I want to write about this life-changing paper which was brought to my attention by a colleague of mine in previous firm.  Adoption of the ideas there really helped my work life. 

I’ll call the Integrity Factor mentioned in this paper Commitment Competence so there is no confusion with moral connotations of the word Integrity. I’ll cover the personal aspect of this in a later post, but it has occurred to many times that the this Commitment Competence is the single biggest factor that separates successful economies from ones that perennially seem to lag (“emerging”, if you will, in the language of finance or “developing” in the language of the UN).  The lack of commitment competence introduces massive friction into an economy because a contract – verbal or written, is not sacrosanct.

I’ll illustrate with the difference between certain developed countries (like the US) vs an emerging country I know well (but let me not name it).   The thing that really kills the economy is this: In the developed country, when the mechanic says “your care will be ready tomorrow by 5pm”, it will be.  If it gets done earlier, s/he may even call you to say you can pick it up any time from now.  If it looks like it will not be ready tomorrow, S/HE will call YOU proactively (usually, today, not waiting till tomorrow) and tell you something is up – new parts need to be ordered/his employee has fallen sick or something.  In the emerging country, on the other hand,  there are no guarantees that the mechanic will have it ready when you show up at 5 pm tomorrow.   You can only find out at 5 tomorrow if he’s going to say I couldn’t get it done and “it will be ready in another day”.  He would not have called you, which would have been the only way to make you avoid a trip there at 5 pm. If you call at 2 pm tomorrow, he may be annoyed at you for pestering him (if he’s indeed going to get it done by 5) or casually tell you that yeah, he’s not going to get to it for another 2 days  (as if his promise was never meant to be taken seriously) or worst of all – tell you to come by/call at 5pm AT WHICH POINT he’ll tell you “not done yet”

It’s simply this – if one doesn’t respect one’s own word, it’s corrosive to the act of doing business with one. There is a direct link to GDP.    And truth/lie is very much relevant here: for, when a person says “I’ll do it next week” without knowing that s/he can deliver, or being serious about trying hard to make the deadline, it’s a form of lying.  And the person really is using the lie to get you out of his/her face.  And most maddening of all – “I can only do it after Tuesday” – the only thing the person committed to is NOT doing it before Tuesday.  He hasn’t said when he will get it done, which is the one thing the counterparty wants to know.

Of course, it’s not possible to know for sure if this a causal factor or an effect or the economic disparity, but I suspect it’s a cause.  I find this cause much more appealing than the ones people offer like racial differences, religious differences and the nebulous, all-encompassing and information-free term, “culture”.   There are plenty of counter examples to rebut those other factors.