Why Be Honest If HonestyDoesn’t Pay

(Amar Bhide and Howard H. Stevenson.)Harvard Business Review, Sep.-Oct. 1990

Presented byDeepak A.Pratush B.

RanajeePhD (2008-11) Batch-II

IIMT, Hyderabad

The authors

Bet on Rational case for trust.

Honesty is the best policyIs

Checked through extensive interviews to support the theories

But Evidence seemed weak.

RESULTS DISCUSSED……….

Trust through Retaliation and reputation.VS

TREACHERY(Violation of faith and confidence)Can pay as there is no economic reason to tell the

truth orKeep ones word

And Punishment is neither swift nor sure.

Cont……

E.F. HuttonExxon

Borland internationalProfessional sports- Basketball Coach and

athletes.Power-the ability to do others great harm or great

good can induce amnesiaAs

substitute for Trust.

Protection by..

Ambiguity and complexity As

Trust is a factor of(i)Integrity

(ii)Native ability(iii) Favorable external condition.

Determination of Whether and to what extent.Forget and move on.

BUT………

It would be gross exaggeration if we claim thatHonesty has no value.

OrTreachery is never punished.

AS

Trustworthy behaviorProvides

Protection against (i) Loss of power

(ii) Invisible snipingBut they are intangible and are responsible for

believe in a business entity .All business has its ups and downs.

What really matters……

Trust of suppliers (i) Don’t systematically screw.

(ii) Treat them right.(iii) Keep the promises.

(iv) Don’t penalize for honest mistake.Neither the benefits can be nor the financial losses

of these measures.Unknowns and unknowables.

Cont…..

Trustworthiness has attained the status of(i)Strategic focus.

(ii) Sustainable competitive advantage.(iii)Long term economic value.

Roots ….of trustworthiness

Businesspeople value their reputation and not the nebulous financial gain.

Trustworthiness cant be judged from outside so they are guided by inner voices, consciences.

Own sense of values.Credibility as an individual.

Conclusion

Tolerance for broken promises encourages risk taking and hence facilitates a dynamic

entrepreneurial economy.Only our individual wills and determination to do

what is right, whether or not it is profitable, save us from choosing between chaos and stagnation.

Thank you.