Salutary lessons place ethics closer to the core

Recent corporate scandals have put the spotlight on ethical values in business

In the wake of Enron, WorldCom and other corporate scandals, US business schools have been quick off the mark to provide management students with popular new courses in how to sleuth for accounting irregularities. One such offering, 'The Enron Case', taught at the University of California at Irvine can even claim the participation of an Enron whistleblower.

Giving MBA students added skills to nip corporate fraud in the bud is all very well, but how should business schools best impart the ethical values that business needs, if these massive scandals are to be avoided in the future? This is an issue that many European schools had been grappling with before the recent spate of US collapses and there are no easy answers.

"A business school cannot be prescriptive in its teaching of business ethics which are themselves a reflection of human nature. Instead, we can only highlight different approaches and provide some insight into the possible dilemmas that managers may face," argues Professor Ian Turner, director of Graduate Business Studies at Henley Management College. When it comes down to brass tacks, Dr Carol Print, in charge of teaching Finance and Accounting at Henley, explains: "The recent US scandals have not entirely changed the philosophy of accounting and finance teaching on our MBA course but have rather highlighted the role – and factors to be aware of – when working with auditors."

For some years, the Henley MBA programme has used the example of Ben & Jerry's, the ice cream manufacturing company set up with strong ethical values, as the basis for teaching corporate governance and business ethics. This international case study is conducted in partnership with the University of Calgary. Transatlantic contact takes the form of a video conference with Henley students role-playing members of a large multinational company which has faced its own ethical dilemmas in the past. Based on their case study research, Henley players offer advice in this field to their Calgary counterparts who act as the board of Ben & Jerry's as it tries to redefine its own ethical values in the aftermath of its own takeover by a much larger company.

At Cass Business School (formerly City University Cass Business School), associate dean Chris Brady makes innovative use of The Godfather films as an exemplar for studying organisational and personal ethics. As he explains: "A Mafia family is governed by its own, albeit distorted, version of 'ethical' rules, and loyalty is a key issue. Our students are encouraged to apply their analysis of these films to a business situation. For example, if they discovered papers damaging to their company, would they shred them or turn them over to the authorities? I avoid moralising as that simply turns students off. Instead we hone their analytical powers so that they can make their own judgement. They come out with an understanding of the issues, but not necessarily the answers."

At many UK and European schools, ethics has until now been offered to MBA students purely as an elective. There are forward-looking academics, including Peggy van Luyn, director of the full-time MBA programme at the University of Bath School of Management, who believe that this must change. "Ethical issues should not be treated as a stand-alone subject, but rather they should be incorporated into the entire programme and way of thinking. Having said that, you cannot force businesses or individuals to behave in an ethical manner. However, you can raise their consciousness and encourage them to connect management to social, ethical and environmental responsibility."

This view is echoed by Xavier Mendoza, dean of the Spanish business school, ESADE, where an ethical dimension is integrated across all MBA courses from marketing to strategic management. "Society's expectations of business behaviour are growing and we need to equip future managers to be able to meet these expectations," he explains. While he resists the notion that his school sets out to train potential whistleblowers as such, Xavier Mendoza stresses that "we aim to develop MBA graduates who can feel free to take the right action at all times, whether it means resigning or going public if necessary". This, he says, is in keeping with the spirit of Spanish business schools in general, which have long placed a strong emphasis on personal integrity. "This stems from the fact that religious orders played a leading role in setting up the key schools and their influence is still felt."

ESADE is one of the founder members of the new European Academy of Business in Society where leading European business schools, universities and top companies come together to encourage research and teaching in the broader field of corporate social responsibility (CSR) which includes ethics. As part of the wider European Business Campaign on CSR, the Academy has been set up to drive these vital topics into the mainstream of business theory, practice and education. UK business schools already signed up are Ashridge and Cranfield. "Participating schools will begin to restructure their curriculum so that taking account of the social and environmental impact of any business activity becomes a natural part of the teaching discipline," explains the Academy's Professor Gilbert Lenssen, who cites the lack of research and a true interdisciplinary approach as hurdles to be overcome.

One of the main problems, according to Simon Webley of the UK-based Institute of Business Ethics is the lack of effective teachers to take on ethics as a specialist subject. "Ideally, teachers in this area should have a business background rather than being academic philosophers." To help fill this gap, the Institute is organising a conference on teaching business ethics to be held at Brunel University in December.

Peter Calladine of the Association of MBAs, which accredits business schools worldwide, points out that, disappointingly, few prospective MBA students believe that how a school deals with these key issues is particularly significant when comparing the merits of individual courses. However, with CSR beginning to hit companies' bottom line, forward-looking business schools are beginning to edge personal and corporate ethics further into the spotlight. In the post-Enron world, this is an issue that will inevitably get hotter by the day and MBA schools and students ignore it at their peril. After all, it has already seen some of the most powerful businesses in America brought to their knees.