• Attitudes are learned enduring predispositions to respond consistently either in favourable or unfavourable manners towards objects, events and persons.  
• In entrance exams, interviews are specifically designed to check the attitude of a person.  
• Attitudes can be positive or negative
  • Positive Attitudes includes Optimism, Tolerance etc.
  • Negative Attitudes includes Pessimism, Intolerance etc.

• Studying attitude is important because it shapes people’s perceptions of the social and physical world and influence their behaviour.

The main point for the Administrator is how to change the attitude of people. Following examples will help you to appreciate this fact

1. Swachh Bharat Scheme: Even if the government helps the common people in building latrine via the Swatch Bharat Scheme, people use it as a storage room instead of a latrine. Hence, just pouring money can’t help. There is a need to change the attitude of people.
2. Mid Day Meal: If a school employs a cook of lower caste to prepare food to be distributed under Mid Day Meal Scheme, people belonging to higher caste stop sending their children to school.
3. Immunization Scheme: In countries such as Pakistan and Afghanistan, people don’t immunize their children thinking it to be an American scheme to make them infertile. 
4. Temple Entry: Women aren’t allowed to enter the temple based on the Purity – Pollution Concept.

• Attitudes are abstract constructs, not something we can directly observe.
• Attitudes are enduring. 
• Attitude reflects the readiness for a response. 
• Attitudes are acquired and learned. 
• Attitudes are held because they perform some function for the holder.
• Attitudes change with experiences and knowledge.
• Attitudes are subjective experiences.
• Attitudes conform to the principle of consistency. 
• Attitudes may involve individual or group.
• Attitudes are evaluative judgements.
• Attitudes can be expressed verbally or non-verbally. 

Attitude is the product of Genetics and Socialization (Environmental) factors

Models to Study Attitude

There are three broad ways for analysis of Attitude

1. Structure of Attitude
2. Function of Attitude
3. Formation of Attitude

Instead of trying to think about the attitude in the very abstract way explained above, it is beneficial to study in terms of the functions they serve.

2.1 Need / Want Satisfaction Function

• Some attitudes are held by the attitude holder because they help in satisfying their needs and wants. 

• These attitudes are termed as
  • Adjustive: As they help us in adjusting to life situations.
  • Utilitarian: A person will form this type of attitude to maximise reward & minimise punishment. 
• The person will hold some attitude only till that attitude is helping the person to satisfy his needs.  
• Hence, Attitudes serving Need or Want Function will change when 
  • Individual’s needs are changed. 
  • The individual is convinced that new attitudes that are suggested to him can meet his existing needs better (this can be used in case studies of convincing people with old ideology to change their attitude. Eg: Village elders stopping girls from going to school).

2.2 Knowledge

• Attitude helps the Attitude holders to organize and interpret diverse sets of information.  
• In simple words, when for the first time we see a person with a particular attitude doing particular work, we make a picture in our mind that another person showing a similar attitude will do the same work & create generalization (or stereotyping).

• Knowledge function doesn’t provide us with a factually truthful picture of the world, in fact, it provides a picture that is meaningful and understandable.
• Such attitudes are likely to change in situations when due to the addition of certain facts or experiences, it becomes difficult for the attitude holder to continue with his existing attitude. 

2.3 Ego Defensive

• Attitudes help to prevent us from guilt feeling by holding attitudes that enhance our self-esteem and defend us against the arrows of life. 
• It is also known as ‘Scape-Goat View’ as Scapegoating helps us to release pent up feelings and emotions.

• Ego Defensive attitudes are difficult to change as they result from the inadequacies in the individual’s personality rather than the attitude object (all other functions are wrt Attitude object).  Thus merely providing the individual with counter attitudinal information is not sufficient. Therefore the need is to provide an environment where the individual feels truly valued & manifests readiness to lower his defences.   

Other examples of Ego-Defensive Attitudes

• America is one of the largest Green House Gas emitters in the world. Their industrialists/academicians are in ‘climate denial mode’- by arguing that global warming is a fictional theory.  

2.4 Ego Expressive

• Ego Expressive attitudes help a person to establish his identity & convey the kind of person he is.
• Eg: Gandhi switched to Khadi from Coat-Pant to express his value of SELF RELIANCE & SIMPLE LIVING.
• Value expressive attitudes, therefore, helps us in the exercise of expression management.
• Like Ego Defensive Attitudes, they are difficult to change as they are deeply entrenched in the individuals’ personality.
• Change may however occur if 
  1. Individual’s values have changed 
  2. A person is convinced that the attitudes that are suggested to him will express his underlying values better. 

• Attitude is formed by ‘stimuli’ – it can be internal or external.
• Application to learn how Attitudes are formed is that we can use the same to change Attitude as well.

