Indo- International Conference On Gross National Happiness Vol 02, October 2013 Pages: 138-145 “Role of Business Schools in Orienting Students towards Building Happy Economies (Happiconomies)”

M.K.Ingale MIT School Of Management,Kothrud, Pune 411038 () [email protected] Abstract Parameters of measuring economic development and business performance had always been of great interest not only to economists but also to the policy makers, administrators and business community. Business schools had been accordingly making their students oriented towards achieving these parameters .Last couple of decades have seen many new concepts for evaluating both economic development of a country and financial performance of a business.This paper aims at discussing these emerging parameters and the role Business Schools will be required to play in near future in orienting their students towards the new parameters of evaluation economic development and business performance. Scope of the paper is limited to this aspect. Some of the measures suggested to Business schools in the paper are only indicative and it is not a comprehensive road map for achieving this objective. The author has emphasized the need for all concerned with this task to come together and design a detail plan of action for this purpose.

Emerging Parameters of Economic wealth started concentrating in a few hands Development and Business Performance leaving a majority of people without the Traditionally, most of the businesses are benefits of economic development. measuring their business performance on the The following charts show the divide clearly. basis of net profits and their motto is ‘Maximization of Profits’ or in more sophisticated words ‘Maximization of wealth in the hands of the shareholders’. Naturally, the performance of the managers and entrepreneurs is evaluated on the criteria of growth in profits and therefore, the managers and entrepreneurs are orienting all their business activities and actions towards achieving this goal of “Profits at any cost”. At macro level, the economy of a nation was Source: Analysis of U.S. Census Bureau data traditionally evaluated on the basis of in Economic Policy Institute, parameters like standard of living, per capita The State of Working America 1994-95 (M.E. income, and per capita consumption, Gross Sharpe: 1994) p. 37. Domestic Product and Gross National Product, Gross National Income etc. However, these measures were not taking into account the distribution of income or consumption amongst the people of the nation and overlooked the income divide. During the period 1947-1979, the income distribution was fairly even in USA but, during the period 1979 – 2009, the income divide become alarming and the national

International Journal of Business Intelligents (IJBI) 138 www.ijbui.com Indo-Bhutan International Conference On Gross National Happiness Vol 02, October 2013 Pages: 138-145 Source: U.S. Census Bureau, Historical with the concept of ‘Triple Bottom Line Income Tables: Families, (TBL)’. Table F-3 (for income changes) and Table F-1 Triple Bottom Line (TBL) (for income ranges in 2009 dollars). Triple Bottom Line is a matrix for a “For long, it was considered that development corporations’ social, environmental, and per se is the answer to human problems like economic performance. TBL is the latest series poverty, hunger and unemployment. Since the of buzz words to describe business beginning of the first UN Development involvement in sustainability. TBL is all about Decade forty years ago, this concept has dropping the financial bottom line as a proved to be an over-simplification in the meaningful indicator of where you stand in the context what is happening in real life in the market place and replacing it with a bottom areas of gender and economic equity, line that properly acknowledges the interplay environmental degradation and jobless of the social, economic and environmental economic growth.”( ‘Ethics Of Economic dimensions of our lives. Development’, Paper prepared by M.S. (The phrase ‘Triple Bottom Line’ was coined Swaminathan Research Foundation for the by John Elkington in his 1997 in his book Regional Meeting on Ethics of Science and Cannibals with Forks: the Triple Bottom Line Technology 5-7 November 2003, of 21st Century Business.) Bangkok,UNESCO) ‘Triple Bottom Line’ emphasized the Development approach of the 1980s, which importance of evaluating business presumed a close link between national performance on the basis of three bottom lines economic growth and the expansion of i.e. individual human choices was proved to be 1. Financial bottom line – How much is the inadequate to measure overall development of profit earning? a nation and a need to develop a more 2. Environmental bottom line – has the comprehensive model was felt by economists. organization helped/harmed the environment Bertrand Russell and Albert Einstein in while earning the profits. Pugwash Conference on 9 July 1955 while 3. Societal bottom line – has the organization releasing “The Russell-Einstein Manifesto” helped/harmed the society at large while issued in London warned the scientific earning the profits. community that “Remember your humanity, The concept of TBL demands that and forget the rest. If you can do so, the way responsibility of a company's lies with lies open to a new Paradise; if you cannot, stakeholders than shareholders. In this case, there lies before you the risk of universal "stakeholders" refers to anyone who is death.” influenced, either directly or indirectly, by the It is also relevant to quote Albert Einstein who actions of the firm. According to the said, “Unless the technology push is matched stakeholder theory, the business entity should by an ethical pull, we will find, the products of be used as a vehicle for coordinating our brain will become a curse rather than a stakeholder interests, instead of maximizing blessing.” Warnings given by Russell and shareholder (owner) profit.( source: Einstein can be applied to the economic http://en.wikipedia.org/wiki/Triple_bottom_lin growth models followed by world economies e) to-day. Profit maximization orientation was Human Development approach found to be ignoring the effects of the business ‘Human development Approach’ emerged as a activities on environment and society. A more more realistic and comprehensive measure to comprehensive measure to evaluate evaluate economic development of nations. organizational performance was developed Prof. Amartya Sen, Professor of Economics, described the approach as

