1. Introduction In recent years, the search for ways to stop the production of economic, environ- mental and social crises has extended to business education. Reformers and institutions that address environmental and social issues have increas- ingly looked to business schools for positive contributions. Progressive business scholars have argued for the integration of sustainability (e.g. Stubbs & Cocklin, 2008; Willard, 2004) and corporate social responsibility (e.g. Carroll, 2000; Schwartz & Carroll, 2003) content in business school curricula. Influential organizations like the Aspen Institute and even the United Nations have developed programs to promote more responsible and sustainable leadership development in business education. 1 1 See The Aspen Institute’s Business & Society Program and the Principles of Responsible Management Education initiative of the United Nation’s Social Compact program. Chapter 11 Beyond Business Ethics and Corporate Social Responsibility Courses D.P. Gijsbertse Abstract Many business schools have integrated business ethics, sustainability and corporate social responsibility content into their curricula. The goal of these reforms is to change the broader economic, environmental and social ef- fects of organizational decision-making by their graduates in positive ways. This chapter distinguishes four levels of integrating ethical reflection into business education based on the type of reforms that schools have under- taken so far. It argues that each of these levels is necessary, but not suffi- cient to effectively change the broader economic, environmental and social effects of organizational decision-making in positive ways. It then proposes two further, much more radical levels of integrating ethical reflection into business education that can change the broader effects of organizational decision-making in positive ways. 125 Published in: Gijsbertse, D.P. & Naeije, W.J. (2014). Bedrijfskundigen in de 21ste eeuw: Nieuwe perspectieven op bedrijfskundig onderwijs. Rotterdam: Hogeschool Rotterdam Uitgeverij.
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Gijsbertse (2014) - Beyond Business Ethics and Corporate Social Responsibility Courses
Many business schools have integrated business ethics, sustainability and corporate social responsibility content into their curricula. The goal of these reforms is to change the broader economic, environmental and social effects of organizational decision-making by their graduates in positive ways. This chapter distinguishes four levels of integrating ethical reflection into business education based on the type of reforms that schools have undertaken so far. It argues that each of these levels is necessary, but not sufficient to effectively change the broader economic, ecologic and social effects of organizational decision-making in positive ways. It then proposes two further, much more radical levels of integrating ethical reflection into business education that can change the broader effects of organizational decision-making in positive ways.
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1. Introduction
In recent years, the search for ways to stop the production of economic, environ-
mental and social crises has extended to business education.
Reformers and institutions that address environmental and social issues have increas-
ingly looked to business schools for positive contributions. Progressive business
scholars have argued for the integration of sustainability (e.g. Stubbs & Cocklin, 2008;
Willard, 2004) and corporate social responsibility (e.g. Carroll, 2000; Schwartz &
Carroll, 2003) content in business school curricula. Influential organizations like the
Aspen Institute and even the United Nations have developed programs to promote
more responsible and sustainable leadership development in business education.1
1 See The Aspen Institute’s Business & Society Program and the Principles of Responsible
Management Education initiative of the United Nation’s Social Compact program.
Chapter 11
Beyond Business Ethics and
Corporate Social Responsibility Courses
D.P. Gijsbertse
AbstractMany business schools have integrated business ethics, sustainability and
corporate social responsibility content into their curricula. The goal of these
reforms is to change the broader economic, environmental and social ef-
fects of organizational decision-making by their graduates in positive ways.
This chapter distinguishes four levels of integrating ethical reflection into
business education based on the type of reforms that schools have under-
taken so far. It argues that each of these levels is necessary, but not suffi-
cient to effectively change the broader economic, environmental and social
effects of organizational decision-making in positive ways. It then proposes
two further, much more radical levels of integrating ethical reflection into
business education that can change the broader effects of organizational
decision-making in positive ways.
125Published in: Gijsbertse, D.P. & Naeije, W.J. (2014). Bedrijfskundigen in de 21ste eeuw: Nieuwe perspectieven op bedrijfskundig onderwijs. Rotterdam: Hogeschool Rotterdam Uitgeverij.
