ethics at its birthplace.

on_ethics_and_competitiveness-_understanding_business_graduate_students_perceptions_0 b-school_backlash._1 property_elders-_dust_off_moral_compass_to_help_new_generation_2

This is a simple paper combining two formats. One being reviewing the article and two, critical thinking. The focus of the paper is to looking at a few articles provided and analyzing the following question. What is done and what more can be done to promote good ethical values at the breading ground, businesses schools.

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Title:On ethics and competitiveness: understanding business graduate students’ perceptions.(Report)
Pub:Competition Forum
Detail:Gwen E. Jones, Linda Cannilla and Joan Slepian. 8.2 (July 2010): p.220(7). (4238 words) From Academic
OneFile.

Abstract:

At no greater time in the history of our world market economy has ethics played such an important role in our
competitive advantage. In this study, graduate business students rated 20 unethical workplace behaviors in terms of
moral wrongfulness. Understanding the perceptions of the students–who will become our future business leaders–
will positively impact how we tailor our educational objectives and how we manage and work with individual
differences in organizations. Ratings were compared across gender and across domestic versus international students
(primarily from India). Both comparisons were statistically significant and follow-up analyses identified individual
items that were rated differently across the groups. Implications from these findings for future research, education,
and management of organizations are discussed.

Keywords: Unethical workplace behaviors, Business student perceptions, Gender differences, Cultural differences

INTRODUCTION

In the past decade, we have witnessed the collapse of giants such as Enron, Worldcom, and Arthur Andersen.
Recently, we have seen major financial firms such as Bear Stearns and Lehman Brothers collapse, leading to the so-
called meltdown of global financial markets. The very recent passage of the Wall Street Reform Bill, which calls for
transparency, accountability, and governance of the banking and finance industry, clearly denotes a refocus on ethics
in business. Goldman Sachs is under investigation for unethical practices. Bernard Madoff has become a household
name for his activities that created the largest Ponzi scheme in history and cost clients over $50 billion. Many are
calling the financial recession an ethics recession (Kidder, 2009) because of the lapse in moral character and
ethically sound judgment that undermines the crisis. Business ethics continues to be an undeniably important subject
and is fundamental to a competitive global market.

How has our current financial and business ethics climate affected the perception and views of our future business
leaders? In this study, we asked graduate business students to rate the moral wrongfulness of unethical workplace
behaviors generated from the literature. We examined differences across gender and across American students
versus non-U.S. students and also how these results compare to results from prior similar studies ‘pre-Enron’.
Understanding the perceptions of business students helps to not only understand if our business education is
succeeding, but it also helps us tailor our curriculum to fit and adapt to our changing student body.

DeGeorge (2006) defines ethics as “the systematic attempt to make sense of our individual and social moral
experience, in such a way as to determine the rules that ought to govern human conduct, the values worth pursuing,
and the character traits deserving development in life” (p. 19-20). Many studies have examined the perceptions of
business students on unethical workplace behaviors or dilemmas and reported differences across biographical
variables such as age, gender, country of origin, and major. Again, understanding the general differences in
perceptions across demographic lines can aid in tailoring our education and in how we manage and work with
individual differences.

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Gender differences continue to fascinate researchers of ethics because of the changing gender demographics of the
workforce. As a greater proportion of women are in leadership roles in companies, will global markets and
economies exhibit overall more ethical practices and behaviors? Another reason gender continues to be investigated
is that studies have not been conclusive, results have been mixed, but generally the body of research demonstrates a
tendency for females to respond more ethically than males to ethical dilemmas or to deem behaviors as more
unethical. In a large, nationally representative survey study done by Patterson and Kim (1991), it was found that less
than half as many women as men reported believing that the only way to get ahead was to cheat. Moreover,
differences in responses across gender showed that women are less willing to compromise their values in order to
get ahead. Borowski and Ugras (1998) conducted a metaanalysis of 47 empirical studies from 1985 to 1994
reporting the ethical attitudes and behavior of business students and found that women were found overall to report
more ethical attitudes and behavior than men. More recent studies (e.g., Joseph, Berry, & Deshpande, 2010;
Alleyne, Devonish, Allman, Charles-Soverall, & Marshall, 2010; McCabe, Ingram, & Dato-on, 2006) reported
gender differences in the direction of women responding more ethically or viewing unethical behavior as more
wrong.

