The Push-Pull Fight For Integrity Within a Free Market Economy

Free market societies are based on a proposition that economic markets will control themselves with its own systems of checks and balances. From the historical writings of laissez-faire proponents (http://en.wikipedia.org/wiki/Laissez-faire) in the 1600’s to present day, forces have argued against governmental intervention in free market economies.

While few totally free market societies exist today, many democratic societies are based on free market concepts such as the balancing factors of supply and demand. This particular concept is key in that free markets allow new market entrants when supply lags demand and opportunities for wealth accumulation occur. In many respects, the US economy is based on this dynamic.

This dynamic of wealth accumulation can overshadow effective leadership practices and present challenges to senior management caught between the pressures of increasing revenues and the challenges of leading subordinates. The news media consistently provides new evidences of this challenge.

Case in Point: Pfizer

Extensive research by James Kouzes and Barry Posner provides evidence accumulated over more than 20 years concerning how subordinates gage effective leaders. In their book The Leadership Challenge, they present findings that show credibility as the foundation of effective leadership and honesty the key behind credibility (James Kouzes and Barry Posner, 2007, The Leadership Challenge, p. 32. 37).

So, what would cause a seasoned executive to stray from proven research that credibility and honesty is key to effective leadership? The answer is clear in that increasing pressures to generate revenues and profits from CEO’s and shareholders cause senior management to make value judgments they ordinarily would not make.

For example, the Wall Street Journal recently published a story about the Pfizer Pharmaceutical company concerning improper marketing practices specific to their painkiller medicine Bextra. According to the article, Pfizer was marketing this drug for so called off-label uses, or unapproved uses. As the article states, doctors can prescribe a drug as they deem appropriate but pharmaceutical companies can only market the drugs for approved uses (Jonathan Rockoff and Brent Kendall, September 3, 2009, Pfizer to Plead Guilty to Improper Marketing, Wall Street Journal, p. B2). The $2.3 billion settlement was the largest pharmaceutical settlement for marketing purposes in history.

When looking at this case, one must question who within the management chain of Pfizer knew about these practices and knew they were not allowed according to federal mandate? While one must speculate not knowing all the details of the case, it would not be beyond reason that many within the management chain knew of such practices but were likely tore between providing honest, values driven leadership and the pressures to produce profits and increase stock price.

While such leadership challenges will likely always exist, the level of true ethnics within a company will drive the frequency of such challenges.