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March 16, 2003
Review: Critical factor
AS is widely believed by business management scholars and practitioners, ethics in business management is no fiction. In fact good ethics is believed to be good business. Business ethics is taught extensively in US business schools and with “great fanfare” at Harvard. It became all the more imperative when “...a management graduate (was found to be) at the root of the worst scams in the USA”. Professor (Emeritus) R.C. Sekhar demonstrates its significance further in his must read Ethical Choices in Business.
With a rich experience in both the business field and academia, the author has a wide variety of interests including textiles, energy economics, and rural science. He has written extensively on diverse subjects ranging from finance and controls to culture and ethics. He is known for his innovative methods of teaching ethics in management. His book contains numerous case studies to illustrate the points. As his book received outstanding reviews from all over the world, several business schools and universities have prescribed it as a basic textbook.
The fifteen chapters focus on several issues. While corruption is an important issue, it is not the sole concern of business ethics. The first two chapters give the basic sources of ethics and encapsulate its conceptual and, to some extent, its philosophical underpinnings. This is an add-on to the American tradition in business ethics’ writings which the author refers to as “fragmented empiricism”.
While analytical, American writings tend to ignore the traditions of ethical thinking of the past. They also do not attempt to bring a sense of sociology, culture, and history into ethics. This book makes a departure from this line of analysis and tries to highlight the roots of moral and ethical values. There is an effort to integrate ethics with human behaviour. The following five chapters build on the ideas presented in the first two and illuminate the role of the basic institutions in generating and administering ethics. The institutions include the market systems, the legal framework, psychological processes, professional intermediaries, and the modern organization. Then the author focuses on functional and topical issues before summing it all up.
As also in Chester Barnard, a powerful management thinker of the 20th century, stakeholders’ interest is emphasized upon throughout the book so as to achieve the organizational goals. This is specially so in a new world order that cannot rely only on the high-born men of wealth to run the affairs of the state as was the case in the old world order. In liberated market economies, the direction of the state as well as that of the firm is determined collectively by the stakeholders.
As business is a socially sanctioned activity to fulfil the socially acceptable needs and wants, management as a profession is to be driven by higher principles of life. Managers with personal integrity, therefore, make ethical choices thereby developing into true professionals and assets for the organization.
In the process, a balance between the rights and responsibilities of stakeholders is struck which leads to the build-up of “social capital” required essentially to put nations on the path of growth and development.
As the “pragmatists” tend to disagree, T.A. Pai Institute of Management in India tried to bridge the gap between traditionalists and “pragmatists” as did the Rockefeller Foundation. Professor Sekhar states, “Ethics is no longer a ‘rhetoric’. Ethical education can be and is designed to produce balanced, pleasant, flexible and effective managers with the power of insight and the courage to create and use ethically desirable means to sustain organizations in an ambience of liberalism and democratic choice.”
The corporate governance paradigm that would optimize “social capital” has, therefore, moved on from the shareholder to the stakeholder to the transaction cost to the social welfare paradigm. While these are not mutually exclusive, the requirements of pluralism and the greatest good of the greatest number should be borne in mind.
The foreword, by Dr Menon, brings out a paradox in the behaviour of businessmen. He says, “It is paradoxical that many individual businessmen are extremely ‘religious’ in their private lives while in their business they hardly take account of the extent of human suffering that their actions might cause in society.” Ethical business behaviour, therefore, needs great emphasis until it is internalized and becomes intuitive.
However, while moral values are respected by many organizations, they need to guard against the tendency of proclaimed ethics serving the interests of only those in power who discourage dissent and rational debate on issues. Even ethical organizations founded by Tagore and Gandhi fumbled as they failed to use dissent creatively. Moral standards should, therefore, not be set to convenience and on-the-spot to encourage sycophancy with the chief executive ending up in the emperor’s new clothes syndrome. Whistle blowing is supported.
Exchange of goods and services affects people in various ways and should, therefore, aim at achieving the greatest good of the greatest number otherwise business will be affected by the wheels of “ethical reprisal” that are always moving.
The book also provides a theoretical framework for analyzing the ethical aspects in marketing, sales and purchase with 34 situational and legal examples to clarify the concepts contextually. It also discusses the ethicality of the instruments used in the investment industry including banking, capital markets, and mergers and acquisitions.
Environmental ethics is discussed in three areas: actions that influence the quality of human life in its current form, intergenerational ethics, and non-human-centric ethics. A chapter is devoted to gender exploitation and gender-based discrimination with a view to achieving ethical gender balance.
All of the above is set in the context of 27 lessons from history which include 16 basic values, three rights-privacy, individual choice, and a minimum standard of life, six institutions for regulating ethics, and two ancient formulae of the ‘Golden Rule’ and the ‘Greatest Good of the Greatest Number’.
A convincing presentation that brings ethics to life with real life examples, this is a book that must be read by all supporters of ethics and sceptics alike.
Ethical Choices in Business
By R.C. Sekhar
Response Books/Sage Publications, B-42, Panchsheel Enclave, Post Box 4109, New Delhi-110017, India. Tel: 91-11-2649 1290-7.
Email: marketing@indiasage.com Website:
www.indiasage.com
ISBN 0-7619-9718-0
308pp. Indian Rs290
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