Abstract

This case is about the Tata Group, one of the leading business houses in India, a key emerging market. The group had a long-standing reputation for ethical leadership and was well known for its corporate social responsibility and principles such as the “Tatas don’t bribe” and the “Tatas don’t indulge in politics”. Under the leadership of Ratan Tata, the group carried forward this legacy and consolidated its businesses further in India while also acquiring a global footprint. India, like many markets in transition, was passing through a period when excessive power was concentrated in the hands of the political elite and their cronies. This had led to a government-dominated economy characterized by nepotism, patronage, and corruption. According to some experts, most Indian entrepreneurs operated in “oligopolistic markets and in sectors where the government had given them special privileges”. Despite operating in this market, the Tata Group had managed to build its empire emphasizing the twin pillars of “trust” and “integrity” – so much so that these had become a key aspect of the Tata brand. However, in 2010, the group and its leader Ratan Tata were dragged into the infamous 2G scam that broke out in India. Investigations into the scam in the fast growing telecom sector revealed deep-seated corruption in the country. There was quite a bit of evidence of corporate wrongdoing, and many corporate houses including the Tata Group came under the scanner. Ratan Tata refuted these allegations and argued that he had not been able to expand more in his home country due to bureaucratic delays, arbitrary regulatory decisions, and widespread corruption in various sectors. Despite this, the group upheld its traditions and did not indulge in corruption, he said. The case study deals with one of the major challenges that organizations face in many emerging markets – corruption. It is designed to spark a discussion on whether corruption should be encouraged, whether this is a necessary but transient phase in the development of modern capitalism in emerging markets, what organizations should do to fight the menace of corruption, and whether ethical leadership is the answer while operating in emerging markets. This case is meant for MBA students as part of the Business Ethics/ Responsible Leadership curriculum. It can also be used in a General Management and Strategy curriculum.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the leadership challenges facing organizations operating in emerging markets, particularly in India.
• Study how the Tata Group had established a strong position in key industries in India while emphasizing on ethical leadership.
• Understand one of the key leadership challenges posed to organizations operating in emerging markets – corruption.
• Discuss and debate whether the Tata Group and its leader Ratan Tata had ‘walked the talk’ while jostling for additional spectrum in the 2G scam.
• Discuss and debate whether corruption is a normal part of business, especially in emerging markets such as India, or an economic malaise that needs to be urgently curbed.

Keywords

Leadership issues in emerging markets, Ethical leadership, Responsible Leadership, Business Ethics, Corporate Social Responsibility, Values and ethics, Strategies for emerging markets, Corruption, Bribery, Crony Capitalism