In the not-so-distant past, business news was seldom carried on the front page. This has changed dramatically in recent years, with one corporate scandal after another making headlines. The amounts of money involved are staggering, and the effect on stock markets and pension accounts has been felt by many American investors.

The impact of these crimes is wide ranging. Recent federal laws demand a much greater level of business accountability in financial reporting, and appropriately so. And there has been a change in public attitudes towards business, captured in a recent movie review in Entertainment Weekly: “The Perfect Score. A movie about high school students trying to steal SAT answers. So they can go to business school and learn how to steal millions.”

As a business educator, I find it bewildering to see business education included among the presumed rotten apples. Still, we do not want to dodge questions about ethics and business education; they are valid and challenge our assumptions about the effectiveness of what we are doing to prepare our graduates for business careers.

“ETHICS” IN BUSINESS SCHOOLS
My experience teaching in a number of business schools has convinced me that most are getting business ethics wrong. I think the elite business schools might be even worse at teaching this subject than others. One recruiter recently characterized a visit to a prestigious Ivy League business school as “a walk in the Land of the Velociraptors.” It was not a compliment. Students can walk out of an ethics class and not see a connection to their next class, even when a case study deals with corporate fraud.

The core problem is that business schools tend to teach business ethics as a set of rules—typically, legal rules. Students too often conclude that it is okay to walk the boundary of the law as long as they do not stumble into illegal behavior. This is the opposite of what we want our students to learn because the boundaries of ethical behavior are typically crossed well before the behavior is illegal.

There has to be a better way.

David Eccles School of Business (DESB) faculty started struggling with the question of teaching business ethics about 14 years ago. As we better understood the failure of traditional approaches to preparing people for ethical leadership, it became clear that two issues needed to be addressed:

1. Ethical dilemmas are drawn in subtle shades of gray, and the boundaries are sometimes hard to see. What our students needed was a much better grounding of their business behavior in personal values and “gut instincts.” This approach is not about externally defined rules; it is about understanding core personal values and how they relate to business decisions.

2. Ethical business dilemmas occur in complex social systems with concentrated authority, distributed responsibility, and diffuse accountability. In many instances of illegal activity, hundreds of people are involved, yet no one raises an alarm. We found that the ability to act ethically when one lacks authority depends in large part on personal attributes (like courage), skills (like effective dissent), and career preparation (leading to the quip, “Six months salary in the bank is the key to integrity”). There is no textbook on courage.

The DESB did something extraordinary 12 years ago, replacing “Introductory Business” with “Foundations of Business Thought,” a course examining personal values and business practices. DESB students begin their studies with questions about the responsibilities of business to the community, the moral obligations of leadership, and market economy values. More than 2,000 students a year take the class, and only 60 percent are business majors.

ETHICS AND VALUES IN LEADERSHIP
DESB faculty are also researching how values-based businesses can effectively compete, studying business leaders like Bill Child BS’54, who defied convention in building a business that reflects his personal values of integrity and loyalty. R.C. Willey is a tough competitor because of Child’s values and the business model they define, and it is important for business educators and students to understand that model. Associate Professor Christine Botosan’s research, which won a Distinguished Contributions to the Literature Award from the American Accounting Association, shows that truthful firms have a competitive advantage under certain conditions. There is great complexity in this research, but there is also a ray of hope in her finding that ethical business practices are rewarded.

We are proud that our faculty are at the forefront of asking such questions, looking for answers, and sharing what they learn with our students.

—Jack Brittain is dean of the David Eccles School of Business.