Ethical Business Leadership in India: Myth or Reality

Presented By:Group 7 , Section FNamrata Jha-140103106Keerthana-140101081Mohd Mohtashim-140201078Nikith-140103082Viswa Sai Raja-140102064Omkar-140201089Rangavardhan-140101128

Ethical Leadership

The 4-V Model of Ethical Leadership

• Leadership that is directed by respect for ethical beliefs and values and for the dignity and rights of others

4-V Model of Ethical Leadership

Values•Ethical leadership begins with an understanding of and commitment to our individual core values

Vision•Vision is the ability to frame our actions

Voice•process of articulating our vision to others in an authentic and convincing

Virtue•Understanding that we become what we practice, we foster virtue by practicing virtuous behavior – striving to do what is right and good

Characteristics of an Ethical Leader

Articulate and embody the purpose and values of the organization

Focus on organizational success rather than on personal ego

Find the best people and develop them

Take a charitable understanding of others’ values

Create a living conversation about ethics, values and the creation of value for stakeholders

Frame actions in ethical terms

Do Business Ethics Pay?

Remi Trudel and June Cotte conducted a research to gauge how customers would react to ethically produced goods.

‘Ethically produced good’Progressive stakeholder relationsRespect for human rightsProgressive environmental practices

Internal Forces Shaping Corporate Ethics

Indian Culture and Ethics

Influence of ancient culture on ethics

•A history that cuddles the concept of noble ends justifying dubious means

•Basis of Indian business ethics:

1. Ramayana2.Mahabarata 3. Arthshastra

•The foundation of Indian strategic thought•Advisory for a king on statecraft, economic policy and military strategy•Advocates the use of deception and sometimes brutal measures for the common good•Topics range from “when a nation should violate a treaty and invade” to “when killing domestic opponents is wise’’

Indian Culture: A culture that has flourished for more than three thousand years old is impossible to view through Western glasses

Ethical Relativism What? Ethical norms are socially constructed and highly

dependent on context Describes both relativity in ethics between

individuals as well between societies

Why? Morality may be seen as a means in which humans

try to adapt to their environment. Thus, different environments will result in different moralities.

Moral rules differ between societies because of different beliefs

India and the West: Different Ethical Equilibriums

A culture of favours, friendship and clanship that clashes with the Western concepts of conflict of interest and pure meritocracy

Favours Loyalty over competence

Gives more emphasis on loyalty over competence

The ethical equilibrium of the two civilizations are likely to differ as both have different origins, norms and culture

Ethical Indian Leaders

Ratan Tata, Tata Group A long-standing reputation for ethical leadership and corporate

social responsibility “Tatas don't bribe” and the “Tatas don't indulge in politics” Built in the twin pillars of "trust" and "integrity“ A mission toward society-

‘Tata Nano’ the small car produced by Tata Motors especially for the middle class is cheaper than Ford’s’ Model T ‘launched in America in 1908.

Tata Steel donates 65% of its profit to charity

Ethical Theory of CSR – Tata Steel Has four subparts:

Normative Stakeholder Theory – Tata Steel has taken proactive measures to address stakeholder’s concerns. Example: For community and society – infrastructure for civic amenities, healthcare etc.

Universal Rights – States that human rights have been taken as the basis of CSR, especially in the global market place. Tata Steel has promoted human rights as a part of its core business philosophy. It has adhered to the Universal Declaration of Human Rights. It has implemented the principles of the UN Global Compact

Sustainable Development – Tata Corporate Sustainability Reporting initiative (GRI Process, Triple Bottom Line Report). Tata Index for Sustainable Human Development to evolve a common direction for CSR initiatives

Common Good Approach – Tata focuses on the development of underdeveloped people as a part of its CSR

Ethical Theory

Universal Rights

Stakeholder Theory

Sustainable Development

Common Good

Approach

Ethical Indian leaders

Azim Premji, Wipro

World’s Most Ethical Companies (by the Ethisphere Institute for the Fourth Successive Year -2012 to 2015) ethics and compliance program ,reputation, leadership and

innovation ,governance, corporate citizenship and responsibility and culture of ethics

