Category: Business Ethics

The Ifs and Buts of Corporate Apologies

Posted on October 10, 2012

A decade after a Knowledge@Wharton article analyzed an outpouring of corporate apologies, the word “sorry” is back in the headlines. Apple’s apology for errors in its maps app sounds truly remorseful, but the company needs to watch out for less forgiving technology users, says Wharton professor of operations and information management Kartik Hosanagar.

“While it is true that consumers are often forgiving of [problems] with technology products because of the usual trial and error issues, this is less so for a product that charges a premium like the iPhone,” Hosanagar notes. “Apple will need to be careful about these kinds of mistakes more so than a typical tech player.”

This isn’t Apple’s first mea culpa over the iPhone. The company was prompted to offer $100 rebates to some consumers after it slashed prices for the first iteration of the iPhone from $599 to $399 just two months after the product launched. Apple was made to apologize again in 2010, when iPhone 4 users complained about poor signals and dropped calls due to a design problem with the device’s antenna.

Apple under Jobs had been seen as generally reluctant to acknowledge errors. But current CEO Tim Cook was more candid in his statement about the maps flap. “We fell short on our commitment,” he said, as he apologized for the company’s decision to remove Google Maps from the list of default apps in the newest version of the iOS operating system and to replace it with an in-house program that has proven to be riddled with errors. Cook even directed customers to maps apps of rivals including Google and MapQuest while Apple fixes its mapping utility.

Comparing Jobs to Cook on apologies may not be entirely fair. “Tim Cook is an unfortunate position in which everything he does will get compared to Steve Jobs,” Hosanagar notes. “These kinds of things happen often and good CEOs often take responsibility for such missteps. That his style is different from that of Jobs will keep getting attention. But analysts must recognize that Cook has his own style.”

Others like ousted Barclay’s Bank CEO Bob Diamond have also not minced words when their firms were caught making an error. In July, he apologized to a British parliamentary panel for “reprehensible behavior” on the part of his bank’s traders indulging in manipulating interbank lending rates. It didn’t help much, though. By then, U.S. and U.K. regulators had already slapped a fine of $453 million on the bank.

On Thursday, appliance maker KitchenAid of St. Joseph, Mich., apologized for “an irresponsible tweet” about President Barack Obama’s late grandmother. “Another company learns the pitfalls of social media,” said a USA Today report on that episode.

Companies must use their apologies carefully, Wharton marketing professor Stephen Hoch cautioned in the 2002 Knowledge@Wharton article referenced earlier. When a company is apologizing for a mistake to a group of people, such as customers, who know about the mistake, then the “right way to do it is to spill your guts, lay the negatives on the table and then try to refute those negatives,” he noted. It’s a kind of “boomerang approach, turning the negative into a positive …” Yet, he advised against firms apologizing to all and sundry, since they tend to deal with heterogeneous sets of customers. “In fact, a massive apology can be risky.”

Even the world of apologies has its heroes, however. James Burke, the former Johnson & Johnson CEO who died last week, will be most remembered for the 1982 Tylenol recall, according to a Knowledge@Wharton Today blog post from last week. Burke ordered a nationwide recall after seven people died in Chicago from taking cyanide-laced Tylenol capsules. In a 2004 Wharton School Publishing Book titled, Lasting Leadership: What You Can Learn from the Top 25 Business People of Our Times, Burke explained that Johnson & Johnson’s celebrated credo that places customers above all had emboldened him: “It gave me the ammunition I needed to persuade shareholders and others to spend the $100 million on the recall.”

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The Dangers of Blocking Medicaid Expansion

Posted on September 19, 2012

States’ refusal to expand their Medicaid programs as originally envisioned by the Affordable Care Act (ACA and now commonly called Obamacare) may diminish that law’s role in reducing health care disparities by 10% to 20%, according to a report from the Leonard Davis Institute of Health Economics (LDI).

Polsky

Writing in the LDI Health Economist, Wharton health care management professor Dan Polsky and LDI Health Policy Program associate director Janet Weiner based their estimate on Congressional Budget Office figures indicating four million more people than originally expected will remain uninsured in 2014 when the law fully takes effect. They say this group “would be disproportionately poor and minorities.”

Commenting on that report, Julia Lynch, a Penn political science professor who studies public attitudes about health care inequities, notes the national press pays little attention to this issue because “for most people, the ACA was not about reducing health care disparities.” She points out that although many of the law’s provisions directly address disparities, the framing used to sell it to Congress and the public largely focused on its potential pocketbook and market benefits for the middle class and insurance companies.

