Prof C Panduranga Bhatta is a Professor of Business Ethics and Communication Group and Coordinator of Management Centre for Human Values  at the Indian Institute of Management Calcutta (IIMC). He has been continuously involved in academic administration of the IIMC since 1999 and is the founder coordinator of Business Ethics and Communication Group. He was recently in Kathmandu for a conference on World Forum for Ethics in Business (WFEB). In an interview with New Business Age’s Angila Sharma, he discussed core principles of business ethics and its relevance in the present context. Excerpts:

 

Generally business ethics and CSR are treated as synonymous. How to distinguish them?

Before the introduction of the term Corporate Social Responsibility (CSR), business ethics’ definition was limited to not doing corruption in business and was particularly limited to financial matters. But now, business ethics is defined and understood in a broader way and includes Corporate Social Responsibility also.So, I would like to say that CSR is one of the aspects of business ethics. As such, the business houses that are active in their CSR can be called ethical because they have realized that they have a duty to perform. 

 

Earlier, business houses would conduct business in an ethical manner but would not be concerned with things going around them. But, now, business houses cannot only be ethical in their business. They have to be aware about the things happening around them. The business houses should be concerned with the society because they make profit because of the ordinary people around them. So, CSR is a part of business ethics.

 

The popular view including that of the government is that business ethics and profit making cannot go hand in hand. What is your opinion on this? 

This is the biggest mistake people are making. We can take examples of corporations in the international arena that are making profit ethically. Ethics means taking care of the safety of the products; it means you don’t do any wrong to the customers through your products. Business ethics means that corporations allocate certain amount of their profit for the betterment of the people. So, the corporations, which are conducting business in an ethical manner, also earn profit.

 

This issue can be looked upon in two ways. It depends on the business corporation whether it is looking at the short term or long term while starting a business.Short-term business means operating for a small period of time, earning profit in any manner and then shifting to a new place. We describe these kinds of businesses as ‘fly by night operators’. This type of activity is completely unethical and we do not consider these types of activities as business. We are talking about business corporations that are established to operate for a long period of time.Such business corporations do not limit themselves to stopping fraud and other corrupt activities, but widen their view to the entire society. Thus, in the long run, such business houses survive, make profit and they are considered as ethical business firms. In the long run, ethics pays.

 

So, I don’t agree that business firms, which make profit, cannot be ethical.

 

In today’s competitive world, how can business houses gain comparative advantage through practicing business ethics?

Globalization can give you advantage as well as disadvantage. Firstly, if you are an ethical company, you will be welcomed everywhere. This is because of the reputation of the business house and reputation is built on ethics.If a business house has global ambition and wants comparative advantage, the business house has to build a brand first. Business houses have to take care of ethics firstly. For example: Infosys is a company that is present throughout the world. It is recognized and accepted everywhere because they have taken ethics as their main priority. They have a motto that says ‘Powered by Intellect; Driven by values’. They have been practicing it and people have been watching their loyalty towards their motto. If people are convinced, they will accept the company. This way the business houses can gain comparative advantage. Their ethics provide them the comparative advantage.

 

What innovative methods are being practiced or developed to instil human values in the management of business organizations?

Human Values is a very comprehensive term. It includes the behaviour of the business houses towards its customers, employees, community and the environment. The business house has to be concerned about the environment and the community while practicing business. If the business house is not eco-friendly, it can affecthuman life and thus the business house is considered of not practicing human values.

 

Business houses can instil human values in their practice through the development of caring attitude.Any business houses should consider human beings as their first priority. As a businessperson, relationship matters a lot. If business houses fail to maintain good relationship with the employees, customers and the community, it will fail. This way business houses can work for their betterment through respecting human values.

 

How do you see the situation of business in South Asia?

The situation is picking up now because of globalization. People are exposed to the activities of business houses. Earlier, the situation was such that business houses would carry out their work in an unethical manner and to cover it up, they would do some charity and give donations. But, now, how any corporation makes business is noticed and reported. This is coming from the globalised context.

 

Another thing that is improving the situation is the international ranking. Every business house wants to participate in the international ranking. For example: Transparency International ranking.The moment you perform corrupt activities or you compromise with the safety of the employees and customers, you are ranked in the top of the most corrupt company and the country. Earlier, companies were not concerned with the country’s image, but now, companies are tied up with the country. If the country does not have good image, nobody would want to do business in that country. Countries are the conglomerates of certain companies. So, the business houses are concerned with ethical issues because of the international ranking. This has helped in improving the situation of business ethics in South Asia and the rest of the world.

 

What do you think makes an excellent leader?

There are so many aspects by which a person can become an excellent leader. Firstly, the person has to be sensitive towards the community and the people. Secondly, the person has to be creative and has to have a vision. The means and methods of achieving the vision is what matters the most. Any leader to be successful in the present context should have these qualities. Above all, it is very important that the leader is ethical because people will be watching the behaviour of the leader.

 

Marketing profession is derided as an example of unethical business practice. What is your suggestion to this professional field for overcoming this challenge?

In marketing, what matters the most is the product. Communication becomes very important while marketing. If you are giving false information to the consumers while selling the product, then, you lose reputation. What you are marketing and how you are marketing is very important. If you are advertising your product by giving false information, then that is a problem. If you are marketing a product that does no harm to the consumers, then it is not unethical.

 

There is a school of thinkers who believe that ethics can’t be taught. How do you respond to this assertion?

This is nothing more than a myth. Teaching ethics directly to the students may not go well with the students. So, teaching business ethics should take another form. Rather, sensitizing people towards unethical acts can do no good. Teaching ethics in a direct way will be of little or no use. If ethics is incorporated in all the departments and activities, it can be useful. Awareness has to be created among people regarding ethics.