Sound values, integrity and professional will were identified as the impetus that drove Permji to churn Wipro from a $2 million company to $1.76 billion and turn it into one of the most ethical companies of the world

Ethics, Integrity and Responsible citizenship are a foundational first principle of the organization

Examples of Unethical Business Practices

Satyam Scam; Unethical behaviour by the director, Mr. Ramalinga Raju, the auditor PwC and SEBI

Overstated revenues and profits

Overstated debtors’

Understated liabilities

Paid salaries to non-existent employees – 53,000 in place of actual 40,000

Serious questions regarding conflict of interest:

when promoter families become executive directors

when audit firms which are tasked to uncover any wrong doing, end up certifying worthless accounts

when otherwise competent Independent Directors are unable to live up to the expectations of those investors whose interest they are mandated to represent

‘’It was like riding a tiger, not knowing how to get off without being eaten’’

The Indian Scenario

“If you choose not to participate in [corruption], you leave behind a fair amount of business’’ –Ratan Tata

• The company believes that the growth of the company has decreased as the company’s policy is only to deal with the clients of ethical standards

Goldman Sachs India

•Enercon, the world fifth’s largest wind turbine manufacturer was coerced to end the joint venture with the Indian company. The joint venture was worth US$566 million. The company was intimidated by the authorities and it termed the situation as “government-abetted theft

Enercon

Business success in India comes at an ethical cost?

The outcome

Fiscal Loss

• US$314 billion has flown out of India since 1991 in the form of evaded taxes and corruption

Shaky investor confidence

• 87th out of 178 countries on its Corruption Perceptions Index

• 134th out of 183 countries in “ease of doing business’’ (ranked by World Bank)

Breakdown of Customer Trust

• Tourism (only 6.5 million foreign tourists compared to 57 million in China)

• Financial Services (only a fourth of households savings went into financial channels)

What needs to be done?

Attitudinal changes • Businesses must realise that the key to sustained growth in top and bottom line is ethical

business practice• Aggrieved customers must raise their voice against deficiency in services at all forums, starting

from social media to consumer courts

Regulatory changes • Tough regulators for high complaint sectors like real estate and travel and tourism• Tightening tort laws and providing for class action suits to dent fraudulent business practices• Improving complaint registration and empowering unorganised customers against unethical

business practices

Reference List CSR Ethical Practices for Indian Business: The Strategy toAchieve Global Leadership by Nishant Gehlot,

Yamini Sharma and Neelam Kalla,1DMS, JNV University, Jodhpur in Global Journal of Management and Business Studies, ISSN 2248-9878 Volume 3, Number 10 (2013), pp. 1173-1180

Ethical Leadership: Best Practice for Success by Dr Subhasree Kar Associate Professor Sambhram Academy of Management Studies Bangalore in IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-487X, p-ISSN: 2319-7668 PP 112-116

Ritesh Kumar Singh, P. (2013). India lacks business ethics. The Hindu Business Line. Retrieved 18 August 2015, from http://www.thehindubusinessline.com/opinion/india-lacks-business-ethics/article5093688.ece

Scu.edu,. (2015). Business Ethics in a Global World: India's Changing Ethics. Retrieved 18 August 2015, from http://www.scu.edu/ethics/practicing/focusareas/business/conference/2007/presentations/sheth.html

Wipro.com,. (2015). Wipro Named as a 2014 World's Most Ethical Company by the Ethisphere Institute for the Third Successive Year. Retrieved 18 August 2015, from http://www.wipro.com/newsroom/press-releases/Wipro-named-as-a-2014-worlds-most-ethical-company-by-the-Ethisphere-Institute-for-the-third-successive-year/

Knowledge@Wharton,. (2015). Business vs. Ethics: The India Tradeoff? - Knowledge@Wharton. Retrieved 18 August 2015, from http://knowledge.wharton.upenn.edu/article/business-vs-ethics-the-india-tradeoff/

Mishra, R., Sarkar, S., & Singh, P. (2012). Today's HR for a sustainable tomorrow. New Delhi: Allied Publishers. pp. 280-281