School for scandal? Business schools turn their attention to ethics education
This case examines the role of the business school in encouraging corruption in business, and looks at the potential impacts that business ethics training might have on students. It offers the opportunity to explore the significance of the individual and their education and experience for understanding ethical decision-making. It also provides a context for investigating the specific role, purpose, and impact of business ethics courses on business behaviour.
When it turns out that the key figures in some of the most infamous cases of fraud and corruption in business are alumni from leading business schools, it is perhaps not surprising that the business schools themselves might come in for some criticism. After all, if people like Andrew Fastow, the convicted chief financial officer at Enron, or his boss Jeffrey Skilling, could have got MBAs from two ofAmerica’s premier business schools, then it is inevitable that questions will be raised about what kinds of principles and practices business school students are being taught.
In the last few years, a number of business gurus and commentators have publicly condemned business schools in general, and MBA programmes in particular, for their perpetuation of ‘misguided’ amoral theories and techniques, and the lack of attention to ethics in the curriculum. For example, Henry Mintzberg, the Canadian management expert has famously condemned the MBA model, suggesting that it ‘trains the wrong people in the wrong ways with the wrong consequences’, whilst Sumantra Ghoshal, the late London Business School professor has argued that the ‘worst excesses of recent management practices have their roots in a set of ideas that have emerged from business-school academics over the last 30 years.’ Ghoshal’s ire is directed to typical theories taught at business schools such as agency theory and Porter’s ‘5 forces’ model, which he claims perpetuate an idea that everyone is self-interested, managers cannot be trusted, business is a zero-sum game, and shareholder value is the only legitimate aim of business. The perpetuation of such assumptions, he suggests, leaves business school students devoid of any sense of moral responsibility.
These criticisms have received a lot of attention in academic debates, but have also been readily recounted in the media and the business community. For instance The Economist ran a 2005 article headlined ‘Business schools stand accused of being responsible for much that is wrong with corporate management today’ which brought the arguments from Ghoshal, Mintzberg, and others to a wider audience – albeit in a context where the magazine rather predictably mounted a strong defence. After all, as The Economist argued, there are plenty of examples of corporate crooks who have not had a business school education, so there are clearly other aspects to consider too. Nevertheless, whatever else the debate has done, it has certainly helped refocus the attention of business schools on their curricula, and especially on the provision of courses on ethics and social responsibility.
At one level, this debate is simply about whether more business schools should be encouraged to introduce such courses into the curriculum. Whilst some schools have long included ethics in their curricula, others have tended to focus more on areas such as strategy, innovation, marketing and finance, whilst others have even dropped ethics courses due to low enrolments or political manoeuvring by sceptical colleagues. Asone Wall Street Journal article put it, ‘MBA students and professors bristle at ethics requirements. Some faculty members resent being forced to squeeze ethics lessons into an already jam-packed syllabus, while students grumble that ethics classes tend to be preachy and philosophical.’
In this context, the evidence on the scale of ethics teaching is revealing. A recent survey of US schools found that 34 per cent required an ethics course at undergraduate level whilst only 25 per cent did so on MBA degrees. In Europe, the figures are if anything a little lower for compulsory courses, but more than 50 per cent of business schools report having an optional module on ethics or responsibility at undergraduate level and more than 30 per cent at masters level. Essentially, though, most business students can still complete a degree having had hardly any exposure to these subjects in the classroom – a situation that some are now trying to change.
One development comes from theUS, where a long running campaign by business ethics professors has been trying to make courses on ethics and responsibility compulsory for business students. Over 200 professors offered support to the campaign, but the AACSB (the body responsible for accrediting business degree programmes) appears, so far, to be unconvinced. A recent redraft of their guidelines for accreditation did not bow to the campaigners’ demands, and business ethics remains outside of their list of accredited subjects. Diane Swanson and Bill Frederick, the campaign leaders responded by condemning the AACSB’s arguments for excluding ethics as ‘desperate and out of date against the backdrop of unprecedented corporate scandals, increased public distrust of business, and a virtual sea change in corporate governance.’ However, some leading schools have moved towards greater attention to ethics.Harvard BusinessSchool, for instance, introduced a compulsory course on ‘Leadership and Corporate Accountability’ for all first year students in 2004 – a development that the school claimed represented ‘the most far-reaching course we’ve ever introduced on this subject’.
