“The American economy—our economy—is built on confidence. The conviction that our free enterprise system will continue to be the most powerful and promising in the world…All investment is an act of faith, and faith is earned by integrity.”
President George W. Bush
July 09, 2002
THE GLOBAL ECONOMY, TO A LARGE EXTENT, IS built on the power of the American marketplace. A major strength of America’s business empire that makes it so dynamic and resilient is the basic relationship that exists between customers, investors and businesses. Working together, the market synergy created by the three results in extraordinary economic wealth. Working apart from each other, American markets can look very ordinary, as in some recent cases. Information is the glue that connects them. Managing the flow of information is the only way to combine the various parts and create a market entity that is bigger and better than the sum of the parts. In other words, much of the American business mystique is based on an implicit trust in the information that flows across, through and around businesses. Simply put, information is the DNA of the contemporary markets. Recent events have provided ample evidence that “bad” information can be extraordinarily costly to businesses, customers, investors and society.
Consider this. What do these have in common: customers feeling ripped off, shareholders feeling cheated, business partners feeling they’ve been taken advantage of? All of them used judgments that turned out to be faulty. Judgments, one might add, that were based on bad information. Bad information results in a no-win situation for all concerned—customers, investors and businesses—and destroys economic wealth. Good information, on the other hand, enhances the synergy and creates more economic wealth. The marketplace is a meeting ground between customers’ expectations and vendors’ promises, sparked by shareholder investments. Business deals go sour when these expectations and promises are not aligned. Accurate, consistent and reliable information, made available to the right party at the right time, can shape and project expectations and promises in the intended manner.
So, the question becomes how do we ensure that the information present is good? In fact, how do we even begin to define good information? The goodness of information can be measured by the integrity
of the information. Information integrity is a futuristic concept that goes well beyond traditional data quality, security, privacy, etc. The three pillars of information integrity are accuracy, consistency and reliability.
If the information concerned lacks any one of the three properties, then it does not have the integrity needed and bad things may happen.
Consider a simple illustration. A customer makes a purchase using his credit card. In order for this transaction to be completed successfully, two aspects of information flow need to be present:
• The credit card company grants the customer credit facilities based upon that customer’s credit history.
• The product vendor accepts the credit terms imposed by the credit card company based on the belief that the latter will pay them as agreed to.
• Both the above require information integrity. Without accurate, consistent and reliable information, the purchase transaction will become a bad experience for some or all concerned.
The recent cases of corporations misreporting their earnings can be seen as fraudulent auditing practices. Yes, at a superficial level, these are cases of poor auditing practices. However, audits can only uncover information that lacks integrity. The real issue here is lack of information integrity. If integrity can be embedded into information in a systematic manner then all stakeholders can proactively anticipate and head off unpleasant situations; if unpleasant, unethical or illegal misrepresentations can only be uncovered through auditing practices then we are reacting to situations.
So, one may ask, where’s the beef? Well, the real contribution of information integrity is in the creation of a new competitive advantage for businesses. Those businesses that invest in this will see returns far exceeding those that choose not to. Information integrity not measured and managed in an appropriate manner, can lead to debilitating corporate problems. Properly managed, Information Integrity can be a powerful corporate asset. Information technology was said to be the great equalizer. If that is true, then information integrity is the next great competitive advantage.
Dr. Paul Prabhaker is a Professor of Marketing and Associate Dean at the Stuart Graduate School of Business, Illinois Institute of Technology, with a Ph.D in Business Administration and a master's degree in Econometrics from the University of Rochester (NY). He also has an MBA from IIM Calcutta and a B.Tech (Mech) from IIT Madras.