In the Game of Business, Playing Fair Can Actually Lead to Greater Profits Knowledge@Wharton.com
Tune into “The Apprentice,” and you get an all-too-common view of business. Every week, the contestants try to impress Donald Trump by preening, cajoling and conniving. In this world, toughness is the measure of every CEO, and the boss glories in firing people and squeezing every penny out of suppliers. Yet according to John Zhang and Jagmohan Raju, both Wharton marketing professors, and Tony Haitao Cui from the University of Minnesota, many people aren’t purely mercenary in their business dealings. They care about fairness — and they should, the researchers say, because doing so can maximize their profits. Call it a new glove for the Invisible Hand: The manufacturer sets his price, and the retailer’s sense of fairness takes care of the rest.