The Grey Areas of Firm Behavior: An Economic Perspective

摘要: Firms do some things that are profitable, and contribute to the greater good. Adam Smith’s Invisible Hand is idea profitable activities socially desirable frequently one same. It popular scoff at (e.g., see Hardin, 1968), but articulation of it remains most important discoveries in history social science. explains not just how we get our daily bread (which was examples) iPhone might be his example today), more fundamentally, wealth created humankind has escaped penury autarky. Not everything for businesses, however, good rest us. can profit by polluting, defrauding customers or investors, bribing government officials, reneging on contracts with employees, holding up payments suppliers. Moreover, there many beneficial firms because they such as investing basic research, giving charity, adhering stricter environmental guidelines than required. Stated differently, profitability desirability perfectly correlated. Activities which coincide grey areas business behavior. These can, indeed must, guided forces other their apparent firms. This paper examines these inducements have exploit avoid them. Recent research offers reasons both hope concern. On hopeful side, turns out a longer reach first anticipate, managers face powerful private harmful fraud misrepresentation. This implies “grey activities” really so grey, sense act badly end hurting bottom lines well. Of concern, findings market weak types activities, including harms bribery. There remain strong financial incentives pollute bribe, implying controlled only through moral suasion legal enforcement. A further concern widespread use political process shift costs onto others. encourages invest resources make otherwise would pursue.