Corruption in Private Sector

Today (19th August, 2011) there was an interesting Question that was raised by @centerofright. Will Corruption in Private affect the General Public?

In some ways I am surprised that there is some doubt in this. But then I realise the general view held is that Public enterprises are owned by all while Private Enterprises exist for the benefit of a small few. The truth is the owners are not the only Stakeholders in a private enterprise. Customers are an important part of the business. To quote Gandhi a business exists because of the customers and not the other way round.

Till few years back Businesses worked in what was essentially a Cost Plus economy. Product pricing was simple. A margin was added to cost and was forced on customers who had no choice. By default we think things have changed now. That is not the case. Even now there are reasons for imperfect competition like Entry Barriers in terms of Capital, technology. But to a great extent Customers are being benefited. A typical example is the Computer field. The Computer Industry has always worked to give more value to the customer. I remember a quote around 10 years that went like “if the Aeronautic Industry had gone through same cost reduction as the Computer industry the cost of a Boeing would typically be equal to the cost of a car”.

But unfortunately the computer industry is in a minuscule minority. In most other fields business can still pass on most of their inefficiencies to the customers. The burden of corruption is rarely on the owners, it is ultimately passed on to the customers.



One thought on “Corruption in Private Sector

  1. Sridharji, thank you for this simple post. Very true that people realize the corruption in Pvt. Sector, which is not to be undermined. It starts with ‘Managing’ your performance, gratitude for favors done to your superiors, if you are not a chamcha, you are lost in Pvt. Sector. No sector, pvt. or public do not liven upto the values of Ethics, all is required is bottomline of any organisation at any cost.
    Jai Bharat ..Vande Mataram

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