Chapter One

Business Ethics: An Overview

INTRODUCTION

The study of ethics has become an important ingredient of the syllabus of management schools in recent years. This is because of ethical issues that have come to the forefront as a result of many well-known failures of corporates. The fraudulent activities of these corporates have resulted in the defrauding of stockholders, consumers, employees, creditors and governments to varying degrees. It has therefore become important that students of B-schools as future managers of business should imbibe ethical values. Ethics reflects a society’s notions about the rightness or wrongness of an act. Ethics also involves the evaluation and application of certain moral values that a society or culture has come to accept as its norms. It is generally described as a set of principles or moral conduct. Business ethics, therefore, is a sum total of principles and code of conduct businessmen are expected to follow in their dealings with their fellowmen such as stockholders, employees, customers, creditors, and comply with to enact the laws of the land and to protect all these stakeholders.

The word “ethics” is derived from the Greek word ethikos meaning custom or character. The Concise Oxford Dictionary defines ethics as the treating of moral questions. But this definition is imprecise and leaves a number of loose ends. Whose morals? Which moral questions? Business ethics covers diverse areas ranging from labour practices, free and fair trade, health concerns, euthanasia to animal welfare, environmental concerns, to genetic modification, to human cloning. Perhaps the definition provided by the Chambers Dictionary comes closest to providing a workable definition: ‘Ethics is a code of behaviour considered correct’. What the society considers correct may have been arrived by the crystallization of consumer pressure on corporations and governments and regulatory forces. It is the science of morals describing a set of rules of behaviour. Business ethics itself is an offshoot of applied ethics. The study of business ethics essentially deals with understanding what is right and morally good in business.

Ethics is a branch of philosophy and is considered a normative science because it is concerned with the norms of human conduct, as distinguished from formal sciences such as mathematics and logic, physical sciences such as chemistry and physics, and empirical sciences such as economics and psychology. As a science, ethics must follow the same rigours of logical reasoning as other sciences. Ethics, as a science, involves sys-temizing, defending and recommending concepts of right and wrong behaviour.¹

The principles of ethical reasoning are useful tools for sorting out the good and bad components within complex human interactions. For this reason, the study of ethics has been at the heart of intellectual thought since the time of early Greek philosophers, and its ongoing contribution to the advancement of knowledge and science makes ethics a relevant, if not vital, aspect of management theory.

PRINCIPLES OF PERSONAL ETHICS

Personal values are the conception of what an individual or a group regards as desirable. Personal ethics refer to the application of these values in everything one does. Personal ethics might also be called morality, since they reflect general expectations of any person in any society, acting in any capacity. These are the principles we try to instil in our children, and expect of one another without needing to articulate the expectation or formalize it in any way.² The principles of personal ethics are

1. Concern and respect for the autonomy of others.
2. Honesty and the willingness to comply with the law.
3. Fairness and the ability not to take undue advantage of others.
4. Benevolence and preventing harm to any creature.

People are motivated to be ethical for the following reasons:

1. Most people want to maintain a clear conscience and would like to act ethically under normal circumstances.
2. It is natural for people to ensure that their actions do not cause any injury, whether physical or mental, to others.
3. People are obliged to obey the laws of the land.
4. Social and material well-being depends on one’s ethical behaviour in society.

PRINCIPLES OF PROFESSIONAL ETHICS

A profession is a vocation or calling, especially one that involves a specific branch of advanced learning or a branch of science, for example, the profession of a doctor, advocate, professor, scientist or a business manager. A professional is one who is engaged in a specified activity as one’s paid occupation like a salaried business manager who is paid for his specific skill in managing the affairs of the business enterprise he is engaged in.

There are certain basic principles people are expected to follow in their professional career. These are the following:

• impartiality: objectivity;
• openness: full disclosure;
• confidentiality: trust;
• due diligence/duty of care;
• fidelity to professional responsibilities; and
• avoiding potential or apparent conflict of interest.

WHAT IS BUSINESS ETHICS?

Ethics is a conception of right and wrong behaviour, defining for us when our actions are moral and when they are immoral. Business ethics, on the other hand, is the application of general ethical ideas to business behaviour. Ethical business behaviour is expected by the public, it facilitates and promotes good to society, improves profitability, fosters business relations and employee productivity, reduces criminal penalties from public authorities and regulators, protects business against unscrupulous employees and competitors, protects employees from harmful actions by their employer, and allows people in business to act consistently with their personal ethical beliefs. Ethical problems occur in business for many reasons, including the selfishness of a few, competitive pressures on profits, the clash of personal values and business goals, and cross-cultural contradictions in global business operations. Ethical issues, such as bribery and corruption, are evident throughout the world, and many national governments and international agencies are actively attempting to minimize such actions through economic sanctions and international codes of ethical behaviour. Although laws and ethics are closely related, they are not the same: ethical principles tend to be broader than legal principles. Illegal behaviour by business and its employees imposes great costs on business itself and the society at large.

To be precise, “Business ethics is the art and discipline of applying ethical principles to examine and solve complex moral dilemmas.”³ Business ethics proves that business has been and can be and ethical and still make profits. Until the last decade, business ethics was thought of as being a contradiction in terms. But things have changed; today more and more interest is being shown to the application of ethical practices in business dealings and the ethical implications of business. “Business ethics is that set of principles or reasons which should govern the conduct of business whether at the individual or collective level.”⁴

Ethical solutions to business problems may have more than one right answer or sometimes no right answer at all. Thus logical and ethical reasoning are tested in that particular business situation. A business or company is considered to be ethical only if it tries to reach a trade-off between its economic objectives and its social obligations, such as obligations to the society where it exists and operates; to its people for whom it pursues economic goals; to the environment, from where it takes its resources; and the like.”⁵

Business ethics is based on the principle of integrity and fairness and concentrates on the benefits to the stakeholders, both internal and external. Stakeholders include those individuals and groups without which the organization does not have an existence. It includes shareholders, creditors, employees, customers, dealers, vendors, government and the society.

WHAT IS NOT BUSINESS ETHICS?

It is also equally important to clarify what is not ethics.

Ethics is Different From Religion

Though all religions preach high ethical/moral standards generally, they do not address all the types of problems people confront today. For instance, cyber crimes and environment-related issues are totally new in the context of most religions. Moreover, many persons today do not subscribe to religious beliefs and have turned agnostics. But ethics applies to all people, irrespective of their religious affiliations.

Ethics Is Not Synonymous With Law

Generally, a good legal system may incorporate many moral/ethical standards. However, there are several instances where law deviates from what is ethical. Legal systems may vary from society to society depending upon its social, religious and cultural beliefs. For instance, the United States law forbids companies from paying bribes either domestically or overseas; however, in other parts of the world, bribery is an accepted way of doing business. Similar contradictions may be seen in child labour, employee safety, work hours, wages, discrimination, and environmental protection laws. Law can be corrupted and debased by dictators and made to cater to serve interests of narrow groups. Sometimes, law could be unreasonable and even stupid, as for instance, it is illegal in Israel for a hen to lay an egg on a Friday or Sturday! (The Trends Team, Times of India, Chennai, July 7th, 2008). It is also slow to respond to ethical needs of the society. People are often sceptical about the objectives of any legal system and comment “Law is an Ass,” while few people question ethical standards.

Ethical Standards Are Different From Cultural Traits

The English adage ‘When in Rome, do as the Romans do’ leads to an unethical cultural behaviour. Some cultures may be ethical, but many of them are not. They may be quite oblivious to ethical concerns. For instance, our system of castes reflects an unethical streak inasmuch as it tends to take for granted that some people are superior to others in God’s creation.

Ethics Is Different From Feelings

Our ethical choices are based on our feelings. Most of us feel bad when we indulge in something wrong. But many, especially hardened criminals, may feel good even when they do something bad. Most people when they do something wrong for the first time, may feel bad, but if they find it to be beneficial or if it brings them pleasure, they may make it a habit without feeling any remorse.

Ethics Is Not a Science in the Strictest Sense of the Term

We draw data from the sciences to enable us make ethical choices. But science is not prescriptive and does not tell us what we ought to do in certain situations leading to ethical dilemmas. But ethics being prescriptive offers reasons for how humans ought to act under such situations. Moreover, just because something is scientifically or technologically possible, it may not be ethical to do it; human cloning, for instance.

Ethics Is Not Just a Collection of Values

Values are almost always oversimplifications, which rarely can be applied uniformly. Values tend to be underdefined, situational by nature and subject to flawed human reasoning such that by themselves they cannot assure true ethical conduct. Consider the sought-after value of employee loyalty. Should employees be loyal to co-workers, supervisors, customers, or investors? Since it may be impossible to be absolutely loyal to all the four simultaneously, in what order should these loyalties occur? Employers who demand employee loyalty rarely can answer this question completely or satisfactorily.

CODE OF CONDUCT AND ETHICS FOR MANAGERS

Having gone through the definitions of what is and what is not ethics, let us see now how ethics and values should form the bases of the code of conduct that ought to govern the behaviour of business managers. In the exercise of their duties and responsibilities, managers must observe the following ethical values:

• Integrity: Integrity is the cornerstone of all values. A business manager should be morally upright. It is this characteristic that distinguishes a professional manager from a mercenary.
• Impartiality: A manager should look at and treat all aspects of an issue in a fair and unprejudiced manner.
• Responsiveness to the Public Interest: Though a manager is paid to serve the interests of the stockholders of the company, public interest is no less important. In fact, managers should consider it as of paramount importance, if they have to be successful in their tasks.
• Accountability: Accountability is one of the basic characteristics of a good business manager. Business managers are responsible for all their actions and are accountable to all the stakeholders—stockholders, creditors, employees, consumers, government and the society at large.
• Honesty: A cardinal ethical value that a manager should possess is this quality. Managers should be fair, just and sincere both in character and behaviour. They should not indulge in cheating or stealing and should be free of deceit and untruthfulness.
• Transparency: Good business managers should be transparent and set standards for others to follow. They should be frank and open. Their actions should be easily discussed and understood by others.

