Article (January-2019)

Articles

Indigenizing Corporate Governance

CA Balasubramanian Gopalakrishnan

Designation : -   Doctoral Researcher in Corporate Governance

Organization : -  Banasthali Vidyapith (Raj.)

Other Writers : -  Prof. Harsh Purohit - Dean Faculty of Management and Faculty of Law, NCCG, SBI School of Commerce and Banking, Banasthali Vidyapith (Raj.)

01-Jan-2019

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The idea of governance is extremely important for any entity be it 'self' or 'organization'. An entity functions effectively by following certain said/unsaid norms. But, the reality is not black and white, and not even grey! It has large array of colours. Diversity in all aspects exists, unchallenged and undeterred even by dictators. This gets even more complex in a scenario called VUCA - Volatility, Uncertainty, Complexity and Ambiguity, a term coined by Johansen (2013) most probably inspired by the era which is very well depicted in Indian shastras, called as Kaliyug.

So, what could be our approach? 

Self-Governance - If we take the indigenous1 approach to governance in case of Bharat (India), the equivalent translation in Sanskrit is Shaasan (emanating from the root word - Shamsan, 'to control'). Bhagwan Shri Krishan in Gita described it as an important characteristic of a wise man (Shlok 42, Chapter 18). Gandhi ji also emphasized on it, when he called for "pahle nij par shaasan phir anushaan" (first govern and discipline self, and then govern others). Just as good upbringing, impeccable value systems and integrity are the hallmark of a good individual of a family, inculcating similar values in each individual comprising the corporate is also equally essential. So, self - governance is the key to bringing good governance in any organization and it is over and above all forms of governance.

Learning from visionaries - Time and again visionaries philosophers, thinkers, and practitioners like King Janak, Mahatma Vidur, Yudhisthir and Kautilya etc. have emphasized the idea of "self-discipline" and taking righteous actions. The concepts elaborated by them include Indriya-Jay (control over senses), Aatm-Vijayi (control over self), Loksangrah (discharging duties selflessly) etc. Such principles can guide us towards the path of good governance.

Implication for corporate governance

The scenario would be best when the need for corporate governance does not arise! If professionals with high integrity are present in organizations, this could be possible. However, to be able to institutionalize integrity and achieve the desirable state, there is a need for corporate governance.

Next comes - How to improve corporate governance? 

Acknowledging the work of corporate, researchers and consultants to advance this domain, here we present a few new ideas based on indigenous ideas of Bharatiya culture that have potential to bring requisite improvements.

1. Addressing feminine drain : With the inclusion of women representation in the board, we have tried a good balance of masculine and feminine traits in the boardroom. But, the critical question is - to what extent we have been successful in bringing feminine traits to the board? Do the women, who have entered board posses feminine traits or are they themselves masculine? This also reflects the need to adhere with the CG norms in the spirit and not just tick boxes of compliances. Thus, we posit that instead of focusing on biological gender equality we need psychological gender equality. Prof. Subhash Sharma suggested that the touch of feminity is essential for creativity and good governance.2

2. Integrative/Holistic approach - Prof. Nandram developed the idea of 'Integrative Intelligence'3 which suggests that leaders should be able to take decisions by considering multiple factors into account like humanness, artificial intelligence, history, future course, diversity etc. Prof. Sharma presented the idea of holistic management approach that comprises of character competence, ethics, and HOPE (Higher order purpose of existence).4

3. Indigenous definitions and parameters - The frameworks of corporate governance researched and developed in western context are based on western culture. This affects the companies adversely, as instead of contextualizing the business to needs of that society, the businesses are forced to comply with norms developed in and for western societies.5 For example, a Bharatiya corporate person will be able to resonate more with the concept of Dharm-Arth-Kaam-Moksh towards holistic development rather than integrated reporting, which would be alien to him/her.6 Also, the family owned and controlled businesses are dominant form of organizations all over the world so it is natural that their approach is significantly shaped by the traditional culture. For example, every three out of four family businesses in India go out of way to help and retain employees in adverse conditions and also support community initiatives7 and this was even before CSR became mandatory in india. Shri Sandeep Singh, Founder of SWASTIK, categorically mentioned that there are many such cases like Birla Group, Tata Trusts, and even people from ancient India contributed to the social causes without any rules and regulations.8

To Conclude

 If well researched models are developed, it will increase the effectiveness of the businesses and corporate governance, resulting in ultimate objective of social development. The authors do not propose to discard the existing frameworks and models of corporate governance, but highlight the need for better adaptation to needs of each culture.