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Updated: September 28, 2010 15:41 IST

Ethics in corporate governance

R. Devarajan
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Business houses are the basic cells of modern economic life. Their outstanding success in converting the resources of the earth into wealth has shaped the physical and social world. The downside of the story is that, in popular perception, business houses have no use for ethics and values in life. In fact, till the middle of the 20th century, the phrase “business ethics” was considered an oxymoron!

However, in recent times, there has been a lot of discussion on how Corporate Social Responsibility [CSR] may be redefined — its legal obligations, its social commitments, and its duty vis-à-vis ecological and environmental protection.

The question is whether the role of the business organisations is confined to creating wealth for their owners, or is it more inclusive, embracing the well-being of a wider spectrum of stakeholders. Doubtless, the 21st century demands a new business economics, which warrants CSR, both inside and outside the organisation. In other words, business corporations are obliged to subscribe in thought, word, and deed to the long-term sustainability of this planet.

Values

This book is a collection of 14 essays and the authors include academics, consultants and management professions. Ananda Das Gupta, the editor of the volume, provides, in the prologue, a comprehensive and consummate introduction and, in his article, takes a look at the performance of the small manufacturing industries on the environmental front. The opening article, by Arabinda Ray, which examines “business ethics” in its varied dimensions, is a fitting preamble to the book, for it encapsulates all the core values that a business house ought to assimilate and sustain.

Two articles, one by N. Balasubramanian and the other by Arindam Banik and Pradip Bhaumik, focus on corporate governance. The former discusses the changing global scenario and explains how the management philosophy of Mahatma Gandhi can be integrated with the principles of corporate governance. In the other, the authors exhort the independent directors on corporate boards to ensure that the companies function within the legal and moral frameworks. The other two essays on corporate governance stray away from the main theme of the book. The one on “Governance and Economic Development” is a long narrative about economic theory and development; and the other, on “Civil Society and Governance”, discusses the evolution of society from the earliest era down to the modern times. The article “Indian model of Leadership,” true to its title, speaks only about leadership and its significance in the Indian companies.

Parthasarathy Banerjee spells out how science and technology can bring about far-reaching changes in trade and commerce; how such changes may lead to some ethical dilemmas; and how business organisations must resolve those issues. The essay by Usha Jumani is a succinct analysis of CSR in the Indian socio-economic context.

Case studies

The book presents five case studies that have a bearing on its central theme. If the one related to the Novartis Foundation for Sustainable Development brings out the distinction between corporate philanthropy and corporate responsibility, another highlights the pioneering work the Tata Group of Companies has done in the realm of CSR. The third shows how the Azim Premji Foundation enables the government school system to impart quality education to children from the deprived sections of the society. BITS at Pilani and XLRI at Jamshedpur are the focus of the other two case studies. While the BITS experience exemplifies the role of an academy in inculcating ethical values in the student community, the XLRI's record demonstrates how a programme of rural reconstruction can be used to awaken the social conscience of management graduates.

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