Indian Ethos and Business Ethics

Dr. Deepmala Baghel

Assistant professor
IIM Nagpur
Objectives

Learning Outcomes: Understand the practical advantages of ethical conduct

and practices

 Identify the features of applied ethics and the business and societal
implications of ethical decision-making.

 Establish and compare rules-based and results-based ethical decision-making.

 Determine and evaluate the intersections between commercial activities and

the ideals of censorship, privacy, and public safety.
• The goal is to know:

What are Ethics?

What is Business Ethics?

Why is Business Ethics?

What do ethical business practices mean, and how to tackle

the challenges we face in a sustainable manner?
 Introduction

 The question is not just of

‘What can we do?’, but also

‘What should we do?’ (aspirational ethics)

what should not be done (preventive ethics)

 The ‘good’, the ‘bad’, and the ‘should’ are a domain of ethics,
and a basis for other important concepts such as justice,
fairness, rights, and respect.

 The roots of an extremely important currency in the modern

economy: trust.
Ethics:
➢ System of moral principles
 “According to the Oxford English Dictionary, the word ethics is derived
from the Greek ethos or the nature or disposition of a culture.
 It is about the Principles of right and wrong

 Guidelines for conduct governing the behavior of an individual or a group.

 Finding the correct balance between values is a creative process.

➢ Ethics at the world level-UN ethics office

https://www.un.org/en/ethics/index.shtml
Concept of Ethic

 At its most basic level, ethics is about choice-- choice guided by

instinctive feelings that emanate from values.
 Values-
 religion-socialization-rational thinking
 Empathy and self-interest

 https://www.youtube.com/watch?v=1Evwgu369Jw
Let's begin the process of discovering which values drive our choices by considering
how ethics can be used to make decisions.
Law vs Ethics

Ethics

Law
Law vs Ethics

 Law -a consistent set of universal rules -accepted, and enforced.

 Ethics- are like norms of conduct without the force of law.

 Ethics: Individuals have choices to decide which way to go

 Law: more imposed upon, the individual need to follow the law of the land.

 Law is obedience to the enforceable;

 Ethics is obedience to the unenforceable
 Factors influencing ethical decision making
 Individual factors
 Age, gender, education, psychological factors-ego strength (sticking to
one’s conviction)
 E.g. people for whom individuality, independence, and freedom are
important values become unsatisfied in work environments that ask
for obedience and compliance

 Cultural factors
 Culture determines ethics- cultural relativism/imperialism
 Countries vary on 4 values: power distance, uncertainty avoidance,
individualism (collectivism), and masculinity (femininity).
(Hofstede, Geert. 2001. Culture’s consequences)
 “People’s actions would be influenced by whether they saw the wrongdoing
of others being punished and whether others’ ethical actions were
praised”. Trevino and Youngblood (1990)
 American Vs China work norms
Factors influencing ethical decision making

 Situational – position in the hierarchy, locus of control

 Cognitive development- people pass through an invariant

and hierarchical sequence of three stages – the pre-
conventional, the conventional, and the post-conventional
– in the development of their ethical cognitive ability
(Lawrence Kohlberg)
Self- evaluation

A person’s behavior is always ethical when one:

A. Does what is best for oneself

B. Has good intentions, no matter how things turn out
C. Does what is best for everyone
D. Does what is legal
Is business ethics an oxymoron?
Perspectives towards Business

 The classical view-

Separatist view

❑ Adam Smith was of the opinion that the objective of any business was to
generate profits only, and business had no relationship with ethics.

❑ Milton Friedman’s shareholder approach views corporate executives as

hired to follow the desire of the shareholders to maximize their profits,
legally and according to ethical custom
Perspectives towards Business

 The Unitarian view-

Humans have a capacity for transcendence – the ability to give themselves away to others, and to God.
Financial gains are not the ultimate motive of business nor the pinnacle of success for a business house.
❑ William C. Frederick (1960, 1978, 1998). Social responsibility in the final analysis implies a
public posture toward society's economic and human resources and a willingness to see that
those resources are utilized for broad social ends and not simply for the narrowly circumscribed
interests of private persons and firms. (1960: 60)

❑ Peter F. Drucker, the renowned management guru, in his book titled- “The Practice of
Management”,
the relationship between business and society “is like the relationship between a ship and the sea
which engirds it and carries it, which threatens it with storm and shipwreck, which has to be
crossed but which is yet alien and distant, the enterprise. Even the most private of private
enterprises is an organ of society and serves a social function”.

