Business schools and ethics;
Nimisha Pandey

In the aftermath of Enron, Tyson, WorldCom et al many schools in the industrial world have pruned curriculum of courses on ethics. All over the world the academics, analysts and the stakeholders began a debate on the increasing incidence of episodes of corporate tragedies. Corporate greed supplants ethical values, morals, and standards. The contrived compression of time cycle in which the contemporary corporations seek supernormal profits creates incentives for the industry to violate ethical and legal rules. The changing market structure and the phenomenal pace of change in the information technology compound these situations. In the case of family businesses, the implications of divergent interests, information asymmetries and bounded rationality are colossal. The potential agency costs increase as the firms expand and the role of the non-family managers become extensive. Both in the bank-led and equity market led models of corporate governance, corporations have come under closer scrutiny and surveillance from the securities regulators and in a significant number of cases legal remedies have been applied.

In the India context the debate on corruption is becoming popular. Especially, when the political executive is a bundle of weak coalition, the court led governance model seems to emerge as predominant in the social and economic systems of governance. Scams and scandal are highlighted by the media and there is apparent demand for ensuring transparency and accountability in the corporations. There is thus a lot of concern for corruption and the need for a system of governance to deal with the same. However, ethics is not the main agenda. Very few academic institutions have a curriculum on ethics. On the one hand, some leading business schools claim to develop leaders for the future, on the other, they have no institutional priority to develop worthwhile curriculum on ethics for the would be leaders. The students are unaware of ethical values, standards, dilemmas, codes, the best practices, the role of ethics and values in decision-making, and the potential benefits of whistle blowing. Barring a few most institutions do not have a caliber of intellectuals who can provide conceptual and human inputs in ethics courses.  There is also serious dearth of research on ethics in academic products including the ‘doctoral programs’ in of these institutions.  The concept of corporate governance and ethics are almost alien to these institutions, this is an identical constraint both on the supply and demand side.

We need to overcome these supply side constraints and adopt institutional approaches and remedies.  Such solution is feasible only when the business schools acquire a status and credibility. There are already a number of pertinent issues of internal governance structures and systems of these institutions which are yet to be resolved. This is a disability which may not pave a smooth passage for the institutions to create a credible and demonstrable commitment towards ethical training both to the existing managers of the industry and the potential leaders who are being ’shaped’ by these catalysts. We need to encourage ethical communication, ethical quality, collaboration, and ethical succession planning.

Nimisha Pandey

Rai University,

Usha Bhawan,

Delhi Campus