The Hindu Business Line : Business corruption and individual values

THE survey results on corruption released annually by Transparency International generate the usual comments on which countries have improved their ranking and which have not. The perception of corruption is now so widespread that the organisation's 2002 survey shows that 70 per cent of 102 countries surveyed got a score of 5 or less out of 10. While one may quibble about the nature or conduct of the survey, it is now universally acknowledged that corruption in society seriously impacts progress.

An independent study in China by a professor at the Tsinghua University,for example, suggests that siphoning of funds from projects and companies in that country has wiped out the equivalent of 13 per cent to 16 per cent of its gross domestic product (that is, the value of total goods and services produced in the nation). Given China's remarkable growth in the last couple of decades, we can only wonder about ``what might have been".

Such reports and results, of course, always leads to pointing the finger at public agencies. Bureaucrats and politicians, who wield public power, are blamed for the official corruption that is suffocating. Enforcement of regulations related to tax collection, licensing, etc. are all justifiably identified as being hotbeds of corruption. Election seasons produce the usual glut of promises by parties and candidates vowing to fight corruption once they are in power. While governmental corruption needs to be fought, how does one tackle private corruption? When one hears businessmen complain about how difficult it is to deal with the corrupt government and run a business, one would think they are paragons of virtue when it comes to dealing with other businesses. The reports of dealings leading to the collapse of Enron, WorldCom, and so on, suggests that private sector corruption is perhaps as extensive. But conversations with two small business persons in India got me thinking about this relatively less-discussed aspect in the debate on corruption.

One small manufacturer of industrial equipment I spoke with recently (let's call him `A') was beaming with a new order he had received amounting to over rupees one crore. At last, he said, the much reported business revival has begun to benefit him. He was pleased that the margins on this order would help him significantly reduce debt and make his firm less vulnerable to market fluctuations in the future. We went about discussing the organisational controls to be put in place to manage an order of this magnitude. Just as I was about to leave, he remarked that a kickback of 20 per cent order value that he would have to `spread' around in the organisation that gave him the order was worth it. Looking at my raised eyebrows, he remarked, `That is how business is done. I can't change it.'

Not very long after, I ran into another small business owner, a manufacturer of instruments (call him `B') who said he was doing reasonably well and happy with his level of business. I prodded him with a comment that in his line of business he should be doing much better given the boom conditions in some sectors of the economy. He said that he does not believe in giving bribes for orders as a personal value system and this had restricted his growth. But he is very happy dealing only with others who subscribe to his ethics and is content with his level of profitability.

This experience appears to qualify the results of the China study reported above. Public corruption might obstruct but private corruption lubricates? Businessman A (compared to B) is making a greater contribution to GDP although he is indulging in corruption. He has created greater economic activity while businessman B in adhering to `higher' values is possibly restraining GDP growth. Of course, this is a spurious comparison since there are too many variables and levels of analysis to be taken into account before we can make that kind of comparison, but it brings to light the distinction between personal and public optimum. At an individual level, we may argue that since the system is structured so, we have to accept what is and cannot make an impact at an individual level. But businessman B relied on an individual `value' system in order not to contribute to a societal problem.

Is that the way to cure the ills of a corrupt society that is not being taken advantage of? We certainly need to deal with public issues of vigilance, enforcement and punishment, and so on, but what can be done at an individual level concerning the values of our business people?

As we move away from the Dussera season and move towards Deepavali, Ramadan and Christmas, it may be useful to ponder if religion has any role to play in this process. Going by the number of religious festivals in India, the places of worship that dot our landscape and pavements, and the religious symbols we see both in places of work and on the person, it is an obvious conclusion that Indians are a very religious people. The fact that this correlates strongly with the level of corruption can only suggest immediately that being religious perhaps has nothing to do our indulging in acts of corruption!

Studies that have examined the connection between religiosity and business ethics are mixed. Thus, one needs to chart the path of the connection to see the other factors that provide the link. Professors Weaver and Agle (Academy of Management Review, January 2002) suggest that the first connection is the `role expectations' that religion places on the individual.

Each individual has a role-set that is comprised of several roles, as a parent, a spouse, an employee, and so forth. They all collectively contribute to a sense of self-identity. We may have a stronger connection between one particular role and our religion.

Thus, if we perceive the religion as stressing the importance of providing for one's family, then paying a bribe in a particular situation can be justified as being necessary to protect the welfare of the family. In addition, the importance given to religion in one's daily life is important. If the religion is central to his or her identity, then it will greatly influence values and thereby behaviour. Whereas if it is only peripheral to one's identify, then one can do what one wants during the week long as one performs the required ritual the coming Friday or Sunday as the case may be.

The above gives us a clue as to how one can influence ethical behaviour of individuals in organisations through their religion.

Our bookstalls are full of narratives that deal with `Jesus Christ, CEO' and how the Bhagwad Gita has lessons for management. Thus, the route of religion in affecting ethical standards can be a fruitful path. What is needed is to carefully plot the route by which the influence takes place.

First is to understand the motivation that drives the individual to be religious. It may be because the individual sees religion as an end in itself, or as a means to some benefits such as salvation. Second, is to understand the self-identity that the person assumes for himself. A better understanding of these two links will give us clues to deal with ethical behaviour in the workplace.

It is time individuals took responsibility for the corruption in society and examined their own beliefs and practices, rather than relying on the next government to clean the mess.

(The author is a professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinat@suffolk.edu)

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