Critics, on the other hand, have blamed business schools for the corporate scan-
dals of the early 2000’s and the 2008 financial crisis. Several business scholars
(e.g. Adler, 2002; Gioia, 2002; Khurana et al., 2004; Swanson, 2005) have blamed
corporate scandals like Enron, Arthur Andersen, WorldCom and Tyco on the
absence of ethics from business school curricula. Influential journals like Harvard
Business Review (Podolny, 2009) and Forbes (Serchuk, 2009) and quality news-
papers like The Financial Times (Bradshaw, 2009), The New York Times (Holland,
2009), The Guardian (James, 2009) and The Independent (Green, 2009) gave a
stage to critics who argued that business schools are responsible for the financial
crisis for the exact same reason.
In response to these concerns and criticisms, many business schools have integrated
business ethics, sustainability and corporate social responsibility content into their
curricula. While Forbes had previously criticized business schools for their complicity
in the financial crisis, it called it encouraging to see that ‘many schools, in response
to the financial crisis, are updating their curricula to better prepare students for the
ethical questions they may be forced to answer in the decades to come’ (O’Connor,
2013). More importantly, a study by the Aspen Institute (2011) found that the per-
centage of leading business schools with ethics and corporate social responsibility
content in their curricula had increased from 34% in 2001 to 79% in 2011.
This chapter addresses the efficacy of the reforms that business schools have
undertaken so far – focusing especially on their capacity to change the broader
economic, environmental and social effects of organizational decisions in posi-
tive ways. It argues that these reforms are indeed necessary, but that the ways in
which ethics, sustainability and corporate social responsibility content has been
integrated into business school curricula so far is not sufficient. Therefore, it also
proposes more radical ways of integrating a combination of ethical reflection and
critical thinking into business education that seem to be more promising.
The following section discusses why reformers and critics are right to target busi-
ness schools in their search for ways to stop our production of economic, environ-
mental and social crises. This is followed by a distinction of four different levels of
integrating ethics, sustainability and corporate social responsibility content into
business school curricula in section three. Section four explains why each of these
levels is necessary to change the broader economic, environmental and social
(side-)effects of organizational decisions in positive ways. After that, section five
will continue to argue that these four levels of integration nevertheless still fail
to address the actual driver behind the production of economic, environmental
and social crises. Section six discusses why, as a result of this failure, the first four
levels of integration are not sufficient to change the outcomes of organizational
decision-making. Section seven proposes two further and much more radical
levels of integrating ethical reflection on the broader economic, environmental
and social effects of organizational decisions into business education.
126
2. Why Target Business Schools?
For every newly appointed corporate social responsibility or sustainability profes-
sor or lecturer, there is at least one business school professor or lecturer who
thinks these subjects do not belong in business education. For every critic who
has blamed business schools for the financial crisis, there are at least ten who
have blamed the financial crisis on governments instead.2 Before evaluating the
ways in which business schools have responded to growing environmental and so-
cial concerns and criticisms about their functioning, a brief discussion on whether
reformers and critics are right to target business schools is in order.
In general, there is a tendency among reformers and critics to blame the economic,
environmental and social crises on institutions or actors that can control, or, as
they would argue, could have controlled the production of the negative effects that
create these crises. The financial crisis, for example, is blamed predominantly on
governments, because they could have contained the creation of systemic econom-
ic risk through tougher regulation of the financial sector. The environmental crisis
is often blamed on consumers, because more sustainable consumption patterns
on their part could reduce greenhouse gas emissions, pollution and the depletion
of natural resources. Even growing unemployment in an increasingly automated
and competitive global economy tends to be blamed on individual members of
the work-force, because they could – as the argument has it – compensate for the
decline in labor market demand by becoming better entrepreneurs of the self
(i.e. personal investments in the development of one’s human capital or literal
engagement in entrepreneurial activities).3
Although this focus on the failures of the constraining and compensating mecha-
nisms that these actors and institutions have at their disposal can surely be useful
(as will be discussed in section 4), it does overlook where the production of these
crises actually occurs. While governments may be able to curb or compensate
for the creation of financial risks, they do not drive the production of these risks
themselves. Consumers may be able to reduce greenhouse gas emissions, pollu-
tion and the depletion of natural resources by changing their consumption pat-
terns, but it is not the act of consumption itself that brings these negative effects
into being to begin with. Individual members of the work force can compensate
for decreasing labor market demand by becoming better entrepreneurs of their
self, but their decisions and actions as individuals looking for work do not drive
the disappearance of jobs.