 The Integrated view: Ethics and Business should be integrated (Talcott Persons)
Business and morality are inter-related and are guided by external factors like government, market
system, law, law, and society.
Why Business Ethics?
1. The power of business
 Research says that…
 The managers of the biggest companies know that as a business gets larger, the public takes
more interest in it because it has a greater impact on the community.
 As impact is more so that corporates are tuned to public opinion and react to it.

2. Relationship between business and society

 the Enron scandal
 Watching executives climb the courthouse steps became a spectator sport -BusinessWeek
 Information age
 A company’s ethics and corporate social responsibility matter more today than they did a few decades
ago.
 The Millennial Factor
 Individual independent thinking
 According to a Bentley University study, 86 percent of millennials consider it a main priority to work for
a business that conducts itself ethically and responsibly.
Business scenario- ethical concerns

3. Need for ethical education in a business context

 Do you believe that ethical questions are raised?

❑ When foreign businesses establish sizable mineral extraction activities

in emerging nations both culture and ecology are changed.

❑ When deceptive marketing strategies are utilized to deceive

consumers, particularly when it comes to potentially dangerous items.

❑ When should marketing strategies be praised for giving consumers

more options rather than chastised for making unfounded claims?
Business scenario-ethical concerns: examples

 Various scams in India:

 Harshad Mehta Scam (1992), The Mutual Fund scam (1995), Coalgate Scam, 2 G scam, Chit Fund
Scam, NSEL Scam etc.

 Regulator SEBI on Friday imposed penalties on Reliance Industries Ltd, it’s Chairman and
Managing Director Mukesh Ambani as well as two other entities for alleged manipulative
trading in the shares of erstwhile Reliance Petroleum Ltd (RPL) back in November 2007.
The Hindu, January 01, 2021

 Amidst Safe City Project controversy, IPS officers Roopa and Hemant Nimbalkar
transferred. Roopa has accused Nimbalkar of favouring certain interested players during
the tender process of the multi-crore ‘Safe City Project’. The Print.

 Cambridge Analytica- Invasion of privacy-Facebook

 “The people whose job is to protect the user always are fighting an uphill battle
against the people whose job is to make money for the company,” Sandy Parakilas,
who worked on the privacy side at Facebook, told the New York Times. Facebook CEO Mark Zuckerberg
giving a speech in Barcelona in
February 2016. David Ramos/Getty
Images
4. Business Sustainability

 responsible practises that will ensure the longevity and success of a business

 acting ethically is as simply avoiding possible penalties.

 When allegations of fraud and corruption are substantiated, companies involved in misconduct
are debarred from engaging in any new World Bank Group-financed activity. Concerned
governments receive the findings of World Bank Group investigations.
 To date, the World Bank Group has publicly debarred or otherwise sanctioned more than 1,000
firms and individuals. (https://www.worldbank.org/en/topic/governance/brief/anti-
corruption)
Ethical Dilemma: Whistle-blowing
Ethical Dilemma

 An ethical dilemma involves a situation that makes a person question what is the
‘right’ or ‘wrong’ thing to do.

 Ethical dilemmas make individuals think about their obligations, duties, and
responsibilities. These dilemmas can be highly complex and difficult to resolve.

 Easier dilemmas involve a ‘right’ versus ‘wrong’ choice; whereas, complex ethical
dilemmas involve a decision between a right and a right choice.