3.1 Pavlovian/ Classical Conditioning

• A learning process occurs when two stimuli are repeatedly paired: a response that is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.
• It was first discovered by Igor Pavlov in his dog, bell & food experiment. Hence, it is also known as Pavlovian Conditioning.
• In humans, it can be used to create phobias. This was shown by Watson and Rayner in their Experiment on Albert (1920).
  • Albert (9-month-old infant) was shown a rat, a rabbit, a monkey and various masks and Albert remained unemotional. But if a hammer was struck against a steel bar, sudden loud noise would make him burst into tears.
  • In the experiment, he was shown a rat and simultaneously the hammer was struck against the steel bar. This was repeated.
  • After that, when he was just shown rat he started to cry. 

• Application: Creation of Phobias to change attitude (Cut Challan for not wearing a helmet with full strictness. Gradually person will start to equate not wearing a helmet with Challan (Operant Conditioning is also at work here)).

3.2 Operant Conditioning

• Related to Reward and Punishment 
  • If certain behaviour leads to a positive outcome or reward, the attitude related to that behaviour will be strengthened. 
  • If certain behaviour leads to a negative outcome or punishment, the attitude related to that behaviour will be suppressed.

• Application 
  • If a person is doing wrong things, punish him and he will form a negative attitude towards that.
  • If a person is doing good work, reward him/her and he/she will form a positive attitude towards that.

3.3 Observational / Social learning

A person forms attitude by watching other people around them or people they admire. 

Family

• Children observe the attitude of their parents and most of the times their attitude is conformant with that of their parents. 
• If parents follow the caste system, children will follow too.

Media

• Whatever one sees on TV & other social media, there is a high likelihood that person will try it in his life.

3.4 Direct personal experience

• Direct Personal Experiences have a huge impact on the formation of attitudes towards that thing.
• One might have heard negatives about Pakistanis throughout his life. But if his direct encounter with them even for an hour is good, that will have an overpowering influence on the person.

It should be noted that Attitude formation or learning is a lifelong process, as it is based on experiences we gather or the lessons we learn from people around us.

Agencies of Attitude Formation

The attitude and Behaviour link is not so simple. Many times, a person doesn’t act according to the attitude he holds. Attitude – Behaviour link can be seen in the following ways:-

Attitude Relevance

• The greater is the vested interest, the stronger would be Attitude-Behaviour link.

Attitude Strength

• The stronger is the attitude held, the more consistent the would be Attitude-Behaviour link. 
• Strength will be high when
  1. If attitude is formed by direct experience.  
  2. If one is expecting a favourable outcome. 
  3. If attitude is formed because of his vested interests.  

Attitude Specificity

• Specificity here means how specific an attitude do we have towards something. Having hazy or multiple attitudes towards something reduces their specificity. For example, political attitude towards an issue can be fuzzy and change according to the group that we are in.

Attitude Accessibility

• The more accessible are the Attitudes, the more likely it is that they will dominate our consciousness. 
• Those attitudes which are expressed more frequently are more accessible. 

Social /External pressure

• We are less likely to display our true attitudes if we believe that others hold a different attitude regarding the same object and we have high regard for those others. 
• Bandwagon Effect: When people do something primarily because other people are doing it. It is seen commonly in political and consumer behaviour. 
• Peer Pressure: You might be against Caste System but still marry in your caste because of peer pressure. 
• Bottom line: Relation between attitude and behaviour is not straightforward. “Social influence / peer-pressure” matters and it can force a person to behave differently from his Attitude.

Congruence

• Congruence refers to the consistency among different components of our attitude. If the knowledge component and affective component are inconsistent then our behaviour would depend more on the situation than on attitude per se.

Direct Experience

• Attitudes based on direct experience are more strongly held and influence behaviour more than attitudes formed indirectly (for example, through hear-say, reading or watching television).

Behaviour-Attitude mismatch and its use  in Governance

• There are many instances where we don’t behave in accordance with our attitude  
• In Administration too, this has utility. The reason is, changing Attitude is a time-consuming process. Hence, as a first measure, the Administrator must change behaviour.

• Cognitive Dissonance is the situation of intense psychological stress due to conflict or inconsistency in feelings, beliefs and behaviour (the three components of attitude).
• For example: When people smoke (behaviour) and are aware that smoking causes cancer (cognition), they are in a state of cognitive dissonance.
• The principle of Cognitive consistency states that human beings have an inner drive to hold their attitudes and behaviour in harmony and avoid disharmony. So, when there is an inconsistency between attitude and behaviour, something must change to eliminate the dissonance. Hence, a person will adopt one of the following ways to deal with this
  1. An individual can change or eliminate inconsistent behaviour. E.g.- giving up smoking.
  2. Acquire new information that outweighs the dissonant beliefs. For e.g. new information such as “research has not proved definitely that smoking causes lung cancer”.
  3. Reduce the importance of the cognitions (i.e. beliefs, attitudes). For e.g. a person could convince himself that it is better to “live for today” than to “save for tomorrow”, thus decreasing the importance of the dissonant cognition.

