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What is the Value of Ethics Education?

Are Universities Successfully Teaching Ethics to Business Students?

Last week I read an article on the failure of ethics education of business students to change the dynamic in the business world where the pursuit of self-interests trumps all else. We certainly have been through a decade or so of glaring unethical business practices at companies such as Enron and WorldCom, Bernie Madoff’s insider-trading scandal, and the financial meltdown of 2008-2010 from which we still have not recovered.

As a professor who teaches ethics I was struck by the reasoning given for the failure of ethics education. Some claim ethics is taught only in a separate course rather than integrated throughout the curriculum creating a perception in the minds of students that ethics is only important tangentially rather than as an integral part of business practice. I agree with this perspective but realize, having been an academic administrator for many years, the problem lies in not being able to get faculty from various business disciplines on board to incorporate ethics into their individual courses. Some feel unequipped to do so; others do not believe we should be “preaching” to college students.

I did some research on how ethics is taught to business students and their perspectives on business responsibilities and found some interesting results. Surveys conducted by the Aspen Institute, a think tank, show that about 60% of new M.B.A. students’ view maximizing shareholder value as the primary responsibility of a company; that number rises to 69% by the time they reach the program's midpoint.

There is nothing wrong with maximizing shareholder value – it is a basic tenet of capitalism. The problem lies when that is the only driver of corporate behavior to the exclusion of broader stakeholder approaches that would include customers, suppliers, and employees in the mix. Though maximizing shareholder returns isn't a bad goal in itself, focusing on that at the expense of societal interests can lead corporate decision-makers down the road of greed. By maximizing shareholder value, bonuses increase and stock options are worth more.

Some schools are experimenting with a more integrated approach. This fall, Boston University's School of Management will introduce a required ethics course for freshman business students, and is also tasking instructors in other business classes to incorporate ethics into their lessons. It may also overhaul a senior seminar to reinforce ethics topics.

"We need to hit the students hard when they first get here, remind them of these principles throughout their core classes, and hit them once again before they leave," says Kabrina Chang, an assistant professor at Boston University's business school, who is coordinating the new freshman class.

Another school with a serious attempt to teaching ethics to business students is Kansas State University. Kansas State has developed a Business Ethics Education Initiative designed to help strengthen business ethics education internationally, nationally, and locally. The goals include enhancing public awareness of the importance of business ethics coursework and identifying effective models of ethics education for relevant stakeholders. Without tying ethics to a business curriculum, "we are graduating students who are very myopic in their decision-making," says Diane Swanson, founding chair of the Business Ethics Education Initiative at Kansas State University.

Interestingly, K-State strives to achieve those goals through external and internal (campus) outreach activities, including affiliations with profit and not-for-profit organizations. I particularly like the stakeholder-influenced approach to business ethics education. It should be a two-way street between the college and greater business community to move the effort more towards the practical implications of business ethics education.

I could mention additional business ethics programs but the fact is the value of such programs is unclear. The whole issue of business ethics education has not been aptly dealt with by AACSB – International, the worldwide accrediting agency for business schools in colleges and universities. AACSB’s task force addressed this issue in 2004 and came up with what can best be described as weak and ineffective standards. I can tell you first-hand that business schools generally will not follow standards set by AACSB unless they are mandatory, and AACSB’s are not. Here are excerpts from the standards:

“While the task force does not prescribe a particular curriculum or course, it recommends that AACSB encourage its member schools and their faculties to renew and revitalize their commitment to ethical responsibility at both the individual and organizational levels. Schools should be encouraged to demonstrate this commitment throughout their academic programs, assessment processes, research agendas, and outreach activities.”

This is "academic-speak" for we do not want to hold the schools accountable for ethics education. AACSB's failure to set specific goals for business ethics education speaks volumes about the political pressure from accredited schools that were brought to bear on any new standards that require specific education. Academic administrators do not want to be tied down to a specific course of action or program; they want a more "flexible" approach. The result is a meaningless standard that fails to address the critical problems that face us today in graduating business students who become tomorrow's future abusers of the capitalist system because of narcissitic behavior.

So, what should be done about the failure of business ethics education over the years to stem the rising tide of corporate fraud and wrongdoing? I believe the emphasis of business ethics education has to change from teaching philosophical reasoning methods that rarely work in practice to a more values-based approach that emphasizes ethical leadership. Ethical leadership is a must in any discipline -- accounting, finance, information systems, management and marketing. Therefore, all college instructors should buy into the need to slant their teaching methods to incorporate leadership -- ethical leadership.

Blog posted by Steven Mintz, aka Ethics Sage, on February 12, 2013