The reason for the tendency toward women to respond more ethically is unclear from the theoretical literature.
However, most research cites Gilligan’s (1982) and Noddings’ (1984) assertions that females and males hold a
different set of criteria for determining what actions are moral. These researchers (Choderow, 1974; Gilligan, 1982;
Noddings, 1984; Beutel & Marini, 1995) have consistently found that females across cultures are socialized to be
more emotionally expressive, to exhibit an “ethic of care,” interdependence, value the needs of others, and altruism.
In contrast, men are socialized to be more independent and competitive (Choderow, 1974; Keller, 1985). Thus,
based on the prior theoretical and empirical literature, we hypothesize that women will tend to rate unethical
workplace behaviors as more morally wrong than will men.

A secondary demographic variable that we examined was differences between U.S.-born graduate business students
and international students. It is often the case in graduate business school classes that there are a contingency of
non- American students studying from abroad. In our sample, non-U.S. students were primarily from India. It is
important to understand differences for better instruction of the students and also to manage individual differences
in the workplace. Interestingly, there is a paucity of research comparing Indian to U.S. students or professionals in
their attitudes and behaviors toward unethical workplace issues. This is not the case for comparisons between the
Chinese and Americans, which have shown differences in perceptions of unethical workplace behavior are
significant (Jones, 2009). Chan, Ip, and Lam (2009) identified 90 studies reported in the Journal of Business Ethics
between 1999 and 2009 on Chinese ethical perceptions. India is rapidly following China as a major economic force
and we need to understand Indian culture and values to remain competitive.

It is surprising there is so little research on Indian comparisons with U.S. students or professionals on ethical
perceptions. Some studies have looked at values of Indian managers in the workplace (e.g., Malhotra, 1985; Soares,
1981). Cyriac (1994) and reported that Indian managers tended to have a Machiavellian orientation. In 1978,
England compared values of Indian respondents with those of several other countries. He concluded that Indian
managers were morally oriented unlike American managers who tended to be more pragmatically oriented and
posited that American managers would be more influenced by economic aspects of behavior and decisions, whereas
Indian managers would be more influenced by bureaucratic consequences of actions.

Hofstede’s (1980) dimension of cultures derived from his empirical data from many countries is useful for
comparison of cultural values and resulting perceptions. Indians value more of a collectivist orientation (collective
effort, responsibility, conformity), whereas Americans are highly individualistic (individual work performance and
achievement). Indians value a higher power distance (unquestioned authority, respect for hierarchy) than Americans.
Indians are somewhat higher on uncertainty avoidance as compared to Americans, and therefore could be less
tolerant of ambiguity or risk. Indians also value a more long term orientation than do Americans. It is hypothesized
that there will be differences in perceptions of the moral wrongfulness of unethical behaviors between Indian and
American students because of these underlying value dimensions, but the nature of those differences is purely

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speculative and exploratory in this study.

METHOD

Subjects were 105 students enrolled in graduate business courses at a large northeastern private university. All
subjects were asked to sign a consent form indicating their understanding that the survey was confidential and
voluntary. Of the valid responses, 54 percent were male and 46 percent were female with a mean age of 26.4. The
majority were Caucasian (44 percent) or Asian/Asian American (38 percent). Fifty-five percent of respondents
indicated they were a U.S. citizen and 45 percent indicated that they were not. Note that 91 percent of the non-U.S.
citizens were of Asian race (primarily from India). Regarding employment, 56 percent were currently employed,
with a mean of 4.2 (SD = 5.12) years full time work experience and 1.3 (SD = 2.31) years supervisory experience.

Behaviors are considered to be of an unethical nature when there is a value judgment that distinguishes right from
wrong. Twenty frequent or widely known unethical workplace behaviors representing a range of moral
wrongfulness intensity (Jones, 1991) from high intensity (e.g., polluting the environment), to low intensity (e.g.,
padding expense accounts) were identified in the literature, primarily from Ruch and Newstrom (1975), Thompson
(1990), and the Ethics Resource Center (2009). The behaviors included those impacting society (e.g., marketing
unsafe products, polluting the environment), those impacting the organization (e.g., embezzling company funds,
falsifying invoices), and those impacting individuals (e.g., abusive behavior, passing blame for errors to an innocent
coworker). A definition was provided for each of the 20 behaviors. Subjects were asked to rate each behavior on a
Likert-type scale ranging from 1 (not morally wrong) to 7 (extremely morally wrong). Two versions of the survey
were distributed with the behaviors printed in reverse alphabetical order in the second version to reduce order effects
bias. Finally, subjects were asked to complete a short biographical questionnaire.