2 As a quick measure for approximation, there are fourteen chapters dedicated to the
various forms of government failure compared to one chapter about business schools
in Howard Davies’ (2010) The Financial Crisis: Who is to Blame?
3 The term entrepreneurship of the self is derived from Michel Foucault’s discussion of the
reformulation and generalization of the notion of homo œconomicus as ‘an entrepreneur
of himself’ in American neoliberalism (see Foucault, 2008, p. 226).
127
So where does the production of economic, environmental and social crises
actually occur? The answer is rather simple: it occurs as a side-effect of the
current functioning of organized forms of economic production, or, more simply:
business. It is not governments, but financial institutions that have produced the
systemic financial risks that came close to bringing down the world economy. It
is not consumption, but heavy industry that produces greenhouse gas emis-
sions, pollution and the depletion of natural resources as byproducts of their
business operations to begin with. The decisions of business, not individual
members of the workforce result in automation and lay-offs at the expense of
employment opportunities.
Knowing that these crises are produced first and foremost by the current func-
tioning of businesses, it is but a small step to see why business schools are
responsible for these crises indeed. Governments, consumers and individual
members of the workforce can be blamed at most for their failure to constrain- or
compensate for the production of negative economic, environmental and social
effects by businesses. Business schools, on the other hand, can be blamed (in)-
directly for the production of these crises, as they have developed, taught and
distributed the management tools and theories that have increasingly come to
govern organizational decision-making and the organization and functioning of
economic production (i.e. firms) more generally over the last 50 to 70 years.
3. Four Levels of Integrating Ethical Reflection
So if business schools are to blame, what have they done to change in response to
these crises? Detailed empirical studies about the content, teaching methods and
the position in the overall curricula of their reforms are missing or difficult to find.
But it is still possible to capture most of these reforms by making some conceptual
distinctions. Since we are interested in the capacity of these reforms to change
the outcome of organizational decision-making, these distinctions are based on
the extent to which ethics, sustainability and corporate social responsibility con-
tent is integrated in the ways in which business schools prepare their students for
real-world organizational decision-making. Based on this criterion, the following
four levels of integration can be distinguished.
Level 1: Stand-alone Courses
At the first level of integration, business ethics, sustainability and corporate social
responsibility are added to the curricula as separate, stand-alone course content.
There either is one course or part of a course dedicated to one of these three
topics entirely, or there are two or three courses or parts of courses that are each
dedicated to one of these three themes. A separate, stand-alone course on busi-
128
ness ethics, for example, would teach students to reflect on the effects of organi-
zational decisions on stakeholders from an ethical point of view.
Level 2: Integrative Courses
The second level of integration is reached when business schools offer course
content that integrates and relates ethics, sustainability and corporate social
responsibility topics. Such integrative course content teaches students to reflect on
the effects of organizational decisions for stakeholders and the broader economy,
environment and society from an ethical point of view. (Henceforth, the use of ‘ethi-
cal reflection’ will refer to this broader mode of reflection unless stated otherwise).
Level 3: Integration Across the Curriculum
The third level is reached when ethical reflection is integrated into the core
courses of the traditional curriculum (e.g. strategy, corporate finance, business
economics, marketing, human resource management etc.). These courses would
teach students to incorporate ethical reflection into the problem-solving and
decision-making approaches they learn.
