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 intellectual property. 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 is treading 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 mutually beneficial 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 acceptance by 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