Mahatma Gandhi had leading-edge views on corporate responsibility

Mohandas Karamchand “Mahatma” Gandhi was best known for his role as a leader of Indian independence and a champion of non-violent struggles for social justice. Less well known, however, are his views on ethical leadership and the important role that businesses may play in improving society.

Oct. 2 is Gandhi’s birthday, a national holiday in India (called Gandhi “Jayanti”) and the International Day of Non-Violence, as declared by the United Nations. Professors in the Haskayne School of Business at the University of Calgary say Gandhi’s thoughts on corporate responsibility are more important than ever.

In a recently published article in the Journal of Business Ethics, Haskayne professors Jaydeep Balakrishnan, Ayesha Malhotra, and Loren Falkenberg review Gandhi’s thoughts on corporate responsibility and their implications for business today.  

Alignment with Albertans' views

“It might surprise many people to learn that Gandhi’s views on business are actually quite aligned with Albertans’ views of the free-market,” says lead researcher Balakrishnan. Gandhi argued that businesses, operating with minimal interference from government, should act as “trustees” for society.

In other words, the wealth business owners create should be used for the betterment of society, after owners keep a reasonable profit for themselves. Business titans such as Warren Buffet and Bill Gates have echoed these thoughts when urging mega-wealthy entrepreneurs to contribute their material wealth and non-material talents to society.

Balakrishnan says he was fascinated to learn about Gandhi’s views on business after being involved for many years with the Gandhi Society of Calgary. He gave the society’s 2012 keynote address on Gandhi’s normative principles for business and his research motivated him to look deeper at Gandhi’s relevance for modern firms.

“Gandhi’s economic views are important because they still influence the corporate sector in India, one of the world’s fastest growing major economies,” says Balakrishnan. “He has also begun to influence Western thinking on corporate governance and business leadership.”

Influence on Mumbai-based Tata group

In their journal article, Balakrishnan, Malhotra, and Falkenberg illustrate how Gandhi’s principles have been (and continue to be) applied by one of India’s largest conglomerates, the Mumbai-based Tata group, which employs close to 600,000 people, operates in over 100 countries (including Canada, and even Alberta), and had 2013–2014 revenues of $103.27 billion (US). Between eight and 14 per cent of the group’s annual net profits have been distributed to social causes and invested in scientific and technological education in India. The company also focuses on treating its employees, customers, and competitors fairly and contributing to nation building in the different countries it operates in.

A major contribution of Balakrishnan, Malhotra, and Falkenberg’s work is its comparison of Gandhi’s corporate responsibility framework with that of two influential modern frameworks: stakeholder and stewardship views of business responsibility. Compared to these two frameworks, Gandhian trusteeship specifies a broader concept of corporate responsibility by explicitly connecting individuals’ rights and obligations with trusteeship in business firms and with various principles of ethical capitalism, including value creation and service to the community and nation.

Practice of corporate responsibility

Malhotra says, “Our research indicates that trusteeship has strong potential to help firms and their stakeholders achieve shared value by considering the interactions between individual, organizational, and institutional factors, and also by paying attention to a range of multi-level stakeholder obligations.”

Falkenberg adds, “Gandhi’s framework combines self-interest with pro-social behaviour, as exemplified by his ideas on the reciprocal rights and obligations of business owners, managers, and other stakeholders such as employees.”

Clearly, Gandhi’s framework is still very relevant and fruitful for the worldwide research and practice of corporate responsibility. Read the full paper, “Multi-Level Corporate Responsibility: A Comparison of Gandhi’s Trusteeship with Stakeholder and Stewardship Frameworks.”