Economics of Integrity

Introduction

Profit maximizing firms strive in investing on goods and services without any consideration on integrity. To most investors, integrity, being natural, is rarely accorded the attention it deserves. However, a deeper and broader approach of consumption integrity reveals that it takes integrity for customers to make any purchases.

Therefore, successful companies should endeavor to shift their attention from building their brands by enhancing the company’s integrity. Bernasek asserts that integrity is shifting attention from product oriented to customer satisfaction (1).

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Bernasek defines integrity as a corporate asset that needs investing in. To her, integrity is the confidence that brings assurance that the products purchased are of exceptional quality, safe, and represent value for money. In addition, integrity is the foundation from which company values such as culture, norms, and accountability emanates.

Unlike the goodwill that represents the monetary value of the firm, integrity represents the value that customer attaches to it products and services. Hence, by investing in integrity, the company places customer’s satisfaction at the forefront. This eventually becomes a strategy that cements customers’ royalty and enhances business going concern.

It takes integrity for any customer to trust that the milk he or she purchases is safe and fit for consumption. Despite the fact that the milk company processes its products behind the veil, the consumers still trust that the milk is not contaminated and it contains all the ingredients written on the pack.

What happens when the producer lacks integrity? Should customers consume contaminated milk, they will get sick, and lose trust in the company’s products. Eventually, the company revenues will decline drastically and shortly a firm may close down. Lontos outlines that it is a hectic task, and expensive venture to win-back customers, thus, it is economical to retain them in the first place (153).

With the advent in technological advancement, consumers withdraw their money at the convenience of the nearest ATM. Before the bank makes the cash available in the ATM, it takes many companies to make such an easy transaction a success: the bank hires ATM engineers to fix the machines, it hires programmers to code the transaction interface, and the bank contacts internet suppliers to connect ATMs with their databases.

All these firms need to portray high level of integrity for attaining customer satisfaction. Even with such a high number of parties involved, ATM users still believe that their money is safe, and the bank holds their pin details confidential. This illustration reveals that integrity compels contracting parties to place the interest of the customer first before personal gains.

The success of Toyota Company helps to illustrate the relationship between integrity and economic prosperity. The company has been the world carmaker over the years, but it still manages to convince customers to use its products. Toyota Company embarks on continuous improvement of its products to meet customers’ current needs and future satisfaction.

With the focus on integrity being constant, the company in return ensures continuity in cash flows. Therefore, investing in integrity as an asset not only enhances customer royalty, but it also guarantees financial payoff. Conversely, to compromise integrity paves way for customers’ transition and commences the downfall of a business empire (Bhote 79).

E-commerce (Amazon and eBay) is yet another area that portrays the importance of investing in integrity as an asset. During the online shopping, the customer picks products to the shopping bag and then pays for them using his/her credit card. The customer trusts that the product he or she purchases is genuine and matches the description provided.

In addition, he trusts that the seller will deliver the product according to the agreement. The customer expects the seller to deduct the stock value from the credit card. At times, the seller is at liberty to bleach the agreement and deduct more, with integrity, the seller satisfies the customer by taking the right amount.

At times, firms deliberately avoid investing in integrity in order to pursue their selfish motives. For instance, large Multinational Food Companies operating in the US aim at maximizing profits at the expense the consumers’ health (Robbert). These Companies produce junk food and sell cheaply to ignorant people who do not assess the hidden costs.

For example, beef cattle feed on biologically incompatible feeds to make them mature faster; this leads to E.coli bacterial effect. The bacterium affects over 75,000 people, and it also causes obesity to the children.

In addition, chickens that used to mature for three months now takes 45 days to reach maturity due to chemicals injected (Food Inc). The movie (Food Inc) reveals how the multinational companies have controlled the food industries in an attempt to fight competition to protect their greedy motives (Robbert).

The economical understanding of integrity perfectly relates with Adam Smith’s belief in sympathy as a regulator of self-interest. To Smith, self-interest is the motive of pursuing business while the sympathy is the capacity or the regulating force. However, striking a balance between the two is not always an easy call, since the motive often suppresses the capacity (Davenportm, 210).

Integrity shows sympathy or concern for the potential users of the product. Just like in Adam Smith’s analogy of sympathy, integrity shifts attention to provision of customer satisfaction profitably.

Works Cited

Bernasek, Anna. The Economics of Integrity. New York: Harper Collins, 2010.

Bhote, Keki, R. The Ultimate Six Sigma: Beyond Quality Excellence to Total Business Excellence. New York: Amacom, 2002.

Davenport, Stewart. Friends of the Unrighteous Mammon: Northern Christians and Market Capitalism. Chicago: University of Chicago press, 2008.

Lontos, Geoffrey, P. Consumer Behavior in Action: Real-Life Applications for Marketing Managers. New York: M.E. Sharpe, Inc, 2011

Robbert, Kenner. Food Inc. 2008, Web. 27th July 2011.