What do we mean by Corporate?

Any Organization, whether public or private, which has a separate legal entity. For example

• Reliance Jio, BSNL etc. are corporations => If a person registers a case against them, it will be against this organization only (like Name of Person vs BSNL).
• But the Department of Communication or MEITY is not included in this because it has no separate legal entity. If a person registers a case against MEITY, the case will be against the Government of India.  

What do we mean by Corporate Governance?

• Corporate Governance is the set of systems and processes to ensure that the company is governed in the best interests of all stakeholders (shareholders, employees, customers, society etc.)
• The concept of Corporate Governance is associated with gains that can accrue from following a moral path. It means Ethical Governance. Every Corporation should function in such a way that along with its own development and growth, it should ensure the development of its employees, shareholders, customers, society, nation and world.

What do we mean by Corporate Social Responsibility? 

• Corporate Social Responsibility (CSR) is the moral responsibility of any organization (whether private or public) to positively impact the society in which it exists.

The world started to become aware of Corporate Social Responsibility and Corporate Governance with the start of LPG in the 1980s (because a large number of private entities came into sectors where earlier only the government was involved, and obviously, their main aim was maximization of profits).  

• The main principle on which Corporate Governance works is the SEPARATION OF OWNERSHIP AND CONTROL. If such a separation exists, both will have checks and balances on each other. Hence, to ensure Corporate Governance, the company is owned by the Shareholders but controlled by Directors. 

• If those who own the company and those who manage them are the same, all their actions and decisions will likely be governed by the motive of maximizing their profits, even at the cost of other stakeholders.

There are two Models

Anglo Saxon Type

• It is found in those countries where the influence of the rule of law is strong. 
• It only focuses on the interest of shareholders (only)
• Its impact is mainly seen in countries like Britain and USA   

Continental Type

• It is found in those countries where the influence of administrative law is more. 
• E.g., France and Germany 
• In this, more emphasis is laid on the interests of shareholders, customers and employees. 

1. Bhopal Gas Tragedy

• The Bhopal Gas showed that India lacks a regulatory and legal framework even for dangerous industries. 

2. Satyam Computer

• Satyam Computer owner Ramalingham Raju indulged in creative accounting to show higher profits. He transferred the company’s funds to an individual account.  

3. Sahara Fraud

Sahara gathered funds from the sharemarket and transferred the funds to a private account.  

4. Nirav Modi Scam and Punjab National Bank

• Nirav Modi gathered Rs 14,000 crore of money from Punjab National Bank using fraudulent means by colluding with the bank officials.

5. Volkswagen

• Volkswagen tweaked the vehicle software in such a way that they could dodge the Environmental Protection Agency about their emission standards.

• Liberalization and de-regulation the world over have given greater freedom to management. The greater freedom demands even greater responsibilities.
• Intense Competition: Players in the field are many. Competition brings in its wake weakness in standards of reporting and accountability.
• Inadequate monitoring and response failure by regulatory authorities: The enforcement machinery has not been strengthened with the same speed with which regulatory changes have been brought in. As a result, the oversight by regulators remains weak.
• Market conditions are increasingly becoming complex in light of global developments like WTO, the removal of barriers & reduction in duties. 
• Failure of corporations due to lack of transparency & disclosures and instances of falsification of accounts (embezzlement). For example, it was witnessed in Satyam Computer, Franklin Templeton (India) and Sun Pharma Ltd. cases.
• The absence of Corporate Governance leads to fraud, mismanagement, embezzlement and harm to society & environment.
• Sustainable growth: Corporations following corporate governance witness sustainable growth. E.g. Tata Group of companies ​continues to be one of the biggest conglomerates even after 150 years of its ​existence as it followed the principles of corporate governance.

• To improve the functioning of the boards: Good corporate Governance curtails nepotism and favouritism and thereby helps fill the capability gap in the organizations.

According to various committees such as Kotak Committee and Narayan Murthy Committee, Indian corporations face the following Corporate Governance issues.   

• Creative Accounting: Indian corporations such as Satyam Computers indulged in Creative Accounting, leading to their eventual downfall.
• Insider trading: For example, Aptech India ltd
• Nepotism in board appointments: The board members are relatives or known ones.
• Independent directors have either played a passive role or can be removed easily if they don’t side with promoters. Hence, Independent Directors aren’t independent enough. Moreover, recent experiences like ILF&S and DHFL showed that independent directors are not fulfilling their roles and responsibilities.
• Executive Compensation policies are not transparent.  
• Family-owned Indian companies have excessive controls and poor succession planning. 
• Lack of serious efforts by the board toward Corporate Social Responsibility (CSR) projects. 
• Corporate Fraud: Corporate frauds are happening as the main motive of the corporations is profit maximization.
• Lack of Diversity: Corporate boards lack diversity. The representation of other genders on the boards is nominal.
• Lack of transparency and disclosure.

