Business Schools Aren't Producing Ethical Graduates

You can’t accuse them of not trying. Business schools make efforts to teach students to carry ethical lessons from their MBA program into the working world and to behave ethically as professionals. Most top schools include ethics courses or build ethics-related segments into classes on global management and leadership.

As much as they try to impart ethical lessons, programs often fail to contribute to an ethical business climate. At least 100 publicly traded companies, including Wal-Mart, GlaxoSmithKline , and Hewlett-Packard, have reported  investigations relating to violations of the Foreign Corrupt Practices Act (FCPA). Over the last two years, Walmart has paid $439 million in legal fees in response to a probe of possible violations in Mexico. In May, Avon Products reached a preliminary $135 billion settlement over allegations of bribery in its China operations.

Acting as an ethical manager in the gray areas of global business is an especially huge challenge. It’s not that Western MBAs become immoral or amoral when they take on management roles in China, Russia, India, and other countries. It’s simply that what they’ve been taught—and how they’ve been taught—has little effect on their decision-making when they’re placed (literally and figuratively) in foreign situations.

In the classroom, teachers implore students to resist improprieties or even to blow the whistle when they spot corrupt practices. Try repeating this admonition to an MBA who has just landed a job after months of searching, to an experienced manager struggling to make numbers, or to professionals who have learned to do as they’re told in a hierarchical culture. Good luck.

The teachings of the classroom are no match for the harsh realities of the global workplace. That’s why MBA programs should provide ethical lessons that give students on-the-job experience in real situations.

At the Thunderbird School of Global Management, we send students on seven-week consulting projects in markets such as Indonesia, Vietnam, Angola, and other countries. They experience first-hand how business is done in that particular region, such as being asked for a “facilitation fee” (an alternative term for a bribe) that is par for the course in most of the countries where students do projects.

One of the top ethics programs is at Babson College. Mary Gentile, who heads up their effort, has teamed with the Aspen Institute and Yale School of Management to develop Giving Voice to Values (GVV), which moves from theory to action by putting students in situations in which they must demonstrate how to act on their convictions and answer the question: “If I were going to act on my values, what would I say or do?”

Other schools have adopted this program, and sessions are currently being held on campuses in all seven continents. Even better, the program has been gaining traction in countries such as India, helping business people in that country confront their own particular ethical challenges.

We are making progress, but it’s not enough. Here are three actions all business schools can take to improve ethics education:

1. Put more emphasis on doing rather than telling, giving students experience working in an emerging market or in role-playing situations that force them to examine their ethics and act on them.

2. Create joint classes with MBA students from other countries (or B-schools) to foster a first-hand appreciation of the ethical challenges of doing business in these countries.

3. Establish programs that involve global corporations so that students have a chance to learn from business executives who have dealt with the issues they will soon face. Or, if possible, create internships and additional corporate-partner efforts that allow students  to work abroad and experience ethical dilemmas in the field.

Until additional MBA programs adopt this approach, we will continue to see a rise in investigations—and wonder why the lessons taught in school don’t stick in the real world.

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