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Multi-Level Corporate Responsibility: A Comparison of Gandhi’s Trusteeship with Stakeholder and Stewardship Frameworks

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Abstract

Mohandas Karamchand “Mahatma” Gandhi discussed corporate responsibility (CR) and business ethics over several decades of the twentieth century. His views are still influential in modern India. In this paper, we highlight Gandhi’s cross-level CR framework, which operates at institutional, organizational, and individual levels. We also outline how the Tata Group, one of India’s largest conglomerates, has historically applied and continues to utilize Gandhi’s concept of trusteeship. We then compare Gandhi’s framework to modern notions of stakeholder and stewardship management. We conclude that trusteeship has strong potential to help firms and their stakeholders achieve shared value by (a) considering the interactions between individual, organizational, and institutional factors, and (b) paying attention to a range of multi-level (reciprocal) stakeholder obligations.

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Notes

  1. First, Gandhi provides a useful multi-level perspective, in which he integrates the individual, corporate, and social/institutional factors affecting CR. Second, he provides a pragmatic balance between normative and instrumental motivations for CR, i.e., between pro-social ideals and individual self-interest. Third, Gandhi emphasizes the reciprocal obligations of the firm and its stakeholders in creating social and economic value.

  2. Aguinis and Glavas (2012, p. 2) define CSR as “context-specific organizational actions and policies that take into account stakeholders’ expectations and the triple bottom line of economic, social, and environmental performance.”

  3. For example, institutional- and organizational-level research relies more heavily on instrumental theories versus studies at the individual level, which rely on normative and psychological theories.

  4. Much of the Gandhi’s actual work, such as his wrings and speeches, may be found at the “The Gandhi Heritage Portal” (www.gandhiheritageportal.org).

  5. He also expected business owners and society to become stewards of the natural environment (Kolge and Sreekumar 2011).

  6. Beyond a moral basis, trusteeship also has religious and legal bases. First, Gandhi stated that “God, as the originator of everything is the owner, lord, and master of the material universe. Humans are only its trustees” (Parel 2006). Second, he borrowed the idea of trusteeship from jurisprudence (Dwivedi 1982; Dasgupta 1996; Gopinath 2005). In law, trusts are organizations that are formed for a stated purpose (profit or non-profit), where management is in the hands of individuals who do not run them for personal gain.

  7. His advice to industrial employees was to “understand your own rights, understand the method of enforcing those rights and enforce them” (Gandhi 1920a, p. 165). He also stated that: “No person can amass wealth without the cooperation, willing or forced, of the people concerned” (National Voice, p. 232, in Dwivedi 1982).

  8. Nevertheless, he also supported strikes as a means of passive resistance or non-violent non-cooperation (satyagraha). He distinguished between “authorized” and “unauthorized” strikes, pointing out that authorized strikes should have just cause, have “practical” unanimous support, and eschew using violence against non-strikers. He also felt that the conduct of strikers could be regulated (Ibid, p. 203).

  9. It is perhaps another indication of recognition of Gandhi’s global influence that an aircraft manufacturer in Canada has only this quote displayed prominently in their main reception.

  10. In the context of pre-independence India, trusteeship was a clever and instrumental way to better unite industrialists with poorer sections of society to realize political independence and economic development (Dwivedi 1982; Rolnick 1962).

  11. In particular, Gandhi believed in a concept of “bread labor,” which emphasized an individual’s duty to earn bread by physical labor.

  12. Piketty’s (2014) thesis is that the rate of capital return in developed countries is persistently greater than economic growth and that this will lead to increasing income inequality. While Piketty favors wealth redistribution through a global tax on wealth, Gandhi argues for pure moral suasion.

  13. Gandhi was not against trading with other countries, saying that: “..for I buy from every part of the world what is needed for my growth. I refuse to buy from anybody anything however nice or beautiful if it interferes with my growth or injures whom Nature has made my first care” (Gandhi 1925a, p. 88).

