The vivid videos of an elderly physician being dragged down the aisle of a United Airlines plane, along with recent scandals engulfing Fox News, Wells Fargo, Volkswagen and other firms, highlight the importance of teaching business ethics and business law effectively in business schools and elsewhere. As a professor who teaches business ethics, I have a unique view on how to improve education in “B-Schools” so things like we have recently seen don’t happen again.
First, business schools simply must teach more business law and ethics, and less of the economic doctrines that emphasize profits over principle. In the soon-to-be-published “The Golden Passport,” business journalist Duff McDonald pins corporate greed on a lust instilled at Harvard Business School. The Harvard school is certainly a fat and deserving target, but most B-Schools across the country are similarly guilty. Surveys demonstrate that students tend to enter business school believing that the purpose of a corporation is to benefit society and leave believing that it is to profit the shareholders.
Business schools were originally created to provide the economy with professional business leaders whose authority, according to Rakesh Khurana of Harvard Business School (ironically), would be rooted not only in their expertise, but “in their obligation not to represent the interests of either owners or workers — much less of themselves — but to see that the corporation contributed to the general welfare.” Somewhere along the line, McDonald suggests, “the money got too good.” The unsustainable economic inequality in our economy is just one of the adverse outcomes of this B-School evolution away from training students to serve a higher purpose.
Psychological research makes it clear that one key to a happy life is the belief that one has made a meaningful contribution. Prosocial activity is correlated with this feeling. Many of our students come into business programs with a desire to make the world a better place and not just become millionaires. B-Schools should foster that attitude, not douse it.
Second, we must do more to educate our students about the rising private-to-private compliance world. Firms’ reputations are increasingly tied to the actions of other companies — their suppliers, their business partners, etc. Think of how much money the Takata airbag scandal cost car makers or how the reputations of Nike and other shoe and apparel makers have taken a hit due to child labor scandals. Realizing this potential danger, firms have begun to place provisions in their contracts that require counterparties to have in place certain compliance procedures that will ensure that worker safety is protected, that governments will not be bribed, and that other wrongdoing will be minimized. How ironic that just as President Donald Trump is retreating from government regulation of questionable business activity, this private-to-private movement promises to raise firms’ overall legal and ethical conduct. Our students must be aware both of the burdens that these compliance provisions may place on their firms as well as the opportunity that private-to-private compliance presents for them to spread “best practices” across their industries and the economy as a whole.
Finally, we must emphasize the psychology of ethical decision-making. Most of our students are well-intentioned in a general way. They do not wish to be bad people, but they are naïve regarding the many social and organizational pressures, cognitive biases and situational factors that can lead good people to do bad things. The field of behavioral ethics, which draws from psychology, cognitive science and related areas, is producing research insights that can be translated into the classroom.
We must educate our students that although it is easy to intend to do the right thing while engaged in an ethical discussion in a classroom, it is much more difficult to live up to their own ethical standards every day in the workplace when they are also trying to please the boss, get along with co-workers and achieve metrics that entitle them to that next bonus.
Instead of dragging passengers down the aisle, we should be dragging legal and ethical education into the 21st century.
Prentice is a professor and chair of the Department of Business, Government and Society in the McCombs School of Business at the University of Texas.