Because this week two of the major monotheistic religions celebrate holidays, and because on 9 April our Mission Intangible Monthly Briefing  explores the value of ethical behavior, today we take a break from headline risk to look at ethics.

Ethics comprise prescriptions for fairness. As we discuss in the Society’s latest book, Mission: Intangible, ethics are the moral principles by which a company operates; integrity is the act of adhering to those moral principles. For executives in a perpetual search for competitive advantage, the existence of fairness in the general population may be a puzzle. In a dog-eat-dog world, what possible biological advantage could accrue to those who behave in a trusting and cooperative manner with unrelated individuals?

There are two answers: financial and anthroplogical. From a financial perspective, our data show that companies with superior reputations for ethical behavior outperform their peers. And while that should be sufficient and compelling for any senior executive or board member, anthropological data suggest that fairness is an adaptive social construct.

The Economist reports in the 20 March issue that research from the University of British Columbia indicates that the variance of fairness found in difference societies has a cultural explanation -- a response to the development of trade. According to work by Joseph Henrich and colleagues,

…those societies that most resemble the anthropological consensus of what Paleolothic life would have been like (hunting, gathering with only a modicum of trade) were the ones where fairness seemed to count least. People living in communities that lack market integration display relatively little concern with fairness or with punishing unfairness in transactions. Notions of fairness increase steadily as societies achieve greater market integration. People from better integrated society are also more likely to punish those who do not play fair, even when this is costly to themselves.

Which explains the wisdom of the 1998 observation by Alan Greenspan that “in a market system based on trust, reputation has a significant economic value.

Heads Up - Date Change

As noted above, the Mission: Intangible Monthly Briefing for April 2010 will be held one week later than usual in deference to those who celebrate Good Friday. On 9 April 2010 at 12h00 EDT, the second Friday of the month, we will host a conversation featuring incoming Integrity and Corporate Responsibility Committee Chairman Paul Liebman from Dell (NASDAQ:DELL) and IA Value Signaling Committee Chairman Jon Low from Predictiv. The title for the one hour moderated discussion is: Ethics - A valuable intangible asset? Mary Adams from Intellectual Capital Advisors hosts.

As always, registration for this popular series is complimentary and slides will be available for download in advance of the event. To register now, click here.

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If the above intrigues you or challenges you to learn more, look no further. The Intangible Asset Finance Society wants to be your business resource. Join us and be part of an organization that provides a wealth of educational materials, including a new book, to further your executive career, and exciting monthly conferences such as the upcoming one on ethics mentioned above.