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Prof Sumantra Ghoshal, Professor of Strategic and International Management, London Business School, congratulating the FICCI President, Dr A.C. Muthiah, at the launch of the new FICCI logo. Also seen are the FICCI Vice-President, Mr Omkar Kanwar (left), and the FICCI President-elect, Mr Y.K. Modi, in the Capital on Tuesday. — Kamal Narang

New Delhi, Nov 25

AS FICCI unveiled its new logo in the Capital on Tuesday, Prof Sumantra Ghoshal of the London Business School marked the occasion with his address on "Management's Crisis of Legitimacy".

While describing FICCI as an interest group, a shared resource and a platform for change, he implored corporates to rectify the image that managements were acquiring globally and in India. "Worldwide people do not trust managements and corporate leaders and the distrust is growing, not reducing," he said quoting a trustworthiness survey that showed that managers were way down in the trustworthiness score. Putting the blame on the shoulders of management academicians, corporate managers and journalists, Mr Ghoshal said that business academicians have created amoral practices of management, managers have made the practice unreasonable and journalists/consultants are guilty of making the practice of management heroic. Collectively, the three have promoted irresponsible management.

He felt that it was necessary for managers to be trusted and respected because there was a strong co-relation between economic prosperity of a nation and companies. He made a distinction between markets and companies and said that markets operate solely on self-interest, but companies have to grow, diversify and control their destinies, hence they should operate in collective interest and create new values.

In the sphere of corporate governance, Mr Ghoshal said that research has shown that there is no significant association between performance and the three prescriptions of corporate governance such as creating more independent directors, separating the role of chairman and CEO in a company and giving stock options. He said even Enron followed these parameters.

In his view it was time to look at a new intellectual agenda for management, where business leaders would reshape the models of economic growth by going beyond the myth of the market economy, revise the process of corporate governance by going beyond shareholder absolutism and rethink the concepts of strategy.

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