You have probably been faced with dilemmas in the past, where all potential
outcomes are equally undesirable. Now, let’s start thinking about these situations and
how to deal with them.
Ethical Dilemma

The three complex situations leading to moral dilemmas are:

1. The problem of vagueness: One is unable to distinguish between good and bad (right
or wrong) principles
Example- accepting a gift from a client or not

2. The problem of conflicting reasons: One is unable to choose between two good moral
solutions. One has to fix priority, through knowledge or a value system.
Google.com
Example- Launching the challenger space shuttle by the engineering manager Bob Lund

3. The problem of disagreement: There may be two or more solutions and none of them
are mandatory. These solutions may be better or worse in some respects but not in all
aspects. One has to interpret, apply different moral reasons, and analyze and rank the
decisions. Select the best suitable, under the existing and the most probable conditions
Example- disagreements among managers over clients visiting to inspect their plants and
procedures
Ethical dilemma

 ‘ethical dilemma’ in business, consider the five main

areas identified by the UN Ethics Office:

1. Conflict of Interest
2. Honours, Favours, Gifts, and Remuneration
3. Favouritism
4. Outside Employment and Activities
5. Use of Company Property and Assets.
Common cases of ethical dilemma

 Corruption: covers bribery, fraud, embezzlement, and kickbacks

 Discrimination: If two employees in similar situations are treated differently as a

result of one person’s race, color, national or ethnic origin, caste, class, gender,
and age this is legally considered social discrimination.

 Sexual harassment: Complaints of sexual harassment are often ignored by the

authorities within the organization

 Fraud: Fraud refers to any wrongful or criminal deception undertaken to gain

financial or personal benefits. Fraud can be committed in almost any field,
including business, education, and government. The most common examples are
price fixing, over-billing or billing for services not performed, concealing safety
concerns or violations, and false certifications by educational institutions or
certifying agencies.
Example- ENRON: WHISTLE BLOWER

 Enron was a Houston-based energy company founded by a brilliant entrepreneur, Kenneth Lay. The company was
created in 1985 by a merger of two American gas pipeline companies in Nabraska and Texas. Lay assumed the role
of chairperson and CEO, a position he held through most of the next 16 years, until the company’s downfall in
2001. In a period of 16 years the company was transformed from a relatively small concern, involved in gas
pipelines, oil and gas exploration, to the world’s largest energy trading company. In 2001 Enron became a
household name-and probably in most households in most countries around the world. On 2 December, 2001 Enron,
one of the 10 largest companies in the US, filed for bankruptcy. During the boom years of the late 1990s the
company positioned itself as a trader of virtually any type of asset: pulp and paper, weather derivatives,
commodities, credits, and so on. It also expanded into areas that it thought would benefit from rapid growth,
including water (following deregulation measures), fibre optic capacity/ Internet bandwidth, and so on. At the end
of 1999, Enron launched its Internet based trading platform– Enron online. In February 2001, the company’s stock
market value was USD 4.60 billion. In early 2001, as Lay handed the CEO role to Skilling, Enron reached an apex:
the company reported revenues of US $ 100 billion and ranked seventh on the Fortune 500 list of largest global
companies. In early 2001, however, the company’s problems started mounting: the expensive expansion into the
broadband sector became questionable. Enron’s stock prices started falling. In August 2001 the chief executive
Jeffery Skilling, left the company following concerns about the company’s management. Former CEO Lay returned
to his old role (retaining the board chair as well). Whistleblowers within the firm – aware of widespread financial
improprieties – were attempting to convey information to the board of directors; one employee Sherron Watkins,
Enron’s vice president of corporate development, was finally successful in alerting certain board members that all
was not well. It became clear that Enron was facing serious financial problems with discussion over a takeover or
bankruptcy (The Economist, 1 November 2001). Towards the end of October 2001, Moody’s credit rating agency cut
Enron’s rating to barely above that of junk bonds. Most stakeholders suffered considerably: shareholders saw
the value of their investments vaporise almost completely, thousands of employees lost their jobs and
creditors lost billions of dollars.
Example- The case

 You have just been assigned to a company operation in Asia. Your predecessor
appears to have established a very cordial rapport with your primary client.
Everything goes well when you first meet the client, but he makes it
abundantly clear during your conversation that he expects payment for
ensuring you continue to win work and for maintaining a special relationship
with you rather than your main competitor.
 Your ethics training has taught you that such payments are unlawful. The only
issue is that if you report this situation, you will almost certainly implicate
your predecessor, who is now your direct supervisor and wields considerable
sway at the corporate office.

 What do you do?