• 1/3rd to 1/2rd of the Total Directors of the Company should be Independent Directors.
• Auditing the accounts of Big Corporations should be done under the vigil eye of CAG & Indian Auditing Services. 
• Whistleblowers Protection Act should be applicable to both public and private sectors. 

The above recommendations have not been implemented in the true sense. Although Whistleblower’s Act has been formed, it has many lacunae.

• There should be at least 6 Independent Directors in the top 500 companies (earlier 3).
• At least 50% of Directors should be  Independent Directors.
• No board meeting can be conducted without the presence of an independent ​director.
• At least 1 Independent Director should be a woman.
• Board of Directors Meeting should be held 5 times (earlier 4) in which one meeting should be exclusively dedicated to Corporate Governance. 
• All the Independent Directors in the Board of Directors should be compulsorily present in the meetings.
• For government companies, it is recommended that the board have the final say on the ​appointment of independent directors and not the nodal ministry. 
• Reporting System should be of ‘Matrix Type‘.
• Permission of Minority shareholders should be necessary in case payments to related parties exceed 2% of revenue. 
• Disclosures of Auditor Credentials and Audit Fees should be mandatory.
• Market Regulator (SEBI) should be strengthened to improve corporate governance. ​SEBI should have the power to act against auditors if the need arises.

Corporate Social Responsibility can be explained as

• Corporate: Meaning ‘Organized Business
• Social: Meaning ‘Dealing with People’ 
• Responsibility: Meaning ‘accountability between the two’

Corporate Social Responsibility is the moral responsibility of any corporation(whether public or private) to positively impact the society in which it exists.

Corporate Social Responsibility vs Corporate Governance

Basis /Reason /Rationale for CSR

• Corporations utilize the resources of society – both human & natural. So they have the responsibility to pay back to the community. 
• Corporate plants create negative externalities in the form of pollution. To compensate for negative externalities, the government can force them to work in the interest of society. 
• Triple Bottom Line Principle of CSR: ‘Triple Bottom Line’ (TBL, or 3BL) means that Corporations should work for the ‘people, planet and profit’. 
  1. Planet: The actions of corporations shouldn’t impact the planet negatively. 
  2. People: Corporations should work to improve the lives of local communities. 
  3. Profit: The corporations have the full right to increase their profit.

• Creates a favourable image of the company, which attracts customers. The reputation & brand equity of companies demonstrating their social responsibilities is very high. E.g.: Tata Corporation. 

Case Study: Patagonia

• Patagonia is a garment company based in California.
• The company follows the triple Bottom Line Principle in letter and spirit.
  1. Planet: The company uses environment-friendly materials like organic cotton and recycled polyester.
  2. People: The company do a large charity and persuades its customers to donate their used products.
  3. Profit: The company is least interested in greater profits, and the owner donated his whole wealth to charity (around $ 3 billion) to fund the research to combat climate change.

The provision in the Companies Act regarding CSR

• Companies will have to spend 2% of their last three years’ average profit on social development-related activities like education, health, slum development etc.
• CSR rule applies only to companies having annual turnover above Rs 1000 crore and net profit of Rs 5 crore
• Companies have to set up a CSR Committee of 3 Board Directors.

Issues with CSR in India

• Less Importance to CSR: Most companies have not looked at their CSR strategies through the same lens as their core business functions.
• Lack of clarity about regulations as government changes the provision each passing month.
• Imbalance in CSR spending: Most of the CSR funds are spent on a handful of activities like education and health
• Geographic equity: Five states, i.e. Maharashtra, Gujarat, Andhra Pradesh, Rajasthan, and Tamil Nadu, accounting for well over one-quarter of all CSR funding. Towards the bottom of the list are Nagaland, Mizoram, Tripura, Sikkim and Meghalaya-all from North-East. 
• A large number of shell NGOs have come up which take up money from companies but don’t spend on targeted projects. 
• Since there is no standardised way to measure the impact of CSR spending, companies can’t make informed choices.   

Administrative Reform Commission’s (ARC) Recommendation on CORPORATE PHILANTHROPY

• When a corporate entity takes up a community benefit project, there should be some mutual consultation between the company and the local government so that there is no unnecessary overlap with other similar development programs in the area. 
• The government should act as a facilitator and create an environment that encourages businesses and industry to take up projects and activities that are likely to impact the quality of life of the local community.