Amnick

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Business vs. Ethics: The India Tradeoff?: Knowledge@Wharton (http://knowledge.wharton.upenn.edu/article.cfm?articleid=2897)

Business vs. Ethics: The India Tradeoff?
Published : January 03, 2012 in Knowledge@Wharton

As Ratan Tata, chairman of the Tata Group, observed, "If you choose not to participate in [corruption], you leave behind a fair amount of business." Much has been written about the benefits of doing business in India -- low input costs, easy access to labor and a massive consumer base. Less has been said about the ability of companies in India to thrive by bending rules, greasing palms and broadening ethical boundaries. At a time when the issue of corruption threatens the stability of the Indian government and scandals unearthed in sectors from sports to telecommunications total tens of billions of dollars, it is becoming increasingly critical for multinational managers to ask whether business success in India comes at an ethical cost.

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Following the 1991 fiscal reforms, India's growth story is entering its third decade in dramatic fashion. Annual growth bordering on double digits, a middle class set to grow eightfold in the coming two decades and 800 million mobile subscribers are but a few highlights of the narrative that has reshaped the global business landscape. The sheer magnitude of the opportunity has brought multinational businesses racing to the subcontinent from all over the world for a slice of the burgeoning pie: In a recent survey conducted by the United Nations Conference on Trade and Development (UNCTAD), India replaced the U.S. as the second-most important foreign direct investment (FDI) destination for transnational…...

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