In Europe, the situation is also changing, and in fact there appears to be significantly more support than in theUS from European accrediting bodies. The Association of MBAs for example, has issued new criteria for the accreditation of MBA programmes that stipulate that the curriculum ‘should pay attention to ethical and social issues’, while the European Foundation for Management Development (EFMD) is also considering ways to integrate CSR into its EQUIS accreditation. New academic departments and centres have also sprung up in universities to lead ethics and responsibility teaching, such as the Business and Society Management department at Rotterdam School of Management and the International Centre for Corporate Social Responsibility inNottingham UniversityBusiness School.
Whilst there is still a long way to go before schools successfully infuse ethics education across all of their courses, such developments certainly point to an increased emphasis over the past decade. Ethics and corporate responsibility feature far more prominently in the prospectuses of business schools than they did even a few years ago. Questions remain though about how ethics should best be integrated into the curriculum, and even whether exposure to the subject really has a positive effect on the decisions made by managers. While some maintain that a stand alone course on ethics is necessary to develop a suitable understanding of the subject and to consolidate its importance on the curriculum, others argue that this raises the prospects of generating an ‘ethics ghetto’ unconnected to mainstream business subjects such as finance and marketing. And the jury is still out on just how much of an effect any form of ethics training is likely to have on individuals. Various objections have been raised over the years, including the suggestion that students’ morality is already fixed and cannot be improved, and the accusations that ethics teaching is abstract, ambiguous, subjective, and little more than indoctrination from self-righteous ideologues. Of course, the extent to which some of these accusations are true will vary from course to course, and on the goals of any specific programme. In the main, evidence suggests that courses are rather better at enhancing students’ recognition of ethical issues, stimulating their moral imagination, and developing their analytical skills rather than improving students’ moral development or changing their values. As one business ethics professor puts it, ‘I do not want to teach moral standards; I want to teach a method of moral reasoning through complex issues so that students can apply the moral standards they have.’
This highlights another growing debate among business ethics professors about the very purpose of business ethics education – and even what a business ethics course should consist of. Whilst one camp retains belief in the established practice of teaching moral philosophy to develop better normative thinking among students, other camps have started to emerge. Some business school professors see more need to focus on practical management concerns, such as managing the corporate reputation or preventing accounting fraud, whilst others point to the need to understand ethics within wider social, political, and economic structures. One recent business ethics textbook (by Jones et al. 2005) was even introduced by the authors with an admission that they were ‘not particularly fond of business ethics’ because ‘business ethics in its present form is at best window dressing and a worst a calculated lie’!
Ultimately then, developments in the field of business ethics education suggests that business schools and accreditation bodies may be beginning to take the subject more seriously, especially in Europe where something of a momentum appears to be building. However, the future direction of business ethics remains in some doubt. Not only will its integration into the curriculum remain problematic for some time yet, but as the subject expands and develops, the approach to teaching business ethics will probably shift quite considerably into new conceptual territory. Whatever the outcome, business ethics will have to go a long way before it presents a completely convincing antidote to corporate wrongdoing, and misconduct in the workplace.
1. What are the main factors encouraging business ethics education and what are the main barriers to its further development and expansion?
2. To what extent can business education cause or prevent ethical infractions in business? Give arguments for and against.
3. Given the importance of situational factors in shaping ethical decision-making, what are the limitations posed by business ethics courses that focus on individual students? How would you design a course to focus primarily on situational issues?
4. Consider the aims and approach of the business ethics course that you are currently studying. What are these, and how effective is the approach for achieving these aims? What would you like to see done differently?
Alsop, R. 2005. At MBA programs, teaching ethics poses its own dilemmas. Wall Street Journal, 12 April. wsj.com.
Boston Globe. 2003. Harvard raises its hand on ethics.Boston Globe, 30 December.
Ghoshal, S. 2003. Business schools share the blame for Enron. Financial Times, 18 July.
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Jones, C., Parker, M., and ten Bos, R. 2005. For business ethics.London: Routledge.
Lacy, P. 2005. From the margins to the mainstream: corporate responsibility and the challenge facing business and business schools. Business Leadership Review, 1 (2) (April): 3.
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Mintzberg, H. 2004. Managers not MBAs: a hard look at the soft practice of managing and management development.Harlow: FT Prentice Hall.
Swanson, D. and Frederick, W. 2005. Campaign AACSB: status report, January.www.pitt.edu/~rorst6/sim/aacsb.
The Economist. 2005. Business schools, bad for business. The Economist, 17 February.