About Principled Entrepreneurship™
Principled Entrepreneurship™ is defined as “maximizing long-term profitability for the business by creating real value in society while always acting lawfully and with integrity.” Such value creation can only be measured in a free market where consumers have choices, and where profits (and losses) are meaningful measures of business performance.
Principled entrepreneurship eschews political profiteering, which redistributes and destroys wealth rather than creates it. Thus political capitalism is discouraged in favor of free-market capitalism by the company practicing principled entrepreneurship.
In practice, principled entrepreneurs spend their time anticipating and meeting consumer demand rather than seeking non-market political favors such as a special tax provision, a cash subsidy, or a restriction placed on a competitor.
Principled entrepreneurship is part of Market-Based Management® , defined as “a philosophy that enables organizations to succeed long-term by applying the principles that allow free societies to prosper.” MBM sees firms as “miniature societies” that perform best when “property rights are clearly and properly defined and protected, people are free to speak, exchange and contract, and prices are free to guide beneficial action.” Thus the successful firm will be a meritocracy where all challenge all in the improvement process and decision rights (“property rights”) go to those who best create real value.
MBM and principled entrepreneurship promote economic efficiency, but they also have an ethical basis in that the means of reason and voluntary exchange are promoted while the initiation of force (coercion) is inadmissible.
This discussion is based on Charles Koch, The Science of Success (Hoboken, N.J.: John Wiley & Sons, 2007) and the epilogue of Robert L. Bradley Jr., Capitalism at Work: Business, Government, and Energy (Boston: M & M Scrivener, 2008).
| Book review of The Science of Success (Charles G. Koch) |
| Book review of The First Billion is the Hardest (T. Boone Pickens) |
| “The Two Faces of American Capitalism” Cover article in The New Individualist (May 2008) |
| What Happened to Business Prudence? The New Individualist (Summer 2009) |