[Model Answer QP2023 GS4 ETHICS] What do you understand by ‘moral integrity’ and ‘professional efficiency’ in the context of corporate governance in India? Illustrate with suitable examples.

Ethical Keywords: Duty, Virtue, Utility, Transparency, Accountability, Welfare.

Moral Integrity

Moral integrity refers to the steadfast adherence to a set of ethical principles and values, even when confronted with personal, professional, or societal pressures. It is the quality of being truthful, honest, and consistent in one’s actions, ensuring that one’s inner values align with outward actions.

Ethical Perspectives on Moral Integrity:

Kantian Ethics: Immanuel Kant emphasized the importance of duty and adhering to moral laws. In this context, moral integrity would mean doing the right thing because it is one’s duty, irrespective of the outcomes or external pressures.

Virtue Ethics (Aristotle): For Aristotle, moral integrity is an essential virtue, indicative of good character. He believed that virtues like integrity are cultivated over time through repeated good actions.

Example: The Tata Group is often cited as a paragon of moral integrity in the business world. Their commitment to ethical business practices, even if it means incurring short-term financial losses, is well documented.

Professional Efficiency:

Professional efficiency refers to the capability of producing desired results with minimal wasted effort or expense. In the context of corporate governance, it means ensuring that a corporation’s operations are streamlined, its resources are used optimally, and its goals are achieved effectively.

Ethical Perspectives on Professional Efficiency:

Utilitarianism (Jeremy Bentham and John Stuart Mill): From a utilitarian standpoint, professional efficiency is ethical because it seeks to produce the greatest good (or utility) for the greatest number. Efficient operations mean better products, services, and potentially more jobs and profits.

Pragmatism: This school of thought would appreciate professional efficiency for its emphasis on what works best in practice, promoting methods that provide the best outcomes.

Example: The IT giant, Infosys, has consistently shown professional efficiency by delivering projects on time, maintaining high-quality standards, and optimizing resource allocation, making it one of the most respected IT companies globally.

Linking Moral Integrity and Professional Efficiency to Corporate Governance:

Corporate governance refers to the systems, processes, and relations by which corporations are controlled and directed. In the Indian context, with scams like the Satyam Computer Services scandal coming to light, there’s a pressing need for both moral integrity and professional efficiency.

Transparency and Accountability: Companies must be transparent in their dealings and held accountable for their actions. This embodies both moral integrity (by being truthful and open) and professional efficiency (by ensuring that operations are above board and optimal).

Stakeholder Welfare: Keeping in mind the welfare of all stakeholders, not just shareholders, signifies moral integrity. Professional efficiency ensures that stakeholder welfare is achieved in the most effective manner.

Illustration:

The case of ICICI Bank’s former CEO, Chanda Kochhar, raised questions about moral integrity in corporate governance. Allegations of quid pro quo transactions and failure to disclose potential conflicts of interest brought to the forefront the importance of strict adherence to ethical principles. On the other hand, companies like Wipro have set benchmarks in delivering professional efficiency while maintaining robust corporate governance structures, reflecting a balance between the two.

Conclusion:

Moral integrity and Professional efficiency are not just buzzwords but essential pillars for robust corporate governance. The Indian corporate landscape, with its unique challenges and vast potential, offers myriad examples of the importance and interplay of these concepts.