What if corporate governance had a conscience?

Economic Times

14-07-2025

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A reflection on the Union Finance Minister of India inaugural (Indian Institute of Corporate Affairs Shillong) address at IIM Shillong.
Rarely, a public speech surprises you - not because of its grand announcements, but because it dares to think differently and even sometimes, trigger a revolution. For me, the recent address by Hon. Finance Minister Smt. Nirmala Sitharaman at the inauguration of the IICA Northeast Chapter at IIM Shillong was such a moment.
She did not merely speak about logistics hubs or institutional outreach. She rooted her words in the values of the Khasi people—Ka Tip Briew Tip Blei (to know a person is to know God), Ka Kamai ia ka Hok (to earn through righteousness), and Ka Bhalang ka Imlang Sahlang (the common good). At first glance, these may seem like gentle cultural embellishments - perhaps offered in deference to the local audience. But for anyone paying attention to where the world is headed - and where it is faltering - these values go to the heart of a much larger and more urgent conversation: How do we understand corporate governance, and why must we now reimagine it?For decades, the dominant model of corporate governance has been built on a single premise: control. How can shareholders ensure that managers - who act on their behalf – do not misuse power or deviate from profit-maximizing objectives? This is the logic of agency theory, which became the basis for most corporate governance codes globally, from the U.S. Sarbanes-Oxley Act to the UK Corporate Governance Code.But in the face of growing ecological collapse, social inequality, and public distrust in large corporations, this model now appears worryingly narrow. Governance, in the agency model, became a system of defence - a fortress of rules to guard capital. But the world outside the fortress is burning. Today, businesses are being asked harder, more profound questions: What is your climate impact? How do you treat the communities in which you operate? Does your board decisions advance equity and sustainability? Are you accountable—not just to your investors, but to future generations?
This is where ESG - Environmental, Social, and Governance - enters. But here too, metrics alone cannot solve the problem. What the Finance Minister's speech reminded us in Shillong is that many of these ideas are not new. They are not alien. They are embedded – deeply – in the moral and philosophical foundations of Indian life, especially within our indigenous wisdom.If one traces the evolution of corporate governance theory - from agency to stewardship theory (where managers are seen as responsible stewards), to stakeholder theory (which considers all affected parties), and now to sustainability governance - we see a subtle but important shift. The field is slowly, perhaps reluctantly, moving from control toward conscience. And it is here that the Khasi worldview offers something precious. It tells us that governance is not just about systems and structures. It is about ethics, responsibility, and reciprocity. It teaches us that how we earn (Kamai) must be inseparable from the justice of how we earn (Hok), and that our success means little if it does not uphold the good of the collective (Imlang Sahlang).This is not mere cultural romanticism. It is philosophy in action. And it is increasingly in conversation with what the global scientific literature is pointing to: a growing interest in moral legitimacy, ecological ethics, and community-centred leadership. What is often dismissed as 'traditional wisdom' may, in fact, be the most advanced system of checks and balances we have—because it works not through surveillance, but through shared meaning and moral imagination.This opens a deeper and more radical question:
Not just add local CSR projects, or sprinkle cultural symbols in boardrooms, but redefine its own being? What if Indian corporations saw themselves not as legal persons fighting for market dominance, but as trustees - entrusted with wealth, resources, and livelihoods that are part of a much longer human and ecological story? What if Indian business leaders began to see their duty not in quarterly profits, but in dharma - the sustaining of right conduct, balance, and shared flourishing?
We see signals of this in the emerging body of work around Ubuntu governance in Africa, Confucian stakeholder ethics in East Asia, and Gandhian trusteeship deeply anchored in the Bhartiya Dharmik Principles. And yet, these remain at the margins - spoken of, but rarely institutionalised. The Finance Minister's speech - in its sincerity and clarity - challenged us to change that. It reminded us that the Northeast is not just a frontier for development; it is also a frontier for thinking. For governing differently. For leading with memory and meaning. A review of the academic literature offers a comprehensive and structured account of how corporate governance (CG) as a field of theory and practice has evolved over time, beginning with the classical agency theory and moving toward more inclusive and ethical frameworks like stewardship theory, stakeholder theory, and ESG-based governance. The foundational premise of agency theory - resolving conflicts of interest between principals (shareholders) and agents (managers) - is critically examined as being overly reductionist, prioritizing control and financial performance while neglecting broader social responsibilities. As corporate crises, climate disasters, and public distrust in business grew, the literature reflects a pivot toward sustainability - centric governance models that emphasize long-term value creation, environmental stewardship, and social accountability. These paradigms are not only normative but are also backed by regulatory mechanisms like integrated reporting and ESG metrics. However, the review also established how the mainstreaming of ESG often becomes a matter of compliance checklists rather than a deep transformation in organizational consciousness.Therefore, the attempt to draw associations between Tribal Khasi/Indigenous Values to define and shape Corporate Governance makes a compelling case for re-indigenizing corporate governance - moving away from abstract universals and towards governance models rooted in civilizational wisdom and local realities. The Minister even mentioned how IICA Shillong needs to get these Cultural Values 'edged in their walls'.Still, it leaves open the challenge of operationalizing such frameworks within modern corporate institutions, a task that remains under-theorized and under-researched.The Shillong address ultimately demanded - quietly but firmly - was a shift from compliance to cultural legitimacy. Can our codes and committees reflect the worldview of those who live on the land, not just those who govern from boardrooms? Can governance feel as rooted in a Khasi village as it does in a corporate tower in Mumbai? Can it carry the trust of a weaver in Manipur as it does the confidence of an investor in New York?We often speak of 'Make in India'. But perhaps we also need to speak of 'Think from India'. If corporate governance is to serve its true purpose - of holding power to account and enabling just economies - it must find not just its rules here, but its roots.India today stands at a critical global juncture. It is not just a growing economic power - it is also increasingly expected to establish and be an exemplar with a strong moral compass. As global crises mounts, there is a deep hunger for such a corporate compass that can blend efficiency with empathy, scale with sustainability, and wealth with wisdom. As one of the most prominent political leaders in the world today, the Union Finance Minister of India Smt. Nirmala Sitharaman did more than inaugurate a regional chapter. She offered a new vocabulary for corporate governance, grounded in values that are as old as our forests, and as relevant as tomorrow's climate challenge.As someone who has been teaching in the hills of Shillong, I see this not just as a thought for policy - but as a possibility. If we listen - truly listen - then perhaps corporate governance can become more than a set of rules. It can become a relationship. A way of being. A shared journey toward fairness, dignity, and a liveable future.And that, after all, is what good governance should be.
The author is Professor (Organizational Behaviour & Human Resources) at Indian Institute of Management, Shillong.