“Insurers were the key players that needed to be brought onboard, and for them it’s not about reducing disparities,” Lynch says. “It’s about increasing their market and protecting themselves from radical risk. The one group for whom access-related disparities were an issue was state Medicaid administrators. They knew what this was about and, it turns out, a number of their states filed suit because they don’t want to do it.”

Some individual states, in their Supreme Court lawsuit, hoped to overturn the entire ACA. To their surprise, the high court upheld the overall law but struck down the provision that empowered the federal government to make the planned expansion of Medicaid mandatory.

Jointly funded by the federal and state governments, Medicaid is a $430 billion-a-year health insurance program for the poor. It currently covers about 70 million people, and estimates released just prior to the June court ruling indicate the mandated ACA provisions would have expanded the program to cover about 17 million more low-income individuals.

But since June, some 15 states have announced that either they will not expand their Medicaid programs or they are leaning in that direction.

“The extent of the impact will depend on which states fail to implement the expansions,” says Karin Rhodes, director of the emergency care policy and research department at Penn’s Perelman School of Medicine, and a researcher studying disparities in access to health care. “For example, if Massachusetts failed to implement, it would not have a big impact as they only have 6% uninsured, whereas in Texas almost a quarter of people lack health insurance — so it will have a bigger impact. Moreover, those without health insurance are disproportionately Hispanic, African American and young adults. So we can expect a decrease in equity of access and an increase in health disparities in states that have high rates of uninsured and reject Medicaid expansions.”

Lynch

In health services research, community disparities have long been recognized as one of health care’s most important issues. The annual National Healthcare Disparities Report by the federal Agency for Healthcare Research and Quality (AHRQ) concludes that “racial and ethnic minorities and poor people often face more barriers to care and receive poorer quality of care.”

For example, AHRQ found that in 2011, African Americans received worse care than whites for 41% of the AHRQ health care quality measures. The report also notes that while the general quality of care is improving across the U.S., disparities are not.

Evidence from other recent studies shows that insurance itself plays a role in defining some disparity patterns. One of the arguments for the ACA’s Medicaid expansion provision was laid out in a Kaiser Foundation study by Marsha Lillie-Blanton and Catherine Hoffman, which cited “evidence that a sizable share of the differences in whether a person has a regular source of care could be reduced if Hispanics and African Americans were insured at levels comparable to those of whites.”

This summer, a new Johns Hopkins study detailed in the Journal of General Internal Medicine further underscored what a dramatic difference insurance coverage can make. A team led by Derek Ng studied the outcomes for a diverse group of 13,000 patients admitted to three Maryland hospitals with acute cardiovascular events over a period of 14 years. The findings show that race was not associated with an increased risk of death — but insurance coverage was.

Uninsured or underinsured heart attack patients had a 31% higher risk of death than those with private insurance; arteriosclerosis patients were 50% higher; and stroke patients 25%. These cardiovascular diseases are a major component of the mortality disparity between low-income African Americans in urban neighborhoods and people of all races living in healthier neighborhoods.

“Our findings,” wrote Ng and his co-authors, “suggest that a lack of health insurance, or being under-insured, is a major cause of insufficient treatment and subsequent premature death.”

Rhodes

Just a month before the Supreme Court’s June ruling, a study in Health Affairs calculated that as a result of the Affordable Care Act’s full implementation with Medicaid expansion, “racial and ethnic differentials in coverage could be greatly reduced, potentially cutting the eight-percentage-point black-white differential in uninsurance rates by more than half and the nineteen-percentage-point Hispanic-white differential by just under one-quarter.”

The bottom line on exactly how much the Medicaid expansion will be curtailed won’t be known until sometime after the upcoming national elections. But for health policy researchers like Karin Rhodes, the general trajectory of the economic and health implications seem clear.

“We are not yet at the stage where we let people die in the streets,” she said. “So [patients] will still present for health care, frequently to an emergency department. But without preventative care, they will arrive sicker and have worse outcomes. This is one of the current system failures the ACA is designed to remedy. People who present late in their disease are also in need of more high tech, critical care and end of life care — so in the long run we will spend more — for even worse outcomes.”

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Is Flogging Bankers an Option?

Posted on July 31, 2012

Another week, another bank scandal. The latest affront: a vast money laundering scheme by HSBC involving illegal drug and possibly terrorist funds. Some say it will take jail time for executives to end the epidemic of financial crime. But is the court system up to the task?

