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Ethics and SocialResponsibility
Doing good also involves doing right
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FLOW OF PRESENTATION
1. What is Ethics
2. Decline and Growth of Philanthropy : the Paradox
3. Towards Social Responsibility
4. Business Response
5. Conclusion
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Ethics
Ethics is a Greek word, it means Character or manners.
Ethics is about sense of belongingness to society of
business or Organization Formed with a limited vision for
economic generation but should resolve conflict with
society by servicing the community.
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Ethics in Business
Deals with determination what is right'," fair, prior and just" in
decisions and actions made that affect stake holders. It focuses
on the business relationship with employees, customers,
stockholders, creditors, suppliers and member of the society in
which it operates. Business is a part of activity of society..
Corporate ethics , is a a matter of leadership.
Adhere to corporate credos-code of conduct.
Development of IQ,EQ and SQ culture.
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The Business Scene
Corporate Growth
Five Year Plans and Industrial growth ( 1951- 1965)
Industry top League and Economic power of the Corporates remainedconcentrated with the pre Independence Business Houses.
Continuous Growth in the number and size of Business Growth
Decline and Growth of Philanthropy :The Paradox
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Rank Growth Assets (Rsmillion)
1 Tata 4177.22 Birlas 2927.23 Martin Burn 1496.14 Bangur 779.15 ACC 773.66 Thapar 7797 Sahu Jain 676.98 Bird Heilgers 601
9 JK Singhania 59210 Soorajmull Nagarmull 573.7
TOP 10 Business Houses (1965)
Source : Report of the monopolies Inquiry Commission 1965
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Changes in Organizations and Management of Industry and in nature of
business class.
Industrial Entrepreneurship more driven by Economic and Industrial Factors
such as Capital, Possession of business experience, etc . Rather than by
social factors such as caste, community, and social approval or disapproval .
Till 1950First generation of
industrialists dominated thebusiness sceneFamily business operating
on the joint family andhighly personalized decision
making
From 1960
New generations of first timeentrepreneurs more educatedIndianisation of Non Family
owned business likeHindustan Lever, ICI, L & T
Changes in the Business Class
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The third Plan Ran into heavy weather due to a series of unforeseen difficulties such
as the border troubles with China in 1962, failure of monsoon and war with
Pakistan.
Population Growth
Unemployment
Recessionary Conditions in Heavby Industry
Growing Budgetry Difficulties
The unfavourable Economic climate impacted adversly on the industrial growth and
therefore on the business pschye, making it less willing to be generous. Matters
were made worse by governments restrictive policies.
Economic Difficulties
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Distrust of Business:
Public image of the business as a whole begun to deteriorate in public eyes
soon after the World War II.
Widespread hoarding, black marketing and Price manipulations.
Unhealthy and undesirable trends in company formation and management
such as interlocking of funds, diversion of profits and defrauding of
shareholders.
State and Business: Emergence of Disharmony
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Governments industrial policy incorporated social goals such as
reduction of disparities in income and wealth; prevention of
monopolies and concentration of Economic
Power; reduction of regional disparities and improving living
conditions of the workers.
Holding of corporate sector and business houses was synonymous
with monopoly in a particular industry .
Obsession with Concentration ofEconomic Power
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Tax Policy
Heavy taxation by the state to finance planned
development and to make more equitable distribution of
income and wealth.
Compulsory distribution of dividend coupled with corporate
taxation made business to divert available funds into
working capital and development, rather than into
charity.
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The deceleration of industrial growth, controls on
industry, a high tax regime and changes in the
attitudes of new business class had several adverseconsequences for philanthropy:
Impact on Philanthropy
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The industrial and govt. policy sapped self-
confidence and self-esteem, lowered business
morale, and charity.
Paying heavy taxes, anti-poverty programmes.High tax rates, licence permit, political corruption,
Black money
G th i G t d F i F di f
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In 1953 and 1966 the Central Social Welfare Board
sancioned Rs 61.6 million by way of grants to
approximately 6000 Institutions for the Welfare of
Women, children, handicapped.
In 1960-61, 36% of a voluntary agencys came from
Central, state and local governments.
Growth in Govt. and Foreign Funding of voluntary Action
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When there was a large influx of foreign fund from
the 1960s onwards in response to the social and
economic troubles, the indigenous business
community felt further relieved of its earlier
obligation to society.
Social development hereafter become increasingly
funded by govt. and foreign donor agencies.
Cont..
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A seeming paradox
The finance Act of 1948 had extended to companies
the existing 50% tax exemption for charitable
contributions available to individuals. The companies Act of 1956 introduced Section 25 to
enable individuals and corporations to set up non-
profit companies for charitable purposes.
Growth of Philanthropy
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1970s : shift from pure charitable behaviour
measured in terms of money
Development of communities
Charity through trusts, establishing institutions
Global trends, mounting social problems, proactive
chambers and carrot and stick policy
Towards Social Responsibility
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Unethical practices
Vivian Bose Commission Dalmia Jain Co. 1963
Monopolies Inquiry Commission 1965
1957 Kanoria : the general impression we have made on themasses is that we are intoxicated with power and wealth, amassfortunes for ourselves regardless of national interest
TATA : Business man must become politically active, openly espouse the virtues of free enterprise, and ostracise anti-socialelements in the community
Fall from Grace
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Kasturbhai Lalbhai , JRD Tata , Arvind Mafatlal and
Ramakrishna Bajaj
believed in the trusteeship ideals of Mahatma Gandhi and insound business ethics.
