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Ethics, Leadership, and Business-School Education of MBAs

Guest Blog on Business Ethics Education by Julianna Davies

Poll most people on the street, and they’ll be able to identify at least one example of unethical corporate behavior. Business ethics are a hot topic these days, and the following article explores a new dimension -- namely, how these issues can be addressed in MBA programs. Contributor Julianna Davies writes frequently on business education topics, including surveys of the larger purpose of executive MBA programs. Here, she argues that training future executives in ethical dealings before awarding them a degree may make a real difference in the marketplace.

Are MBA Programs Creating Leaders Who Are Actually Ethical?

Although business success is an important part of a country’s economic prosperity, corruption in the corporate world can just as easily drain resources—not to mention stifling innovation and damaging morale. Economists following the Milton Friedman school of thought often argue that corporations have no responsibility for ensuring the stability or prosperity of the communities in which they exist. While this may be true from a purely legalistic standpoint, complete disassociation is often ethically indefensible, particularly when a corporation is actually causing harm. The rise in corporate malfeasance and seeming ambivalence in recent years has led many to question whether business schools are doing a good enough job of instilling ethics principles in new graduates.

Financial dishonesty is one of the biggest problems corporate leaders face. CEOs who pad their bottom lines, lie about investments, or set up shell entities for squirreling away assets have become all too commonplace in the years since the financial meltdown first began. Many people have seen their investments devastated, their homes foreclosed, and their retirement accounts all but dried up as a result. In some cases, poor business ethics goes even farther.

Take petroleum company Chevron, for instance. Swiss research firm Covalence ranked Chevron as the third worst company in the world in terms of business ethics in 2011. Not only did the company lie about its finances, it was charged with criminal tax evasion in the United States. In the foreign communities where it mines and drills its oil, it allegedly committed numerous and repeated environmental infractions, and was suspected of orchestrating an armed retaliation against protests in Nigeria. Meanwhile, it continued to raise prices and rake in the profits at home.

Chevron, of course, is an extreme example—and officials have promised that the company’s ways have changed. Still, the example it paints is somewhat harrowing. Many have begun wondering whether business schools are doing enough to help foster a sense of global ethics in their graduates, and what, if anything, can be done to instill morality and good stewardship alongside the drive for profits.

Part of the problem may be rooted in the deep competitiveness of the  business school model. A 2011 study conducted by professors at Penn State University, Rutgers University, and Washington State University found that a staggering 56 percent of business students across the U.S. admitted to cheating at some point in their graduate coursework. "Our research revealed that graduate business school students cheated primarily because there was a perception that their peers were cheating," Linda Klebe Treviño, one of the authors, said shortly after the paper was released. "We speculate that they may have reasoned that cheating was therefore acceptable or necessary in order to compete."

Most graduate schools incorporate courses on ethics and sound business practice into their curricula, but the disconnect between studying ethics in the classroom and actually applying it to real situations may be too wide to bridge. "As long as we offer courses strictly as stand-alone affairs, with ethics over here and finance over there, we will continue to groom leaders inclined to perpetuate a siloed view of the world," Michael Beer, an executive with TruePoint Partners, told Bloomberg Business Week. The fix may come in the form of more integrative seminars on ethics, Beer said, or even through guest lectures or workshops led by industry executives who have seen these sorts of dilemmas first hand.

Mary Gentile, a professor at Babson College, recommends a more focused approach she calls "Giving Voice to Values." "Rather then'teaching ethics,' this approach teaches managers how to be ethical, enabling them to believe they have a choice," she said. Business schools across the country are beginning to look for programs like this as a way to really instill ethical principles in students.

Teaching ethics in a foundational way may be one of the best ways of combating the corporate greed and dishonesty so prevalent around the world today. Students need to learn honesty and the reasons behind clean dealing before being launched into the wider corporate world, both for our economy and the greater global good.

I would add just one additional thought to Julianna’s excellent article that I am posting as a guest blog today. It is the problem we face in America today, and throughout the world, in identifying role models after whom young people, such as graduate business students, can model their behavior. I mean business-leaders who the students might study about in their programs. All we seem to hear about today from the business world are the financial frauds, the misuse of funds, the greed and self-dealing and otherwise inappropriate behavior. Absent the existence of exemplars to model ethical behavior in business dealings, we, as professors, seem to gravitate towards swindlers who committed a crime, such as Barry Minkow, and bring them into the classroom to tell students why they shouldn’t model their behavior after the speaker.

Julianna Davies is a contributor at