Case Study-2 Ethics
You are the CEO of a prominent IT Company, based in Bengaluru. Recently,
your company has successfully developed a software which seamlessly
translates many regional languages into English. The applications of this
software are multi-fold and are expected to generate a lot of revenue for the company.
A few days after the software is released, an employee of your firm informs you that a pirated version of the software is being used by a private skill
development institute. This institute has dozens of branches in many Indian
cities and is using this pirated version on a large scale in almost all its
branches. You are angry upon hearing about this and decide to take strict
action against this institute.
Upon enquiring further, you learn that the institute is actually run by an
NGO which freely trains poor graduates from the vulnerable sections of the
society. The NGO has a good reputation but is facing a severe scarcity of
funds. It is unlikely that the institute can procure the software officially from
your company, even as a bulk purchase. However, the illegal usage of the
software is bound to impact the economic interests of your company in the future.
In these circumstances:
i) What are the options available to you?
ii) What course of action would you adopt and why?
(250 words – 20 marks)
The different stakeholders involved in this situation are: Company management,
NGO and the poor unskilled graduates. In this context, the various actions which
can be taken are:
1.Resorting to legal action against the NGO.
2. Taking no action against the NGO.
3. Innovative approaches like:
Meeting the apex leadership of the company for a joint venture with NGO.
Taking support of Government to appeal on behalf of NGO.
Raising money for NGO through CSR or equity market’s domestic funding.
Appealing through media for collaboration through sale of products.
(a) Evaluation of the options:
Option 1: The problem can be solved immediately. It secures the company’s
economic interests and also sends a strong signal against piracy.
However, the potential of the product is not being reaped even in though it has
been demonstrated. It is a narrow option considering the need for skilling the
poor labour force and embracing greater social responsibility.
Option 2: This can be an indirect way where social activities are augmented. It
acknowledges the activities of NGO and can promote free skilling of poor
graduates.
But this option precludes the company’s economic motives. It also pays no
interest to furthering the potential of the product or expanding it. Also, it may give
wrong signals of laxity and others may exploit the product.
Option 3: The problem can be solved in a holistic manner. It can also become a
viable model for expanding the idea to other areas, which can boost the
company’s revenue and image, meet the private sector contribution to ethical
governance.
However, this requires capacity building of the NGO before implementing the
idea. Also, the NGO may not be able train freely in this case. The company may
also come under financial stress due to extra funding.
Considering all the above options, I will go for the third option, of pursuing a joint
venture with the NGO. This can safeguard the company’s true ownership of the
product and can also boost the NGO’s capacity. The funding issues can be made
partially with CSR obligations which can sustain low prices of the product. It can
effectively address the dilemma by taking an effective middle path. This step
reaffirms the role of Private- Civil Society partnership in Skill India and ethical
governance.
The product has utility to different customers for different purposes. I assume it was deemed a profitable product because there are customers, individuals or businesses, (a) who can afford to buy or rent the product. There are also organizations, like the (b) NGO, which cannot afford it. Since it is an educational product, it would also be desired by private and public (c) schools, to give their students access to information from other regions using a different dialect (or perhaps to translate articles in English to regional dialects).
The interest of government is to encourage innovation, by protecting copyrights for a limited time so that the creator can profit and recover the costs of developing the new product. The interest of the IT company is to recover its costs and a profit by producing something useful for the community. The interest of the schools and the NGO is to provide education and training to everyone.
The IT company needs a way to protect its income from those that can afford their product. The public and private schools should be able to afford the product. However, the NGO may not be able to. The NGO should utilize public schools to train the people they serve and thereby get free access to the product. Or, the IT company may provide the NGO with the product as a charitable act, so long as the NGO protects the copyright, so that the IT company can continue to profit from its paying customers.
The key is to protect the interests of all parties involved, and to assure that each party’s real needs are met.