RESULTS

Table 1 shows the overall mean moral wrongfulness ratings and standard deviations for the all subjects. A higher
mean indicates a higher perceived degree of moral wrongfulness. Note that those unethical issues that have face
validity on the dimension of moral issue intensity are rated appropriately. More specifically, issues that have high
moral issue intensity, such as marketing unsafe products (possibly killing someone) are also rated as highly morally
wrong, and those of a low moral issue intensity, such as using company supplies for personal use (stealing, but more
on the level of petty theft) are rated as not so morally wrong.

A multivariate analysis of variance (MANOVA) was conducted to test for gender differences in rated moral
wrongfulness of the 20 unethical workplace behaviors. The results for gender were significant (Wilks [OMEGA] =
.630, F = 2.23, p < .01). As a result, univariate analyses of variance were performed for each of the 20 items. Mean ratings of moral wrongfulness and the univariate F ratios are shown in Table 2. As can be seen, while most items did not significantly differ across gender statistically, there were four items that women were more likely to rate as more morally wrong than men. The four items rated higher by women were (1) marketing unsafe products, (2) discriminating unfairly based on sex, race, religion, etc., (3) abusive or harassing behavior, and (4) failing to report coworkers' violations of company rules or policies.

A multivariate analysis of variance (MANOVA) was also conducted to test for differences between domestic and
international students on rated moral wrongfulness of the 20 unethical workplace behaviors. These results were also
significant (Wilks [OMEGA] = .563, F = 2.95, p < .001). Follow up, univariate analyses of variance were performed

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for each of the 20 items and these results are shown in Table 3. Six items were statistically significantly different
across the two groups. Specifically, four items were rated by international students as more morally wrong than by
American students: (1) marketing unsafe products, (2) polluting the environment, (3) using company materials,
supplies, or services for personal use, and (4) conducting personal business on company time. Two items were rated
by international students as less morally wrong than by American students: (1) disclosing confidential employee
information and (2) covering up company errors.

DISCUSSION

This research examined the relative differences in moral wrongfulness of unethical workplace behaviors as
perceived by graduate business students. These behaviors ranged in terms of moral issue intensity and whether they
impacted society, the organization, or individuals. Overall, the behavior rated as most morally wrong was
‘Embezzling company funds.’ In a prior study conducted before the Enron collapse (Jones & Yao, 1999), we
administered the nearly same list of items to business graduate students and embezzling was not the highest mean.
The sample reported here were surveyed in spring of 2010, and have ‘grown up’ in an age of business scandals and
keen attention to the role of ethics in business. Jeff Skilling of Enron and Bernie Madoff may have done much to
raise awareness of the consequences of embezzlement and creative accounting on the financial world. We found it
interesting that ‘polluting the environment’ was not higher, with the recent emphasis on sustainability and greening
business. This item was actually rated near the top in the 1999 study. This finding calls for business curriculum to
place more focus on sustainability and its ethical consequences for business.

This study also examined differences in mean ratings across gender. The findings support prior research that has
also found that women tend to rate or perceive unethical behaviors as more morally reprehensible. Women
perceived ’embezzling company funds’, ‘marketing unsafe products’, ‘discriminating unfairly’, and ‘abusive or
harassing behavior’ to be e qually and most morally wrong. Men, however, rated all of these except ’embezzling
company funds’ as significantly lower in moral wrongfulness than did women. The male result for ‘marketing unsafe
products’ is surprising since this is a potentially lethal business act. In the 1999 study, it was found overall to be the
most morally wrong behavior. Finding gender differences between the behaviors of discrimination and abusive
behavior makes sense in that woman historically have struggled with these issues in the workplace more than men
and thus may be more sensitized to these acts as morally wrong. Lastly, a highly significant difference was found
between men and women for ‘failing to report coworkers’ violations of company rules and policies’. This was rated
low relative to other items, but much higher for women. The Ethics Resource Center (2009) reported that
whistleblowing is up from two years prior (“more employees said they had reported misconduct when they observed
it; 63 percent in 2009, up from 58 percent in 2007 (p. 9). Whether this could be due to gender differences was not
reported. However, our study suggests that woman feel more of a sense of duty to report wrongdoings in the
workplace. In educational settings, we may want to foster this for woman and raise more awareness with men
regarding the morality of whistleblowing.

