Archives for June 15, 2010

The financial meltdown, the Toyota mess, and the BP oil spill are all examples of companies acting badly. Of course, such bad behavior is not limited to these companies. Banks and credit card companies are notorious for excessive fees and brutal policies. Many companies also have a tendency to treat customers badly and this sometimes extends to illegal activity. Just do a search on Google for customer and consumer horror stories involving major companies and you will get an idea of  the sort of things that occur, such as complaints against MCI. Companies also often engage in practices that serve to needlessly alienate customers, such as the latest incident with AT&T.

One reason companies behave badly is they can. The can because  they often have considerable influence over the law makers and regulatory agencies that are supposed to protect the public. While the government does step in from time to time, this is most often in the truly egregious cases that make it into the media spotlight. However, misdeeds that remain in the shadows around the light tend to continue. The fix for this involves finding a way to reduce corporate influence and to get agencies and lawmakers to do what they are morally supposed to do: serve the good of the people.

Another reason companies behave badly is that they(think they) are able to make money without behaving well. In fact, executives often seem to believe that behaving badly (for example, deceiving people about bills, overcharging, or operating unsafely) is more profitable than behaving well. In some cases, they seem to be right. However, they also seem to find out that the long term costs of such behavior (such as loss of customers, bad PR, and lawsuits) can be higher than the profits. One way to work on fixing this is to ensure that bad behavior is more costly than good behavior. This, obviously enough, ties back into the problem addressed above.

A third reason that companies behave badly seems to involve arrogance and a  tyrannical character. The economic power of companies tends to breed such attitudes which can translate into bad behavior. For example, CEOs might see themselves as above the law or, at least, exempt from the usual rules of good behavior. The rather undemocratic and authoritarian corporate culture probably also contributes to this sort of behavior.

The views of Hobbes and the discussion of Plato in his Ring of Gyges are also quite relevant here: people want more than they deserve and if they have the power to act badly, they will do so. As such, it is hardly shocking that large companies often behave badly.

To be fair to the big companies, their behavior is really nothing unusual. Normal folks also try to get away with things. However, they generally lack the power and resources to do misdeeds on a large scale. They also tend to lack the influence to get away with their misdeeds.