A634.1.6.RB - The Buck Stops and Starts With You

The MBA curriculum has remained almost standard for decades, but, ethics curriculum has been added as a new topic. Ethics is institutionalized as an academic requirement and not elective at leading business schools including Harvard, Wharton (Pennsylvania)  and Darden (Virginia). With the criminal convictions of insider traders in the 1980s, business schools identified a new opportunity and started focusing on ethics in the 1990s. The business and leadership collapses of Enron, WorldCom, Arthur Andersen, etc. have kept ethics a hot and important issue. Ethical case study scenarios usually make for engaged classroom discussions including research, casework, re-enactments and role-playing for future workplace applications. The top business schools train their future champions of business and industry to deal with any challenge. The focus of  ethics in the MBA curriculum is not to make students role model citizens but to make students and future business leaders aware of the ethical implications of business decisions including: anti-trust actions, predatory pricing, insider trading, environmental issues, corporate restructuring, employee privacy issues, diversity issues, sexual harassment and conduct of multinational corporations. (Silbiger, 2012)

Discussions and curriculum about ethics rests on the foundation that businesses should adhere to a socially responsible approach to decision making called the social responsibility approach. Proponents of this approach believe that companies have societal obligations that go beyond making profits. Business schools teach students to adopt this "politically correct" philosophy. It is argued that because companies are so powerful with impacts on society, they have an obligation to assume social responsibilities. Companies should be managed for the benefit of their stakeholders: customers, suppliers, employees, communities and owners (stockholders). Company leaders bear a fiduciary responsibility to all stakeholders. (Silbiger, 2012)

Just opposite of  the "politically correct" philosophy espoused at mist institutions is a competing school of thought led by Milton Friedman at the University of Chicago. Friedman's philosophy is that business's sole duty is to make profits. "Businesses are in the business of maximizing shareholders' value by a prudent use of scarce organizational resources, as long as the activities of the businesses are within the letter of the law." Friedman believes it is up to government to determine what the laws should be. A profitable business benefits society by creating jobs, improving the standard of living of its owners and employees. Corporations pay taxes that support government's social action. Friedman's theory and philosophy is regarded as one of the proponents of capitalism in economics courses (Silbiger, 2012)  

What is the feedback from business school students? Students give several responses to whether ethics can be taught. "If it can't be taught, why am I taking this class?" "Look at the behavior of certain corporate executives who have been found guilty of criminal conduct. They surely haven't learned proper ethical values." Students summarize the learning lesson is this: "although certain ideals or types of knowledge can be taught, ethical behavior (actions) cannot because it is a matter of individual choice." (MacKinnon and Fiala, 2015)

Even several leadership, management and business books, e.g., The Guerilla Marketing Handbook, and Sun Tsu: The Art of War for Managers use the common theme that surprise attacks, guerilla warfare, and other warlike tactics are necessary to win the battle for American consumer and sales. Unfortunately, this business-as-war reasoning and philosophy fosters the idea that honesty is unnecessary in business. Boeing and European Airbus is the biggest business rivalry and competition in the world. Several books document this including The Sporty Game and Boeing versus Airbus: The Inside Story of the Greatest International Competition in Business by John Newhouse. (Ferrell, Fraedrich, and Ferrell, 2015)

In addition, The Goal: A Process of Ongoing Improvement (Theory of Constraints) business novel by Eli Goldratt emphasizes that the goal of any business is to make money. The theory, philosophy and novel is used by many companies and business schools. (Goldratt, 2012)

Podolny suggests that business focus is too much quantitative (numbers) and needs more focus and emphasis on qualitative (soft skills) including ethics and corporate social responsibility. This includes a holistic approach to business problems and case studies. Faculty from both the "hard" and "soft" disciplines must discuss material in the same classroom, e.g., teaching teams. When business schools teach leadership, emphasis is on the big picture and not the hands-on practical details. Podolny recommends business schools adopt a code of ethics similar to the medical (doctors) and bar (lawyers attorneys) associations to develop codes of conduct for MBAs and to withdraw the degrees of those who break the manager's code including conduct, behavior and actions. (Podolny, 2009)

References

Ferrell, O.C., Fraedrich, John, and Ferrell, Linda (2015). Business Ethics: Ethical Decision Making and Cases (10th ed.). Stamford, CT: Cengage Learning.

Goldratt, Eliyahu M. (2012). The Goal: A Process of Ongoing Improvement. Great Barrington, Massachusetts: The North River Press Publishing Corporation.

MacKinnon, Barbara and Fiala, Andrew (2015). Ethics: Theory and Contemporary Issues (8th ed.). Stamford, CT: Cengage Learning.

Podolny, Joel M. (2009). The Buck Stops (and Starts) at Business School. Harvard Business Review (June 2009). Boston, Massachusetts: Harvard Business School Publishing.

Silbiger, Steven (2012).  The Ten Day MBA: A Step-By-Step Guide To Mastering The Skills Taught In America's Top Business Schools (4th ed.). New York, NY: HarperCollins Publishers.