While HSBC has not been charged formally with a crime (it is in settlement negotiations with British and American authorities), the bank is preparing to pay as much as $1 billion in fines and has twice in recent years apologized for money laundering activity. The bank’s chief executive, Stuart Gulliver, was quoted yesterday calling the bank’s failed money-laundering controls “shameful and embarrassing.”

The list of major of bank wrongdoings has been relentless leading up to the HSBC case. The latest, involving JPMorgan Chase & Co.’s derivative losses of nearly $6 billion, along with the LIBOR interest-rate-fixing scams, seem to solidify charges of systemic corruption rather than problems resulting from lone-wolf traders or some other one-off explanation.

In the HSBC case, a multi-year probe found that the bank provided a network for illegal drug money, maintained clients who allegedly had terrorist connections and sterilized information from transactions that would tie them to principals in Iran, which, according to press reports, could place the bank in breach of U.S. sanctions. Senator Carl Levine of Michigan, who led the U.S. investigation, said HSBC’s culture has been “pervasively polluted for a long time.” HSBC is also potentially involved in the LIBOR scandal, which could involve an additional $1 billion in fines.

Those levels of fines and penalties can seem big. Barclays recently paid $453 million to U.S. and British regulators for fixing LIBOR interest rates, and many other big banks look likely to be involved. But given the huge size of the banks, do these fines simply amount to a relatively small cost of doing business?

“I think penalties for these large corporations need to be much higher,” says Wharton finance professor Franklin Allen. “They should perhaps be defined in terms of a percentage of profits over recent years or of market capitalization.” Allen also believes that people should go to jail if the offenses are serious enough. He thinks the recent LIBOR fines for Barclays were “much too low,” although in the LIBOR case more broadly, there is talk of some jail time for “the fraud abuses.” And even in the case of HSBC, where penalties could reach $2 billion once LIBOR offenses are accounted for, “the kinds of figures they are talking about are small given the seriousness of what the bank did.” 

Wharton finance professor Richard J. Herring thinks jail time may be the only thing that has a chance of deterring fraud. Financial penalties don’t seem to work. It is generally “inappropriate to levy penalties on corporations because shareholders seldom have the information or ability to curb such infractions.… Most shareholders simply … sell their shares if they don’t like the firm rather than try to reform it.”

That leaves stiffer sanctions on the “individuals who commit such crimes” as the best route, Herring argues. Yet, “from the evidence of the worst crisis since the Great Depression, it would appear that the chances of being held personally liable are minute, while the potential gains, if you aren’t caught, are huge. It’s not surprising that we seem to be witnessing an epidemic of financial crime.”

What’s more, in the HSBC case and many others, bank bonuses appear to be tied to risk management performance. While perhaps well-intentioned, this incentive model can end up discouraging bank executives from reporting problems to compliance officials. Such misaligned incentives look like “a major flaw in our attempt to establish accountability that undoubtedly contributes to excessive risk taking,” Herring says.

On those rare occasions when officials actually do try to prosecute someone, “it usually ends in an out-of-court settlement….”  And even when a fine is levied, insurance usually covers it, Herring points out. True, insurers could try to throttle such behavior “by demanding more rigorous compliance inspections, but so far they have mainly reacted by raising rates that are passed on to the shareholders.”

Given such incentives, or the lack thereof, Allen agrees that jail sentences would help, along with more bonus clawbacks for senior managers that should go back “many years.”

Mauro Guillen, a Wharton management professor, agrees. “Aiding in money laundering should be punishable by jail time. I think it is dealt with in that way in many countries. I can imagine, though, that targeting specific employees of a bank might be difficult.”

So, even if regulators get more serious about imposing jail time on miscreant bankers, it may not solve the problem. It’s very difficult to prove a case beyond a reasonable doubt, Herring notes. “The standard of proof in a criminal proceeding is very high, and most juries simply can’t understand the complexity of many financial crimes.”

That fact that no bank executives have gone to jail following the global financial crisis supports this view. And the most notable exceptions do not inspire confidence. Before finally being convicted, Bernie Madoff managed to “elude prosecution for decades even when it was evident to sophisticated observers that he was running a Ponzi game,” Herring says. And Martha Stewart, also convicted, had nothing to do with the “the financial crisis that has impoverished many Americans. This was most assuredly not a victimless crime, but the authorities appear to lack the will or the appropriate tools to prosecute the perpetrators. Until this situation is improved, we should not be surprised to witness more of the same.”