What values are to individuals, ethics is to business.

EVOLUTION OF ETHICS OVER THE YEARS

If we trace the history of ethics in business, we would realize that ethics had been a part of theological discussions prior to 1960. Before the 1970s, there were a few writers like Raymond Baumhart who dealt with ethics and business. Ethical issues were mostly discussed as part of social issues. Men of religion and theologians continued writing and teaching on ethics in business. Professors in B-schools wrote and continued to talk about corporate social responsibility (CSR), the handmaid of ethics. However, the catalyst that led to the field of business ethics was the entry of several “philosophers, who brought ethical theory and philosophical analysis to bear on a variety of issues”.⁶ Norman Bowie⁷ dates the genesis of business ethics as November 1974, with the first conference on the subject held at the University of Kansas. In 1979, three anthologies on business ethics appeared. They were (i) Ethical Theory and Business by Tom Beauchamp and Norman Bowie; (ii) Ethical Issues in Business: A Philosophical Approach by Thomas Donaldson and Patricia Werhane; and (iii) Moral Issues in Business by Vincent Berry. In 1982, Richard De George brought out Business Ethics, while Manuel G. Velasquez published his Business Ethics: Concepts and Cases. All these books created a lot of interest on the subject and business ethics courses were offered in several management schools. The emergence of business ethics, however, was not restricted to textbooks and courses in B-schools. By 1975, business ethics became institutionalized at many levels through writings and conferences. By the 1980s, the subject was taught in several universities in the United States and Europe. There were also, by this time, many journals of business ethics, apart from centres and societies established to promote ethical practices.

By the year 1990, business ethics as a management discipline was well-established. “Although the academicians from the start had sought to develop contacts with the business community, the history of the development of business ethics as a movement in business, though related to the academic developments, can be seen to have a history of its own”.⁸

Parallel to these academic pursuits, around the time from the 1960s to the 1980s, the Consumers’ Association in Britain multiplied its membership and campaigned hard on issues such as consumer rights, quality, safety, price, customer service and environmental concerns. The late 1980s and early 1990s saw increased concern for the environment and by 1989 environment was the issue of greatest concern in Britain. In 1988, more than 50 per cent of the people in West Germany called themselves green consumers, that is, those who preferred to select one product over another for environment-friendly reasons. The United States followed with 45 per cent, Australia with 27 per cent, Great Britain with 14 per cent, which within one year shot up to 42 per cent.

Simultaneously with these developments or even anticipating them, religion also lent its powerful voice. Catholic teachings such as Papal Encyclicals emphasized the need for morality in business, such as workers’ rights and living wages as in Rerum Novarum of Pope Leo XIII. Some of the Protestant seminaries developed ethics as part of their curriculum. During the 1960s, there was a rise of social issues in business and many business practices came under social scrutiny during this period. President John F Kennedy’s Consumer Bill of Rights reflected a new era of consumerism. During the 1970s, professors teaching business began to write about business ethics and philosophers began to involve themselves in the theoretical evolution of the subject. Businessmen became more concerned with their public image and addressed ethics more directly. From this historical development, we can see that business ethics as a field of study and research is a fairly nascent subject.

IMPORTANCE AND NEED FOR BUSINESS ETHICS

Ethics is closely related to trust. Most people would agree on the fact that to develop trust, behaviour must be ethical. Ethical behaviour is a necessity to gain trust. Trust will be used as an indicator variable of ethics. Basically, trust is three-dimensional, that is, trust in supplier relationships, trust in employee relationships and trust in customer relationships. In such a situation, the entire stakeholders of the company are taken care of. If the company is able to maintain this trust-relationship with the internal as well as external stakeholders, then we can call that company as an ethical company.

Trust leads to predictability and efficiency of business. Ethics is all about developing trust and maintaining it fruitfully so that the firm flourishes profitably and maintain good reputation. Lack of ethics would lead to unethical practices in organizations as well as in personal life. One wonders why sometimes even educated, well-positioned managers or employees of some reputed companies act unethically. This is because of lack of ethics in their lives. We can point out to numberous examples of companies whose top managements are involved in unethical practices, for example, Enron and WorldCom, in 2002 and a host of others including investment bankers Lehman Brothers and Merrill Lynch in 2008.

Earlier it was said that ‘business of business is business’. Now there is a sudden change in the slogan. In the contemporary scenario where ethics has got its due importance, the slogan has taken the form: ‘the business of business is ethical business’. Applying ethics in business makes good sense because it induces others to follow ethics in their behaviour. Ethics is important not only in business but also in all aspects of life. The business of a society that lacks ethics is likely to fail sooner or later.

People as investors and members of civil society are concerned about unethical and anti-social development in organizations. The collapse of the Global Trust Bank, the UTI fiasco and the spat between the Ambani brothers caused concern to the investing and general public. A study of business ethics helps us to unravel the underlying forces—Why these things happen? What are their implications and what are the options available to solve the problems that arose? Business ethics enables us “to assess the benefits and problems associated with different ways of managing ethics in organisations”.⁹ It helps us assess the role of business in contemporary society. Even as business contributes to the growth of the society by offering products and services, enhancing incomes and standard of living, providing jobs, paying taxes to the government and being the facilitator for economic development, its functioning often raises several ethical issues such as pollution, environmental degradation, and corrupt practices. “that go to the heart of the social role of business”¹⁰. By enabling people to understand these malpractices and the consequent repercussions, business ethics seeks to improve the welfare of the society by offering a social and political platform for remedial, and sometimes proactive action.

There are thousands of companies which, notwithstanding the poor image business community as a whole has among the public, have succeeded in making profit and enhanced public esteem by following ethical practices in their realm of business. Some of such companies are: Johnson & Johnson, Larsen & Toubro, Wipro, Infosys and Tata Steel. They have gained the trust of the public through ethical practices. In India, the House of Tatas, for instance, adheres to, and communicates key ethical standards in several ways. The Tata Code of Conduct affirms that “The Tata name represents more than a century of ethical conduct of business in a wide array of markets and commercial activities in India and abroad. As the owner of the Tata mark, Tata Sons Ltd., wishes to strengthen the Tata brand by formulating the Tata Code of Conduct, enunciating the values that have governed and shall govern the conduct and activities of companies associating with or using the Tata name and of their employees”.¹¹

SIGNIFICANCE OF BUSINESS ETHICS

Events in corporate America, Europe, and in many emerging economies at the beginning of the new millennium and more recently in the fag end of 2008, have demonstrated the destructive fall-outs that take place when the top management of companies do not behave ethically. Lack of ethics has led highly educated, resourceful and business savvy professionals at mega corporations like Enron, Tyco, Waste Management, WorldCom and Adelphia Communications to get themselves into a mess. In India too, we have had several instances of highly successful corporations like ITC and Reliance getting into severe problems when the top brass misled them to unethical practices. Recently, the chairman of the South Korean automobile giant, Hyundai, Chung Mong-Koo was arrested and jailed for diverting more than $1 billion from the company as bribe to government officials.

If we analyse the reasons as to why such unethical practices take place in corporations, we may come across several dimensions to the discussion on the importance and significance of business ethics. There are quite a few businessmen and entrepreneurs who are of the opinion that business and ethics do not go hand in hand, as there is no proven evidence that following ethical practices does bring profits to the firm. They think that a company may not be in a position to reap the full benefits offered by the business environment if they were to worry about how ethically they should run the organization. It may not be able to take advantage of the opportunities provided by circumstances if they have to worry about ethical considerations all the time. Besides, the choice of an ethical alternative among many other alternatives and getting due benefits after investing on ethical practices may take time, which may act as a constraint. There are others to whom making profit and increasing market capitalization are the only imperatives and yardsticks of efficiency and successful corporate management. To them, the end justifies the means. There are hundreds of CEOs who hold this opinion and act unethically, though many of them were proved wrong when nemesis caught up with them as in the cases of top executives of WorldCom and Enron.

Real-life situations have shown that use of ethical practices in business does create high returns for companies. There have been many empirical studies that have shown that companies that follow ethical practices are able to double their profits and show increased market capitalization compared to companies that do not adhere to ethics. In our own country, Tata Steel and Infosys are two classic examples that illustrate this line of thinking.

Running a business ethically is good for sustaining business. Applying ethics in business also makes good sense. The corporation that behaves ethically prompts other business associates, by its good example, to behave ethically as well. Organizations work on synergy and delegation. It is the feeling of the oneness with the company, which is called as a feeling of ownership, that enhances the sincerity of a worker in an organization. Organizations cannot work in a manner where the employees are not given due importance in their affairs. For example, if a management exercises particular care in meeting all responsibilities to employees, customers and suppliers, it usually is rewarded with a high degree of loyalty, quality and productivity. Likewise, employees who were treated ethically will more likely behave ethically themselves in dealing with customers and business associates. A supplier who refuses to exploit his advantage during a seller’s market condition retains the loyalty and continued business of its customers when conditions change to those of a buyer’s market. A company like Sakthi Masala Pvt. Ltd. that does not discriminate against elderly or handicapped employees and uses every opportunity to convince them that they are wanted as much as others, discovers that they are fiercely loyal, hard working and productive.