This level can be achieved in several ways. One is to adopt a textbook that treats
the ethical aspects of the kind of organizational decision-making that is typical to
the subject of a course and actively involve reflections on these aspects in teach-
ing the course. Another way is to assign additional readings about ethical aspects
connected to the subject, explicitly discussing the ethical dimensions of business
cases that involve decision-making on the subject of the course. Finally, instruc-
tors of stand-alone courses on business ethics can help instructors of courses
from the traditional curriculum to integrate ethical reflection in the approach to
organizational decision-making that their specific courses teach.
Level 4: Integration in Business Assignments
The fourth level is reached when ethical reflection is integrated into business
assignments for real organizations. This level can only be attained by business
schools that have their students carry out projects or internships at real organiza-
tions during their studies. Schools that do, can achieve this level by making ethical
reflection on the effects of organizational decisions that are made or recommend-
ed as part of business assignments into a standard assessment criterion, as well
as a discussion point for coaching sessions during the project.
Most business schools are somewhere between the first and second level of inte-
gration. They have somehow added course content on business ethics, sustain-
ability and corporate social responsibility to their curricula. But the content is not
129
yet fully integrated. There is no ethical reflection on the effects of organizational
decisions for the broader economy, environment and society. Business schools
that have progressed to level two, three or four are at the forefront of making
business education more responsible and likely to be concerned with ways to en-
sure that ethical reflection actually changes the broader economic, environmental
and social effects of the decisions their graduates make in positive ways.
4. Why These Four Levels of Integrating Ethical Reflection are Necessary
Though each of the first four levels of integration has its shortcomings (as will be
discussed in section 5), they also represent necessary steps for business schools –
steps that must be taken in order to change the broader economic, environmental
and social effects of organizational decisions in positive ways.
Adding a separate, stand-alone (Level 1) course on ethics is necessary, because
students have to learn how to make judgments about decisions from an ethical
point of view. From the 1960’s onwards, business schools have adopted a science-
based approach to management.4 As a result, business education has come to be
dominated by a positive approach to business that is based on the-way-the-world-
(of-business)-is. In fact, this positive approach is so dominant that students would
not even know what ethical reflection and normative reasoning about the-way-
the-world-(of-business)-ought-to-be are, if their educational experience were lim-
ited to the traditional business school curriculum. If ethical reflection is going to
change the way organizational decisions are made, business students would first
have to know how to reflect on decisions from an ethical point of view. Therefore,
teaching separate stand-alone course content on business ethics is a necessary
precondition for more responsible organizational desicion-making.
Likewise, adding separate, stand-alone (Level 1) course content on sustainability
and corporate social responsibility is also necessary, because students have to
become aware of the (side-)effects that organizational decisions can have on
the economy, the environment and society. Traditional core courses focus on the
way that the relevant aspects of one business function (e.g. strategy, finance,
marketing, human resource management, etc.) are related to the performance of
the individual firm. In doing so, the business environment tends to be taken into
4 See discussions by Mintzberg (2004, p. 27ff), Ghoshal (2005, p. 77) and especially
Khurana (2007, p. 268ff), among others, about the way in which business schools were
transformed into science-based and analysis-centred institutions for ‘training in the
functions of business’ (as Mintzberg, 2004, p. 5 puts it) and turned away from the pro-
ject of developing management into a profession (as Khurana 2007 puts it).
130
account only to the extent that it is relevant for the performance of the individual
firm itself. That is, the effects of organizational decisions on the broader economy,
the environment and society are not considered as relevant in- and of themselves.
Business students who follow a traditional curriculum without any sustainability
or corporate social responsibility course content may even be(come) oblivious
to the fact that such effects exist. If the negative economic, environmental and so-
cial effects that are currently produced by businesses are to be changed through
the way organizational decisions are made, then business graduates who are go-
ing to make these decisions must be aware of them first. Therefore, it is necessary
to integrate stand-alone course content on sustainability and corporate social
responsibility themes into business school curricula.