In addition, this study examined differences in perceptions of unethical workplace behaviors between domestic and
international students. The international students were primarily from India and thus cultural value differences
between the U.S. and India were thought to possibly manifest differences in perceptions. One clear difference is that
the international sample reported ‘marketing unsafe products’ as the most morally wrong act, which was not the case
for the American students, who rated it significantly lower. The standard deviation is very low for the international
students (SD = .64), but high for the American students (SD = 1.61). In addition, ‘polluting the environment’,

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another potentially lethal act and high on moral issue intensity as well, was rated statistically significantly more
ethically wrong by international students than domestic students. Future research might investigate why these items
were not rated higher by the American students.

‘Using company materials, supplies, or services for personal use’ and ‘conducting personal business on company
time’ were rated the lowest of all the behaviors by the domestic students. The international students rated these two
items significantly higher on moral wrongfulness. Perhaps in America these are viewed as ‘perks’, are the ‘norm’, and
not so wrong to do these acts. In addition, this may be a manifestation of the individualist (American) versus
collectivist (Indian) value orientation. These two behaviors impact one’s organization and a collectivist-oriented
individual may perceive acts against the group or organization to be more wrong. Conversely, American students
reported ‘disclosing confidential employee information, and ‘covering up company errors’ to be more morally wrong
than did the internationals. Americans may value individual privacy (again from the individualistic value) more than
Indians. In addition, they may not feel as much group loyalty (collectivism) to the organization and feel it is morally
wrong not to expose or whistleblow on the company’s wrongdoings, whereas Indians may feel they are betraying
their organization or being disloyal to the group, and therefore try to protect the reputation of their organization.

While this study exhibits some interesting results, several study limitations should be noted. First, this was a
relatively small sample of students. Generalizing to all graduate students or professionals in the workplace is
cautioned. In addition, the sample was relatively young and inexperienced. The international student sample was
quite small and, again, may not be representative even of Indian students. Future research should sample students
from a variety of schools representing the diverse population of graduate business students. In addition, we found
very little research on cross-cultural comparisons with India. Given this country’s growing impact on the world
economy, as well as the influx of students and workers from this country to America, we should be looking at these
cultural differences to enhance our competitive advantage. Finally, while we attempted to mitigate item order effects
by reversing the order of items in the second version of the survey, a randomization of items across several survey
versions would better counter any order (item comparison) biases. We are truly in an era of an ‘ethical’ recession. It
is important to understand how our students and future business professionals perceive unethical workplace
behaviors so that we can better gauge our classroom instruction and management practices. As America and the
world continues to face challenges in the market economy, remaining competitive will require strong ethics in the
culture of organizations (Kidder, 2009) as well as the individuals who comprise them. Perceptions and attitudes
affect behavior (Fishbein & Ajzen, 1975) and at no time has it been more important to understand ethics in business.

REFERENCES

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Beutel, A., & Marini M. (1995). Gender and values. American Sociological Review, 60, 436-448

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Jones, T. (1991). Ethical decision making by individuals in organizations: An issue-contingent model. Academy of
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Joseph, J., Berry, K., & Deshpande, S. P. (2010). Factors that impact the ethical behavior of college students.
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Gwen E. Jones, Fairleigh Dickinson University

Linda Cannilla, Fairleigh Dickinson University

Joan Slepian, Fairleigh Dickinson University

TABLE 1:
Ratings of the Unethical Behaviors from Most to Least Morally Wrong
by Graduate Business Students

Unethical Behavior Mean Std Dev

Embezzling company funds 6.53 1.08
Marketing unsafe products 6.32 1.30
Discriminating unfairly based on sex, race, 6.30 1.03
religion, etc.
Passing blame for errors to an innocent coworker 6.20 1.23
Abusive or harassing behavior 6.16 1.13
Using unsafe production techniques 5.97 1.23