There is a cultivated belief in society for thousands of years, may be due to religious influence or an unwavering faith in morality, that a “good man” who steadfastly tries to be ethical is bound to overtake his immoral or amoral counterpart in the long run. A plausible explanation of this view on ethical behaviour is that when individuals operate with a conviction on the ethical soundness of their position, their minds and energies are freed for maximum productivity and creativity. On the other hand, when practising unethical behaviour, persons find it necessary to engage in exhausting subterfuge, resulting in diminished effectiveness and reduced success.

Professionals like Kenneth Lay, Martha Stewart, Dennis Kozlowski or Bernard Ebbers, the CEO of WorldCom who earned themselves disrepute by paying themselves millions of dollars in compensation while their companies were in dire financial straits were certainly aware of what constitutes ethics.¹² They were either too blinded by self-interest or simply did not care that they were not following the standards that they had set for their subordinates.

The top management of organizations, who take personal pay cuts in difficult financial times for their organizations are respected by everyone. Companies should have the flexibility of adjusting cost structures during bad times, replace old factories with new ones, or change technology in ways that would require fewer people to do the work. These decisions should be taken after ensuring that those affected are empathized with and are provided adequate and financial support.

Managers may face situations where they are not sure, or are perplexed about the ethical side of their actions. If a company believes that profits are more important than environmental protection, the decision of its manager to halt a process on account of his concern about its impact on the environment might not be appreciated by the company. It is up to the manager to analyse whether the proposed action would be in terms with the goals of the firm and take a decision accordingly.

Moral or ethical behaviour can neither be legislated nor taught in a vacuum. Authority, it is said, cannot bring about morality. The best way to promote ethical behaviour is by setting a good personal example. Teaching an employee ethics is not always effective. One can explain and define ethics to an adult, but understanding ethics does not necessarily result in behaving ethically. Personal values and ethical behaviour are taught at an early age by parents and educators.

The innate human belief that ethical, moral or good behaviour will find its reward ultimately is deeply ingrained in people psyche. This is demonstrated in stage plays and films where the ‘virtuous’ hero wins over the ‘wicked’ villain. The fact that people would rarely accept the success of evil or unethical forces over the ethical or good ones has been demonstrated time and again by the failure in box office of such plays or films depicting such on unconventional formula.

Ethics are important not only in business but also in all aspects of life because it is an essential part of the foundation on which a civilized society is built. A business, as much as a society, that lacks ethical principles is bound to fail sooner than later.

HONESTY, INTEGRITY AND TRANSPARENCY ARE THE TOUCHSTONES OF BUSINESS ETHICS

Ethical corporate behaviour is nothing but a reiteration of the ancient wisdom that ‘honesty is the best policy’. The dramatic collapse of some of the Fortune 500 companies such as Enron and WorldCom or the well-known auditing firm Andersen showed that even successful companies could ultimately come to grief, if their managers did not practise the basic principles of integrity. For every profession “we would think of a code of conduct or a set of values, which has a moral content and that would be the essence of ethics for that profession”.¹³ There should be transparency in operations leading to accountability, which should ensure safety and protect the interest of all stakeholders.

VALUES AND ETHICS IN BUSINESS

Business ethics are related to issues of ‘what is right’ and ‘what is wrong’ while doing business. The constituents of business ethics include adherence to truth, a commitment to justice and public integrity. What values are to individuals, ethics are to business.

Personal values as we have seen earlier, refer to a conception of what an individual or group regards as desirable. A value is a view of life and judgement of what is desirable that is very much part of a person’s personality and a group’s morale. Thus, a benign attitude to labour welfare is a value which may prompt an industrialist to do much more for workers than what the labour law stipulates. Service-mindedness is a value which when cherished in an organization would manifest in better customer satisfaction. Personal values are imbibed from parents, teachers and elders, and as an individual grows, values are adapted and refined in the light of new knowledge and experiences. Within an organization, values are imparted by the founder-entre-preneur or a dominant chief executive and they remain in some form, even long after that person’s exit.

J.R.D. Tata once said this when asked to define the House of Tatas and what links that forge the Tata companies together: “I would call it a group of individually managed companies united by two factors: First, a feeling that they are part of a larger group which carries the name and prestige of Tatas, and public recognition of honesty and reliability—trustworthiness. The other reason is more metaphysical. There is an innate loyalty, a sharing of certain beliefs. We all feel a certain pride that we are somewhat different from others”.¹⁴ These several values that J.R.D. Tata refers to have been derived from the ideals of the founder of the group, Jamsedji Tata.

Business ethics operate as a system of values relating business goals and techniques to meet specific human ends. This would mean viewing the needs and aspirations of individuals as part of society. It also means realization of the personal dignity of human beings. A major task of leadership is to inculcate personal values and impart a sense of business ethics to the organizational members. At one end, values and ethics shape the corporate culture and dictate the way how politics and power will be used and, at the other end, clarify the social responsibility in the organization.

A typical dilemma faced by people in business is to decide whether to reconcile the pragmatic demands of work which often degenerate to distortion of values and unethical business practices, or to listen to the call of the ‘inner voice’ which somehow prevents them from using unethical means for achieving organizational goals. This dilemma stems from the fact that apparently the value system of the organization has already been contaminated beyond redemption. Some analysts attribute this to the acceptable behaviour in society at a particular point of time or justify it in terms of the rapid transition of a developing society where social mechanisms become obsolete. For instance, many multinational companies (MNCs) in India indulge in some undesirable practices such as resorting to payment of speed money, bribery, use of substandard inputs, evasion of excise duties and corporation taxes, etc., which they would be wary of doing in their home countries because of the stigma and penalty attached to such activities. Besides, the dire need to make a profit in a fiercely competitive environment also makes them indulge in such malpractices.

Corruption in industry, which is a major by-product of degradation of values and ethics, is also related to the inability of industry to stand up to the discretionary powers of a regulatory system designed and administered by an unholy alliance of bureaucrats and politicians. But repeated observations have shown that excellent organizations—besides other values—have explicit belief in, and recognition of the importance of economic growth and profits, and are driven by values rather than avarice. It has been possible for Indian companies such as Infosys, Tata Steel, Asian Paints, Bajaj Auto and Wipro to excel on the basis of super-ordinate goals—a set of values and aspirations and corporate culture. Managers, therefore, have to provide the right values and ethical sense to the organizations they manage.

Take for instance, such issues as consumers being taken for a ride on matters such as warranty, annual maintenance contracts, consumers being asked to pay very high prices for components, discriminating prices, management’s collusion with union leadership, FEMA violations, insider trading, lack of transparency, lack of integrity and unfair presentation of financial statements, feeding top managements only with information they want to hear, window dressing of balance sheets, backdating of contracts, manipulation of profit and loss accounts, hedging and fudging of unexplainable and inordinate expenditures and resorting to suppressio veri, suggestio falsi, and continuous upward revaluation of assets to conceal poor performance, etc. These are only the tips of the iceberg.

VALUES, ETHICS AND BUSINESS STRATEGY

Personal values and ethics are important for all human beings. They are especially important for business managers as they are custodians of the immense economic power vested in business organizations by society. However, can managers prevent their personal values from affecting business strategy formulation and implementation? This is a tricky question.

It is often observed from failed corporations that management executives while working out their business strategy are guided generally by what they personally want to do, rather than what they have been directed to do by the board, or the company policy in the absence of any direct supervision. As a result, somewhere down the line, the right connection between values, ethics and strategy is lost while their managing business. However, it is vitally necessary that business managers should be guided as much by values and ethics as by economic reasons. Guided by this, it can be added that ‘purity of mind’, can come only from having the right connection between values ethics and strategy. It is imperative that executives take business decisions not only on the basis of purely economic reasons but on ethical and moral values as well.

“Using ethical considerations in strategic decision making will result in the development of most effective long-term and short-term strategies. Specifically, ethical criteria must be included as part of the strategic process in before-profit decisions rather than after-profit decisions”.¹⁵ This will enable the company to maximize profits and enhance the development of strategy and its implementation.

DISTINCTION BETWEEN VALUES AND ETHICS

At this point, it is necessary to differentiate between values and ethics. Values are personal in nature (e.g., a belief in providing customer satisfaction and being a good paymaster) while ethics is a generalized value system (e.g., avoiding discrimination in recruitment and adopting fair business practices). Business ethics can provide the general guidelines within which management can operate. Values, however, offer alternatives to choose from. For example, philanthropy as a business policy is optional. An entrepreneur may or may not possess this value and still remain within the limits of business ethics. It is values, therefore, that vary among managers in an organization and such a variance may be a source of conflict at the time of business strategy formulation and implementation.

Managers have to reconcile divergent values and modify values, if necessary. A typical situation of value divergence may arise while setting objectives and determining the precedence of different objectives. One group of managers (may be a coalition) may be interested in production-oriented objectives-standardization, and mass production while another group may stress marketing-related objectives product quality and variety, small-log production, etc. These interests may be legitimate in the sense that they arise from their functional bias. It is for the chief executive to reconcile the divergent values. Obviously, this can best be done in the light of strategic requirements and environmental considerations.

Modification of values is frequently required for business strategy implementation. A particular business strategy, say of expansion, may create value requirements such as stress on efficiency, risk-taking attitude, etc. Implementation may be sub-optimal if existing values do not conform to these requirements. In such cases, modification of values is necessary. But what was said of corporate culture is true for values too: They are difficult, if not impossible, to change. A judicious use of politics and power, redesigning of corporate culture, and making systematic changes in organizations can help to modify values gradually.

