Tom

Business Ethics

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This may be a neurotic question, or a fairly simple question to solve, but it is something that has been on my mind.

My business sells services to other businesses--business-to-business. When I started my business, I tried to compete with local competitors trying to win local clients. One of the things I noticed was that my competitors who were most successful tended to have a few things in common: They were not experts (at least not anymore, they still knew more than clients) in the services they sold, but were very skilled at networking and building relationships. I was able to have conversations with them, in which they described how to established themselves in local markets--which amounted to targeting a niche and networking within it to gather sales.

Still early in my business, I looked into various industries-as-niches; and typically found that each niche already had an embedded competitor. Further, just due to geography and political-economic circumstances, the biggest industries (there are about 5 major ones in my area: health care, energy, agriculture, construction/building, and real estate [each has a majorly profitable competitor dominating the industry]) happen to be highly government subsidized or guaranteed in some way. For example, one of my competitors has a huge office and many employees and makes more than half of his income from a clean energy company which itself makes few actual sales and instead relies on several millions of dollars in Department of Energy grants each year. I likened these major competitors, some of which were aware, as being derived "pull peddlers"--though they and their employees lacked proficiency and expertise, they were either related to politicians or old friends with major leaders in the industry they worked in and simply had the social influence to get the business.

I was able to secure plenty of work to do outside of local niches and hook into a more global desire for service quality (because we are good, not because I am somebody's nephew)--this shift in strategy was simply out of necessity. Over the years, some local competitors and competitor employees started to spend time around me; I had a sense of moral superiority. Is that appropriate? I haven't really questioned it. However, I have started a partnership on another project in which one key partner has connections to one of these niches (daughter to an industry leader) and will use them to secure customers; I am not likely to give up on the project, because it has an uncommon challenge to confront and other customers really do need the service, and it represents an actual value and improvement over competitors, but I am very much aware of this distraction of niche customers flowing in.

Is this a valid ethical dilemma?

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I was able to secure plenty of work to do outside of local niches and hook into a more global desire for service quality (because we are good, not because I am somebody's nephew)--this shift in strategy was simply out of necessity. Over the years, some local competitors and competitor employees started to spend time around me; I had a sense of moral superiority. Is that appropriate? I haven't really questioned it. However, I have started a partnership on another project in which one key partner has connections to one of these niches (daughter to an industry leader) and will use them to secure customers; I am not likely to give up on the project, because it has an uncommon challenge to confront and other customers really do need the service, and it represents an actual value and improvement over competitors, but I am very much aware of this distraction of niche customers flowing in.

Is this a valid ethical dilemma?

Valid ethical issues involve YOUR choices and what YOU ought to do.

Should you have a sense of moral superiority? That is an emotional reaction and emotions are automatic, not chosen, so "should" doesn't apply. As to whether there are rational grounds for your feeling, ask yourself if you have made better choices than your competitors. If so, then you are, in fact, superior in that regard.

Also, there is nothing wrong with profiting from government contracts or connections in a mixed economy as long as you don't advocate government intervention or regulation. Ayn Rand explains why in her essay, "A Question of Scholarships" which you will find in the book, The Voice of Reason.

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ask yourself if you have made better choices than your competitors

What kind of standard would I use to determine that? Profit/sales numbers?

Also, there is nothing wrong with profiting from government contracts or connections in a mixed economy as long as you don't advocate government intervention or regulation.

I did consider that essay, but I'm not sure what to make of the types of businessmen and politicians who qualify as "pull peddlers." Is there a line one should cross to be parasitic?

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