16 January, 2005: Oxymorons define the contemporary global world. "Ethical business" seems to be one such antithetical idea. Many feel that anything that is labelled as a 'business' is fundamentally an unethical enterprise. Most suspect that for a business to be successful, it must be built on a conscious compromise with morality. What these notions really reveal is that there is a major conflict between business and moral life - a conflicts that is disturbing.

Success in business is seen as making profits, advancing private interest and having an unlimited ambition for money, position and power. On the other hand, moral life focusses on abstract wealth: riches of the soul and the heart that come from performing duties for others, taking responsibility wherever it matters, placing other people's interest over self and always treating others with the dignity and respect they deserve or what we would like them to give to us.

Simplistically, a business can be spoken of as a process of adding value to a product or service. This value addition is usually accomplished through people. Even so, most businesses concentrate on the transaction mode and try to maximise profits without worrying about the people and processes adopted to achieve the obvious goal. Sooner or later these businesses run into problems. Statistically, the more a business does something illegal or unethical, the more likely that it will be caught. A classic example is Enron. When the ethical environment is poor, organisational performance suffers through bad communication, which harms openness and clarity vital to growth. These are hard to measure but can be felt. Easily measured are drops in productivity. Overall, the morale is badly affected, leaving the organisation vulnerable to setbacks.

On the other hand, businesses that are ethical, too, are faced with some fundamental questions. ``What is in it for us to be ethical?"or``Why should we be ethical, when the rest of the world is greedy?"

There are many answer to these, some are simplistic, like: An ethical business means a sound perception by the world around, greater control over organisational and people behavior, a better and stronger business, and happy restful sleep and hassle-free life for the people working in the business.

There are deeper and wider answers too. Like: Ethical organisations create an organisational culture that can be revered. It enhances group dynamics, improves communication greatly and lightens the burden of immorality. It increases the flow of knowledge, information and reasoning capabilities. The feedback mechanism works extremely effectively both ways. All these are a real strategic advantage. Ethical organisations also play much better in teams as they do not have to cover their track all the time.

Invariably, managements blame individuals in technology, marketing or manufacturing functions for failures and look for scapegoats. But the organisation has a contributory factor in failure. When people are not provided with an environment to think, plan, adapt and execute effectively as a team to meet objectives, they are bound to stumble. There is evidence to suggest that this capability is culturally derived and can be advanced or regressed through cultural practice. Ethical organisations provide precisely that cultural environment and spend enormous time and effort on training and development of every person.

Ethical organisations can actually have a ripple effect on the entire economy. Ethical structures discourage unhealthy behaviour and, instead, inspire superior reasoning and performance. Ethical reasoning prevents evil from seeping into the work culture. Ethically run organisations also realise that it is only through good human beings that they can inspire greater levels of innovation and process breakthroughs that result in sustainable competitive advantage.

When managers in such organisations understand how ethics makes them better, their roles as managers change forever. Ethics becomes a way of life. Ethics forces one to respect the rights of all stakeholders. A certain mutual interest, respect and trust are developed. This creates the possibility of transactions, which meets the needs of both parties, instead of exacting prices from one or the other so that neither will intentionally, or unintentionally, offend the other, thus leading to a committed relationship.

Kautilya's Arthashastra, the ancient treatise, says: "If no man you transact with will lose, then you shall not." Over a hundred years ago, my grandfather adopted this philosophy to run the business that he established. After working for over 40 years in that environment, I find it is true. His quoting from ancient Indian scriptures has had equally long-lasting philosophic meaning to it.

The twin concepts of " knowledge and welfare" are worshipped in the form of Goddess of "wealth." While knowledge might be something that is private, welfare signifies community wealth. Generating wealth for all is the true test of a good business. Thiruvalluvar, Author of Thirukural, the ancient poetic treatise, put it beautifully: "Wealth and knowledge must always be shared with the community as water in a village pond, unlike the water in a private well."

So my belief is that as long as businesses create wealth ethically, and share it with the community, they prosper. And remain perennially meaningful, never out of step with the changing world.