Claiming credit for someone else’s work 5.96 1.11
Polluting the environment 5.95 1.33
Stealing company equipment or inventory 5.89 1.40
Disclosing confidential employee information 5.82 1.37

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Falsifying invoices 5.73 1.40
Presenting false or misleading advertising 5.73 1.27
Padding expense accounts 5.70 1.29
Covering up company errors 5.56 1.45
Falsifying time or quality reports 5.34 1.31
Accepting gifts or favors in exchange for 5.04 1.59
preferential treatment
Giving gifts or favors in exchange for preferential 4.85 1.62
treatment
Failing to report coworkers’ violations of company 4.82 1.31
rules or policies
Using company materials, supplies, or services for 4.44 1.63
personal use
Conducting personal business on company time 4.25 1.62

N = 105

TABLE 2:
Mean Differences in Rated Moral Wrongfulness for 20 Unethical
Workplace Behaviors by Men and Women

Men’s
Rating

Unethical Behavior Mean Std Dev

Embezzling company funds 6.56 .83

Passing blame for errors to an innocent 6.33 .96
coworker

Marketing unsafe products 6.12 1.58

Stealing company equipment or inventory 6.12 1.20

Discriminating unfairly based on sex, 6.06 1.16
race, religion, etc.

Polluting the environment 6.00 1.33

Claiming credit for someone else’s work 5.94 1.07

Abusive or harassing behavior 5.88 1.08

Using unsafe production techniques 5.88 1.28

Disclosing confidential employee 5.71 1.33
information

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Falsifying invoices 5.50 1.42

Padding expense accounts 5.67 1.23

Presenting false or misleading 5.65 1.41
advertising

Covering up company errors 5.65 1.33

Falsifying time or quality reports 5.35 1.24

Accepting gifts or favors in exchange
for preferential treatment 4.77 1.60

Giving gifts or favors in exchange for
preferential treatment 4.63 1.61

Failing to report coworkers’ violations 4.50 1.28
of company rules or policies

Using company materials, supplies, 4.44 1.69
or services for personal use

Conducting personal business on company 4.40 1.62
time

Women’s
Rating

Unethical Behavior Mean Std Dev F

Embezzling company funds 6.58 1.12 .010

Passing blame for errors to an innocent 6.07 1.32 1.25
coworker

Marketing unsafe products 6.58 .78 3.17 *

Stealing company equipment or inventory 5.69 1.54 2.36

Discriminating unfairly based on sex, 6.58 .81 6.34 **
race, religion, etc.

Polluting the environment 5.93 1.30 .06

Claiming credit for someone else’s work 5.96 1.13 .00

Abusive or harassing behavior 6.51 .84 9 93 ***

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Using unsafe production techniques 5.93 1.21 .04

Disclosing confidential employee 6.07 1.27 1.79
information

Falsifying invoices 5.96 1.19 2.88

Padding expense accounts 5.73 1.21 .06

Presenting false or misleading 5.73 1.18 .09
advertising

Covering up company errors 5.58 1.37 .08

Falsifying time or quality reports 5.36 1.26 .00

Accepting gifts or favors in exchange 2.11
for preferential treatment 5.22 1.44

Giving gifts or favors in exchange for
preferential treatment 5.07 1.41 1.96

Failing to report coworkers’ violations 5.22 1.15 8 49 ***
of company rules or policies

Using company materials, supplies, 4.36 1.42 .07
or services for personal use

Conducting personal business on company 4.27 1.60 .17
time

* p < .05, ** p < .01, *** p < .001 TABLE 3: Mean Differences in Rated Moral Wrongfulness for 20 Unethical Workplace Behaviors by Graduate Business Students U.S. Citizens and non-U.S. Citizens US Rating Unethical Behavior Mean Std Dev Embezzling company funds 6.55 1.11 Discriminating unfairly based on sex, 6.34 .96 race, religion, etc. Abusive or harassing behavior 6.21 1.01

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Disclosing confidential employee 6.13 1.02
information