 The case of ethical dilemma: Ethical business decision-making

 Merck & Co is one of the world’s largest pharmaceutical products and Services Company.
Headquartered in Whitehouse Station, New Jersey, it is a great example of ethical behavior
by the whole company corporate social responsibility, and ethical leadership. The
cooperative nature of the programme has helped to strengthen the primary health care
system in many countries where Mectizan has been delivered: in fact, the delivery strategy
and treatment guidelines have resulted in the delivery of other health services e.g. Vitamin A
in the Central African Republic and diagnosis of `other conditions such as cataracts
 Merck research scientists discovered a potential cure for a severely debilitating human
disease known as river blindness (Onchocerciasis). The disease is caused by a parasite that
enters the body through the bite of black flies that breed on the rivers of Africa and Latin
America.
 On October 21st, 1987, Merck &Co decided to donate a newly discovered drug molecule to
combat River Blindness.

 It took $200 million in research and 12 years to bring the drug into the market

 More than 60,000 cases of blindness have been prevented.

 The case of ethical dilemma-continue

 Merck decided to produce the drug even though it would not financially profit from
doing so.
 No government or aid organization stepped forward to buy the drug, Merck pledged to
supply the drug-free forever. When Merck recognized that no effective mechanism
existed to distribute the drug, they went far beyond industry practice and organized a
committee to oversee the distribution. Hailed as one of the best-managed US
companies,
 Decision to pursue research is a complex one as resources, money and time are finite.
 Research dilemma- There were enough people suffering from the disease to justify the
research, but a disease afflicting people in some of the poorest countries sufferers can
not pay for the medication. Since it takes $200 million in research and 12 years to
bring the average drug to market, the decision to pursue research is a complex one.
 continue

 Roy Vagelos, CEO of Merck, responded: “People will remember” and will
reciprocate.

 Mectizan has taught us about how to mobilize resources in successful

public/private partnerships to address significant problems.

 The world needs more such companies today to fight the global pandemic.
Your Task
 Examine the following scenario, and choose the most ethical
response.
A rumor is circulating that ridicules a new employee, accusing
him of having typos in his latest slide presentation. You overhear
your coworkers discussing it in the break room.

➢ How should you respond?

 Report the gossipers to their supervisors.
 Participate in the gossip to build better relationships with your
coworkers.
 Praise the positive impact the new employee has made.
 Do nothing
 Is it appropriate to use the publicly posted images in the
report without permission?
1. Maybe, as long as the owners of the images do not find out.
2. Yes, images on the Internet are freely available.
3. No, using the images may break the law.

 Were you to get permission to use the images in the

report, how should you use them?
1. You should cite yourself as the image’s original source.
2. You should include a citation of the image’s original source.
3. No citation is necessary because the report is a business document.
 Case study: Wilson, S. (2002, June 9). A Life Worth More Than Gold. The Washington Post.