By the same token, (Level 2) courses that integrate ethics, sustainability and
corporate social responsibility content are necessary, because students have to
learn to reflect on the broader economic, environmental and social effects of
organizational decisions from an ethical point of view. Teaching students to reflect
on decisions from an ethical point of view and teaching them about the broader
economic, environmental and social effects of organizational decisions is a first
step. But if these topics remain disconnected, students will learn only to identify
the broader economic, environmental and social effects of organizational deci-
sions in purely descriptive ways and remain unable to evaluate, argue and judge
whether these effects are good or bad from an ethical point of view. If business
graduates are to change the broader economic, environmental and social effects
of organizational decisions in a positive way, then they would have to be able to
evaluate- and argue about the normative reasons for doing so first. Therefore,
it is necessary to add courses to business school curricula that integrate ethics,
sustainability and corporate social responsibility themes in a way that students
learn to reflect on- and evaluate the broader economic, environmental and social
effects of organizational decisions from an ethical point of view.
The third level of integration, then, is also necessary, because ethical reflection
needs to be incorporated into every type of organizational decision-making.
Traditional courses like strategy, finance and marketing teach students how to
analyze- and solve problems and make decisions that are typical to the business
functions they address. If ethical reflection on the broader effects of business is
merely taught in stand-alone courses on ethics, it will remain detached from the
standard approaches to problem-solving and decision-making that are taught
for each business function. Business ethics, sustainability and corporate social
responsibility courses would appear to be just another set of separate courses,
each with their own approach to their own domain of problems. Such an isolated
position would make ethical reflection appear as a rather abstract exercise that
is detached from, and therefore irrelevant to, the problem-solving and decision-
making methods that are taught in other function-dedicated courses. If ethical
131
reflection has to change the outcomes of organizational decisions in practice,
it has to be an integral part of all the standard approaches to organizational
decision-making that are taught in business school curricula. Therefore, it is
necessary to integrate ethical reflection across the core courses of the tradi-
tional curriculum.
Finally, even the fourth level of integration is necessary, as the traditional cur-
riculum is too theory-centered to prepare students properly for dealing with the
complex dynamics of real world organizational decision-making. The traditional
business school curriculum prepares students for making real-world organizational
decisions by training them in abstract analysis of business cases that are written
in a way that the available theories can easily be applied to find the right solution.
Factors that complicate decision-making in business practice (e.g. limited available
information, changing circumstances, organizational politics and all the unique
particulars of a situation that are not a part of the theory) are either bracketed or
excluded through a series of simplifying assumptions. This predominantly analytical
approach has led Henry Mintzberg (2004) to argue that business education fails to
develop competent managers in general, because it is to detached from the com-
plexities of real-world business contexts. His argument for doubting the efficacy of
business education extends a fortiori to the efficacy of teaching ethical reflection as
an integral part of organizational decision-making in classroom settings only. If busi-
ness students are to change the outcomes of decision-making in business practice
based on ethical reflections, they will have to learn how they can integrate these
ethical reflections and act upon them in the complex social reality of real-world
organizational contexts. Therefore, it is necessary to integrate ethical reflection into
business assignments, projects and internships for real-world organizations as well.
5. The Actual Driver Behind the Production of the Crises
The previous sections have argued that business schools can indeed be blamed
(in)direclty for the production of economic, environmental and social crises (sec-
tion 1), distinguished four different levels in the ways in which business schools have
reformed their curricula so far (section 2) and explained why each of these reforms
are necessary to change the negative economic, environmental and social effects
produced by organizational decisions (section 3).
This section discusses why the first four levels of integration – even though they
are necessary – fail to address the way in which traditional business school cur-
ricula drive the production of negative economic, environmental and social (side-)
effects in organizational decision-making. This failure results from their solution-
oriented approach, which merely seeks to use ethical reflection as a constraint on
132
the production of negative external effects. This approach overlooks and distracts
from the actual driver behind the production of these negative effects.
There are two different ways to respond to crises: a problem-oriented approach,
which analyzes and seeks an understanding of the causes of a crisis first, and a
solution-oriented approach, which prioritizes the search for- and implementation
of possible solutions over gaining a complete understanding of the causes of a
crisis first.