Marketing unsafe products 6.06 1.61

Passing blame for errors to an 6.06 1.23
innocent coworker

Covering up company errors 5.96 1.04

Claiming credit for someone else’s 5.85 1.15
work

Stealing company equipment or 5.77 1.31
inventory

Polluting the environment 5.74 1.55

Using unsafe production techniques 5.72 1.41

Falsifying invoices 5.66 1.33

Padding expense accounts 5.58 1.23

Presenting false or misleading 5.49 1.45
advertising

Falsifying time or quality reports 5.42 1.12

Accepting gifts or favors in exchange 5.08 1.56
for preferential treatment

Giving gifts or favors in exchange for 4.87 1.56
preferential treatment

Failing to report coworkers’ 4.66 1.26
violations of company rules or
policies

Using company materials, supplies, or 3.94 1.38
services for personal use

Conducting personal business on 3.85 1.45
company time

Non-U.S.
Rating

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Unethical Behavior Mean Std Dev F

Embezzling company funds 6.59 7.9 .05

Discriminating unfairly based on sex, 6.25 1.14 .18
race, religion, etc.

Abusive or harassing behavior 6.14 1.05 .12

Disclosing confidential employee 5.57 1.55 4.63 *
information

Marketing unsafe products 6.66 .64 5.50 *

Passing blame for errors to an 6.39 1.02 2.02
innocent coworker

Covering up company errors 5.09 1.60 10 47 ***

Claiming credit for someone else’s 6.07 1.02 .97
work

Stealing company equipment or 6.18 1.37 2.24
inventory

Polluting the environment 6.25 .89 3.81 *

Using unsafe production techniques 6.14 .98 2.79

Falsifying invoices 5.77 1.34 .17

Padding expense accounts 5.84 1.20 1.06

Presenting false or misleading 5.93 1.07 2.81
advertising

Falsifying time or quality reports 5.23 1.36 .56

Accepting gifts or favors in exchange 4.73 1.61 1.17
for preferential treatment

Giving gifts or favors in exchange for 4.66 1.57 .43
preferential treatment

Failing to report coworkers’ 5.09 1.29 2.76
violations of company rules or
policies

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Using company materials, supplies, or 5.05 1.48 14 39 ***
services for personal use

Conducting personal business on 4.98 1.50 13 99 ***
company time

* p < .05, ** p < .01, *** p < .001

Source Citation
Jones, Gwen E., Linda Cannilla, and Joan Slepian. “On ethics and competitiveness: understanding business graduate
students’ perceptions.” Competition Forum July 2010: 220+. Academic OneFile. Web. 16 Mar. 2011.

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B-School Backlash.(International Edition)(business schools)

Sheridan, Barrett, and Adam B. Kushner. “B-School Backlash.” Newsweek International 17 Aug. 2009.
General OneFile. Web. 16 Mar. 2011.

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Byline: Barrett Sheridan and Adam B. Kushner

Some critics have blamed the crash on the M.B.A.s. How to fix business education.

In the upper echelons of the financial world, it’s practically a requirement. Former SEC chairman
Christopher Cox, has one. So do former Merrill Lynch CEO Stanley O’Neal and O’Neal’s successor, John
Thain. The same goes for Goldman Sachs chief turned Treasury Secretary Henry Paulson.

These men all played a starring role in last fall’s financial collapse. And each is a proud bearer of a Harvard
M.B.A. degree. So it’s probably no surprise that many people looking for the origins of the crisis have
started focusing their search on the ivory towers that produced them. Pablo Triana, a BusinessWeek
columnist, is typical; he claims the collapse was caused by “a tiny bunch of guys inside a handful of
financial institutions” who, he says, were poorly trained by “the status quo prevalent inside business schools
for the past 50 years.” Boil down his argument and it comes to this: B-schools are to blame.

Such attacks have intuitive appeal. But probe deeper, and it starts to seem like they may confuse correlation
with causation. While business programs are undoubtedly flawed, it’s not so easy to actually connect their
problems to the crash. After all, although plenty of the worst culprits had M.B.A.s, lots of other central
players lacked those dreaded initials.

Critics contend that M.B.A. programs imbue their students with a dangerous overconfidence in data and
financial models; that academic overspecialization keeps students ignorant of systemwide risks; and that
programs treat ethics as an afterthought. Together, some experts argue, these flaws created a myopic,
mercenary mindset among America’s business elite that led, predictably, to the fall.

