of ethical appeals, we paid attention to the way in which investors reacted to the ethical references that the entrepreneurs introduced in their pitches, as seen in the interactive section. Finally, we considered the motivations that the investors gave to justify their decisions to finance or not finance the entrepreneurial projects. The analysis of the interactive section and the final arguments raised by the investors enabled us to determine to what extent ethical appeals were favorably considered by the investors (i. e. they were mentioned as a reason to finance the entrepreneurial project) or if, by contrast, they were ignored or even deemed detrimental for the business venture.

The corpus that we will be using was selected as part of an interdisciplinary research project: “Emotion and language ‘at work’: The Discursive Emotive/Evaluative Function in Different Texts and Contexts within Corporate and Institutional Work: Project Persuasion”.¹ In this project, the members of the research team selected ten pitches from the British TV programme Dragon’s Den and ten from its counterpart in Spain, Tu Oportunidad (Your Chance). Partial results for this project have been presented in García-Gómez (2018), Díez-Prados (2019) and Fernández-Vázquez & Álvarez Delgado (2019a; 2019b). To avoid possible cultural distortions, which may be particularly significant in the case of ethical values, in this paper we limit our research to the Spanish TV corpus. Ethical references were mentioned by the entrepreneurs in seven of the pitches that were analyzed. In the next section we discuss some of the most significant examples from these pitches, which enable us to assess the persuasive force of ethical appeals in entrepreneurial decision-making contexts. For each pitch we analyse the general strategies used by the entrepreneur from the point of view of persuasion, before focusing specifically on ethical argumentation.

After this formulaic introduction, the pitcher proceeded to explain his product, again in compliance with the program’s unwritten rules. However, this was done somewhat chaotically: there was no clear definition of the product’s features or the advantages it meant for consumers. Nor was there any explanation of how investors who committed to the company would benefit: “It’s a tableau, but what it really, what it really … What Vertical is is a maker of vertical ecosystems.”² The lack of any brief, instantly comprehensible explanation of the nature of the product is fatal in terms of persuasion, for it conveys a sensation of imprecision (the message lacks orientation), or even of chaos and confusion, as the investors underlined in their later communicative exchange (Investor 4, for example, referred to “the level of disorder in the company” and spoke of “chaos”). Far from generating confidence in the project and in himself as an entrepreneur, which is what one expects from a speech of this kind (entrepreneurial pitch), the pitcher threw an obstacle of uncertainty and mistrust in the path between ←21 | 22→himself and the investors. This, then, is the first mistake from the point of view of persuasion: the failure to explain clearly and concisely the nature or goals of the project for which external backing is sought.