It’s not this way in every country. Some show little tolerance for those involved in major bank fraud. For example, yesterday an Iranian court sentenced four people to death by hanging for a billion-dollar bank fraud that tainted the government of President Mahmoud Ahmadinejad, Reuters reported. In addition, two people were sentenced to life imprisonment, others received jail sentences of up to 25 years and some were sentenced to flogging.

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Taking a Long Lunch? When Doing Personal Chores on the Job Is OK

Posted on July 20, 2012

Thanks in part to the growth of mobile technology, it’s no secret that work is starting to seep into people’s home lives. But life is also seeping into the office, with an increasing number of employees setting aside a few minutes — or longer — during the workday to send personal e-mails, run errands or take a coffee break.

Those tasks were among the most mentioned in a recent survey by data protection firm Mozy. Other activities that respondents said they felt comfortable doing on company time included leaving early for doctors’ appointments or for a child’s performance at school.

The study of 1,000 employees and employers from the United States, Great Britain, Germany, France and Ireland also found that many managers are taking an increasingly relaxed attitude toward how workers structure their days, in part because the bosses assume — correctly, according to the study results — that many are putting in time outside the office to finish work tasks.

As the workday strays further from the traditional 9 a.m. to 5 p.m. structure, how do employees figure out when it’s permissible to slip in time for personal business — and determine what types of “life-related” tasks are acceptable?

“It’s a combination of factors,” says Wharton practice professor of management Stewart Friedman. “You’ve got to consider the work culture [and] the personal ethical standards and conscientiousness of the employee. The age of the employee probably has an effect as well.” But the most critical factor is the “social and political environment at work, what the expectations and assumptions are about how people are supposed to operate, and whether the emphasis is on results as opposed to how those results are achieved,” he adds.

Workers on an assembly line or in similarly regimented and location-dependent positions are limited in the amount of flexibility they have. “In the pre-Internet world and in the manufacturing-based economy, your physical presence was really the thing that mattered,” Friedman notes. “Performance management systems were created around the idea of time as the essential metric.”

That remains the traditional model and mode of thinking for many organizations, Friedman says. But he adds that managers should consider that it’s just as important for employees to be psychologically present. “It’s harder to be psychologically present when you’re distracted by the demands of other parts of your life. I think the principle to go by is that if [time for personal tasks on the job] helps you take care of things that matter to you – and that you are  responsible for in other parts of your life — an employer is going to want you to do that so long as you meet performance standards and deliver results in ways that create value for the company.”

Friedman knows of a company where employees have even been put in charge of their vacation time. Instead of earning a set number of days, “you take vacation when you need to, just in the way they trust [employees] on a daily basis to figure out when they need to check out to do other stuff.”

Moving toward a more flexible, less location-dependent method of accounting for a worker’s time requires a certain level of trust on both sides, in addition to a transparent, results-focused system to evaluate employee performance, Friedman says. “What you want are people who have a sense of responsibility for the outcomes that matter, and you engender that when you give people the authority to make decisions about when they get things done.”

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Corporate CSR: What It Means to Go ‘All In’

Posted on July 6, 2012

We’re entering the next big wave of corporate social responsibility. At least that’s how Daniel Korschun, a Drexel University marketing professor, sees it.

The first wave of corporate social responsibility, known as CSR, was embodied in people like Sir Titus Salt, a British textile baron who improved conditions for workers toiling in what were then known as “dark satanic mills,” Korschun noted during a panel at this year’s Wharton Social Impact Conference. Salt brought them out of the economic darkness by providing housing, health care and a better way of life.

The second wave came during the 20th century with the growing debate in corporate America over whether CSR should be considered an essential piece of good management or just a marketing tool to garner favor from communities, he said.

Today, “the debate is over,” noted Korschun, who acted as moderator of a panel focusing on innovation in corporate CSR. “We’re seeing the third wave of CSR, and companies are trying to incorporate CSR into the business model. That’s putting the onus on companies and management to find ways to innovate. It’s no longer enough to be somewhat engaged.”

Indeed, panelists at the session talked about how deeply involved companies have become with regards to giving back to society, either through philanthropy or sustainability efforts, and how far they still have to go in this effort.

Catherine Potter, a senior associate at consulting and management company Green Order, spoke about the environmental reality check her company has been able to provide to a client roster that includes General Electric, Pfizer and DuPont. GreenOrder focuses on how environmental innovation can actually make businesses more competitive and profitable, she said. “We’ll be the first to tell them, ‘Don’t just go … green for green’s sake.’ It should be rooted in business value.”

