Does small business sacrifice integrity more than big business?

At a talk I gave recently, a member of the audience commented that in his experience, a big business was more likely to protect its integrity asset than a small business. As a lawyer for subprime lenders, he found that small lenders were willing to cut corners and operate in grey zones to win business but big lenders simply couldn’t afford to take those same risks. His argument was that a big business understood it had more to lose by exploiting integrity than a small business. It was a provocative idea and quite frankly a distinction that I had never made.

My initial reaction was that size shouldn’t matter. But the more I thought about it the more I determined there was something to it. For one, it’s hard to get big without integrity. So big businesses tend to have a lot of built up integrity. Plus big business can afford to have a long run perspective while small businesses, fighting for daily survival may not.

On the other hand, small business has something that big business doesn’t. Small businesses tend to be run by owners and they have a huge stake in the future of the firm. Big business, on the other hand, is often run by professional managers who don’t have as much invested in the firm’s long run performance.

The temptation to exploit integrity seems to arise when a company is under pressure. If a business can’t figure out how to make money or can’t make enough money to satisfy expectations, there will be enormous pressure to sacrifice integrity for short term money making opportunities, regardless of the future. That could mean that small business often faces greater temptations to cut corners or skirt the law than big business. But the key is whether they cave in to that pressure or not. If anyone knows of studies on this topic I’d love to hear about it. Or just chime in with observations!