Ethical but Legal – Standard Business Practice

By Dexter Duncan

Many years ago, when I was still fresh in doing business in Asia, I saw a presentation that connected many of the unfamiliar and distasteful business practices that seemed common.   The presenter (Sorry, I cannot remember who it was) mentioned business could be categorized across two dimensional spectrum:

The first spectrum spanned between illegal and legal business activity.    And the second spectrum included unethical and ethical activity.    Taken together it forms four quadrants.





>>>>Illegal      ————————————————————————–Legal





Most organized crime falls into the left (illegal) side of the spectrum and MOST legitimate business falls in the lower right (unethical, but legal) part of the spectrum.    Lying to the customer is not illegal, for example, just do not get caught.  Manipulating statistics to support your view is another example.   In Asia, using an agent (third party or channels) to handle the dirty work of bribes seemed normal, but I suddenly understood it was considered legal since companies were not directly involved.

Because people generally have different standards and views, you might say, who cares?

Peter Drucker, often called the Grandfather of modern day Corporate Management recommends doing a “mirror test” and gives this example*:

“The most highly respected diplomatist of all the Great Powers (in early 20th century) was the German Ambassador in London.   He was clearly destined for higher things, at least to become his country’s Foreign Minister, if not German Federal Chancellor.   Yet, in 1906, he abruptly resigned.  King Edward VII had then been on the British throne for five years, and the diplomatic corps were going to give him a big dinner.  The German ambassador, being the dean of the diplomatic corps-he had been in London for close to fifteen years-was to be the chairman of that dinner.   King Edward VII was a notorious womanizer and made it clear what kind of dinner he wanted-at the end, after the desert had been served, a huge cake was going to appear, and out of it would jump a dozen or more naked prostitutes as the lights were dimmed.  And the German ambassador resigned rather than preside over the dinner.

“I refuse to see a pimp in the mirror in the morning, when I shave.””

(*from Management Challenges for the 21st Century, Peter Drucker, Page 175, Harper Business)

So before you do business, try to do the mirror test.

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