In Tambogrande, Peru, mineral deposits worth $1 billion were discovered beneath mango and avocado orchards.
However, in order to extract these valuable resources, the foreign mining company would need to demolish as much
as one-third of the town, including people’s homes.
Just below the lime, mango, and avocado orchards that have sustained life in Tambogrande for generations lies a thick
deposit of valuable metal. Gold and silver sit on top, copper, and zinc underneath. The deposit could be worth $1 billion to
the Canadian mining company that has the right to tap it. Doing so, however, would require the demolition of a crescent of
homes bending down from the highest hilltop of Tambogrande, which is crowned with a peach-colored statue of Jesus. The
open-pit mine would open up just blocks from the central square, replacing about a third of this comfortable town beside a
slow river in Peru's arid north. Although this is a place where most streets and houses are made of dirt, the 20,000 residents
of Tambogrande have decided that they prefer their homes, their hillside, and their fruit orchards to gold. In an unofficial
referendum held here last Sunday, nine in 10 voters made known that the mining company, Manhattan Minerals, was not
welcome. Despite that message, the company intends to proceed. In doing so, it has embarked on a confrontation that
involves such enduring national themes as gold and greed, murder and foreign interests -- and even ceviche, the seafood
delicacy that is Peru's most celebrated contribution to Latin American cuisine.
The confrontation has brought the debate over global capitalism to this dusty corner of Peru. A flock of international
nonprofit organizations has arrived to advise townspeople in their fight, precipitating a war between a foreign mining
company and a foreign anti-globalization movement, with Tambogrande in between. Towns like this one have rarely been
allowed to harness their own wealth. The eventual result here in the fertile San Lorenzo Valley may be a mine that sends
most of its profits abroad and the remainder to the government in Lima, 540 miles to the south. But the residents of
Tambogrande have resolved to prevent that. They are counting on a tentative democratic revival underway in Peru after a
decade of quasi-dictatorship, hoping that a clear expression of their will can counter the promise of contracts and cash. "If
they don't respect these results, we will have to rely on the power that comes from the whole world knowing that these are
our wishes," said Hugo Abramonte Ato, a retired schoolteacher born 55 years ago to landless peasants. "We don't want to
change our life in exchange for this supposed bonanza.”
 Continue
The referendum was the first of its kind in a country that has known only 15 consecutive years of
democracy in the past century. It followed months of debate characterized at times by the type of
violence traditionally used to solve problems in this part of the world. Peru is the world's eighth-largest
gold producer -- the largest in Latin America -- while a decade ago it did not appear on the list at all.
Gold accounts for a third of Peru's export revenue, and only 10 percent of the country has been
explored. "This is part of an anti-development campaign that is going to be unfolding across Latin
America, and I think it needs to be understood in that way," said Lawrence M. Glaser, chairman and chief
executive of Manhattan Minerals, who called the referendum a ploy by anti-globalization activists to
undermine the project.
The company has had the concession here for five years. Along with guaranteeing new homes for
displaced families, the company has promised that 300 mining jobs will be filled by town residents and
predicts that another 1,500 spinoff jobs will be generated by the project. The company plans to invest
$350 million in the operation and estimates a billion-dollar profit over the life of the project. "There are
few cases as clear-cut as this one," Ross said. "There's a lot at stake for the company, a lot at stake for
the government. And from their perspective, those look a lot more important than what's at stake for
the local community. "In the past year, scores of Tambogrande residents have heard this message in
workshops organized by Oxfam Great Britain. Many now worry that the mine would transform a place
where the Saturday evening gathering of Christian evangelists has been the most popular form of mass
entertainment in a honky-tonk town with a disco on every street corner. "In mining zones, poverty is the
highest and prostitution the greatest," said Eligio Villegas Salvador, an evangelical Christian, recounting
what he has picked up in the workshops. "So we say no thank you."
Case study

 Based on the Tambogrande case reading, should the mining company proceed to develop in
Tambogrande, Peru?
▪ Yes, the mining company should proceed.
▪ No, the mining company should not proceed.

 While learning about the case, keep these questions in mind:

▪ What are your starting assumptions?
▪ Who are the stakeholders, and what is at stake?
▪ What are the underlying values at play? Are any in conflict?
▪ Who has ethical or legal responsibility in this case? What are they obligated to do?
▪ What are the possible actions or decisions?
▪ Would a rules- or results-based approach lead to the “best choice” option?
Ethics in corporate governance
Governance
 ‘Governance' is now fashionable, but the concept is as old as human history
 The term governance was first described as the need for institutional reform and a better
and more efficient public sector in sub-Saharan countries - World Bank publication ‘Sub-
Saharan Africa- from Crisis to Sustainable Growth 1989

 “The process of decision-making and the process by which decisions are

implemented (or not implemented).”

 ‘The concept of governance refers to the complex set of values, norms, processes
and institutions by which society manages its development and resolves conflict,
formally and informally.’ (Tokyo Institute of Technology)

 Governance can be used in several contexts such as corporate governance,

international governance, national governance and local governance.
Good governance

 World Bank Report (1992)- Good governance entails

 Sound public sector management (efficiency, effectiveness, and economy),
 accountability,
 Exchange and free flow of information (transparency) (transparency), and
 A legal framework for development (justice, respect for human rights and liberties).

