Learning from corporate mistakes

Abstract

Purpose – The purpose of this paper is to contrast the business risks of seeking to hide “questionable” corporate activities with the benefits of achieving high levels of corporate transparency. Design/methodology/approach – The paper summarises three well-documented cases of corporate malfeasance, simply and sequentially. Each is analysed separately. Findings – The paper finds, in each case, that once the concealed “truth” comes out, the companies are in a much worse position than if they had come clean when initially challenged. The generalised finding is that once pressures mount, what is intentionally concealed tends to become exposed, with unanticipated and powerful negative consequences. Practical implications – To minimise business risk, managers are well advised to refrain from doing things behind a veil of secrecy and, instead, opt for greater transparency. Since what is hidden seldom remains hidden, a “policy” of corporate transparency is often in their interest. The lesson is that when under public pressure, for whatever reason, facts, risks and relationships will out. Originality/value – This paper demonstrates how openness rather than secrecy can reduce business risk and raise ethical standards at the same time.