ROOTS OF UNETHICAL BEHAVIOUR

People often wonder why employees indulge in unethical practices such as lying, bribery, coercion, conflicting interest, etc. There are certain factors that make the employees think and act in unethical ways. Some of the influencing factors are “pressure to balance work and family, poor communications, poor leadership, long work hours, heavy work load, lack of management support, pressure to meet sales or profit goals, little or no recognition of achievements, company politics, personal financial worries, and insufficient resources.”¹⁶ The statistical data given by Ethics Officers Association in 1997 show how certain practices or factors contribute to unethical behaviour.¹⁷

 

Balancing work and family	52%
Poor leadership	51%
Poor internal communication	51%
Lack of management support	48%
Need to meet goals	46%

 

From the above statistics it is very much evident that conflicting interests lead to most of the unethical practices.

WHY DOES BUSINESS HAVE SUCH A NEGATIVE IMAGE?

The fact that by and large business has a negative image cannot be overstressed. Books, journals, movies and TV shows invariably depict business in bad light. Even though businessmen may not want to be unethical, factors such as competitive pressures, individual greed, and differing cultural contexts generate ethical issues for organizational managers. “Further, in almost every organisation some people will have the inclination to behave unethically (the ethical egoist) necessitating systems to ensure that such behaviour is either stopped or detected and remedied.”¹⁸

WHY SHOULD BUSINESSES ACT ETHICALLY?

An organization has to be ethical in its behaviour because it has to exist in the competitive world. We can find a number of reasons for being ethical in behaviour, few of them are cited below: Most people want to be ethical in their business dealings. Values give management credibility with its employees. Only perceived moral righteousness and social concern brings employee respect. Values help better decision making.

There are a number of reasons why businesses should act ethically:

• to protect its own interest;
• to protect the interests of the business community as a whole so that the public will have trust in it;
• to keep its commitment to society to act ethically;
• to meet stakeholder expectations;
• to prevent harm to the general public;
• to build trust with key stakeholder groups;
• to protect themselves from abuse of unethical employees and competitors;
• to protect their own reputations;
• to protect their own employees; and
• to create an environment in which workers can act in ways consistent with their values.

Besides, if a corporation reneges on its agreement and expects others to keep theirs, it will be unfair. It will also be inconsistent on its part, if business agrees to a set of rules to govern behaviour and then to unilaterally violate those rules. Moreover, to agree to a condition where business and businessmen tend to break the rules and also get away with it is to undermine the environment necessary for running the business.

Hard decisions which have been studied from both an ethical and an economic angle are more difficult to make, but they will stand up against all odds, because the good of the employees, public interest, and the company’s own long-term interest and those of all stakeholders would have been taken into account.

Ethics within organizations is a must. It should be initiated by the top management, and percolate to the bottom of the hierarchy. Then alone, will the company be viewed as ethical by the business community and the society at large. “Further, a well-communicated commitment to ethics sends a powerful message that ethical behaviour is considered to be a business imperative.”¹⁹ If the company needs to make profit and to have a good reputation, it must act within the confines of ethics. Ethical communication within the organization would be a healthy sign that the company is marching towards the right path. Internalization of ethics by the employees is of utmost importance. If the employer has properly internalized ethics, then the activities that individuals or organizations carry out will have ethics in them.

ETHICAL DECISION MAKING

Ethical decision making is a very tough prospect in this dog-eat-dog world. However, in the long run all will have to fall in and play fair. The clock is already ticking for the unscrupulous corporations. In this age of liberalization and globalization, the old dirty games and unethical conduct will no longer be accepted and tolerated.

Norman Vincent Peale and Kenneth Blanchard²⁰ have prescribed some suggestions to conduct ethical business.

• Is the decision you are taking legal? If it is not legal, it is not ethical.
• Is the decision you are taking fair? In other words, it should be a win-win-equitable risk and reward.
• The Eleventh Commandment—‘Thou shall not be ashamed when found’, meaning when you are hauled up over some seemingly unethical behaviour, if one’s conscience is clear, then there is nothing to be ashamed of.

HOW CORPORATIONS OBSERVE ETHICS IN THEIR ORGANIZATIONS?

Organizations have started to implement ethical behaviour by publishing in-house codes of ethics which are to be strictly followed by all their associates. They have started to employ people with a reputation for high standards of ethical behaviour at the top levels. They have started to incorporate consideration of ethics into performance reviews. Corporations which wish to popularize good ethical conduct have started to reward ethical behaviour. Codes promulgated by corporations and regulatory bodies continue to multiply. Some MNCs like Nike, Coca Cola, GM and IBM, and Indian companies like ICICI, TISCO, Infosys, Dr Reddy’s Lab, NTPC, ONGC, Indian Oil and several others want to be seen as ‘socially responsible’ and have issued codes governing all types of activities of their employees. Securities and Exchange Board of India (SEBI), the Indian capital market regulator, Confederation of Indian Industries (CII) and such organizations representing corporations have issued codes of best practices and enjoin their members to observe them. These normative statements make it clear that corporate leaders anxious for business growth should not make plans without looking at the faces and lives of those oppressed by poverty and injustice. In fact, today, managers and would-be entrepreneurs are groomed to be ethical and socially responsible even while being educated. The Indian Institutes of Management (IIMs) and highly rated B-schools like Xavier Labour Relations Institute (XLRI) and Loyola Institute of Business Administration (LIBA), have courses in their curriculum and give extensive and intensive instruction in business ethics, corporate social responsibility and corporate governance. Many corporations conduct an Ethics Audit and at the same time, they are continuously looking for more ways to be more ethical.

CHANGING BUSINESS ENVIRONMENT AND ETHICAL CHALLENGES

Companies these days respond to the changing business environment by adopting new and effective tools to communicate their ethical culture. The fast-changing external environment of business necessitates positive changes in the response of individual organizations. The change that is created by information and technological explosion is such that organizations cannot resist change any more. With these changes, several ethical issues have to be faced and solved to the satisfaction of all stakeholders. Due to the increasing shift in business growth, most of the organizations tend to give more powers to those at the lower levels of hierarchy leading to decentralization of powers and decision making. The process of decentralization leads to a number of ethical issues in the organization. Conflicting goals of the individual and of the organization are the root cause of several unethical practices. Such strategic alliances have brought about complex and hitherto unknown ethical conflicts and have caused newer situations to emerge and challenge ethical decisions. With the huge increase in the availability of information coming from all sources such as partners, competitors and buyers, the possibility of unlawful and even illegal use of proprietary information is indeed enormous. When such conflicts of interest arise, companies have to solve them through ethical practices alone, as otherwise they will not in the long-run be able to survive in the modern fiercely competitive world.

The ethical implications of a firm’s behaviour in a fast changing business environment were considered by McCoy²¹ who thinks ethics to be the core of business behaviour. He states: “Dealing with values requires continual monitoring of the surrounding environment, weighing alternative courses of action, balancing and (when possible) integrating conflicting responsibilities, setting priorities among competing goals, and establishing criteria for defining and evaluating performance.” Apart from these, there are learning ways that bring this ethical reflection directly and fully into the policy-making processes. Increasingly, value-based skills are being recognized as integral components of performance and policy making and as central for effective management in a society and a world undergoing rapid change.

CORPORATE GOVERNANCE ETHICS

Though the concept of corporate governance may sound a novelty in the Indian business context and may be linked to the era of liberalization, it should not be ignored that the ancient Indian texts are the true originators of good business governance as one important sloka from the Rigveda says, “A businessman should benefit from business like a honey-bee which suckles honey from the flower without affecting its charm and beauty.”²²

Business ethics and corporate governance of an organization go hand in hand. In fact, an organization that follows ethical practices in all its activities will, in all probability, follow best corporate governance practices as well.

The Phoenix School of Management²³defines corporate governance “as a set of policies and procedures that the company’s directors employ in their conduct of the company’s affairs and their relationship with shareholders to whom they are responsible as managers”. The OECD, KPMG and the World Bank conceptualize corporate governance as an entire system with well-defined codes, rules and structures in order to direct and control business and non-business organizations.

There are some others who define corporate governance as the guiding principle that on one hand tries to synthesize the seemingly conflicting goals among the individual, the corporation and the community, and on the other, between the immediate benefits to the corporation such as profits and the secular “and lasting substantive social gains”.²⁴ But more commonly, corporate governance is understood as a set of rules that govern the administration and management of companies. It is considered as “an entire system with codes, values, rules and structures to control the goals and goal performance of companies; and also as a method by which to evaluate the working of an organisation in terms of how rights of various parties are defined and distributed”.²⁵ In all these facets of corporate governance the underlying goalposts are transparency, integrity, full disclosure of financial and non-financial information, protection of stakeholders’ interests. These tenets are as much ethical practice as they are part of corporate governance.

As a public company, it is of critical importance that company’s filings with the regulators are accurate and timely. The CEO and the senior leadership of the finance department bear a special responsibility for promoting integrity throughout the organization, with responsibilities to stakeholders, both inside and outside of the company. A company, well governed in every aspect of internationally accepted corporate governance norms would put in place the following ethical practices²⁶:

1. Act with honesty and integrity, avoiding actual or apparent conflict of interest in personal and professional relationships;
2. Provide information that is accurate, complete, objective, relevant, timely and understandable to ensure full, fair, accurate, timely, understandable disclosure in reports and documents that companies file with, or submit to the regulators;
3. Comply with the laws of the land, rules and regulations set forth by the different layers of governments and those of the regulatory bodies concerned with your business.
4. Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing one’s independent judgement to be subordinated;
5. Protect the confidentiality of the information provided at the workplace and not disclose it to anyone unless authorized or legally bound to do so.
6. Ensure confidential information made available in the place of work is not used to promote personal benefit.
7. Share knowledge and maintain skills important and relevant to stakeholders’ needs. “Proactively promote and be an example of ethical behaviour as a responsible partner among peers, in the work environment and the community”; and
8. Achieve responsible use of and control over all assets and resources employed or entrusted.