 Department for International Development: Good Governance is defined as focusing

on
 Legitimacy (government should have the consent of the governed),
 Accountability (ensuring transparency,
 Being answerable for actions and media freedom),
 Competence (effective policy making, implementation, and service delivery), and
 Respect for law and human rights.
Characteristics of good corporate governance

 Essentials of Good Corporate Governance: a formal system of Accountability and

Control of ethical and socially responsible decisions and use of resources

1. Participatory
2. Consensus Oriented
3. Accountable
4. Transparent
5. Responsive
6. Effective and Efficient
7. Equitable and Inclusive and
8. Follows the Rule of Law.
Advantages of Ethics in corporate governance

 Attracting and Retaining Talent

 According to a Bentley University study, 86 percent of
millennials consider it a main priority to work for a business
that conducts itself ethically and responsibly.
 Investor Loyalty
 Customer Satisfaction
 Support: Business requires consumers, investors, and
larger social-political support to do business in society so
they need to engage in ethical practices.
Advantages of Ethics in corporate governance-continue

 Developing trust in the supplier, customer, and

employee relationship

 Protecting stakeholders’ interests in a fair manner

 Helps in the enforcement of existing regulations and

prohibits people from using the loopholes in existing
regulation
 Benefits of Ethics in Corporate governance

The International Labour Organisation (ILO) -business ethics as a way for

companies to
1. promote self-regulation, thereby
2. deterring government intervention and
3. possible regulatory action.

 Other benefits
1. Ethical system at a societal level
2. Promote a positive brand image
3. Generate respect for the company in the eyes of people
4. Promotes strong team and group work to handle critical situations
5. Establishes an overall ethical and strong moral framework for all
stakeholders
Corporate governance

 According to the Business Ethics Survey Report India- conducted by KPMG

India- Smart Indian companies are increasingly becoming concerned about
“The way they do business”. They realize that good ethics is good business
too.

 The United Nations have adopted a multi-stakeholder approach for the

realization of the SDGs.
“Business is a vital partner in achieving the Sustainable Development
Goals. Companies can contribute through their core activities, and we
ask companies everywhere to assess their impact, set ambitious goals,
and communicate transparently about the results.” (Ki-Moon, 2015)
 Examples- corporations help during covid-19

 Gautam Adani announced a Rs 100-crore contribution by his group's

philanthropic arm to various initiatives in support of the war against Covid-
19.
 Google established a COVID-19 fund that enables all temporary staff and
vendors, globally, to take paid sick leave if they have potential symptoms of
COVID-19, or can’t come into work because they’re quarantined.
 Shine Distillery in Portland started making and giving away hand sanitizer in
an acute shortage.
 Jamm, an audio-visual communication tool used by remote and distributed
teams is offering it free of charge.
 Amazon is hiring 100,000 more workers and giving raises to current staff to
deal with coronavirus demands.
 The Sajjan Jindal-led group will provide equipment to healthcare workers
and its employees will donate one day's salary.
Application of Indian Ethos and Business
Ethics in management-Discussion

 Donaldson and Davis, in “Business Ethics? Yes, But What Can it Do

for the Bottom Line?” (Management Decision, V28, N6, 1990)
explain that
“managing ethical values in the workplace legitimizes
managerial actions, strengthens the coherence and balance of
the organization’s culture, improves trust in relationships
between individuals and groups, supports greater consistency in
standards and qualities of products, and cultivates greater
sensitivity to the impact of the enterprise’s values and
messages.
What can you do to improve ethics at your company?
by Christopher McLaverty and Annie McKee December 29, 2016

Why Ethical People Make Unethical Choices ?

by Ron Carucci December 16, 2016
 Features of an ethical corporate climate: how to
improve ethical practices at workplace

1. Ethical values in their full complexity are widely acknowledged and

appreciated by managers and employees alike.

