Commentary: Why Ethics Is Also B-School Business

All right. So I wasn't selected to serve on the Blue Ribbon Commission on Public Trust & Private Enterprise, the group of execs and pols charged with recommending cleanups for accounting, corporate governance, and ethics. After all, it includes such luminaries as Paul A. Volcker and Andrew S. Grove. But if Paul, Andy, or any of the 12 members had asked me, I would have taken one clear shot: To clean up ethics in corporations, you have to start at the beginning of a career. Business school, that is.

At first glance, it might seem obvious: B-schools, like the corporations their grads work for, must do more to promote ethics--everyone says so. And nearly all MBA programs--and increasingly, undergraduate business programs--have added ethics courses to their curriculums, dating back to scandals such as the savings & loan crisis. But a class here and there isn't enough to set future managers on the straight and narrow. "Management education really needs to look at itself," concedes Lynn Sharp Paine, commission member and Harvard Business School professor.

B-schools shouldn't let the momentum for reform fizzle like some MBA fad. They need to make bigger investments in ethics research, do a better job of screening MBA applicants, and put pressure on corporate partners to support long-term efforts in ethics. In other words, B-schools need to prove they mean business.

-- Invest in ethics. For starters, schools should ratchet up the study of business ethics--not just the consequences of scandals but also positive examples and everyday ethical choices inherent in the lives of managers. Existing research on corporate ethics pales in comparison with that of, say, marketing or strategy. Case studies--the cornerstone of MBA education--number only in the hundreds for ethics, not the thousands, as they do for other subjects. With only a handful of academic journals to showcase ethics, professors facing the publish-or-perish imperative have little incentive to tackle the subject. That leaves scant material for MBAs to mull over in class. "We are facing new realities, and for that we need a new body of knowledge," says Dipak C. Jain, dean of Northwestern University's Kellogg School of Management.

Translation? Professors who want to research ethics should be supported financially by deans, who in turn could encourage up-and-coming scholars to pursue ethics as a PhD track. (Now, most professors take on ethics as a secondary discipline.) New research, in turn, should be quickly integrated into courses such as finance and strategy, not just make a cameo appearance in Ethics 101.

-- Sift for bad apples. Students, too, have to be up to snuff. Top MBA programs accept fewer than 15% to 20% of applicants, a high bar for entry. Even so, more schools than you might think end up expelling students, often for cheating, lying on their application, or other ethical infractions. Kellogg and Wharton say they dismiss up to five students yearly for such behavior. If five are caught, how many squeak by? These borderline-types head straight for Corporate America.

So here's a thought: Find the bad apples before they come to campus. Application essays can be coached or plagiarized. A résumé can be stretched to the edge of truth. Even interviews can be misleading, with best behavior on display.

It wouldn't be cheap, and privacy shouldn't be trashed, but B-schools could act more like investigators to get at the character of an MBA-wannabe. First, staff up to check every credential. Use interviews to probe whether applicants really believe--and stay on track with--what they write in their essays. Or throw complex business problems at interviewees to measure not just acumen, but also behavior. Sure, not every future scoundrel will be obvious. But with the degree--and a school's brand name--at risk of being cheapened, weeding out a few ethically challenged applicants helps.

-- Support from companies. Corporations already wield tremendous influence at some B-schools, making big donations, sending managers to nondegree classes, and sponsoring research. So how about funding a professorship in ethics? Companies should also open their doors to faculty who want to study everyday corporate ethics. "Ethics is a sensitive topic, but access is incredibly important to research," says Thomas Donaldson, a Wharton ethics professor. Both will require B-school deans to put pressure on companies. Finally, recruiters could follow through when hiring MBAs, placing as high a value on good ethics as they do on problem-solving skills. If a school's grads don't meet raised standards, companies should ax the school from their recruiting roster. Paul, Andy, are you listening?

By Jennifer Merritt

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