Q. What do you understand by ‘moral integrity’ and ‘professional efficiency in the context of corporate governance in India ? Illustrate with suitable examples.

Model Answer: 

Moral Integrity in Corporate Governance

Moral integrity refers to the adherence to ethical principles and values such as honesty, fairness, and accountability in all actions and decisions. In the context of corporate governance, it means that the company’s leaders, including the board of directors and top management, should always act in the best interests of the stakeholders, including shareholders, employees, customers, and the community.

For example, Infosys, one of India’s leading IT companies, has a strong reputation for moral integrity. The company has always prioritized transparency, accountability, and ethical business practices. When allegations of unethical behavior arose against the company’s CEO in 2019, the board took immediate action to investigate the allegations and ensure accountability, demonstrating its commitment to upholding moral integrity.

Professional Efficiency in Corporate Governance

Professional efficiency refers to the ability to produce the desired results with minimum waste of time, money, or resources. In corporate governance, it implies that the company’s leaders should be capable and competent in managing the company’s resources effectively and making decisions that enhance the company’s performance and value.

For example, Tata Consultancy Services (TCS), another leading IT company in India, is known for its professional efficiency. The company has consistently delivered strong financial performance, thanks to its efficient management and decision-making processes. Moreover, TCS has been recognized for its excellence in corporate governance, which is a testament to its professional efficiency.

The Importance of Moral Integrity and Professional Efficiency

Moral integrity and professional efficiency are critical for good corporate governance. Companies with high moral integrity are likely to earn the trust and confidence of their stakeholders, which can enhance their reputation and competitiveness. On the other hand, companies with high professional efficiency are likely to achieve better financial performance, which can increase shareholder value.

However, it’s important to note that moral integrity and professional efficiency should go hand in hand. A company that is professionally efficient but lacks moral integrity may engage in unethical practices that can harm its stakeholders and damage its reputation. Conversely, a company that has high moral integrity but lacks professional efficiency may fail to deliver the desired results, which can disappoint its shareholders and undermine its sustainability.

Therefore, for a company to succeed in the long term, it must strive to uphold both moral integrity and professional efficiency in its corporate governance.