Definition of Business Ethics
Ethics comes from the Greek word ethos which means the characteristics of culture embedded in one's beliefs and aspirations. It can be defined as a "discipline with what is good and bad and with moral duty and obligations." (Satterlee, 2014, p.52) Ethics is a source of guidance beyond enforceable law. Business is an activity that involves changes, decision makings, responsibility, and accountability.
Business ethics provides businesses, managers, and employees an idea of behaviors and factors that they should not engage in. It is the study of values and decision making in the world of business. It is clear and uncontroversial that firms and their employees should not participate in unlawful activities. Some of these unlawful activities can be, selling defective, expired and harmful products. However, what is and what is not ethical, differs from person to person based on the different values one grows up with.
Significance of the Study
Ethical behavior in a corporation with corporate social responsibility can benefit significantly to a business, for when customers see that a firm is following ethical practices they put their trust in the company's products and services which as a whole boost the sales and profits of the firm. A successful firm attracts more employees to work for it, that reduces recruitment costs and increases competition for the best employees to enter. This allows only the best employees to work for the firm. This attracts more investors to invest in the firm; hence, increasing the share price of the company.
Another important reason for the requirement of business ethics in today's time is corruption. Corruption can make an economy stagnant and increase economic-social disparities over time. This happens when the high costs of providing public services and low capacities to collect taxes occur together. One doesn't get many investors nor gets to see an economic growth in a place where corruption is rampant.
Business Ethics in the Indian context
There are many gods worshipped and religions practiced in India and many values are drawn from these number of religions, which play a big role in business ethics. This marks the difference in business ethics practiced in west and east national cultures. India, has a rich culture that includes different religious values given more importance in decision making. This makes it different from the western approach to ethical decision making.
Many Indian managers focus first on making profits and second on ethics and while "U.S managers are more analytical in their ethical decision makings, Indians rely more on intuition." (p. 419, para. 3). With this attitude, many of the top management remain rich while the lower management like the employees face all the unethical
Vedantic principles
Vedanta means the philosophy of higher knowledge. An article by Bireshwar Ganguly in 2010, covers the four pillars of religions one of them being ethics. The study explains that the Vedantic ethics were from the days of Vedas (1200 BC) to the period of Mahabharata (3067 BC). Few of the Vedantic principles are, that one should not covet the wealth of others but should perform activities that are beneficial to others. A man should have control over their senses, compassion for others and that all offerings and practices should be given to God.
Phases of business ethics in India
Phase 1 – Panchayati Rule (up to 1700)
A panchayat is a group of elderly people that were elected by the community of locals residing in a town. These elders would decide on the rules of the town and regulate it and while they would encourage wealth creation they would regulate that business ethics was maintained.
Phase 2 – British Rule (1858-1947)
In this period the British ruled India and they inculcated their own ethical principles that brought down the panchayat raj and even decreased the ethical conduct (Chakraborty, 1997). This as a whole brought the economy stagnant. Although the British tried to teach intellectual ethics to Indians, the teachings that Indians needed to continue was consciousness ethics (Chakraborty, 1997).
Phase 3 – License Rule or Permit Rule (1947-1990).
India received its freedom and independence from British rule in 1947. Most of the Indian leader elected during this period led the country into a mixed economy, where they combined elements of soviet style and free market economy (Berger & Herstein, 2014). The term black market and black money was introduced during this time frame and is it still present in India. Black money is that money that is not accounted and taxed.
Phase 4 – Invisible Rule (1990-1995)
In the early 1990s, the ruling government had introduced Liberalization Privatization and Globalization (LPG). However, with the free trade more corruption and unethical practices had entered the country, for the government had privatized many companies and did not interfere in the markets by the demand of International Monetary Fund (IMF) and the World Trade Organization (WTO). (Berger & Herstein, 2014) But with the lack of government regulation, most of these private enterprises only focused on making profits and not on practicing ethics along with it.
Phase 5 Jugaad Rule (1995-current day)
In this period, the practices of ethics continued to reduce with the drive to make success in less time and with the continue competition with China in regard to global economic success. (Saran & Guo, 2005) Jugaad is a Hindi word that means to provide the best way in a low-cost solution. When there is an impossible situation and one finds a solution by weaving his/her own way through it, is called a jugaad. However, this in the long run won't be helpful and Thomas Birtchnell wrote this in his 2011 journal that Jugaad is two things, a systemic risk and a disruptive innovation in India.
