Has business ethics been relegated to the backburner as India is making impressive economic strides? This article attempts to look at it from the state of ethics education in India.
India continues to fare poorly on the business ethics front despite the IMF projecting India to grow at 7.5 percent—the fastest among major economies—as against the global economy’s 3.4 percent in 2017, or the IBM Chief Executive Ginny Rometty seeing the 21st century as the Indian century. Whether abusing the statutory spending of 2 percent of net profit on CSR for laundering of black money or managing earnings to meet performance targets, business ethics in India present a gloomy picture.
India is ranked 76th out of 168 countries in Transparency International’s Corruption Perceptions Index 2016. In this regard, the World Bank’s World Development Report 2015 argues that social pressure and mental models make unethical practices norms in India. Hence, a person who is ethical in one setting may become unethical in another under the influence of, say, social pressures. This is in line with Ratan Tata, who, at an event organized by Harvard Business School in 2011, had said, “I think corruption has become worse and if you choose not to participate in this, you leave behind a fair amount of business.” Hence, we may infer that various socio-economic factors could lead to the prevalence of unethical business practices in India. In this context, emphasizing the role of business ethics education, Nitin Nohria, the dean of Harvard Business School, in an interview to The New York Times in 2013, had said that their core course “Leadership and Corporate Accountability” encouraged students to honestly recognize when they had committed moral lapses and then to discuss, “Why did that happen?” Borrowing the analogy from Prof. Linda K. Treviño at the Penn State University and colleagues, I argue that such inclusive bottom-up approaches not only helps to discuss the bad apple (who commits the questionable action) and the bad barrel (what facilitates the action), but also to analyze various person-situation interactions when good people may have strayed away from what is ethical. Hence B-schools are strategic forums to discuss unethical issues.
In India, B-schools are offering business ethics courses since many years. However, the rising instances of corporate scams, most notably the Satyam Scandal in 2009, have raised serious doubts about their effectiveness. For example, Prof. Jagdish Sheth at the Emory University, in an article in the Economic Times in 2014, opined that “ethics cannot be taught in 1-2 years of business education [rather] firms need to hire candidates with strong values.” Similarly, Jill B. Smart, ex-CHRO of Accenture, in an article in the Wall Street Journal in 2013, remarked, “I’m not so sure that an ‘A’ in an ethics class is really a valid way of judging [an individual’s moral compass].” Hence, teaching business ethics witnesses reservations from academics and practitioner alike. Next, I present two of my direct experiences concerning the current state of the business ethics education in India.
During a faculty recruitment process in a premier B-schools of India, I highlighted the importance of business ethics to the School’s Director. He shrugged this off and said, “My students should master mathematics and economics.”
In an article in Bloomberg in 2012, Prof. Luigi Zingales at the University of Chicago Booth School of Business, admitted that some people would continue to be unethical in spite of ethical cleansing. Yet, he advocated that the current state of ethical decline in corporations was a direct consequence of an amoral culture that B-school professors had helped to foster. He emphasized that the fixing mechanism should start in the classrooms where ethics should become an integral part of the core curriculum and be taught by the most respected professors.
In the next part of the recruitment process, I delivered a research seminar. I discussed some of my research findings, one of which was relative deprivation as a factor behind Kenneth Lay’s, the ex-Chairman of Enron, indulgence in white-collar crimes. The Director shot back, “Don’t misinform us. We can catch your lies from the Internet.” He even went on to ask, “Don’t you know that Lay was acquitted in 9 out of 10 cases registered against him?” Guess what? After the seminar, on cross-checking, I found in the New York Times that Jeff Skilling, the ex-CEO of Enron, was acquitted in 9 instances of insider trading. Hmm! Why did the Director lie?
In an article in Accounting Horizons in 1991, Late Prof. Lawrence Revsine, an ex-professor at Kellogg School of Management, discussed that unethical business was often facilitated by academics who develop “demanded theories” that give leeway to companies to cut corners; in the process, they get remunerated in the form of enhanced prestige and consulting fees.
Is the Director of the above B-school listening?
In the same faculty recruitment process, during my interaction with another professor, I once again reiterated the importance of business ethics education in Indian B-schools. To this, the professor expressed his dismay and said, “You know, out of 200 odd students who graduate every year from here, hardly 2 or 3 have any interest in business ethics. The rest are simply interested in money-making by hook or by crook.”
Money-making! In Nicomachean Ethics, Aristotle wrote, “The life of money-making is one undertaken under compulsion, and wealth is evidently not the good we are seeking; for it is merely useful and for the sake of something else.” Amartya Sen, in On Ethics and Economics, has explained this something as “good quality life.”
Are the students aware?
To conclude, it is safe to say that there exist indifferences toward business ethics education in India among teachers and students alike. If it is not resolved through rigorous business ethics curriculum, future leaders may continue to draw inspirations from people like Kenneth Lay. In the process, they may contribute to India’s economic prowess, which may come at the cost of ethical disgrace.
