Business Ethics

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Ethics in Action 2.1 Satyam fraud – responsibility issues in India

Improvement of corporate social responsibility and ethics

Based on the analysis of the ethical strengths and weaknesses of Satyam, we have identified several aspects to improve the corporate social responsibility and ethics of the company.

As described in the case, Satyam has a very narrow definition of Corporate Social Responsibility (CSR) that only focuses on charity. Thus, they exclude key issues such as transparency, ethics, governance, anti-corruption and accountability. In order to improve their ethical credibility, Satyam should expand their definition of corporate responsibility.

To expand this narrow definition, we advise Satyam to pay more attention to social accounting. Social accounting can be described as ‘the voluntary process concerned with assessing and communicating organizational activities and impacts on social, ethical, and environmental issues relevant to stakeholders.’ One of the main reasons for taking up social accounting concerns enhancing the accountability and transparency. This reason is very relevant for Satyam. Since 2008, Satyam has experienced a significant decline in credibility among its stakeholders and the governmental parties involved. This is inter alia evident in the fact that the World Bank has put the company on the blacklist for eight years for providing improper benefits to staff. This decrease in credibility results in a need to improve the accountability and transparency, which can be reached by taking up social accounting.

Several factors can be described that make for good social accounting. Satyam should specifically pay attention to and improve on the following issues: * Completeness; When talking about responsible issues, Satyam mainly focuses on charity, which is common among Indian companies. However, to increase the quality of their social accounting, Satyam should include all areas of its activities in the assessment of...
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