International Journal of Business Intelligents (IJBI) 139 www.ijbui.com Indo-Bhutan International Conference On Gross National Happiness Vol 02, October 2013 Pages: 138-145

"Human development, as an approach, is  Equity - in terms of economic growth and concerned with what I take to be the basic other human development parameters. development idea: namely, advancing the  Participation and freedom - particularly richness of human life, rather than the richness empowerment, democratic governance, of the economy in which human beings live, gender equality, which is only a part of it." civil and political rights, and cultural liberty, Some of the parameters related to ‘Richness of particularly for marginalized groups defined human life’ included, by urban- rural,  Social progress - greater access to sex, age, religion, ethnicity, physical/mental knowledge, better nutrition and health parameters, etc. services.  Sustainability - for future generations in  Economics – the importance of economic ecological, economic and social terms. growth as a means to reduce inequality and  H uman security - security in daily life improve levels of human development. against such chronic threats as hunger and  Efficiency - in terms of resource use and abrupt disruptions including joblessness, availability. Human development is pro- famine, conflict, etc. (Source : growth and productivity as long as such http://hdr.undp.org/en/humandev/origins/) growth directly benefits the poor, women and other marginalized groups. Gross National Happiness Sr. Wellness Measuring metrics The term "Gross National Happiness" was No. attributes coined in 1972 by Bhutan’s then King His consumer debt, average Highness Jigme Singye Wangchuck, who has income to consumer 1 Economic opened Bhutan to the age of modernization, price index ratio and soon after the demise of his father, His income distribution etc. Highness King Jigme Dorji Wangchuk. He pollution, noise and 2 Environmental used the phrase to signal his commitment to traffic etc. building an economy that would serve 3 Physical severe illnesses. Bhutan's unique culture based on Buddhist usage of spiritual values. antidepressants and 4 Mental The nine parameters of Happy national rise or decline of development for surveying Gross National psychotherapy patients. Happiness (GNH) as developed by Centre for Jobless claims, job Bhutan Studies, Bhutan are, change, workplace 1. Standard of living, 5 Workplace complaints and 2. Health of the population, lawsuits. 3. Education, discrimination, safety, 4. Ecosystem vitality and diversity, divorce rates, 5. Cultural vitality and diversity, complaints of domestic 6. Time use and balance, 6 Social conflicts and family 7. Good governance, lawsuits, public 8. Community vitality, and lawsuits, crime rates. 9. Emotional well being the quality of local Med Jones, the President of International democracy, individual Institute of Management, proposed in 2006 7 Political freedom, and foreign Function of the total average per capita of the conflicts. following measures seven socio-economic

