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Are ethics a lost art in Silicon Valley?

One of the most vital attributes for small business success, is the distinguishing quality of having admirable business ethics. Ethics in Business, practiced throughout the layers of a company, and can mean the difference between success and failure.

The decline of these ethics is found in small ways. Some would say its just comes down to greed and playing the odds. But as former politician Alan Simpson once said, “If you have integrity, nothing else matters. If you do not have integrity, nothing else matters.”

Case Studies: Merchant Circle and Brocade

Two companies- very different in almost every respect (one is public, the other private; one is an Internet company, the other in hardware), except for one. Both have jettisoned the most basic ethics[/spion], and in both cases, the problem clearly comes from the top of the org chart. In the case of Brocade, [spin]former CEO Gregory Reyes became the first executives criminally charged over options backdating.

In the case of Merchant Circle, Chairman Ben Smith has engaged in a practice that has yielded over 80 formal complaints with one division of the Better Business Bureau alone. According to the San Jose BBB, MerchantCircle has an “unsatisfactory” rating as a result of using a fraudulent business practice of auto-dialing businesses and dishonestly claiming that they have on record negative reviews about that company. The small business is enticed to sign up with Merchant Circle, and pay a variety of fees to advertise and engage in “reputation management”.

Not only has Merchant Circle shown to be in repeated violation of the nationwide Do-Not-Call law, they also are engaging in deceptive marketing practices as in most cases. The negative reviews either doesn’t exist or MerchantCircle itself has produced it. Merchant Circle co-founder Ben Smith has thus far evaded a class action lawsuit and investigation by California’s attorney general, but one wonders for how long.

According to one small business owner, “My number is listed on the FTC do not call registry. Today I got a robo-call from Xpedite (which apparently Merchant Circle is using for spam messages) telling me that a review had been posted to my Merchant Circle account. (I don’t have a Merchant Circle account.) It turned out that there was no such review. Conclusion: this was a spam voice mail message intended to drive traffic to the MC site. MC may (or may not) be a legitimate company, but its marketing activities certainly are not.” What many would call a spam/scam operation gets its funding from: Rustic Canyon Partners, Scale Venture Partners, Steamboat Ventures, IAC/Citysearch and Square 1 Bank.

However, there are clear benefits to business ethics. The Institute of Business Ethics (IBE) commissioned a study and found that business that demonstrate “clear commitment to ethical conduct” regularly outperform businesses that do not. Philippa Foster Black, President of IBE, stated: “Not only is ethical behaviour in business life the right thing to do in principle, we have shown that it pays off in financial returns.” These results deserve to be considered as an important insight for companies looking for long-term success and growth.

While the Reyes and Smith’s of high-tech may soar high, it appears that, in aligment with the IBE’s studies, in the long-run they suffer the brunt of their own unethical behavior.

Tags: Business & Management //