Underlying the indictments is a more basic failure. Rakesh Khurana, a professor at HBS and author of From
Higher Aims to Hired Hands, a 2007 book on the history of M.B.A.s, argues that business schools have
veered from their original purpose. The M.B.A. was born during the Progressive era of the early 1900s,
when the giant American corporation was a new force in society and bureaucrats struggled to keep
monoliths like Standard Oil and U.S. Steel from taking advantage of markets and customers. One response
was to train professional -managers–via early M.B.A. -programs–to run these institutions for the social
good, not short-term profits.

After World War II, however, the Ford Foundation spent $175 million to modernize the M.B.A., molding
the curriculum into something close to what we see today. This reorganization happened at the same time
the radically libertarian, pro free-market views of Milton Friedman and the Chicago School of Economics
were coming to dominate business. These scholars argued that markets are efficient and can regulate
themselves; managers should thus work only to maximize shareholder value. That ideology came to
permeate the revised M.B.A. programs.

And that is the very thinking critics claim recently got us into so much trouble. But many of their charges
don’t bear up. Take the first–that M.B.A.s rely too heavily on statistical models. Triana accuses the B-
school establishment of “embedding potentially lethal analytical Trojan horses into our economies and
markets.” While business schools may deserve some of this blame, however, it’s not clear they’re more
responsible than the broader pool of academics, journalists, and bankers who all bought into and hyped the
idea that advanced analytics could give humans near total control over financial risk. It’s true that Myron
Scholes and Robert C. -Merton–widely considered the forefathers of analytical finance–were both
business-school professors (at Stanford and Harvard, respectively). But the real numerical necromancy in
last year’s crisis involved “the Gaussian copula,” a piece of statistical legerdemain that convinced legions of
financiers they could safely repackage subprime mortgages into top-rated bonds. And that nasty trick can be

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traced back to a 2000 paper by David X. Li, an actuary who never taught at a business school.

As for the overspecialization critique–the charge that M.B.A. graduates are unable to see the big picture–
that also doesn’t withstand scrutiny. Academic research has indeed become Balkanized, as critics contend.
But business students still get a smorgasbord of instruction in everything from organizational theory to
marketing, and the case-study method employed by most top schools is meant to encourage out-of-the-box
thinking.

Perhaps the most common critique of B-school programs is that they impart plenty of moneymaking know-
how but little sense of ethics, thus producing amoral guns-for-hire. But Marshall Goldsmith, an executive
coach and author, says any lapses can’t be blamed on schools, since teaching ethics “is largely a waste of
time” anyway. The real problem, he argues, is that while the vast majority of M.B.A. students are
upstanding citizens, about 2 percent aren’t–and they “won’t be helped very much” by grad school.
(Sometimes they don’t find help on the job either, Goldsmith says, since corporations don’t always sack
people for ethics

violations.)

Most business schools these days at least try to impart morality to their -students–the number of free-
standing ethics courses at M.B.A. programs has grown 500 percent since 1988. But quality is also a
problem, since these courses “were kind of shunted in” after the scandals at Enron, WorldCom, and other
corporations in the early 2000s, says Philip Delves Broughton, author of a tell-all book about his two years
at Harvard Business School entitled Ahead of the Curve. Harvard’s Khurana adds that ethics courses are
often introduced as a kind of academic theatrics used to forestall criticism, and in many cases “these courses
have been quietly abandoned or marginalized” since their debut.

Still, even if all these criticisms have merit, they hardly prove that M.B.A. programs actually caused the
financial crisis. After all, the incentives of a corrupt system can overpower even the best training. In cleaner
systems, M.B.A.s did just fine. Take Canada. The CEOs of Scotiabank and CIBC, two of Canada’s largest
banks, both have M.B.A.s. Yet while their Manhattan colleagues borrowed as much as $34 for $1 of capital,
institutions in Canada played it safe, averaging a mere $18 in borrowed money for every $1 they owned. As
a result, they’re now thriving while many U.S. banks remain on life support. What this suggests is that after
graduation, M.B.A.s don’t take their training into a -vacuum–they join an ecosystem with its own
regulations and incentives, and these can prove more significant than classroom lessons.