International Journal of Business Intelligents (IJBI) 140 www.ijbui.com Indo-Bhutan International Conference On Gross National Happiness Vol 02, October 2013 Pages: 138-145 development metrics. GNH value is proposed dignity which will make the people happy and to be an index. not only richer. It is very important to Capabilities Approach (CA) underline the emphasis on ethical practices in Similar approach to development is advocated conduct of business. An ethical mindset and by Prof. Amartya Sen called ‘Capabilities work culture are pre-requisites for achieving a Approach’ (CA) at micro level as against paradigm shift from mere existence to a macro approach of GNH. Prof. Sen, after productive and happy life. In near future, the ample research work and surveys on several policies and commercial activities in a nation sensitive issues like famine, drought, flood etc. will be evaluated on the basis of the new concludes that it is the inequality prevalent at parameters suggested above by various all levels in the society which leads to thinkers and economist. In future, we may unhappiness and is the root of all evils label the economies not as developed considering the fact that only a particular economies, emerging economies, third and section of the society suffers from its fourth world economies etc., but as happy consequences every time and not all. He also economies which may be termed as professes that the need of the hour is to change “Happiconomies” i.e economies with high the mindset of the people and the society Gross National Happiness. rather than increasing the funds in the Who will build these Happiconomies ? consecutive union budgets by citing the The task will be shouldered by politicians, example of teaching illiterate girls.(Ref. : administrators and business community Mihir Jha in his article New Parameters of including managers and entrepreneurs. Economy- I posted on Role of Business Schools in near future http://readersquotient.com/economics/gnh-the- Business School (popularly called B-schools) new-parameter-of-economy on 20th are imparting management education and March,2008.) training to students pursuing management The above concepts of evaluating economic studies. The students of B-schools enter the development are in the process of crystallizing managerial cadres and become decision and a lot of work is going on to make them as makers for business enterprises or become acceptable international measures of entrepreneurs themselves and decide the performance evaluation as much as PPP, GNP policies and practices of running their business and GDP etc. enterprise. Few of the students are entering the Francine Mestrum a researcher, PhD in public sector enterprises and hold top posts in social sciences, specialized in development these organizations. Trend seen in the recent studies, poverty, inequality, gender, state elections in India indicates that globalization, in her blog dated 18 April 2012 Management graduates from premier institutes posted on www.zcommunications.org titled are contesting elections and joining the politics ‘Why We Should Fight Global Income where they will be deciding the policies for Inequality’ has emphasized the importance of economic and social growth and development reducing income divide. of the country. Thus, management graduates She says “People do not revolt because they coming out of B-schools some way contributes are poor, but because they experience to the economy of the nations and their injustice, because their dignity is oppressed, education and training at B-school will have a because they are marginalized and feel strong bearing on their thinking and actions. excluded from the moral unity of human What role B-schools have to play in building kind.” Happiconomies through their alumni? The above discussion leads to the need for In past, even the premier B-schools had not reorienting business activities as well as been able to imbibe the values and ethics in national policies with an approach of human

International Journal of Business Intelligents (IJBI) 141 www.ijbui.com Indo-Bhutan International Conference On Gross National Happiness Vol 02, October 2013 Pages: 138-145 their students as much as they oriented the published an article titled “Why business students for the dictum of “Profits at any cost”. schools struggle to teach business ethics?” It is observed that most of the scammers in Following are the salient points made in the recent past had graduated from reputed article. business schools and did not bother about the  “Most business schools struggle to teach ethical business practices. A few of them are ethics and social responsibility simply because mentioned below. they don't know how to go about it. One . Rebecca Mark, Head, Enron International reason why business schools struggle is – M.A. in International Business from because there's a lack of case studies for the USA. basic courses like finance, organizational . Kenneth Lay, Chairman Enron – Ph. D. in behavior and strategy. As a result, they are Economics from USA. failing to incorporate ethics and social . Andrew Stuart Fastow, CFO, Enron group responsibility into every subject, from – MBA from USA. operations to economics. ” – Craig Smith, . Richard S. Fuld Jr., CEO, Lehman Bros. – Senior fellow in marketing and ethics, London MBA from USA. Business School. . Ramlingam Raju, Owner & President, He further points out that “There are certainly Satyam Computers – MBA from USA. bad apples out there, but many people make . Rammohan Rao, Independent Director on the wrong decisions because they don't see the Audit committee of Satyam- MBA and big picture and what the consequences could Dean, ISB, Hyderabad. be for themselves, their companies and . Krishna J.Palepu, Director, Satyam – society." MBA and HBS professor.  The author of the article Leon concludes They had a common modus operandi. that “Could it be that the training in rigor 1. Divert the funds in other activities without undermined ethical values, notwithstanding the knowledge of the share holders. what was learned in the ethics courses? You 2. Manipulate the financial statements of the might ask whether the focus on analysis company. undermined the so-called "soft data”. And 3. Earn enormous personal financial benefits could it be that focus on analysis resulted in a and create tangible asset. war that was fundamentally ill-conceived, 4. Lead the company to bankruptcy and badly conducted and ultimately immoral? resign.  Certainly those questions come to mind In view of the changing parameters of again when we consider the record of the first evaluation of economic policies and business MBA president, George W. Bush. (Leon, activities from GDP to GNH and from 2007) maximization of profits to redistribution of Association To Advance Collegiate Schools of profits leading to reducing inequalities, the Business, International (AACSB International) politicians, administrators and business USA organized “Teaching Business Ethics community must reorient themselves toward Conference- 2004” wherein the following the ethical mind set and B-school will have to issues were discussed by panel members. play a major role in reorienting the students  Role of Ethics in Business Curricula. towards building Happicomonies.  Successful Programs for Teaching How B-school will be able to reorient the Business Ethics. students towards the new mind set?  Teaching Business Ethics: Integration or ‘Sox first Management & Compliance’ Courses – Which Approach is Best? magazine in its issue of June 26, 2007, has  Experiential Activities in Teaching Business Ethics: Role Plays, Cases, Exercises, and Videos.

