Business Week 2011 - Phillips

The ethical dimension of MBA education

Professor Paul Phillips [email protected]

10 May 2011

Some Business School Facts and Figures I

According to AACSB 12,600 institutions offer business degrees

AACSB:

• 620 Schools have AACSB accreditation (www.aacsb.edu/)

EFMD:

• 129 Schools have EQUIS accreditation (www.efmd.org/)

AMBA:

• 177 Schools have AMBA accreditation (www.mbaworld.com/)

Less than 1% of Schools have triple accreditation

Some Business School Facts and Figures II

• Association of Business Schools have 117 members that offer business programmes and majority perform some form of research and scholarship

• More than 1,700 Business Schools in India producing 120,000 MBA graduates in 2010

• 236 Institutions offer MBA programmes in China in 2011, with more than 70,000 applications

• Internationalisation for most Business Schools is a strategy involving accreditations by AACSB, EFMD and AMBA

“Rethinking the MBA, Business Education at a Crossroads”

These include:

• Gaining a global perspective.

• Developing leadership skills.

• Honing integration skills.

• Recognizing organizational realities and implementing effectively.

• Acting creatively and innovatively.

• Thinking critically and communicating clearly.

• Understanding the role, responsibilities and purpose of business.

• Understanding the limits of models and markets.

Source: Datar, Garvin and Cullen

Why is CSR important?

• What is the relationship between business and society?

• There is a market for morality- if markets are changing, Business Schools need to change and internalise CSR practices

• Students have broader choices about where they end up working

• Can we monetise the values within companies?

• Great companies of tomorrow will have shared values – affecting the mainstream of strategy

• Too important to leave to Government to sort out. Government is incapable and needs a strong regulatory environment,

• MBAs need to consider Triple bottom line – profits, environmental and social performance

Why is CSR unimportant?

• CSR has become an industry, and is a growing phenomenon

• Business education is not about business ethics and CSR, but role of business schools in society

• Businesses should be judged by what they do rather than what they say

• Modern version of CSR-Doing well by doing good

• Businesses are under pressure to create shareholder value

• CSR is an intensely confused concept

• CSR is really good management, which leads to higher profits and good social outcomes

• BP was recognised for being socially responsible, but look what occurred

The Dilemma

• In these challenging times, senior managers leading private and public sector organisations are under pressure to deliver satisfactory returns to internal and external stakeholders. However, there are increasing examples, where the organizational vision statement is in stark contrast to corporate behaviour.

• The real issue is the values inherent in corporate behaviour

• Ethical corporate downfalls, such as Enron, WorldCom and Siemens have shown that problems are not usually created by a single act, but lapses of moral standards.

Multiple stakeholders

• Business schools continue to be criticized for preoccupation with placing MBA graduates in high paying jobs, such as in the financial services sector. The paucity of attention on drawing the line between competing needs of multiple stakeholders escalates.

• Inadequate ethical training in the classroom and the continued examples of recklessness has forced business schools to seriously alter perceptions.

• The growth of ethics and corporate social responsibility in MBA programmes has been noticed. For example, the QS Survey identifies five business schools (www.topuniversities.com/)

Stanford

Ethics and Management.

• This course emphasizes frameworks for conducting ethical analysis (on what basis can you say that a course of action is or is not ethical), the analysis of ethical dilemmas (how do you think about situations in which different ethical precepts collide), and how to deal on a day-to-day basis with the practical issues of ethical behavior in organizations.

Harvard Business School

Leadership and Corporate Accountability (LCA)

• In this course, students learn about the complex responsibilities facing business leaders today. Through cases about difficult managerial decisions, the course examines the legal, ethical, and economic responsibilities of corporate leaders. It also teaches students about management and governance systems leaders can use to promote responsible conduct by companies and their employees, and shows how personal values can play a critical role in effective leadership.

Tuck School, Univ of Dartmouth

Ethics and Social Responsibility Requirement

• Effective leaders must understand how the success of their organizations is intertwined with broader ethical and social issues. And they must recognize that sustainable economic growth is not possible without considering the needs and demands of broader society.

• Tuck's strategy is to provide practical business skills that will help you identify and act on the ethical and social dimensions of business issues, make reasoned decisions when faced with a dilemma, and justify your actions to stakeholders and the public within a social context.

Insead

Actively involved in five areas of research in ethics and CSR:

• How to strengthen the business case for CSR?

• Business and marketing ethics from a normative perspective: what is the right thing to do? How to make ethical marketing business decisions?

• Ethical consumerism: how do consumers track CSR behaviours of firms? How do they act through ethical consumerism (through boycotts)?

• Ethics of defaults: consumers are more likely to retain the default package they buy, until what point should marketing exploit their vulnerability?

• The opening of firm boundaries: how companies should manage this challenge? How should they manage their internal and external workforce?

Wharton

Legal Studies and Business Ethics

• allows students to supplement their major field with in-depth knowledge of one or more relevant legal areas. The study of law provides valuable insight into the business- government interface and the development of public policy affecting the global market. It also enhances students’ knowledge and skills in practical areas directly relevant to business transactions. Familiarity with the law enables one to identify potential legal problems, seek appropriate counsel before making key business decisions, and work more effectively with

Ethics and CSR Initiatives

• Responsibility of Business Schools to produce graduates for business

• Globally Responsible Leadership Initiative (GRLI)

• Principles for Responsible Management Education (PRME)

• United Nations Global Compact Principles

• MBA oath

• Institute of Business Ethics (www.ibe.org.uk/)

• Integration of Humanities into Business School curriculum

• Major changes taking place in England, USA, Hong Kong, Slovenia, Spain

Thank you