The Hidden and Heretofore Inaccessible Power of Integrity

Jenses, M., Erhard, W. (2010). Beyond agency theory: The hidden and heretofore inaccessible power of integrity (PDF of keynote slides). Retrieved on March 5, 2010 from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1552009

This paper is a PDF copy of a PowerPoint presentation written by Michael Jensen, Professor Emeritus at Harvard Business School and Werner Erhard. The focus of this presentation is integrity and how it influences increased performance of individuals and organizations. In this writing, the authors state that there is too much emphasis placed of conflict of interest between agents and owners and not enough emphasis on the damage caused by individual conflicts or actions of individuals that are not in their own self interest. They state that integrity problems, which they refer to as an agency problem with one’s self, accounts for one-fourth of the conflicts of interest and that these conflicts cannot be dealt with in the same manner as an agency problems. Integrity is defined, in part, as an unbroken condition or wholeness, so when there is a lack of integrity, things do not work as they should and performance declines. By this definition, performance maximization can only be reached when integrity, among other factors, is in place. The authors also list several clues of out-of-integrity behavior in organizations including: win at any cost, everyone else is doing it, nobody’s hurt by it, and many more. In contrasting integrity to the “Golden Rule”, which leaves you depending on the actions of others; integrity is something you do for yourself and though it affects others around you, it does not require the cooperation of others. This is a very interesting presentation that makes a lot of good points that can affect the performance and production of individuals and firms. This is insightful information that managers and other individuals should read, understand, and use in their daily business dealings and in their lives in general.