One of the current scams in India is the Nirav Modi jewelry scam for committing a fraud of Rupees 11,400 crores. Modi managed to obtain "Buyer's Credit overseas on the basis of fraudulent guarantees of payment" (Nirav Modi, 2018). While this is one of the big frauds caught recently, there are many individuals that manage to find loopholes in the law and system to become rich overnight. The main reason one sees this corruption happening in India is because of the increase in competition and drive to become rich overnight.
Many Indians that own or work in companies believe that ethical practices will not let one to reap benefits, but this is incorrect and can be proved by some Indian companies that are highly ethical like Tata Consultancy Services (TCS), for this is a business that receives high returns and has many clients internationally that outsource their businesses to this company (TCS) for they trust its ethical standards.
A research performed by Ramesh & Goel in 2014, proves that if an Indian receives an educational qualification they will have a better attitude towards business ethics and can perform activities rightfully. Hence, the government of India will need to give more focus to these criteria and have professors teach valuable teachings and ethical practices to students, so that they do not choose the wrong path of adopting unethical practices and corruption. India can learn from the ethical practices applied in American companies, where the codes of conduct is applied to the full management team and not only the senior management team. Indian companies should inculcate policies for employees to report against fellow employees that dishonor the business code of conduct. A company should even provide a better salary pay/ incentives to encourage the employees and achieve better targets.
Christian Perspective
When one looks at business ethics in a Christian perspective, they have an example to follow and imitate, i.e., Jesus Christ. He is our creator, faultless and perfect. And in all that glory, He still chose and still chooses to accept us sinful people who are only living in this world for selfish gains. Along with His acceptance, He promises to never leave us but to teach and correct us through His Holy Spirit.
He is righteous and calls us to be righteous. He asks His children to obey the laws of the land for He is sovereign and in control over every situation. He tells them "You therefore must be perfect, as your heavenly Father is perfect." (Matthew 5:48, English Standard Version) and commands them "You shall love your neighbor as yourself." (Matthew 22:37-39, English Standard Version).
Christianity focuses on three main aspects in business, i.e., integrity, commitment to excellence and commitment to its people. Integrity means that even when the company can have a turn over, it still chooses to do what is right. Commitment to excellence is when the company chooses to use it business to glorify God. Lastly, a commitment to its people mean a company needs to ensure that there is a fair compensation, growth opportunities and performance recognition of the employees.
Conclusion
"Ethics is an integral part of regular corporate activity and remains an important source of competitive advantage and corporate identity" (Ramesh & Goel, 2014, para. 15). Though India understood the importance of business ethics and followed it back when the panchayat ruled, most companies have now kept ethics aside and are more focused on making profits. Sadly, even the ruling governments in the past three decades haven't understood the importance of ethics in businesses. If India as a country wants to emerge as successful as its neighboring country China, it'll need to put focus on business ethics in its public and private enterprises. The current ruling government needs to understand the need and urgency to apply business ethics in Indian companies by applying more importance in it and have companies adopt the principles of sustainability.
Challenges
Indian is a developing country and as social media reveals more of the development of other countries, the craving to become one of them grows more in India. Though success is not a bad thing to achieve, one must achieve it in an ethical manner. One of the biggest challenges India is currently facing without knowing is the attitude towards allowing 'jugaad' to happen. Though 'jugaad' gets the work done and on time, it is a method that creates a baseline for corruption that leads to unethical conduct. For this supposed smart work that is promoted in India, is nothing less than deception and trickery and this doesn't help one in the long-term guidance.
Recommendation
India is a liberal country but behaves more bureaucratic in nature. The government of India needs to stop acting like a gatekeeper and needs to start acting like an enabler of business transactions. (Ardichvili et al., 2012). Though many companies have started inculcating business code of ethics however, the government of India can have businesses practiced in India adopt the principles of sustainability applied in European Foundation for Quality Management (EFQM) model. It is defined as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs." (Asif, Searcy, Garvare & Ahmad, 2011) This principle is practiced in many developed countries but not in India. Research by Asif, Searcy, Garvare & Ahmad in their 2011 research paper explain the application of EFQM model that address sustainability in businesses. This model focuses on leaders to take more responsibility and promote awareness regarding health and safety to people. It gives focus to maintain an optimum utilization of resources to help it sustain and create a value of the society. This model will help the management team to have sustained results in India.