The morality of gaming, top-ten papers worth reading and another reason why social media rules

Gaming: it’s legal, but is it right?

No rules, no game. That’s how most business works. The alternative is an anarchic free-for-all. But what happens when twisting the rules becomes the rule? That’s the scenario pictured in this fascinating working paper on the subject of “gaming”.

So what is gaming and why does it matter? Gaming, in essence, means skirting the spirit of the law in the search for loopholes and quick wins. It’s behaviour that is legal but not quite legit. Gaming has two sides to it: the rule-making game, which intentionally writes ambiguities into the rulebook; and the rule-following game, which violates aspects of the law that are grey already.

The illustrative example used by Salter is Enron. Fraud aside, the author credits the US conglomerate with one of the “greatest gaming strategies of all time”. Take the company’s approach to financial disclosure. A court-accounted bankruptcy examiner criticised the company’s annual accounts as “calculated to disclose as little as possible”. Technically, however, he couldn’t say that the company flouted the rulebook. Instead, its executives had become masters at treading a “legally grey” tightrope.

It is difficult to detect, the author argues, exactly because so many executives see gaming as “entirely proper”. They buoy themselves up on the notion that economic agents (ie managers) exist to protect the private interests of their principals (ie owners).

So what’s wrong with that? Well, quite a lot actually. The distance between gaming and institutional corruption is a short one, the authors argue. Sure, a company might gain advantage over rivals or see its stock soar, but at what cost? Loss of public trust, for a start.

The game of gaming is not quite lost. Solutions rest on extending companies’ “time horizons”, whether through public policy measures or voluntary actions. Examples of the former could include steps such as restricting the volume of hedge fund trading or changing capital gains taxes to favour long-term holdings. As for the latter, codes of ethics clearly are not enough (Enron had one of the best). What voluntary measures need are qualitative measures, balanced incentives and constant monitoring.

“Lawful but Corrupt: Gaming and the Problem of Institutional Corruption in the Private Sector” by Malcolm Salter, Working Paper No 11-060, Harvard Business School, December 2010.

Top ten research papers

It is tempting to write off “top ten” rankings as statistically unsound, unashamedly subjective and unworthy of comment. Yet, gosh, how seductive they can be. The Network for Business Sustainability (NBS) has searched through a swathe of top academic journals and picked out what it believes are the most original and insightful. The list is worth a look.

Take Xueming Luo and CB Bhattacharya’s Journal of Marketing paper on corporate responsibility and customer satisfaction, for instance. The authors postulated that companies worth roughly $48bn could expect $17m more a year if they made “marginal” corporate responsibility improvements. A solid statistic for the marketing manager’s arsenal.

Or dip into Todd Rogers and Max Bazerman’s work on employee engagement and corporate responsibility. The authors statistically prove how people are more likely to get involved in responsibility activities when “the monetary or physical obligation is far in the future”. The implication is: get sign-up today for programmes tomorrow.

The top-ten covers a full gamut of responsibility-related issues, ranging from human resources (“Beat Burnout, Boost Performance”) and strategy to stakeholder relations and carbon footprinting. For each of the ten articles, NBS provides a helpful one-page summary of the chief findings, methodology, management implications and research consequences (

Social media and the dragonfly effect

Imagine you have been diagnosed with leukaemia. Then picture your marrow containing rare human leukocyte antigens, which makes finding a marrow transplant donor near impossible. Then consider that India, your country of origin, has no bone marrow registry. That was the scenario facing Stanford graduate Sameer Bhatia.

This fascinating short paper, published by Bhatia’s alma mater, describes how a suitable donor was found with the help of social technology. Using a range of different media, Bhatia built up an online story that soon became the talk of cyberspace. Bhatia got his donor and the authors got a prime case study for what they call the “dragonfly effect”.

Dragonflies are the only insects able to propel themselves in any direction, using their four wings in concert. As such, they form a handy metaphor for integrated effect.

The bulk of the paper describes in detail the four facets that make up the dragonfly effect: focus (decide a measurable goal); grab attention (opt for something authentic to cut through the social media noise); engage (create a personal connection); and take action (by empowering others to act). A good internet connection and the world is yours for the changing.

“The Dragonfly Effect” by Jennifer Aaker and Andy Smith, Social Innovation Review, Winter 2010.

Campus news

German engineering giant Siemens is to give $4.3m to the UN Global Compact to promote anti-corruption efforts. As part of the project, the UN-backed Principles for Responsible Management Education initiative is running a working group to develop anti-corruption teaching guidelines for management schools.

The UN is to establish an office for sustainable development to promote new research and training. The new facility will be housed in Korea’s Yonsei University and will focus on developing countries’ sustainability needs. It will begin operations in April this year.

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