But just because business schools didn’t cause the crisis doesn’t mean they can’t–and shouldn’t–be
improved. Khurana’s basic point, that M.B.A. programs have been diverted from their original purpose of
training managers to rule in the name of society, is a valid one. To address it, he says, management needs to
become a true profession, with a licensing exam and an oversight body that polices its members–something
along the lines of what the legal and medical professions have.

But such a change probably isn’t likely, and in the meantime, most B-schools are doing surprisingly little.
The most notable change so far has been the introduction of a student-initiated pledge, mirroring the
Hippocratic Oath, under which future business titans promise first to do no harm. Graduates of dozens of
schools from Arizona to New Hampshire, including 54 percent of this year’s Harvard Business School
grads, have taken the pledge. Elite schools have also added new courses, including ones on regulation and
the lessons of the current crisis. Many schools have task forces writing reports on how to adapt to the post-
crisis world. But Khurana says the most likely response would be for business schools to undergo the usual
“myth and ceremonies” that institutions wedded to the status quo produce when they are under pressure to
change. He’s probably right. The crisis “has not resulted in a systematic reinvention of the curriculum, nor
should it,” says Jim Light, dean of the Harvard Business School. “At the broadest level, everyone is to
blame,” he insists. The one factor that would likely produce real change is if programs were punished for
their failures by the one force they value most: the market. Instead, like in every crisis, student enrollments
are up. Which likely means more business as usual. Luckily, that business probably didn’t cause the last
crisis–nor is it likely to spark the next one.

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Title:Property elders: dust off moral compass to help new generation.(WORK ETHICS)
Pub:Property Week
Detail:Howard Morgan. 75.35 (Sept 3, 2010): p.35(1). (562 words) From General OneFile.

Do you remember the winner of the The Apprentice who lied on his CV, but still won the job with Sir Alan? I
recently took part in a Money and Morals Roadshow with a group of sixth formers and heard from many of them
that it was OK to do the same–after all, the practice had been endorsed on TV.

Why do I mention this? Well, I’ve been thinking a lot about ethics and the property industry since the article,
Double Agents (Property Week, 06.13.10), which lifted the lid on the practice of investment advisers that act for
both vendor and purchaser.

One of my biggest concerns about this practice is the signal that it gives young people coming into our industry.
From where do they take their direction? Will it be the RICS, with its nine core values that include “acting with
integrity” and “being open and transparent in your dealings”, or will it be from the senior managers with whom they
work day to day?

My guess is that, like the sixth formers, they are more likely to be influenced by the behaviour of a high-flying role
model at work, rather than a moral or ethical code published by the RICS.

This means that those who have reached a position of influence in the industry need to take care to ensure that the

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next generation of surveyors has a clear moral compass. My fundamental concern is that by turning a blind eye to
practices such as double dealing, we are, in fact, giving the thumbs-up to unethical practice.

Business ethics has been described as the attempt to resolve the conflict between selfishness and selflessness and
between our material needs and our conscience. I strongly believe the property industry needs to develop a set of
ethical norms to guide its behaviour and help young people deal with the pressures on business today. These norms
need to be debated, challenged and understood. I accept that there are many pressures on business today, but do not
believe this in a reason to put ethical behaviour to the bottom of the agenda. Well done to Property Week for giving
profile to the issue.

I recently spoke with a leading investment agent who told me a string of stories about the ways in which he believes
“certain firms” are crossing the boundary between selflessness to selfishness.

An example, in addition to acting for both sides, includes a subsector of the investment market where he believes
that deals are being shared out between a small group of agents. Another questionable practice he cited relates to the
use of privileged information to obtain introductions.

The property management sector has not escaped the trend either, and stories circulate about “certain managing
agents” who bolster fees by charging suppliers to join their approved contractor list or through pocketing insurance
commissions.

I fear that we are seeing an increasing erosion of the fundamental principles that have underpinned the reputation of
our industry. I suggest it is time to develop a Money and Morals Roadshow for the property industry that will reach
the young surveyors who are tomorrow’s business leaders. We need to make sure that the self-interest, misdirected
bonus culture and ineffective management controls that brought down Enron do not bring down our industry’s
reputation, too.

Howard Morgan is managing director of customer service specialist RealService

Source Citation
Morgan, Howard. “Property elders: dust off moral compass to help new generation.” Property Week 75.35 (2010):
35. General OneFile. Web. 16 Mar. 2011.

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