Building an enduring and effective sustainability platform, she added, takes many steps, but companies first have to understand what their core business model is, how they make money and how environmental sustainability plays into that. When clients come to GreenOrder, it’s usually the CEO who has bought into the idea of promoting green, “but the rest of the team thinks it’s hooey.” Yet buy-in at all levels is critical for making it work, Potter noted.

One example of a company that’s gone all in, she said, is General Electric, which GreenOrder has been advising since 2004. The multinational conglomerate, a global manufacturer of  everything from lighting to wind turbines, was able to cut more than $130 million in yearly energy costs while reducing greenhouse gas emissions and water usage.

Agencies in the public and private sector are coming to realize that CSR is not just about newfangled technology, but about changing behavior. For example, Potter pointed to utility clients who put in smart meters and devices for consumers to track energy usage. “It’s not going to work if you don’t engage people and figure out how to change their behavior,” she noted, adding that companies need to do more outreach to customers and make sure they have the information needed to form a realistic action plan.

Action is exactly what Chhavi Ghuliani, another speaker during the session, wants from all the players when it comes to environmental and social change. Ghuliani is a manager in advisory services for BSR, a consulting and research firm that works with 300 member companies all over the world to develop sustainable strategies for organizations, including everything from health education programs at a Bangladesh factory to creating green initiatives at a news organization.

In the past, Ghuliani said, companies viewed community investing and philanthropy as more important for brand recognition and boosting employee morale than for figuring into their core business operations. But today, it’s beginning to be seen more holistically. For example, he noted, BSR has completed a project with Bloomberg News to define what sustainability means, and was able to define what types of goods the company should be procuring to keep facilities running properly, while also focusing on what was the most sustainable. “As a result, Bloomberg saved $25 million in costs, but [the effort] also positioned them to be leaders in sustainability,” he added.

Figuring out which organizations are leaders in CSR, and which are falling behind, was another area BSR recently tackled by launching a new data service that compares CSR efforts among companies. Looking at two companies and comparing their energy efficiency is one example of this, noted Ghuliani.

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Should Businesses Pay Their Social Costs?

Posted on May 29, 2012

Alcoholism on Indian reservations in the United States has been a chronic and devastating problem for the Native American community. According to a report last year by the Centers for Disease Control and Prevention, Native Americans report more binge drinking episodes per month, and higher alcohol consumption per episode, than other races.

Now, one Native American tribe is suing liquor stores and leading beer companies for $500 million for contributing to alcoholism rates among its population. According to an article in The New York Times, the Oglala Sioux Tribe on the Pine Ridge Indian Reservation in South Dakota, where alcohol is illegal, is suing stores in nearby Whiteclay, Neb., along with Anheuser-Busch and other brewing companies, for “encouraging the illegal purchase, possession, transport and consumption of alcohol on the reservation.” The lawsuit seeks to cover drinking-related health care, social service and law enforcement costs on the reservation, in addition to curtailing liquor sales in Whiteclay, the Times article notes.

In an online debate of the merits of the tribe’s claims, Waheed Hussain, a Wharton professor of legal studies and business ethics, argues that when “businesses pay the full social cost of what they do, the free enterprise system is a terrific engine for social prosperity.” Under such a system, he writes, prosperous companies “have a special responsibility to mitigate the damage that they do.”

If businesses make profits at an expense to all, it’s not the type of economic activity that lives up to the spirit of free commerce, Hussain adds. “A manufacturer might cause pollution but not pay to clean it up. A bank might create financial risks, but leave the fallout to the rest of us. When businesses do not pay the full social cost, their activities might actually detract from social prosperity rather than contribute to it…. [Companies] have a responsibility to make sure that the profits they make actually contribute to the house that we all share.”

Read his full argument here: http://nyti.ms/Mo6Jyl

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Facebook Passwords, Privacy and the Lack of Legal Protection

Posted on April 19, 2012

Reports that some employers are requiring job candidates to hand over their Facebook log on information have caused an outcry over perceived violations of personal privacy — and even calls for a federal investigation by some members of Congress.

But U.S. job seekers and the currently employed as well  should exercise caution, according to Wharton legal studies and business ethics professor Janice Bellace. She says in the U.S., anyone trying to challenge such a practice in court would have almost no legal ground to stand on. “People think they have more rights than they actually have; they seem to think they have rights that are just not there,” she says.