  14. In 2007, the Tata Group won a Carnegie Medal for Philanthropy and, in 2009, the Reputation Institute ranked it 11th globally among the most reputed companies.

  15. It is not entirely surprising that the Tata Group practiced a form of trusteeship as Jamsetji Tata was influenced by some of the same Western and Indian thinkers who influenced Gandhi (Witzel 2010). Further, when Jamsetji set up his second textile mill, in 1886, to produce high quality yarn (to compete with imported yarn), he called it the Swadeshi Mills. Swadeshi was the same concept Gandhi later used to promote local development. Jamsetji’s son, Ratan, was one the first financial benefactors of Gandhi during the latter’s struggle for civil rights in South Africa.

  16. Interestingly, Gandhi himself mediated in a 1925 dispute between management and labor at Tata Steel. In this context, he stated that: “…my identification with labor does not conflict with my friendship with capital” and that: “…I hope that the relations between this great house and laborers who work under their care will be of the friendliest character” (Lala 2007, p. 39).

  17. It is important to note that this was a significant step in a country that ranked 66th (out of 85 possible ranks) in the 1998 Corruption Perceptions Index (Transparency International 2014).

  18. For a very recent discussion of CR at the Tata Group, see Casey (2014).

  19. By doing this, managers may address three interconnected problems in business: (a) the problem of value creation and trade, (b) the problems of the ethics of capitalism, and (c) the problem of the managerial mindset (Parmar et al. 2010).

  20. Jones (1995) has also proposed that his instrumental version of stakeholder theory serves as an integrating theme for business and society.

  21. So far, we have shown the normative and instrumental parallels between Gandhi’s trusteeship and stewardship/stakeholder theories. Stakeholder and stewardship models also have descriptive goals, as they are used to research individual and organizational behavior (Donaldson and Preston 1995; Hernandez 2012; Harrison et al. 2010). Gandhi did not pursue descriptive research but Indian scholars have conducted a handful of case studies on the antecedents and outcomes of trusteeship (Ghosh 1989; Sen 1991; Dwivedi 1982).

  22. In later years, Gandhi was said to have argued for government promotion and regulation of trusteeship, if necessary, as a way to spread its reach in Indian society (Nayyar 1952).

  23. Crane et al. (2014, p. 159) have pointed out that costs of approaches other than voluntarism are far too high.

  24. It should be noted that authors such as Freeman and Phillips (2002), Phillips et al. (2003), and Parmar et al. (2010) stress that stakeholder theory is an organizational theory. They delineate the theory from a “liberal stakeholder economy” approach, which favors significant roles for the government in terms of production and wealth redistribution.

  25. Laplume et al. (2008) argue that integrating stakeholder theory with institutional theory may help reinvigorate the model. Since Gandhi grounded trusteeship in early to mid-twentieth century Indian institutional and political contexts, his work may also serve as a model for integrating modern CSR with broader institutional contexts.

  26. The majority of stakeholder theorists are not explicit about macrofoundations.

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Acknowledgments

We are grateful for the generous advice and suggestions we received from Antony Parel, Alain Verbeke, Jaana Woiceshyn, Won-Yong Oh, Liena Kano, Oleksiy Osiyevskyy, Mohammad Keyhani, Safaneh Mohaghegh Neyshabouri, the Gandhi Society of Calgary as well as anonymous reviewers for the Academy of Management’s Annual Meetings. We also thank Domènec Melé and two anonymous reviewers for the Journal of Business Ethics for their insights and constructive feedback, which greatly helped improve this manuscript. We were fortunate to have had excellent research assistance from Siddhartha Bhattacharya.

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Balakrishnan, J., Malhotra, A. & Falkenberg, L. Multi-Level Corporate Responsibility: A Comparison of Gandhi’s Trusteeship with Stakeholder and Stewardship Frameworks. J Bus Ethics 141, 133–150 (2017). https://doi.org/10.1007/s10551-015-2687-0

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  • DOI: https://doi.org/10.1007/s10551-015-2687-0

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