International Journal of Business Intelligents (IJBI) 142 www.ijbui.com Indo-Bhutan International Conference On Gross National Happiness Vol 02, October 2013 Pages: 138-145  Teaching Business Ethics in Business  We need to convince students that Disciplines: Accounting, Finance, managerial misconduct is always costly for Management and Marketing. society, because you are perverting the  Materials and Frameworks for Teaching mission of business. The practical personal Business Ethics. costs (such as imprisonment, etc.) are not The panel discussions were followed by necessarily the heaviest costs. Heavier costs question and answer session and the Dean’s are human diminishment and self- Perspective. The discussions are summarized degradation. – (Bob Kolb, 2004) in brief as below. The emerging role of the B-schools can be  If management graduates act unethically it summarized as below. will adversely affect the school’s brand – 1. The traditional parameters of evaluating (Ajay Menon., 2004) economic development like GDP, GNP etc.  Ethics must be integrated across the were inadequate to measure the income divide curriculum – Ajay Menon. and inequality and therefore, economists and  Faculty research shall be focused on social thinkers developed new parameters like Gross issues. Ethics goals need to be put in faculty National Happiness(by Bhutan’s King His evaluations and reward structure. – Ajay highness Jigme Singye Wangchuck,1972), Manon. Capability Approach (by Prof. Amartya  Ethics should be taught in a stand along Sen,1980) and Triple Bottom Line (by John course as well as be integrated throughout the Elkington ,1997) curriculum. – (Stephen Lawrence, 2004) 2. In near future, the economic development  ‘Business and Society’ course shall be and business performance will be evaluated on mandatory for management students – Stephen the basis of these new parameters based on Lawrence. human dignity and ethics. The parameters will  Management educators’ responsibilities is include economic, environmental, physical, to raise awareness, develop skills and mental, workplace social and political contextual application of skills – (Brent wellness attributes. Hathaway, 2004) 3. Policy makers, administrators and business  Students should understand the theory that community who mainly are trained in B- ethics involves philosophic ideas like justice, schools will have to change their mind set rights, duties, and virtues, as well as from GDP to GNH and from maximization of sociological concepts like values and culture, profits to redistribution of profits leading to and psychological notions like reasoning. reducing inequalities. We need to educate our students that 4. B-schools will have to play an important corporations have obligations to many role in orienting their students towards stakeholders. There is a social contract achieving the new parameters of economic between business and society, and students development and business performance. need to understand this –(Diane Swanson, Change in and regogy 2004) In order to achieve these objectives, B-school  There is something fundamental that we curricula will require a major change in its are not doing right. A program that relies on and regogy in the following way. electives is not sufficient. Infusion is The core subjects presently included in the extremely hazardous to the disciplines of structure are training students the commercial business and society, and business ethics. aspects of the business activity. In future, Infusion could lead to the destruction of these management students must be well versed academic disciplines. – (Piper, Gentile and with the monitoring techniques related to Parks, 2004) environmental protection and societal wellbeing while enhancing financial

