The Weekly Walk of Shame series usually examines things that just aren't right in the world of finance and investing. Today, though, we're replacing the "Shame" with "Fame." Feel free to spread the love in the comments section below.
Today's subject: In the rough-and-tumble world of business, it can be tough to stay on the side of the angels. However, Google (Nasdaq: GOOG ) co-founder Sergey Brin recently took a huge step toward living up to his company's famous "don't be evil" mantra when he put the brakes on the search giant's Chinese operations.
Why would Brin blow off a huge, highly coveted market for growth-oriented American companies? According to The Wall Street Journal, his stand stemmed from the Chinese government's iron-fisted censorship, which Brin compared to the totalitarianism that drove his own family to flee the Soviet Union.
Brin's decision seems based largely on principle, not near-term profits -- which means, Fools, that it's time to celebrate.
Why you should cheer: Shareholders should be glad when their companies' managers voluntarily stand up for what's right, rather than following the easy path to short-term lucre. Executives who wuss out on ethical considerations can expose their companies to high levels of risk and long-term pain.
Economist Milton Friedman famously argued that the only social responsibility of business is to increase its profits. Perhaps he was wrong on that one.
Antisocial behavior is a lousy policy for people and corporations alike. When companies go overboard pursuing short-sighted gains, they risk destroying their reputations and long-term viability, and both society and shareholders can ultimately suffer.
Thankfully, some corporate leaders run their businesses with rock-solid principles. Compared to most retailers, Costco (Nasdaq: COST ) offers its workers higher wages and better benefits. CEO Jim Sinegal has famously bucked pressure from Wall Street analysts to slash that generosity for the sake of higher earnings. Happy, healthy employees mean less turnover and more goodwill from workers and shoppers alike, making Costco a better business for the long haul.
Whole Foods Market's (Nasdaq: WFMI ) founder and CEO John Mackey similarly preaches conscious capitalism, which contends that the best businesses know all stakeholders matter: not only shareholders, but also employees, suppliers, and customers. Mackey even once debated Friedman regarding businesses' social responsibility.
In Google's case, Brin's decision may cost the company some growth for now. However, Google's strength lies in the Internet, an exemplar of creativity, democracy, and ultimately, freedom. The Chinese government's restrictions on the flow of information and communication might ultimately hurt Google's long-term returns, since the company flourishes by finding better ways to organize the free, dynamic flow of information.
Continuing to play ball with China might also have plunged Google even deeper into a moral quagmire. Almost five years ago, Yahoo! turned in a dissident journalist to China's government. To me, that sort of business decision carries far too high a price.
What now? The pressure on businesses to do the wrong thing for the sake of immediate profit has been awfully intense in recent years. Look no further than the damage inflicted by the financial sector. Many of us now wish we'd never heard of AIG (NYSE: AIG ) , Lehman Brothers, Fannie Mae (NYSE: FNM ) , or their misbehaving ilk. At some point, "everybody else is doing it" stops being a viable excuse.
With noble behavior in short supply, we should celebrate stances like Brin's. It's courageous to take a stand and shun easy money when everyone else seems to be racing to the bottom.
Ethical, principled leaders build businesses that last, and make them great. Companies with such leaders are far less risky, and have a far better chance to thrive for decades to come. More importantly, shareholders can feel proud to own them.
Check back at Fool.com every Wednesday and Friday for Alyce Lomax's columns on corporate governance.