The search for an ethical firm

About a month ago, I was at a fascinating conference on medical ethics at St John’s Medical College in Bengaluru. The best part of these conferences consist of little interludes when one catches up with friends and old conversations.

An acquaintance told me that medicine raises the question of ethics, but business hardly does. He pointed out that the great spy novelist, John Le Carre, who chronicled the evil of the cold war had shifted his attention to the pharmaceuticals companies which have become the real symbol of corporate evil.

My friend claimed that there was no ethical firm in India. He admitted that Thermax, the Tatas, the Mahindras, and the TVS group could lay claims to such a mantle but they could not be called ethical firms. The idea of ethics, he claimed, has changed today. One can no longer claim that what is good for the Ambanis is good for India.

The power of business set me thinking about the style of ethical practices.

One inevitably produces a list with exemplars. There are firms that practice good deeds, pursue business and build temples. Even a simple shopkeeper practices this kind of good work.

There is a second kind of firm which moves from mere charity to systematic philanthropy, building hospitals, educational centres, encouraging research in science.

The Tatas are a classic example of this old style social work, a group that is genuinely welfare-oriented. Tisco today provides free medicines to all its old employees, creating a system of well-being which is rare.

Such philanthropy can be more formalised as a form of patronage, a selective use of wealth to create value. One thinks of philanthropist Kiran Nadar’s attempt to patronise art or Rohan Murthy’s effort to create a Sanskrit series on the lines of the Loeb classical library.

There is today a formal style of ethics which, rather than being voluntaristic or responsible, is seen as an act of duty. One finds it odd that duty should be defined as part of the firm’s budget.

I am referring to the new enthusiasm for CSR, for building toilets, bridging the digital divide, for providing scholarships to women. CSR displays the pomposity and piety of social work but not the grace of ethics. Yet organisations such as ICICI and the Mahindras have created zones of creativity here.

One can go even beyond this to acts of imagination and responsibility, to firms which challenge the current regime of prosperity and the idea of profit. My favourite example is Cipla which reworked the idea of generics drugs, and showed that profit need not corrode compassion or a sense of justice in its battle against AIDS.

I must add that good works beyond must be sustained by quality within. Ethics as a form of competence can be reflected in adherence to standardisation, efficiency, and quality. Organisations such as the like TVS group have established legendary reputations for such competence.

Yet each of these firms represents one aspect of ethics. Today an ethical firm has to claim a systematic frame which goes beyond engineering quality and accounting integrity.

It has to be a value added form which operates within a framework of values. Ethics then becomes a new art form, an act of entrepreneurship creating the new firm which balances binaries, weaving then into new possibilities. Ethics is not automatic or mechanical; it demands creativity of a deep kind.

Firstly, it has to balance between profit, efficiency and sustainability. Sustainability is a commitment to a non-violent renewable future. Sustainability demands not just renewable energy, a rethinking of waste, but the availability of diverse futures. Sustainability also demands that we stop treating people as dispensable.

Cost-cutting has to be looked at in ethical terms especially at a time when we outsource such activities. No ethical firm can be outsource its ethics. Economics can never be a complete answer to ethics; the accountant’s balance sheet is only a partial answer to the question of responsibility.

Secondly, hierarchic forms have to become panarchic entities. The ecologist CS Holling coined the idea of panarchy to affirm that there is no one solution for a problem, that different levels of scale will have different solutions. Such a diversity of solutions is what makes the firm an ethical entity, not the tyranny of top-down instructions.

Thirdly, an ethical firm must embody ideas of justice which go beyond the procedural fairness of a contract. The act of laying off people, which is happening so often in the IT and media industries, has to face an ethic of responsibility beyond contract.

As trade union movements are dying out, as the myth of the permanent job is fading, ethics needs a new frame to look at the unemployed and the obsolescent.

Finally, the business firm must affirm the value of non-violence both within the firm and in a wider societal sense. Peace has to be a goal of the ethical firm and this demands a reworking of the relation between work and violence.

Ethics has to confront the violence that manufacture often brings to processes and people. This Republic Day I was intrigued to hear Anand Mahindra talk of the military-industrial complex and claim it was the main source of American innovativeness. He felt that the Barack Obama-Narendra Modi deal would help create such a rub-off effect for India and dismissed unease about the MIC as a hangover of the sixties.

Such misjudgement is not what we need today when peace is no more a Westphalia proposition but something that deeply concerns civil society and even corporations.

The real danger is to create a narrow notion of ethics as social work or CSR. Today, the ethical firm has to be the next major transition of a knowledge society. Given the traditions of Gandhi, non-violence and Swadesism, one hopes that the Indian firm can achieve some creativity at this level.

The writer is a social scientist and professor at the Jindal School of Government and Public Policy

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