Business Ethics in a Global World: India's Changing Ethics
By Margaret Steen
The 20th century was driven by governments in advanced nations,
but the 21st will be dominated by free market economies in emerging
nations. Jagdish Sheth, executive director of the India, China
and America Institute and a professor of marketing at Emory
University, made this point in his address to the Markkula Center
for Applied Ethics’ fourth biennial business ethics conference
on March 9. The topic of the conference was Business Ethics
in a Global World, with a focus on China and India.
Jagdish Sheth, center,
chats with conference participants
Sheth offered his perspective on why China and India are poised
to dominate the 21st century, how Indian business practices
differ from Western ones and what the consequences are for business
ethics on a global basis.
The collapse of Communism is one of four forces that are driving
the shift from the 20th century global business model to the
21st, Sheth said. He argued that the best capitalistic countries
are former Communist countries, such as China: Communism imposed
discipline on citizens, created greater gender equality and
invested heavily in technical education.
Another driving force is that affluent nations are aging, and
their traditional industries will not generate as many jobs
in the future. Even in the U.S., which is not aging as fast
as other affluent countries, General Motors stands as an example
of a company that is hiring only one new employee for every
eight who retire.
In addition, economic pragmatism means those in power have
discovered economics’ crucial role in elections. Sheth
cited the fall of George Bush Sr., who went from being wildly
popular to losing his re-election bid when the economy faltered.
Finally, Sheth cited the idea that “the world is flat”:
the IT revolution has leveled the playing field between emerging
and advanced economies.
And so Sheth forecast that the world is moving from the 1800s,
which were the European century, and the 1900s, which were the
American century, into the Asian century. He noted that Asian
countries are trading with each other, and said both China and
India are poised to become innovative economies, not just locations
for low-end jobs. This shift will redefine business practices.
Sheth discussed several ways in which Indian business practices
are unique – and may give rise to ethical behavior that
may or may not be compatible with the prevailing Western viewpoint.
Indian business culture, he said, puts a premium on favors,
friendship and clanship. Friendship is highly valued, whether
based on multigenerational family friendships, school friendships
or personal friendships. The Western concept of conflict of
interest, he said, does not always mesh well with the Indian
value of loyalty to one’s group.
Sheth noted that Western business has its own versions of these
ideas: Procurement departments in U.S. companies are more likely
to buy from the company’s customers, for example.
In terms of government rules and regulations, Sheth said that
in India, the government acts as a gatekeeper rather than an
enabler, with slow approval, a complex bureaucracy and corruption.
Enforcement is also lax.
There is a strong belief in corporate social responsibility
in India, Sheth said. He also noted how Indian management style
differs from that in the West: Decisions are made by the person
at the top, not in a participatory way. And there is what he
called a caste system by education.
What are the implications of these differences – and of
India’s rise – for business ethics? Sheth cited, among
other ideas, a shift from a focus on shareholders to a focus
on stakeholders. He predicted that ethics will be anchored to
the idea of business as a profession, similar to the way the
field of medicine is now. And he said there will be global standards
of governance, but their application will be adapted to local
conditions.
Margaret Steen is a freelance author
March 2007
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