For example, she notes that employment law for decades has said that non-unionized workers could always be fired for taking actions that publicly disparage their employers. But 30 years ago, doing so was relatively complicated, and catching workers in the act was just as difficult. “When I was in law school, we used to read about cases where it did happen because it was so unusual,” Bellace recalls. “If you were talking to your friends about how much you hated your boss, you probably did it face-to-face. Although technically, under the law you might have gotten in trouble, nobody ever knew about it.”

But social media has been a game changer. “Technology has made it so much simpler for employees to get into trouble,” Bellace says. Years ago, an employee might have written a letter to a newspaper tearing apart an employer, “but it took time to sit down and type it out. Now you can Tweet it so simply. People say things before their mind stops them and says, ‘What am I doing?’”

The law is equally devoid of traction for potential employees who might be asked to provide access to their Facebook accounts, Bellace notes. “It has always been the case that employers could ask others about you for a reference and, if you refuse to give them names, they can refuse to hire you,” she says. “I’m not saying it’s right or wrong, but it’s the state of the law.”

So why are the current incidents causing such an uproar? “Employees think that their private life is protected by some right of privacy and that either a current or potential employer shouldn’t be able to invade their private lives.” But, legally, in the U.S. there is little guarantee of that, Bellace says.

“Parts of the Bill of Rights refer to the right of the citizen or person against the state,” she notes. “No state can come into your house and ask to read your diary or computer files without a search warrant. It doesn’t say anything about an employer.” Last week, Maryland legislators passed what is believed to be a first of its kind bill that prohibits employers from requiring job applicants to hand over access to private social media accounts. States including California, Michigan, Minnesota and Illinois are considering similar legislation. Bellace says that she knows of no previous state law that explicitly offers this right of privacy, nor any case law that would support an argument in court, “although we may begin to see that.”

She points out that circumstances are very different in other countries where statutes exist that recognize an individual’s right to privacy. In Germany, for example, laws date back to the post World War II era when officials there sought to ensure that people could not be fired from their jobs for aspects of their personal lives, as they had been under the Nazi regime. A few years ago, Bellace attended a conference in Australia and recalls that the organization later couldn’t get a list of attendees from the Australian firm it hired to plan the convention because the law in that country prohibits the sharing of data without permission from the individual.

“Some of these countries developed laws before social media took off,” she notes. “That adds an interesting wrinkle in those countries because they are building on a foundation of law that says you own your information.”

Bellace says even people in the U.S. who try to sue an employer – one who has asked for access to social media accounts — on the grounds of discriminatory hiring practices (because the accounts may contain information such as an applicant’s age or race) may have trouble making a case. The employer could argue that it is asking all job candidates to provide the access and thus applying the policy broadly, Bellace points out, and if that is the case, the job seeker would have to prove that the company violated the law after checking out the entire applicant pool, which could be harder to prove.

“How do you know why others didn’t get hired? How do you know why you didn’t get hired?” Bellace asks. “That’s why employment lawsuits are so hard to bring.”

She predicts that there will eventually be further changes in the law “because younger people used to interacting with others online through social media will be more disturbed by what they view as an unreasonable intrusion into their private lives and therefore may propose legislation.” But Bellace adds that it will be some time “before people completely coalesce around this notion that you have a right to a private life and privacy in online communications.”

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Real Drivers of Corruption in India and the Rest of the World

Posted on March 23, 2012

“Corruption is the most important and topical issue in India today,” writes Dilip Gadkar, editor of Macro Viewpoints, in this response to an article published in Knowledge@Wharton in January. In this opinion piece, he disagrees with the article’s thesis and argues that there is no innate, structural difference between western ethics and Indian ethics. Rather, Gadkar writes, the difference between corruption in India and the rest of the world is essentially a matter of scale and institutional development.

Corruption is the most important and topical issue in India today. Nationwide disgust at the unwholesome political-business nexus has created a spontaneous anti-corruption movement led by the Gandhian Anna Hazare. Recently, the Supreme Court of India cancelled all 122 licenses that were granted in a highly irregular auction of spectrum by India’s telecom ministry as part of what has come to be called the 2G scam. 

So we were happy to hear that students from the Lauder Institute at Wharton had published an article in Knowledge@Wharton titled, “Business vs. Ethics: The India Tradeoff?”. Unfortunately, we were disappointed in what we read. We felt the article, though written no doubt with the best of intentions, seemed to manufacture a thesis rather than provide an analysis. 

 In this opinion piece, we lay out the reasoning that leads us to our conclusions and state our own views about the topic.  Read more…

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