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Stakeholders' Welfare and Arthashastra: Learning for Modern Business Management

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Stakeholders' Welfare and Arthashastra: Learning for Modern Business Management Stakeholders' Welfare and Arthashastra: Learning for Modern Business Management Rishi Manrai Symbiosis Centre for Information Technology, Symbiosis International University, Pune Utkarsh Goel Symbiosis Centre for Information Technology, Symbiosis International University, Pune Abstract The ancient scriptures of our civilization are sources of immense knowledge and Kautilya's Arthashastra is no exception. Teachings of Arthashastra which explains the politics and economics of governance was primarily written for the rulers and kings. Today's modern business can be compared to the ancient empires and the managers have to play a role similar to the kings. This study tries to highlight the learnings for modern business organization from the teachings of Arthashastra to ensure welfare of all stakeholders. The study specifically focuses on corporate governance, training and group dynamics, corporate social responsibility and value base management. The study further proposes a new SHASTRA model which models the teachings of Arthashastra and acts as a guideline for effective business management based on ancient wisdom. The proposed model if adopted by a business organization is expected to improve its performance without reducing its obligation towards the society. 1. Introduction culture of several South East Asian nations derive their management lessons from heritage emerging Deriving management principles and learning from Confucian philosophy. Indian management from ancient Indian texts specifically history, also, following the other parts of the world has a philosophy and culture are increasing (Kale and strong philosophical convention which is Shrivastava, 2003). However contemporary continuing to sustain the cross cultural research in the domain is generic and has not been philosophies in Indian organizations (Chatterjee, conducted in details which leave room or lot of 2007). research. Most of the researchers in the area have worked more on the philosophies and Indians and Indian literature have an enormous managements thoughts of the western part of the contribution in various fields of knowledge, arts world as compared to the eastern part. Therefore and literature. The Indian civilization which dates management theories from the west have a greater back to several thousand years, with recorded influence on management thinking and decision history, is perhaps one of the ancient civilizations making from over the last two centuries. in the world. Indian epics like Valmiki Ramayana, Mahabharata, Puranas, etc offers significant The investigation into the Eastern perspective of knowledge and lessons which in several contexts management learning for decision makers started are highly relevant to present times. Using the with in depth understanding of the Japanese literature which is more than 5000 years ago the management several years ago (Maruyama, 1994). paper discusses the principles of ethical profit On the other hand the research based on ancient making in Arthashastra by Kautilya, with reference management dissertations in China, from this to business decision making. perspective accelerated in the last few years. Literature from Confucianism and Sun Tzu Art of 2. Literature Review War had a very important role to play in this. Not only China, a significant portion of tradition and Research papers analyzing the ancient works of Vol. IX No. 2, September 2016 - February 2017 84 Indian sub-continent, for example Kautilya's Another study by Hofstede in the year 1983 on Arthashastra in the perspective of modern day “National Cultures in Four Dimension” and studies management practices are indeed limited. Due to conducted by researchers like Deresky (2006) the extensive amount of concepts of management show that eastern nations are high in power literatures and concepts available on papers, distance.It was delineated by the studies that Asians in particular, continue to use the theories Indian employees recognize and accept the top and models of the western world. Another reason to manager's authority. The basis of the same is that substantiate this is that the modern day managers they seldom bypass the chain of command. receiving there management degrees from western Besides the above mentioned factor, Indian Business schools follow their tradition (Muniapan, markets are highly volatile, which means 2006). managers have a tendency for safer decisions. India also has low eccentricity, which implies that The relationship between companies' financial and country, society as well as peer groups, are more social performance has been an important area of important than individuals. research for many years. Waddock and Graves (1997) and Preston and O'Bannon (1997) provided Suresh and Janki (2012) from their research said several evidences of research in the domain, that the current business scenario is highly volatile testing and verifying the relationship between because of several causes like unethical practices, corporate social performance (CSP) and financial declining values and shortage of value-based performance. Through their research they leaders at decision making level. In their research advocated a strong support for the hypothesis that the authors explored value-based principles perceived high quality of management. The adapted from Holy Scriptures especially Bhagavad researcher further explained corporate Gita, the teachings of which remains valid even in performance with reference to the various stake the present day. Incorporating these value based holders like consumers, suppliers etc. principles with modern management theories may lead to good Corporate Governance. The fruits of Preston in his research tested different hypotheses which can be realized only when ethical means are to explore the relationship between corporate adapted as policy and are practiced in an social and financial performance and found organization. significantly negative lead lag relationship. Earlier studies did not attempt to express any causation. Value-based management is a source of providing Cochran and Wood (1984), on the other hand found a strong foundation to quality systems and such a positive relationship between the two factors in organizations are very active in CSR initiatives. question. However, Aupperle et al. (1985), found Ethical leadership of the organization is like a either no relationship or insignificant results due to parenting a child, infuse the value systems, beliefs, the method used to measure CSP has been varied culture in the organization to shape a good and contentious. corporate governance. This will help organizations to achieve their prime objective of enhancing Specifically, researchers like Brown and Perry stake-holder's value while protecting the (1995) demonstrated the presence of a "financial environment. Though a corporation is a single/ halo" in the fortune data, declaring the same as small entity but definitely its governance, policies Inappropriate measure of social performance. etc. make an impact on the whole corporate world. Their research used publicly-reported information Muniapan and Dass (2008) also explored the for both financial performance data and philosophy of corporate social responsibility confirmation of a broad concern for stakeholder (CSR) from an ancient Indian viewpoint. Previous interests. studies in the domain shows that there are very few references mentioned in the literature in the form Vol. IX No. 2, September 2016 - February 2017 Stakeholders' Welfare and Arthashastra: Learning for Modern Business Management 85 of articles which discusses the concept of CSR as hundred years ago by Kautilya (believed to be derived from the philosophical, historical and from written in 4th Century B.C.) in the ancient India is a the ancient perspectives. The study, discussed the treatise on political economics. Kautilya also subject area with reference to India by tracing the known as Chanakya was the chief adviser and one origin of CSR from the Vedic literatures such as the of the significant ministers for a very powerful Valmiki Ramayana and Mahabharata including the Emperor Chandragupta Maurya, the first ruler of Bhagavad-Gita and the ancient Puranas. Mauryan empire. Kautilya is believed to be instrumental in finishing the Nanda Empire in By using the appropriate methodology, the authors Magadha. He helped establish the Maurya empire in their research discusses some corporate which is believed to be larger than the Mughal teachings on CSR, providing lessons to corporate empire and even British empire in India (Singh, leaders/ decision makers of today. It was further 2016). Arthasharta was written by Kautilya as a concluded that Arthasastra provided an inclusive guide for those who govern and deal with approach to CSR, i.e expansion of the individual economics and politics. In the text the great master leader's self conscience, as compared to American discusses three important aspects namely national and European perspective that talks about only security, administration of justice and economic outside-in aspect. The roles of decision makers in growth policies. It is clearly evident that although corporations are very critical as these are the the text was written for King Chandragupta people who ensure transparency, good conduct and Maurya but the author had acknowledged in its governance leading to CSR. introduction that it has been written as a rulebook for “those who govern” or in simple words for Muniapan and Satpathy (2010) through their study decision makers. praised Valmiki Ramayana
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