The first four levels of integrating ethical reflection into business education are
solution-oriented responses. After the corporate scandals of the early 2000’s and
the 2008 financial crisis, critics were quick to blame these negative effects on the
absence of business ethics from business school curricula. Business schools quick-
ly responded by integrating business ethics and corporate social responsibility
content into their curricula. These rapid responses by critics and business schools
were focused on integrating business ethics as a solution that was readily at hand,
without any further or more thorough analysis of the underlying problem.
This solution-oriented approach definitely has one major strength relative to the
problem-oriented approach. It does not wait for an exact and complete under-
standing of how a crisis could have occured before coming up and implementing
responses to it. As such, it does not lose any valuable time when it is necessary
to mitigate immediate threats. Imagine that governments, in 2008, had commis-
sioned a thorough investigation into the causes of the financial crisis before issu-
ing bailouts to financial institutions that were at the brink of bankruptcy and too
big to fail. The economic system would probably have ground to a halt.
But the solution-oriented approach also has a major weakness. In skipping over a
more thorough analysis of the underlying problem, it tends to treat the absence
of the solutions that it generates as the problem. Consequentially, the solution-
oriented approach is at risk of responding to crises situations in a way that does
not address the underlying problem at all.
As responses to the economic, environmental and social crises, the first four lev-
els of integrating ethical reflection suffer from this weakness. Critics and business
schools alike did not so much engage in a thorough analysis of the ways in which
business education has contributed to the occurrence of corporate scandals and
the financial crisis. Instead, they proposed business ethics and corporate social
responsibility as a solution first and then backwards-rationalized that the absence
of business ethics was the problem second. But blaming these corporate scandals
and the financial crisis on the absence of business ethics in business education
does not explain why these (and other) negative effects occur when ethical reflec-
tion is absent from business education to begin with.
133
So what, then, drives the production of negative economic, environmental and
social effects in organizational decision-making that is devoid of ethical reflection?
It is the principle of shareholder value maximization.
Over the past three decades economic production increasingly has come to be or-
ganized around the principle of shareholder value maximization. This principle was
first popularized as a new conception of organizational purpose in the United States
in the early 1980’s. Throughout the 1970’s, corporate strategies of American firms
had been oriented predominantly ‘towards retention of corporate earnings and re-
investment in corporate growth’ (Lazonick & O’Sullivan, 2000, p. 13). In the decades
that followed, this was transformed into an orientation on ‘downsizing of corporate
labour forces and distribution of corporate earnings to shareholders’ (ibid.). Though
this transformation started in the United States, it has spread far beyond.
Business schools have played a decisive role in crafting this focus on shareholder
value maximization into the overriding objective for organizational decision-making.
The main intellectual thrust behind the aforementioned transformation of organiza-
tional purpose came from a group of financial economists (e.g. Jensen & Meckling,
1976). These economists translated a series of standard assumptions from neoclas-
sical economics into prescriptions for corporate governance in what has come to be
known as agency theory. Assuming that market mechanisms are superior to mana-
gerial decision-making and that human behaviour is essentially self-interested, they
argued that corporate governance should be designed as to prevent managers from
pursuing objectives that are not in line with the financial interests of shareholders.
One way to do this, as they proposed, is to grant stock options to executives. Another
is to promote a market for corporate control that would replace managers who failed
to maximize shareholder value. The theoretical design and practical implementation
of this approach to corporate governance implicitly transformed the conception of
organizational purpose from one that was tied to institutional stability and growth to
one that was focused on shareholder value maximization above all else.
This principle of shareholder value maximization has developed into the foun-
dational assumption behind most thinking, theorizing and teaching in business
schools. After its development under the guise of agency theory, shareholder val-
ue maximization was quickly adopted as the dominant doctrine on organizational
purpose in business education (Gintis & Khurana, 2006, pp. 303–304; Khurana
et. al., 2004, p. 9). One measure of its pervasiveness is its spread throughout
academic articles, books and standard educational textbooks on the different
business functions to which most core courses in the traditional business school
curriculum are dedicated. Examples of its adoption can be found in the academic
literature- and educational textbooks on corporate governance (e.g. Jensen, 2001;