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Importance of Ethics in Business

This article explores the relevance and application of Principles and Strategies discussed in the 3rd Century BC treatise, Kautilya’s Arthashastra, in Today’s Corporate World.

A huge misunderstanding revolves around the personality of Kautilya, better known as Chanakya. People generally believe that he was a shrewd and cunning person. That’s just a myth.

While training his students in the management of a kingdom, he emphasised on sound philosophy in order to become a good leader. Ethics and morals were of top priority for him. In the very first chapter of Arthashastra, called “The Topic of Training” he provides the importance of spiritual foundations.

Therefore he says in the Arthashastra,

“Philosophy is ever thought of as the lamp of all sciences, as the means of all actions (and) as the support of all laws (and duties)” (1.8.12)

The root of any business lies in its core value system, its philosophy. This was also pointed out by the father of modern management Peter Drucker. He said, “Profits are by- products of business not its very goal”. In the above verse, Kautilya brings out finer points of ethics in business.


The value system initiated by the founders of an organisation always becomes the guiding factor. Even during calamities and difficult times, these values become the light house, providing a direction where the organisation should proceed. Like a lamp, it guides us in darkness.


How to proceed – even with a plan -is always the big question in business. Either one could take the easy route where success is quick and, yet, short lived. Or one can take up the road less traveled where success is delayed but is ever lasting. Only an ethical person can easily handle these tough decisions.


A good businessman is not just law-fearing but law-abiding. He follows the law of the land as set up by a constitution. At the same time, he also understands the higher universal law of nature. Ergo, his thoughts become very powerful. Such a businessman contributes to society and brings great economics prosperity to all persons connected with him.


For such a person duty is a priority over rights. He understands the importance of Giving more than what is taken and producing more than what is consumed. His work and duty is not out of pressure but out of joy and service.

Once, an Indian company which believes in ethical business was asked by a politician to offer a small sum of bribe to clear a huge project. The sum was small compared to the size of the project. However, the philosophy of the organisation did not support bribing. The result? They dropped the project. The gain - it still continues to be the most trusted company in the country.

This kind of a highly spiritual leader and businessman is called as ‘Rajarishi’ by Kautilya.

Contributed by  - Radhakrishnan Pillai

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