HOW ETHICS CAN MAKE CORPORATE GOVERNANCE MORE MEANINGFUL?

1. Corporate governance is meant to run companies ethically in a manner such that all stakeholders—creditors, distributors, customers, employees, and even competitors, the society at large and governments—are dealt with in a fair manner.
2. Good corporate governance should look at all stakeholders and not just shareholders alone. Otherwise, a chemical company, for example, can maximize the profit of shareholders, but completely violate all environment laws and make it impossible for the people around the area even to lead a normal life. Ship-breaking at Valinokkam, near Arantangi in Tamil Nadu, leather tanneries and hosiery units in Tirupur, have brought about too much of environmental degradation, and along with it untold miseries to people in and around their locations.
3. Corporate governance is not something which regulators have to impose on a management, it should come from within. There is no point in making statutory provisions for enforcing ethical conduct. There had been dozens of violations of SEBI rules, RBI guidelines, etc. when company managements were not inclined to follow them. On the other hand, there had also been several instances where companies had gone beyond these rules to serve stakeholders since the top management preferred them that way.
4. There are several provisions in the Companies Act, e.g., (i) disclosing the interest of directors in contracts in which they are interested; (ii) abstaining from exercising voting rights in matters they are interested and (iii) statutory protection to auditors who are supposed to go into the details of the financial management of the company and report the same to the shareholders of the company. But most of these may be observed in letter, not in spirit. Members of the board and top management should ensure that these are followed both in letter and in spirit.
5. There are a number of grey areas where the law is silent or where the regulatory framework is weak. These are manipulated by unscrupulous persons like Ketan Parekh and Harshad Mehta. In the United States, for instance, the courts recognize that new forms of fraud may arise, which may not be covered technically under any existing law and cannot be interpreted as violating any of the existing laws. For example, a clever conman can try to sell a piece of the blue sky. In order to check such crooks, there is the concept of the ‘blue sky’ law. However, such wide-ranging processes are not available to courts in developing countries like India.
6. SEBI has jurisdiction only in cases of limited and listed companies and is concerned only with their protection. What about the shareholders and stakeholders of other unlisted limited companies that far outnumber listed companies?
7. The Serious Fraud Investigation Office (SIFO) in the Department of Company Affairs (DCA) has been investigating several ‘vanishing companies’. By 2003, SEBI had identified 229 ‘vanishing companies’—which tapped the capital market, collected funds from the public and subsequently became un-traceable. However, thousands of investors have lost their hard-earned money and no agency has come to their rescue so far.

A business organization has to compete for a share in the global market on its own internal strength, in particular on the strength of its human resource, and on the goodwill of its other stakeholders. While its state-of-the-art technologies and high level managerial competencies could be of help in meeting the quality, cost, volume, speed and breakeven requirements of the highly competitive global market, it is the value-based management and ethics that the organization has to use in its governance. That would enable the organization to establish productive relationship with its internal customers and lasting business relationship with its external customers.

BENEFITS FROM MANAGING ETHICS IN WORKPLACE

Several benefits accrue to an enterprise if it is managed ethically. They are the following:

Attention to Business Ethics Has Substantially Improved Society

Establishment of anti-trust laws, unions, and other regulatory bodies has contributed to the development of society. There was a time when discriminations and exploitation of employees were high, the fight for equality and fairness at workplace ended up in establishing certain laws which benefited the society.

Ethical Practice Has Contributed Towards High Productivity and Strong Team Work

Organizations being a collection of individuals, the values reflected will be different from that of the organization. Constant check and dialogue will ensure that the value of the employee matches the values of the organization. This will in turn result in better cooperation and increased productivity.

Changing Situations Requires Ethical Education

During turbulent times, when chaos becomes the order of the day, one must have clear ethical guidelines to take right decisions. Ethical training will be of great help in those situations. Such training will enable managers manning corporations to anticipate situations and equip themselves to face them squarely.

Ethical Practices Create Strong Public Image

Organizations with strong ethical practices will possess a strong image among the public. This image would lead to strong and continued loyalty of employees, consumers and the general public. Conscious implementation of ethics in organizations becomes the cornerstone for the success and image of the organization. It is because of this ethical perception that the employees of TISCO and the general public protested in 1977 when the then Minister for Industries in the Janata Government, George Fernandes, attempted to nationalize the company.

Strong Ethical Practices Act as an Insurance

Strong ethical practices of the organization are an added advantage for the future function of the business. In the long run, it would benefit if the organization is equipped to withstand the competition.

CHARACTERISTICS OF AN ETHICAL ORGANIZATION

Mark Pastin²⁷ in his work, The Hard Problems of Management: Gaining the Ethical Edge provides the following characteristics of ethical organizations:

1. They are at ease interacting with diverse internal and external stakeholder groups. The ground rules of these firms make the good of these stakeholder groups part of the organization’s own good.
2. They are obsessed with fairness. Their ground rules emphasize that the other persons’ interests count as much as their own.
3. Responsibility is individual rather than collective, with individuals assuming personal responsibility for actions of the organization. These organizations’ ground rules mandate that individuals are responsible to themselves.
4. They see their activities in terms of purpose. This purpose is a way of operating that members of the organization highly value. And purpose ties the organization to its environment.

There will be clear communications in ethical organizations. Minimized bureaucracy and control paves way for sound ethical practices.

RECOGNIZING ETHICAL ORGANIZATIONS

There are certain characteristics by which we will able to identify an ethical organization.

On the Basis of Corporate Excellence

Corporate excellence mainly centers on the corporate culture. Values and practice of such values constitute the corporate culture. Values of the organization give a clear direction to the employee. Values are found in the mission statement of the organizations. Often they remain as a principle and are never put into practice. Only the practised value creates the organization culture. When values act in tune with the goals of the organization we call it as the corporate culture of that organization. Often we see conflicting interests between the value and the organizations’ goal. Organizations must eradicate such impediments to be identified as ethical.

In Relation to the Stakeholders

Meeting the needs of stakeholders through the activities of the managers determines whether the organization is ethical or not. The top management is the representation of the stakeholders and every decision taken must satisfy the needs of the stakeholder. It need not be stressed here that it was the stakeholders’ pressure that has been instrumental in bringing ethical issues into the centre-stage of corporate agenda. Consumers in most developed societies want corporations to demonstrate ethical responsibility in every area of their functioning and in their treatment of employees, the community, the environment, etc.

Companies have been prompted to change their way of thinking and working so that ethical issues and corporate responsibility become an integral part of their business. The management while taking decisions must see that the stakeholders enjoy the maximum benefit of that decision. For example, Marico, the makers of Parachute Oil, discovered a harmless tint in the oil from one of its production lines. The company withdrew the batch from the market, shut down the production line, but kept the workers on payroll and involved them in the investigation of the cause. Shortly, the workers located the cause, rectified it and resumed normal production.

In Relation to Corporate Governance

Managers are only stewards of the owners of the corporate assets. Thus they are accountable for the use of the assets to the owners. If they perform well in the prescribed manner, then there would not be much question of corporate governance. Such behaviour of the top managers would generate ethical practices or at least would encourage ethical practices in the organization. If only the top management is paid as per their performance, this approach would work.

 

SUMMARY

Ethics involves systemizing, defending and recommending concepts of right and wrong behaviour. It is important to clarify what is not ethics. Ethics is different from religion since it applies to all people irrespective of their religious affiliations. Ethics is not synonymous with law. Ethical standards are different from cultural traits. Ethics is also different from feelings. And strictly speaking, ethics is not a science.

While personal ethics refers to the application of desirable values in everything one does, business ethics is the application of ethical principles of integrity and fairness, and concentrates on the benefits to all stakeholders. Business managers should have integrity, impartibility, responsiveness to public interest, accountability, and honesty.

Prior to 1960, ethics was part of theological discussions. Later on writers like Raymond Baumhart, Richard T. De George, Thomas Donaldson, Patricia Werhane, Vincent Berry, and Manuel G. Velasquez contributed their mite to the growth of the subject. Along with academic pursuits, the Church, B-schools and consumer movement also added to the development of business ethics.

In today’s world, business of business is ethical business. With the globalization of business, monopolistic market condition or State patronage for any business organization has become a thing of the past. A business organization has to compete for a share in the global market on its own internal strength, in particular on the strength of its human resource, and on the goodwill of its stakeholders. While its state-of-the-art technologies and high-level managerial competencies of an organization could be of help in meeting the quality, cost, volume, speed and breakeven requirements of the highly competitive global market, it is the value-based management and ethics in its governance that would enable it to establish productive relationship with its internal customers and lasting business relationship with its external customers. Real-type situations show that use of ethical practices in business creates high returns for companies, for example, Tata Steel and Infosys. Besides, running business ethically is good for sustaining business.

To exist and be successful in a competitive world, business has to be ethical. Moral or ethical behaviour should come from within and should be driven by examples of the top management. Managers have to reconcile divergent values and modify them if necessary. Organizations should work on synergy and delegation which will bring all round progress. Nowadays, companies adopt innovative tools to communicate their ethical culture as a response to the changing business environment. These changes bring in new issues and problems.