Moral leadership and social responsibility.IMC 1963 : actively participate in every worthwhile movement directedtowards preserving for our country a sound social and economic structure.Industry and trade have to discharge many responsibilities to thecommunity. They should provide support moral, personal and financial
to institutions or causes which make their towns and villages better forliving and which are intimately connected with our spiritual heritage.
Advocating Responsibility
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Gramdan; bhoodan; sampattidan
Businessmen interest in humanitarian,
cultural,educational and other beneficial social
activities.
To adopt fair trading practices, and to consider their
business as a social mission.
Trusteeship theory
Vinoba and the Trusteeship Ideal
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Jai Prakash Narain: 1965 seminar in Delhi, Calcutta.
Build social audit as part of social responsibility
Justice and fair play in all dealings
Attempts at growth and development of owners and consumers,community, employees, shareholders, other businesses, and towards thestate.
Utilisation of surplus for social purpose : education, health, research etc.
Fair Trade Practices Association in Bombay in 1966.
Debating Responsibility
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Low ethical std tax evasion, black marketing, illegal foreign exchange etc
JRD : use of fin, hr, to provide task forces to provide relief and reconstruction measures . The
business community is an essential ingredient of our democratic society and it has a duty notonly to create wealth but also to promote the ethical and social goals of the community.
Mafatlal : beyond philanthropy self discipline, quality control of consumer goods, fair trade
practices, avoidance of vulgar display of wealth
Grass root issues : unemployment, social unrest, inadequate provision for social welfare.
Showing the way
l f l bl
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Factors Leading to Emphasis on Escalation of Social Problems:
Population Growth
Governments Socialist Policies
Growing Unemployment
Deprivation
Escalation Of Social Problems
G h Of V l S
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Factors Leading to Growth of Voluntary Sector
Number of Calamities
New Welfare Organizations
Growing Social Consciousness
Womens Issues
Growth Of Voluntary Sector
G t C t & Sti k P li
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Realization Of the Government
Nehrus Last Message
Tax Concessions
Governments Carrot & Stick Policy
L d hi
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JRD Tata Leads
Arvind Mafatlal follows
Leadership
P ti Ch b
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Chambers Of Commerce & Industry
Pre-Independence Emphasis
Post-Independence Emphasis
1.Population Growth
2.Rural Development
3.City Development
Proactive Chambers
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Cont
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Autonomous body called Tata Steel Rural Development
Society for community services in 32 villages.
Today the Society operates in 600 villages in eight districts of Bihar, Orissa and MP for undertaking construction of roads,water sources for drinking and irrigation, promotion of RuralSanitation and other welfare programmes.
The Company stood to gain in terms of Improved IndustrialRelations, rapport with Tribal Leaders, international Exposure
and an image as a good Corporate Citizen.
Cont
Cont
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Cont
TATA MOTORS
Initial thrust on Healthcare, education and building
roads to link remote villages and also FamilyPlanning and Watershed Management.
Made history when conducted the first Social Audit
in 1979.
Other Business Units
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BAJAJ
Systemized and expanded its Rural development work .
Kasturbhai Lalbhai Group
Set up the Narottam Lalbhai Rural Development Fund(NLRDF)
to undertake several programmes of development in family
planning, forestry, rural industries, sanitation and so on.
Other Business Units
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BIRLA
Mix of traditional and Modern philosophy.
Building several new temples and prestigious Institutions likeSangeet Kala Mandir & the Sanskrit Sagar.
In 1978 BM Birla established the Birla Rural DevelopmentAssociation with the objective of improving the life of thevillagers.
For improved agricultural practices, the Birla Agricultural Farmwas set up in Ropar inPunjab.
Multinationals
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Indian Tobacco Company (ITC)
First major contribution to society by establishing in
1977, the ITC Sangeet Research Academy in
Calcutta to preserve and rejuvenate the guru
shishya parampara.
Multinationals
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Hindustan Lever Limited (HLL)
Its involvement with rural communities included
educating farmers in improved dairy farming,provision of interest free loans, R &D for rural
problems, demonstration of improved practices in
oilseeds production and introduction of new incomegeneration activities such as poultry farming, etc.
CONCLUSION
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It began to be accepted that business had to share a
part of the social overhead cost of economicdevelopment if it wished to share in its fruits.
Shift in beneficiary and issue focus from Urban to Rural
areas, and from education to concerns like populationcontrol, agricultural improvement, employment skills forwomen and so on.
Moreover newer and smaller groups with no previoustradition of philanthropy joined established houses totake on this new responsibility.
CONCLUSION
References
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Fernando A C, Corporate Governance Principles, policies andpractices, , Dorling Kinder Sley (india) Pvt. Ltd, 2006
Banerjee R P, Ethics in Business and Management, HimalayaPublishing House, Mumbai, 2008
Sharma Subhash, New Mantras in Corporate Corridors, New AgeInternational Pvt. Ltd. , New Delhi, 2007
Jayashree S, Dastoor S Dhun, Sadri Sorab, The Theory andPractice of Managerial Ethics, Jaico Publishing House, Mumbai,1999
Maddux B Robert, Maddux Dorothy, Ethics in Business A guidefor Managers, Crisp Publications Inc., 2005
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OPEN HOUSE Unleash the Power within
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THANK YOU
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