A Downward Spiral of Business Ethics

Scrolled across this blurb in an article about ethics. The key concept behind the idea is a variation of the Dunning-Kruger effect.

The psychological root of this vicious circle is human misperception, says Dunfee. "Research consistently indicates that people think of themselves as more ethical than others. That leads them to overestimate the amount of unethical behavior others engage in. People adjust their own behavior to that misapprehension, and then it gets scary: There's a downward spiral."

*Thomas Dunfee (deceased); former professor of legal studies and business ethics at UPenn Wharton School of Business

Here is my proposition. Let's assume you are a top executive in a multi-million dollar firm. Competitive pressures from other firms in the industry require you to run a lean operation. In order to remain profitable and keep your shareholders satisfied, you must continually take measures which are marginally beneficial to the firm. Now, refer back to Dunfee's argument. You estimate yourself to be more ethical than the average person. This will consequently lead you to believe that other firms are engaging in unethical behavior, and that is how they remain competitive in your industry. Because of this overestimation, you are now left with no alternatives: you must engage in (enter your unethical behavior here) to remain competitive and thus you succumb to the evils which we are taught to avoid.