International Journal of Business Intelligents (IJBI) 143 www.ijbui.com Indo-Bhutan International Conference On Gross National Happiness Vol 02, October 2013 Pages: 138-145 performance (Triple Bottom Line). They must a result of this exercise, the students of B- also be equally concerned about impact of schools who will be national policy makers, national culture, income divide and ethical administrators, entrepreneurs and business behavior while running their businesses managers shall have to developed a mind set profitably. Management students of tomorrow with firm convictions that, as ‘would be policy makers, administrators,  Economic development must benefit all managers and business persons’ must sections of the society in general and understand the new evaluation parameters of lower sections in particular. their performance and their linkage to Gross  Growth in GDP, GNP and GNI ultimately National Happiness. must result in Gross National Happiness. B-schools will be required to revamp their  Business activities must further the teaching learning process so that the students environmental and societal wellbeing are sensitized to human development, cultural while increasing wealth in the hands of the values, environmental sustainability, societal shareholders. wellbeing, ethics in business, good governance The B-school will thus, have to play a major etc. which ultimately will lead to national, role in orienting their students in building sustainable and inclusive development which nations not only as developed economies but is based on GNH and not on GDP alone. Some also as ‘Happiconomies’.His Highness King of the experiential learning activities to Of Bhutan, Jigme Singye Wangchuck, has sensitize B-school students to the above issues initiated the concept of Gross National will be, Happiness and therefore, it will be in the  participation in social activities of Non- fitness of things that Royal University Of Government Organizations (NGOs) as an Bhutan alongwith like minded professionals essential part of their curricula, from India undertake this task of orienting  Presentations on cultural heritage of their management students towards building own nation. “Happiconomies” in the world.The task is  Writing and debating real life case studies urgent and enormous. Otherwise, the writing of businesses and national policies which on the wall is clear. “Remember your have helped in improving GNH. humanity, and forget the rest. If you can do so,  Presentations and discussions on social the way lies open to a new Paradise; if you cost of unethical practices followed by cannot, there lies before you the risk of policy makers, administrators, managers universal death.” – Bertrand Russell and and business persons in their fields of Albert Einstein. activity.  Grade points for propagation and practice Bibliography : of the concept and importance of GNH [1] Asian Development Outlook 2012, Unfair over and above GDP. Economic Growth Confronting Rising Educationists, economists, thinkers, Inequality in Asia. philosophers, students, in short, all those who [2] Hathaway Brent, “Teaching Business have stakes in making the people of their Ethics Conference- 2004”, Roundtable I: nations happy, will have to come together and Dean’s Perspective 22 & 23 July, 2004. design the curricula, methods of sensitizing [3] Granato Jim et.al., The Effect of Cultural students to the issues leading to national Values on Economic Development. happiness, evaluation criteria to ensure that [4] Ingale M.K .“Global Meltdown – students have undergone a change in mind set Opportunities and Challenges before B- and ways of motivating them to create Schools”, Paper presented at International pressure groups for achieving the goals of Conference On “Global Meltdown – economic development with a human face. As

International Journal of Business Intelligents (IJBI) 144 www.ijbui.com Indo-Bhutan International Conference On Gross National Happiness Vol 02, October 2013 Pages: 138-145 Opportunities & Challenges Before B- [11] Revkin Andrew, Global Meltdown, Schools”, Pune,March,2009. AARP-The Magazine, July & August 2007. [5] Jha Mihir, The New Parameters of [12] ‘Sox first Management & Compliance’ Economy, posted on magazine, June 26, 2007. http://readersquotient.com on March 20, 2008. [13] Swaminathan M.S., ‘Ethics of Economic [6] Kolb Bob, “Teaching Business Ethics Development’, Meeting on Ethics in Science Conference- 2004”, Panel 1: Role of Ethics in and Technology, Bangkok, November, 2003. Business Curricula. [14] Swanson Diane, “Teaching Business [7] Lawrence Stephen, “Teaching Business Ethics Conference- 2004”, Roundtable I-3: Ethics Conference- 2004”, Roundtable I: Teaching Business Ethics: Integration or Dean’s Perspective 22 & 23 July, 2004. Courses – Which Approach is Best? [8] Menon Ajay, “Teaching Business Ethics [15] Thinley Pema (Dr.), keynote address Conference- 2004”, Roundtable I: Dean’s delivered at the three-day International perspective, 22 & 23 July, 2004. Conference on “Human Values in Higher [9] Mestrum Francine, Why we should fight Education” at IIIT Hyderabad, 6-8 January, global income inequality, Blog posted on 2012. http://www.globalsocialjustice.edu on 18 [16] Voice of America, ‘GNH v/s GDP’, ( April,2012. http://www.k4fun.anacel.com/2009/09/15/gnh- [10] Piper, Gentile and Parks, “Teaching gross-national-happiness-vs-gdp/) Business Ethics Conference- 2004”, Panel 1: Role of Ethics in Business Curricula.

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