2. The use of ethical language is honestly applied and recognized as a legitimate

part of corporate dialogue

3. Top management sets a moral tone in words, in policies, and by personal

example like pushing for a change from the top

4. Develop a code of conduct, and procedures for conflict resolution and

disseminate it widely

5. Respect for authority is important in meeting organizational goals. Equally

important is to give respect to the positive virtues of employees.
 Features of an ethical corporate climate
6. Protect whistleblowers and create an environment of open communication
7. Humble leader creates a good team as it allows for open and free of fear discussions
and a free flow of knowledge that facilitates productive work culture

8. Guidance to employees, and punishment to violators

9. Organize ethical training workshops

10. Create an environment for regular meetings and discussion forums for ethical
matters discussions

11. Create tolerance for cross-cultural differences. Cultural relativism should prevail
nor ethnocentrism
 Ethics in the corporation: characteristics of
ethical work in Business corporations

1. They are at ease interacting with diverse internal and

external stakeholder groups.
Ethics
2. Theyinare
theobsessed
corporation:
with characteristics
fairness. of ethical work
in Business corporations
3. Responsibility is individual rather than collective, with
individuals assuming personal responsibility for the actions
of the organization.
4. They see their activities in terms of purpose. This purpose
is a way of operating that members of the organization highly
value.
(Mark Pastin, in The Hard Problems of Management: Gaining the Ethics Edge (Jossey-Bass, 1986)
Application of Indian Ethos & Business
Ethics in management-Discussion

-Infosys Technologies HBR by Ashish Nanda May 2002

-Narayan Murthy’s Address to Shareholders Aug 29, 2017
-How Independent are independent directors?-Business
Standard article March 2017
“The simple step of a simple courageous man is to
not take part in the lie, not to support deceit. Let
the lie come into the world, even dominate the
world, but not through me.”

Alexander Solzhenitsyn
Managers may exhibit their ethical integrity from 4
specific approaches:

(a) Outcome-oriented (teleological theories): achieving good consequences

or ends. Example: Production/ sales managers who focus on bottom line

(b) Duty-oriented (deontological theories): adhering to standards of right

conduct. Example: internal process managers who monitor and co-ordinate
different activities and strictly follow internal policies of the organization

(c) Character-oriented (virtue ethics theories): developing virtuous

character traits. Example HR managers facilitating and mentoring human
talents

(d) Systems-oriented (systems development theories): being motivated by

ethically supportive, holistic context. Systems managers involved in innovating
and brokering for resources to improve the system continuously
Infosys: Torchbearer of corporate governance
 The first company in India to give quarterly reporting.
 First in India to give topline and earnings guidance on a quarterly and yearly basis.
 First in India to adopt the stringent disclosure standards of US GAAP in 1995 much before
our NASDAQ listing to give comfort to our global investors.
 First in India to publish what was considered company secrets in the 1990s like data on
employee attrition, segmentation of revenue by geography and industry, customer
concentration, and on billed man-months.
 Proactively disclosed bad news like losing a large customer contributing 25% of our
revenue due to price negotiations in 1995.
 Appointed a lead independent director for the first time in Indian corporate history.
 First to introduce a retirement policy and a fixed term for all directors, be they
executive or independent.
 First to produce a governance report on all board committees.
 First to follow Sarbanes Oxley Act among all non-US filers.
 Among the first companies globally to file IFRS compliant financials with SEC.
Board of Infosys
 R Sheshasayi- Chairman ( Non Executive)
 Vishal Sikka- CEO & MD
 Rajiv Agarwal- CFO & Director
 Kiran Shaw Mazumdar-Lead ID
 Roopa Kudwa- ID
 Dr Punit Kumar Sinha- ID
 D N Prahlad- ID
 D Sundaram- ID
 Michael Gibbs- ID
Murthy’s Letter to Shareholders

 The core philosophy of corporate governance, which the

company has consistently demonstrated since 1981, can be
summarized as:
1. We will be the most respected corporation in the eyes of all
stakeholders.
2. When in doubt, disclose without any hesitation.
3. Under promise; overdeliver.
4. In God we trust, everybody else brings data and facts to the table.
5. Bad news must take the elevator and good news can take the stairs.
6. The softest pillow is a clear conscience.
Strategy to Build Ethical Organizations

 Have clarity in goals and means to achieve those goals

 Zero tolerance for unethical behavior- corruption and other
unethical conduct
 Holistic approach
 Respect for all forms of existent
 Group behavioral approach-support colleagues in an ethical
dilemma
 Strict compliance with the law
 Leadership- humble and inclusive –lead by example
Thank you