The October 6, 2010, seminar was led by Malcolm Salter, professor emeritus of the Harvard Business School. Professor Salter's presentation focused on institutional corruption in the private sector, with a specific focus on the practice of gaming, in which ambiguous rules or laws are manipulated but not broken. Seminar participants attempted to tease out the various elements that may contribute to the practice and perpetuation of gaming, including the role of legislation in creating ambiguous rules, the shifting expectations of the proper dependencies of professionals, and the pressure that may result from social comparisons across businesses. Tied up in these considerations was the question of whether businesses should be able to self-regulate, or whether their purpose should simply be to make money, with the regulatory role supplied by external agents.
When considering the issues that may enable to the practice of gaming, participants noted the role that law-makers may play, by creating a favorable environment for gaming through the enacting of ambiguous laws and regulations. However, it was also noted that many businesses aggressively lobby Congress to minimize regulatory constraints in an attempt to create just such a favorable environment. This point brought the discussion back to the notion of proper and improper dependencies, both in reference to Congress, as well as the professionals (lawyers, auditors, etc.) who are often put in the position of regulating and overseeing business dealings. While it may be assumed that the work of such professionals is informed by principles that are independent of the ambitions and expectations of the particular client they serve, increasingly it seems that the reverse is true. Participants pointed out that both in law, as well as the audit profession, it has become the norm for one's dependence to be, first and foremost, to the client. This type of dependence may lead a professional to consider very carefully what actions would be technically legal for their client to take, but not necessarily whether such actions would be right. This complicates the question of who should be responsible for regulating business, since the professionals we would naturally turn to for such a task seem to be in a poor position to effectively carry it out.
Seminar participants also discussed the extent to which social comparison across businesses may contribute to the gaming problem by creating extreme pressure for companies to perform at a level (or appear to perform at a level) that may be entirely unrealistic. Some participants also pointed out the extent to which the social comparison problem is exacerbated by the stubborn focus on short-term gains that pervades many businesses.
In summary, participants discussed the various ways that gaming is perpetuated in the private sector though legislation, misplaced dependencies, and social comparison. They also considered whether businesses should be self-regulating, or depend on regulation by external professionals, and the difficulties that arise when those professionals become dependent on the very institutions they are responsible for regulating.