Erich Gutenberg defines in his “principle of profit” that corporations in a market-based system are striving for to maximize their profit, based on the used resources, on the long-run.
This is not the only truth. Not all companies had been founded with the pure idea to maximize profit. A lot of times the founder was an engineer or inventor with a product or idea, in what he or she believed, not just to sell, but to satisfy a need and bring on the development of the society. At least for this first generation of management, the company had always also a social responsibility. This carried on, as the founder’s spirit gets immortalized in the company’s values and code of conduct. Later generations of managers continued with social aspects, as there are economic reasons for that:
A good corporate citizen is regarded in society and politics. It supports the company’s lobbying and avoids the implementation of higher taxes and / or more strict processes, especially for companies which produce goods, which not always compatible with public welfare.
In the ’81 movie “Blade Runner” the Nexus 7-android Roy Batty explained to the computer genius J.F. Sebastian: “We’re not computers, Sebastian, we’re physical.”
- Even if employees work , first of all, to receive a salary, they feel an inner need to be proud of their-selves, which includes the company which they are working for, as they spend a relevant time of the day there. “Proud to work for this company” is a non-tangible part of the salary. An important factor, especially for employees, which are already on a higher level on Maslow’s pyramid. If this motivational factor is not available, the company has to substitute it with higher salaries.
- To maximize economic rent-seeking, employees do not spend anymore their work time for their official tasks, but to execute and hide the bribery. As this is against personal values and interests, their level of motivation goes down and the company’s sick leave level up.
- If corruption is wide-spread in a society and employees do not have the possibility change to a transparent company, they stay where they are, but mentally quit. The company loses potential, especially on the global market, where they compete against transparent companies.
- Further this means a deviation to company’s core values and code of conduct, as most entities define here their sustainability vision and the wish to be perceived as a good global citizen. If the company not consequently protects its values, this can be the start of a lingering corrosion.
Most probably corruption would start at the company’s both ends, sales and procurement; meaning bribing or getting bribed. For instance, it can start with a sales employee, with a small bribe or a facilitation payment. Corruption is learnt and if to such action follows a positive result, the employee learnt it as a successful behavior and may extend its usage. This will not be limited on his or her behavior regarding external stakeholders, but will continue with by-passing first the most bureaucratic internal process and later others. The relevant factor for business success is now sales and its relations to potential clients, what includes bribery. As consequence, the importance of production and procurement goes down. Cost pressure will hit the production side, as quality leadership is not required. Furthermore, procurement loses its independence as the informal sales-client-relations will need concessions, as the usage of providers, which are recommended by the customer. Similar to a public society, corruption slowly crawls through all areas of the company. The results get perceived by all employees, as hopefully someone will use an internal or external whistle blower-hotline. If not, the corrosion continues.
Even if the company is purely focused on profit, the single employee is not. As consequence, a company has to take on social responsibility, which starts with obeying to the law, human rights and goes on to foundations and social events.