Several benefits accrue to a firm if it follows ethical practices: it improves society, enhances productivity and team work, provides cause for ethical education, creates strong public image and insures against any pitfalls the firm may face.

An ethical organization can be recognized on the basis of its corporate excellence and its relation to the stakeholders it follows: corporate governance, a set of rules that govern the administration and management of companies. Its goalposts are transparency, integrity, full disclosure of financial and non-financial information, and protection of stakeholders’ interests. These tenets are as much ethical practice as they are part of corporate governance. It is for these reasons that value-based management and practice of ethics have become imperatives in corporate governance now, and in the foreseeable future. If values are the bedrock of any corporate culture, ethics are the foundation of authentic business relationships.

KEY WORDS

Ethikos • Moral values • Consumer pressure • Regulatory pressure • Applied ethics • Empirical sciences • Personal ethics • Professional ethics • Reasons of conscience • Social need of non-injury • Synonymous with law • Mercenary • Touchstones • Collection of values • Sustaining business • Subterfuge • Values and ethics • Strategy • Unethical behaviour • Negative image • Ethical challenges • Corporate governance • Listed companies • Ethical organization • Conflicts of interest • Insider trading • Credibility.

DISCUSSSION QUESTIONS

1. What is business ethics? Describe its nature. Is business ethics a necessity?
2. What are the major ethical issues that business faces today? Discuss them with suitable examples.
3. Explain what business ethics is, and what it is not.
4. What is the importance of ethics in business? Give suitable examples.
5. Explain the role of values in the making of business ethics. How these can be incorporated in working out business strategy?
6. What is corporate governance? How can ethics make corporate governance more meaningful?
7. What benefits accrue to business if ethics is made part of its strategy?
8. How would you recognize an ethical organization? What are its characteristics?

FURTHER READINGS

1. Christopher Cowton and Roger Crisp, Business Ethics: Perspective on the Practice Theory (New York, NY: Oxford University Press), p. 9.

2. Thomas Donaldson, “Values in Tension: Ethics Away from Home,” Harvard Business Review (September–October 1996).

3. Robert F. Drinan, “Globalisation and Corporate Ethics,” 10th J.R.D. Tata Oration on Ethics in Business, Jamshedpur: XLRI, 21 December 2007.

4. O. C. Ferrel, John Paul Fraedrich, and Linda Ferrel, Business Ethics: Ethical Decision Making and Cases, 6th ed. (New Delhi: Bizantra, 2006).

5. David J. Fritzsche, Business Ethics: A Global and Managerial Perspective (Singapore: McGraw-Hill, 1997).

6. India Less Corrupt Than in 2005: Transparency, Deccan Chronicle, Chennai, 7 November 2006.

7. R. M. Lala, “The Business Ethics of J.R.D. Tata,” The Hindu, 29 July 2004.

8. Zubin Mulla, “Corporates in India Cannot Afford to Be Ethical,” Management and Labour Studies (February 2003) 28 (1).

9. Rituparna Raj, A Study in Business Ethics (Bombay, Himalaya Publishing House, 1999), p. 3.

10. Joseph W. Weiss, Business Ethics: A Stakeholder and Issues Management Approach (Orlando, FL: Harcourt Brace College Publishers, 1988), p. 7.

Case Study
INFOSYS TECHNOLOGIES—THE BEST AMONG INDIAN CORPORATIONS

(This case study is based on reports in the print and electronic media, and is meant for academic purpose only. The author has no intention to sully the image either of the corporate or the executives discussed herein.)

HUMBLE BEGINNING AND SPECTACULAR GROWTH

Infosys Technologies is India’s most popular and best managed IT company with its global headquarters at Bangalore, now named Bengaluru. It was founded in 1981 by N.R. Narayana Murthy and six of his colleagues in Bombay in a single room of Murthy’s house with a paltry sum of Rs 10,000/- as capital. It has today, a global presence of 32 sales offices in 16 countries, 33 global software development centres and one business continuity centre.

INFOSYS’ VISION AND MESSAGE

Infosys’ Vision is “To be a globally respected corporation that provides best-of-breed business solutions, leveraging technology, delivered by best-in-class people”. Its Mission is “To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large”. Infosys has set standards in every business activity—best campus, best working environment, best employer, most transparent dealings, highest quality standards—as well as the highest ethical standards, never seeking any deviant benefits from the government.

The most telling message that Infosys gives out to any discerning observer is its motto: Powered by Intellect and Driven by Values. These two phrases put together, stand for everything that Infosys is, and wants to be. It is a combination of the business acumen and the deep commitment to ethical values.

Powered by Intellect: Infosys plans to take a lead in leveraging the global delivery model (GDM), pioneered and perfected by it, to help clients derive maximum strategic advantage. In the next growth phase, Infosys would focus on customer-centricity, meeting shareholder expectations and building a multicultura workforce—a seamlessly integrated team of talented, global professionals.

Driven by Values: Infosys is an ethical organization whose value system ensures fairness, honesty, transparency, and courtesy to all its constituents and society at large.

Infosys Technologies strives to be the best company both commercially and ethically not only in India but also globally To realize this objective, the company has developed C-Life Principle of core values that it puts into practice in all aspects of its business activities.¹

Customer Delight: A commitment to surpassing customer expectations.

Leadership by Example: A commitment to set standards in the business and transactions, and be an exemplar for the industry and their own teams.

Integrity and Transparency: A commitment to be ethical, sincere and open in their dealings.

Fairness: A commitment to be objective and transaction-oriented, thereby earning trust and respect.

Pursuit of Excellence: A commitment to strive relentlessly, tc constantly improve themselves, their teams, services and products so as to become the best.

Infosys has also developed a strong management system to guarantee at all times to all its stakeholders a set of procedures that would serve them. For example, there was a much publicized sexual harassment case against one of its top managers in the United States that was settled out of court. Bu this unsavoury situation has led the company to review anc improve its staff training to create an awareness of such problems and to introduce a code of conduct for employees with i view to encourage them to follow certain work ethics in thei places of work.

Even while Infosys is committed to long-term shareholdei value, its business activities are anchored in three pillars of corporate behaviour, namely, business ethics, corporate governance and corporate social responsibility. The Infosys fraternity recognizes, understands and appreciates these principles. As a result, Infosys demonstrates an exceptional work ethic.

INDIA’S MOST ADMIRED COMPANY

Infosys Technologies is widely known for its best practices in terms of business ethics and corporate governance. In 2000, the company was conferred the National Award for Excellence in Corporate Governance by the Government of India. The Business World-IMRB Survey ranked Infosys number one among the most respected companies in India, in 2001. It was voted as India’s best managed company for six years in a row, between 1996 and 2001 by the Asia Money Poll. In the year 2000, in the survey of Far Eastern Economic Review, Infosys was selected as one of Asia’s leading corporations and was ranked first as ‘The Company That Others Try to Emulate’. The company was voted ‘India’s Most Admired Company’ in Economic Times in 2000. In 2003, Infosys Technologies cofounder and chairman, N.R Narayana Murthy, won the Ernst & Young World Entrepreneur of the Year award; judges of the award praised his “intellectually, philosophically, ethically and spiritually driven entrepreneurship” and his company’s “outstanding financial performance and global impact in a dynamic and volatile industry”. Infosys Technologies has won the prestigious ‘Global Most-Admired Knowledge Enterprises (MAKE)’ Award, for 2004. Infosys won the award for the second time in a row, and remains the only Indian company to have ever been named a prestigious global most-admired knowledge enterprise.

Infosys Technologies made a winning sweep in the Business World ‘Most Respected Companies’ Award 2004. The company remained ‘India’s most respected company’ since 2001; it topped the special categories of ‘Most Ethical and Most Globally Competitive’ companies and the ‘Most Respected Company in the IT Sector’ category, topping all 19 parameters of the survey. The latest Business Today-A.T. Kearney study conducted in March 2005 placed Infosys Technologies as “India’s Best Managed Company”. Such encomiums have been pouring in for Infosys, year after year.

Infosys Technologies featured among the world’s most respected companies, having climbed in the ‘respect’ ranking since last year. It was also recognized in a number of other categories including corporate governance, creation of shareholder value, corporate social responsibility and innovation.

A PEOPLE-CENTRIC COMPANY

Infosys excels in people management. While its employee strength has skyrocketed to over 35,000 from around 5,000 at the turn of the century, the intense focus on people and their skills has only increased over the years. Infosys’ focus on people is a natural corollary of its growing business, with customers identifying this as a quality that often distinguishes it from other competitors in the IT services sector. As Infosys seeks to transform itself into a global enterprise, it has learnt that its employees have to be the best, not just in India, but in the globe. While the selection is stringent, in 2003–2004, it recruited 10,000 people from over a million applicants, training will keep it ahead of the increasing competition.

BUSINESS DESCRIPTION

The company’s services include business consulting, custom software development, maintenance and re-engineering services, systems integration, IT infrastructure management and business process outsourcing. Infosys is today the second largest publicly traded software services exporter providing specialist IT services to around 350 corporations such as GE, Airbus, Cisco and Nortel, predominantly in the United States. It was the first Indian company to be listed on the NASDAQ exchange in 1999, when their stock value soared.

FINANCIALS OF INFOSYS

Raising the bar a couple of notches higher, Infosys reported a scorching 53 per cent increase in net profit for its second quarter ended September 30, 2006 at Rs 9,290 million, compared to Rs 6,060 million during the corresponding quarter of the previous fiscal. Driven by strong volume growth, the top line too has moved up 50.4 per cent to Rs 34,510 million for the quarter.

