Foreword

I warmly welcome the book compiled by Prof. A. C. Fernando, Director, Loyola Centre for Business Ethics and Corporate Governance, LIBA, Loyola College. The book is an edited compendium of presentations at the international conference on business ethics, corporate governance, and corporate social responsibility (CSR) held at Chennai in March 2007.

The case for corporate decency is a strong one, both from a philosophical as well as from a practical perspective. The basis of capitalism is the utilitarian principle of the greatest good for the greatest number. The market economy has, indeed, brought unprecedented prosperity to the masses in the West, as well as to the eastern countries like Japan and South Korea, and several Third World countries that have veered away from socialist ideology and state control such as India and China, which have also begun to experience the material welfare enriching power of the market economy. But at the same time, history also shows how brutally exploitative unbridled capitalism can be. The current devastating financial crisis in the West, which threatens the Third World also, is attributable, at least in part, to unbridled greed. There is, therefore, a need to hitch the pursuit of profits to a commitment to decency, so that striving in the market place resembles contests in Olympics rather than predation. This decency finds its concrete manifestation in business ethics, good corporate governance, and CSR.

This book is especially interesting because it brings together the perspectives of a wide spectrum of interest groups—corporate executives like Jamshed Irani of Tata; financial sector representatives like Sundara Rajan of Indian Bank; stock exchange regulators like Damodaran, Ex-Chairman of SEBI; representatives of the advertising industry like Krishna Mohan of Ogilvy & Mather; academics like Luc Van Liedekerke of Centre for Economics and Ethics, Belgium; media representatives like N. Ram of The Hindu; government representatives like David T. Hopper, Consul General of the US in south India; representatives of CSR institutions set up by business groups like Venkat Changavalli of EMRI which is set up by the Satyam group; and so on. The interest is especially heightened when the contributor shares specific CSR, good governance, or ethics related practices. Each of these practices is a local experiment from which valuable lessons can be drawn for wider application.

An underlying belief in many of the speeches is that business decency works. Fortunately, this belief need not remain at the level of hope or wishful thinking. Fairly persuasive research evidence is proving that business decency is associated with superior long-term business performance, lesser business risk, and greater customer and employee loyalty. A way this association between decency and superior performance seems to work is that commitment to decency rules out indecent options like bribing and pollution. This triggers wider search for decent alternatives to maintain the achievement of business objectives, in which technology, processes, culture, strategy, structure, management systems, and products are questioned. The resulting brainstorming leads to innovations that enlarge the capacity of the business to garner larger long-term profits and growth. It is possible, therefore, to be decent and show a superior business performance. The resulting corporate behaviour would resemble, to some extent, the behaviour implied in Gandhijis trusteeship idea. Gandhiji wanted to bring about business decency through a moral transformation of business people, a rather daunting task. However, if it can be established that corporate decency can result in better business performance in hard terms, then hard-headed business people are likely to opt for business decency, and thereby improve the entire tone of the market economy. In the Third World in which appalling poverty, business callousness, and corruption co-exist, greater business decency should lead to a far more rapid and inclusive improvement in the quality of life, not just for a few, but for the many.

Will humanity forge a humane and prosperous society that meets the goals of socialism with the tools of capitalism, or one with possibly high material prosperity for the few and widespread deprivation and oppression for the many? Business decency is a powerful tool for tilting the odds in favour of the former.

Pradip N. Khandwalla
Former Director, IIM Ahmedabad