Source: The post BluSmart collapse shows why culture and governance matter has been created, based on the article “Slackening corporate governance” published in “Financial Express ” on 2 June 2025. BluSmart collapse shows why culture and governance matter.
UPSC Syllabus Topic: GS Paper4-corporate governance.
Context: The collapse of BluSmart, a promising electric vehicle taxi service, has reignited concerns about governance, regulatory neglect, and institutional culture. Its failure has affected not only investors but also a broad group of stakeholders who had placed their trust in its clean and reliable service.
BluSmart’s Rise and Sudden Collapse
- A Trusted Brand Built Quickly: BluSmart offered a clean, dependable transport option and quickly earned customer trust. It stood out in India’s tough market by providing value, competitive pricing, wide coverage, and consistent delivery.
- Comparison with Past Corporate Failures: Like Kingfisher Airlines and Jet Airways, BluSmart had a strong brand and loyal base but collapsed due to poor governance. Such companies win public affection through efficiency but falter when internal systems fail.
- Ignored Governance Norms: BluSmart joins a long list of Indian firms that ignored foundational business principles. Many collapses in recent years point to widespread disregard for robust governance standards.
Wider Ecosystem Impact
- Fallout for Stakeholders: BluSmart’s failure impacted not just employees but also consumers and vendors. Public disappointment reflects the vital role such companies play in daily life.
- Investor Sentiment and Risk: These incidents deter especially foreign investors. When governance collapses, doubts emerge about the entrepreneur’s vision, stalling investment and sector growth.
- Concerns Over Compliance: The BluSmart case highlights casual attitudes toward regulatory compliance in fundraising and operations, triggering questions about startup accountability.
From Companies to Institutions
- Superficial Employer Branding: Firms aspire to be “employers of choice,” but few build the required processes. Preferential treatment for promoters undermines this ambition.
- Need for Equitable Culture: True workplace excellence requires inclusivity, fairness, and a purpose-driven environment where all feel valued and empowered.
Importance of Culture from the Start
- Culture as Foundation: Stability, transparency, and consistent performance must be embedded early. They are not corrective tools but building blocks of success.
- Ethics Must Be Proactive: Strong culture prevents collapse. These principles, like physical laws, determine whether organisations endure or fall. Ignoring them is a gamble against long-term survival.
Question for practice:
Examine how the collapse of BluSmart highlights the importance of corporate governance and organisational culture in sustaining business success.