The second largest software exporter from India, given the buoyant off-shoring trend in the global markets, Infosys crossed the $3 billion mark during financial year 2007. “It took us 23 years to do the first billion; it took us 23 months to do the second billion; and in effect, we have gone from $2 billion to $3 billion in one year”,² said a confident Nandan M Nilekani, CEO & MD, Infosys.

Sequentially, net profit moved up by 16.1 per cent while income recorded a strong 14.5 per cent growth. On a half-yearly basis, net profit sizzled up by 52.1 per cent while income surged by 48.1 per cent.

The compelling value proposition offered to clients by Infosys’ global delivery business model prompted Nilekani to dismiss any signs of slack even as global IT behemoths kept increasing their Indian play. “Our robust organic growth coupled with investments in various strategic areas helped us to grow faster,”³ he said.

Infosys added 45 new clients while simultaneously it added a record 10,975 employees during the quarter. The company which is going in for its third sponsored American Depository Shares (ADS) issue of 30 million shares expected to be valued at around $1 billion, also said that at the current juncture, they do not see any evidence of global slowdown.

INFOSYS’ BUSINESS STRATEGY

Like its peers in the upper reaches of India’s IT service industry, Infosys faces the challenges of, all at once, inducting and orienting a large number of employees, ensuring that the Infosys way, a process-driven way of working, does not change, and distilling knowledge from all the projects it has completed or from the work in progress. The company, which currently has around 36,000 employees on its rolls, has addressed these challenges through what it terms Pride (Process Repository @ Infosys for Driving Excellence), an online resource that segues into the company’s fancied knowledge management system termed Kshop (Knowledge Shop) at one end, and the actual development environment at another.

RAPID WEALTH AND VALUE CREATION THROUGH DIVERSIFIED BUSINESS

Building a $2-billion company has not been achieved by just being good to employees. While it was initially just a plain IT services company, Infosys has stepped up its offerings over the past few years at both ends of the spectrum and is increasingly managing to string its various pieces together. Thus, Infosys Consulting, which the company started off in April 2004 with a $20-million investment became a 500-employee unit by 2007 and Progeon, its business process management subsidiary, already boasts of over 3,400 employees.

The company’s extended capabilities are reflected in growing engagements with customers across industries. In many cases, Infosys began with conventional IT maintenance work in 2000, but rapidly stepped up its partnership to encompass many other areas such as business process consulting, software process consulting, application development and support, enterprise architecture services, and technical training as in the case of Hannaford Brothers, a European retailer. The creation of a US-based consulting company is a major step forward in Infosys’ long-term strategy of presenting itself as a global service provider. Infosys’ $20-million investment in this subsidiary is designed to send a clear signal to the marketplace that it is being totally different from its Indian competitors, and that it intends to compete for business consulting services with the traditional consultancies.

Infosys relies on its much-touted Global Delivery Model (GDM), which is based on much more than cheap manpower, to push its case as a preferred vendor. Yet, it is apparent that the competition is intense, with companies like IBM, having recently discovered GDM pushing ahead with their newfound wisdom. The key to GDM is the focus on getting the best talent, wherever it is located, and using that to address the customer’s needs.

One of Infosys’ key strengths has been its ability to add new business offering and mould itself to suit changing market requirements. It has added services such as independent software testing and enterprise applications to its offerings. It has also reorganized itself along verticals or industries compared to the geography-specific orientation it conformed to earlier. And most of the company’s growth has been organic, barring the odd buy like its acquisition of Expert Information Systems, which it morphed into Infosys Australia.

Infosys is also looking to diversify its risk over geographies and is exploring the possiblity of finding customers in emerging markets for its large array of services. For instance there has been a drop in its American clientele from 75 per cent to 65 per cent.⁴

INFOSYS’ KEY TO SUCCESS

Infosys survived the global downturn in IT spending during the years of recession between 2001 and 2004, managing to actually grow by focusing on providing services to companies that desired to update their existing systems, undertaking more work for current clients, launching an aggressive marketing campaign overseas, adding new clients and cutting costs wherever possible.

Infosys’ attributes its success to investing heavily in its employees, leading the market by focusing on cutting-edge technology, and applying strict ethical business practices. Infosys’ success in the highly competitive IT industry lies in its

• giving employees a world-class environment to work and learn;
• giving employees a high quality of life and wealth creation opportunities;
• looking at potential employees’ ability to learn and assimilate technical knowledge and skills;
• replacing obsolete technology regularly to remain at the cutting edge;
• emphasizing constantly on quality by benchmarking against the best processes in the world;
• diversifying income sources to minimize risk of revenue, that is, setting limit to contributions from one client, one technology, one industry; and
• complying with accounting standards of advanced countries and ensuring strictest adherence to corporate governance.

BUSINESS ETHICS AT INFOSYS

Infosys Technologies has unveiled a Code of Ethics for its finance professionals and a whistleblower’s policy to encourage and protect employees willing to share information on frauds, but who choose to remain anonymous. Though the Indian law has not imposed it on companies as yet, Infosys chose to apply this code because it believes it should raise the bar for compliance.

The Code of Ethics for its finance professionals states, “We consider honest conduct to be conduct that is free from fraud or deception and marked with integrity. We consider ethical conduct to be conduct conforming to accepted professional standards of conduct. Ethical conduct includes the ethical handling of actual or apparent conflicts of interest between personal and professional relationships.”⁵ By expecting the highest standards of honesty and ethical conduct, we expect our officers to stay far from the line differentiating honesty from dishonesty and ethical conduct from unethical conduct”.⁶

The Code of Business Conduct and Ethics helps the company ensure compliance with legal requirements and the company’s standards of business conduct. The code deals with aspects of employees’ responsibilities to the company and its stockholders, which includes General Standards of Conduct (covering workplace harassment, drug and alcohol abuse, safety in workplace, dress code and other personal standards, expense claims and applicable laws.

The whistleblower’s policy encourages employees to report questionable accounting matters, any reporting of fraudulent financial information to shareholders, the government or the financial markets or any conduct that results in a violation of law by Infosys to the management even if it is on an anonymous basis. It sets out norms for receiving, retaining and treating complaints and procedures for confidential, anonymous submission by employees, of complaints with regard to accounting frauds that lead to a violation of laws or mismanagement of company resources.

In terms of ethical behaviour, Infosys has an unwavering commitment to best global practices and has been driven by its vision to become a global player. It was one of the first Indian public companies to adopt voluntarily the stringent US GAAP (Generally Accepted Accounting Principles), at a time when many other organizations were only toying with the idea of implementing it in their companies.

The culture of ethical behaviour in the organization emanates from the top and percolates down to the managerial and employees’ level, for the foundations of such system are made to rest on ethical value system. The founders of the company took only salaries and dividends and had no other benefits from the company unlike founders of other companies. In following these principles of observation and preservation of ethical standards in his company, N.R. Narayana Murthy ‘has known the way, shown the way, and gone the way.’ In order to create an ethical working environment, the initiative must be supported by, or better still, come from, the top management and leaders in the organization. The steps in doing the same include:

• making the decision to commit to ethics;
• recognizing that they are the role models by definition, by action, and by values;
• assuming responsibility for instilling ethical behaviour;
• articulating their values;
• train the staff;
• encouraging open communication; and
• being consistent in their approach.

It is only by doing all of the above on a continuous basis, can they ensure the permeation of their ideals throughout the organizational layers, and deep-rooted understanding and following of these ideals by employees. Narayana Murthy and the other leaders at Infosys have taken this to heart and make it a point to express the company’s ideals at every opportunity, to fellow-Infoscions as well as to the society in general.

CORPORATE GOVERNANCE AT INFOSYS

Infosys, beginning as a modest software consultancy firm in 1981, has become over the years, a large public company that conforms to internationally benchmarked standards of corporate governance. Admiration for Infosys both from within and outside the business community comes from its strong focus on corporate governance. It has been rated highly in several corporate governance reports, including one by the rating agency CLSA, which has given it a high CG Star grade.

Infosys has set new and effective standards in communicating with shareholders, stock exchanges, and the general public. Its annual report is said to be a trend-setter with respect to the disclosure norms evidenced by the sheer length and detail of the report. Its annual report has been commended as an ideal report by the Securities and Exchange Commission of the United States of America to be emulated by American companies. Infosys has demonstrated through its practices and procedures its commitment to enhance investor relations and has amply rewarded its shareholders through its impressive performance by increasing shareholder value. In fact, the company pursues a value-based management methodology wherein it measures the company’s performance on the basis of various tools and techniques such as brand value, economic value added, intangible asset scorecard, balance sheet including intangible assets, current-cost-adjusted financial statements and human resources accounting and value-added statements. It continuously strives to improve itself on all these parameters.

Infosys has started implementing best international governance practices even while the concept was getting crystallized, after the recommendations of the Cadbury Committee and the Confederation of Indian Industry’s Code. The Kumar Mangalam Birla Committee Report on Corporate Governance, 1999 summarized the overall objective of the concept thus: “The fundamental objective of corporate governance is the enhancement of long-term shareholder value while, at the same time, protecting the interests of other stakeholders”.⁷ Infosys has adopted these ideals as an article of faith and observes it to the minutest details. While Infosys has complied with most of the recommendations made by the CII and those of the Kumar Mangalam Birla Committee on Corporate Governance, it was also the pioneer in benchmarking its policies with the best in the world. If best Corporate Governance practices are to be implemented in an organization, it has to be done in a manner so as to ensure (i) an independent and proactive board; (ii) independent committees to decide executive compensation and for nomination and audit purposes; and (iii) an independent audit system. Infosys has put in place all these governance practices and has seen to their yielding fruitful results for the overall welfare of all stakeholders.

One of the prerequisites of an Independent Board is to have a clear demarcation of responsibilities and authority between the Chairman of the Board and the Senior Officers of the management such as the CEO, Managing Director, President and the Chief Operating Officer (COO). Infosys has achieved this separation between the board and management long back. The CEO is responsible for corporate strategy, brand equity, planning, external contacts, acquisitions, and board matters. The COO is responsible for all day-to-day operational issues and achievement of the annual targets in client satisfaction, sales, profits, quality, productivity, employee empowerment and employee retention. The CEO, COO, executive directors and the other senior management personnel make periodic presentations to the board on their targets, responsibilities and performance.

Another important criterion suggested by various committees to ensure best global practices in Indian companies is to have an appropriate mix of executive and non-executive directors to maintain the independence of the board. To separate the board functions of governance and the management, Infosys has 8 executive directors and 8 non-executive directors, out of the 16 directors on its board. While the executive directors bring to the board their expertise and experience in managing the day-to-day affairs of the company and the problems and issues involved in decision making, the non-executive directors bring in international professionalism to corporate boards. The board members are known to possess expertise in skills, technology, finance, human resources and business strategy, all of which are essential to manage and guide a high profile, high growth, high-tech, global software company. The directors at Infosys belong to the productive age group between 40 and 55 years, and serve the board actively. They are not related to any senior manager or board members so as to be bereft of any influence. The board members are expected to attend and participate in all board meetings and also in the meetings of the committees to which they belong. While the executive directors are not allowed to serve on the board of any other company—unless it is an industry association or government body relevant to the software industry or one whose objective is promotion of social welfare—nonexecutive directors are not expected to serve on boards of competitor companies. Board meetings are regularly held with clear-cut agenda. Apart from routine meetings, the board also meets once in every 3 months to review the quarterly results and other issues.

An effective corporate board is one that delegates the resolution of important issues to specialized committees. Infosys has three committees—the Audit Committee, the Nomination Committee and the Compensation Committee. As suggested by various committees on Corporate Governance and to ensure independence of the board, the members of these committees are all non-executive directors. The degree of independence vested in these three committees ensures that vital areas such as compensation, audit and nominations are carried out in a just and equitable manner without being influenced by the management (Box 1.1). Infosys’ experience with these committees has been quite beneficial, according to Nandan Nilekani.

An ideal way to ensure better corporate governance is to assess the efficacy of the board of directors through an effective appraisal system. However, this ideal is rarely followed even in developed countries, and universally board performance is hardly monitored or evaluated. Infosys, to some extent, has put in place structures to ensure evaluation of performance of the board. It is a self evaluation process, and external directors also measure the performance of the internal board.

Effective and efficient risk management is one aspect of corporate governance that helps a company achieve its goal of maximizing shareholder wealth. In today’s competitive environment, companies have to, apart from employing shareholders’ money productively, ensure that they do not expose their businesses to unwarranted risks. Infosys has put in place a risk management system that tracks every conceivable form of risk, arising out of client, geographic or technologies concentrations. The company’s diversified business strategy, especially in terms of risk avoidance, has been effective and has ensured that there is no undue dependence either on a single client, territory or technology.

CORPORATE SOCIAL RESPONSIBILITY

If wealth creation for the benefit of shareholders is an objective of corporate governance, social concern to protect the interests of all stakeholders and the society at large is also to be given due prominence. Infosys balances wealth and welfare strategically. Infosys has used its wealth and standing to contribute to improvements in the community. A core value of Infosys is a strong sense of social responsibility and commitment to help people and community. It is actively involved in various community development programmes.

Infosys established the Infosys Foundation, a trust founded to further the company’s commitment to social causes, to aid destitute and the disadvantaged people. One per cent of Infosys’ profit after tax is donated to the foundation every year. The foundation focuses on enhancing the living conditions of the rural population, healthcare for the poor, education, and promotion of Indian arts and culture. In the year 2003–2004, Infosys initiated three social programmes to improve computer literacy of rural people as well as the teachers in rural areas. Along with Microsoft, Infosys launched a programme, computers@classrooms, as part of which old computers were given away to educational institutions.

THE INFOSYS FOUNDATION

“It is better to light a candle than remain in darkness”. The Infosys Foundation starts with this humble, but thought-provoking philosophy. The foundation came into being with the objective of supporting the underprivileged in society. It began its activities in Karnataka in 1996. Today, the activities have been extended to Tamil Nadu, Andhra Pradesh, Maharashtra, Orissa and Punjab. The foundation primarily aims at improving the health, education and basic facilities, benefiting a large number of individuals and institutions.

In a short span of time, the foundation has successfully implemented projects in the following areas:

• Health Care: It has constructed many hospitals, wards in hospitals, donated costly equipment, distributed medicines for free and introduced various schemes to benefit those in need.
• Social Rehabilitation and Rural Upliftment: The foundation has constructed orphanages, girls’ hostels and shelters, and undertaken various initiatives to aid the lesser privileged.
• Learning and Education: The foundation has undertaken ‘A Library for Every School’, one of the largest rural education programmes in the country. It provides financial support to promising students from economically weaker sections. It has constructed science centres and labs in rural schools, and in some cases, entire schools for the benefit of rural children.
• Arts and Culture: The foundation has coordinated a project to donate cassettes and players among rural schools in Karnataka to bring back life into the dying arts, puppet shows to enliven the theatre art, and encourages artistes to perform and also benefit financially.

Infosys Technologies contributed Rs 50 million to the Prime Minister’s National Relief Fund to assist the victims of the giant tsunami that ravaged South and Southeast Asia in the last week of December 2004. The company also actively supported its employees’ efforts across group companies globally, to make monetary and material contributions towards aid operations.

Infosys also instituted in 1999 the Infosys Fellowship Programme to foster excellence in education and offered funds at the five IITs and three IIMs for PhD programmes in computer science, management, law and accounting. Under this programme, the company grants Rs 900,000 per fellowship for the entire duration of the PhD programme.

CONCLUSION

The founder and chief architect of Infosys, N. R. Narayana Murthy is a visionary who exhibits a leading model of innovation and excellence in an industry that is rapidly evolving. He is capitalizing on growing opportunities in a world that is increasing its reliance on e-commerce and technology to form a vital part of business infrastructure. Narayana Murthy’s vision is to harness technology and the free market to create jobs, and to alleviate poverty. Infosys has created thousands of skilled, well paid jobs and furthered opportunity for Indians to develop their expertise and skills. Infosys demonstrates that it is possible to create success and build prosperity among the poverty prevalent in India. Infosys Technologies is a company that the entire world looks up to, in terms of sticking to one’s sound ethical judgment and doing business the ‘Right Way’. It continues to set standards in everything that it does, and the people who make the company never think twice when they have to make a tough decision involving ethics. To them, Dharma is above everything.

DISCUSSION QUESTIONS

1. What are the factors that have contributed to Infosys remaining India’s most admired company?
2. One of the factors that have helped Infosys achieve an unparalleled success in its business is that it has focussed on a people-centric business enterprise. Do you agree? Substantiate your answer.
3. To what extent do you think the success of Infosys can be attributed to the unwavering commitment to the ethical trilogy of business ethics, corporate governance and corporate social responsibility?

FURTHER READINGS

1. Articles from www.domain-b.com/companies/companies_i/infosys/index.html

a. Infosys, HLL best in corporate governance, 2 November 2001.

b. Infosys wins Global Achievement Awards for Asia Pacific, 8 November 2002.

c. Infosys settles sexual harassment suit against Phaneesh Murthy, 12 May 2003.

d. Infosys recognized as a most admired knowledge enterprise, 14 August 2003.

e. That billion-dollar feeling, 15 April 2004.

f. Infosys looks beyond the billion, 24 April 2004.

g. Infosys sweeps Businessworld Respected Companies Award, 8 November 2004.

h. Infosys recognized as a “globally most-admired knowledge enterprise” for 2004, 3 December 2004.

i. Infosys contributes Rs 5 crore for tsunami relief operations, 29 December 2004.

2. Corporate Announcements, Infosys Technologies, available at www.nseindia.com

3. www.infosys.com.

4. Infosys Annual Reports.

5. Saravjit Kahlon, “Value Based Leadership,” 14 December 2004, available at http://valuebased.redifiblogs.com/

6. Boby Kurian, “Having a Conscience is in our DNA,” Hindu Business Line, 15 April 2004, available at www.blonnet.com/catalyst/2004/04/15/stories/2004041500140100.htm

7. Press Trust of India, “Infosys on List of Most Ethical Firms,” Economic Times, 24 February 2004, available at http://economictimes.indiatimes.com/articleshow/571147.cms

8. S. Sadagopan, “Infosys Makes India Proud,” Financial Express, 16 April 2004, available at www.financialexpress.com/fearchive_frame.php

9. Times News Network, “What does it take to be a part of Infosys,” Economic Times, 18 April 2004, available at http://economictimes.indiatimes.com/articleshow/623748.cms

10. Values and Value—Communicating the Strategic Importance of Corporate Citizenship to Investors, 2003 CEO Survey of the World Economic Forum Global Corporate Citizenship.

11. S. H. Venkatramani, “Morals In Management,” 1999, available at www.lifepositive.com/archives/archives1999.html and www.lifepositive.com/Mind/work/corporate-management/business-ethics.asp