There is much angst and hand-wringing among business school academics around the world these days about the efficacy of business ethics education.
In the United States abuse of subprime lending by financial institutions, the blatant multibillion-dollar fraud perpetuated by Bernard Madoff and the greed of corporate executives demanding bonuses despite huge company losses have reverberated around the world.
Fidentia, LeisureNet, the arms deal and Travelgate remind us that South Africa has had its own share of scandals in both the corporate and public sectors.
Of course, the debate is not just about whetherethics can be taught, but whether it makes a difference in protecting the world from amoral managers and leaders.
Business schools return to this debate with each new reported lapse in business ethics. Last time it was the Enrons and Worldcoms provoking self-reflection.
Teaching business ethics is not a new phenomenon in business schools. Most business schools in South Africa and other parts of the world have integrated the study of business ethics into their undergraduate and MBA programmes.
At Unisa’s Graduate School of Business Leadership, master of business leadership candidates take a year-long module in business ethics.
Several of the associations that accredit business schools require business ethics to be part of the curriculum. On one side of the debate there are those academics who place much of the blame for these ethical lapses on the theoretical underpinnings of business education.
According to the late renowned London Business School Professor Sumantra Ghoshal, bad management theories actively free students from any sense of moral responsibility.
With others, he argued that because managers perform an agency role for shareholders, business schools train their graduates to focus too exclusively on profits and shareholder returns to the detriment of other goals such as sustainability, environmental responsibility, concern for employees and corporate social responsibility.
Further, to ensure managers perform their role well, managers’ interests and incentives have to be aligned with those of the shareholders by, for example, stock options.
Those on the other side of the debate argue it is wrong to suggest business school education creates amoral managers. They point to the failure of research to establish such a link.
Furthermore, how do we explain the behaviour of unethical managers in government and non-profit organisations or that of managers who did
not attend business school?
We need to appreciate the sheer complexity of factors that shape an individual’s personal moral philosophy. Ethical decisions emanate from
one’s personal moral philosophy, which is defined as a set of beliefs, attitudes and values.
While beliefs, attitudes and values are formed early in one’s life, they are not static and unmalleable. Individual morality cannot be sustained if societal morality is compromised.
What is true, given the challenges facing South Africa and Africa today, is that business school educators in this country cannot afford to abandon the teaching of business ethics. Unethical behaviour by leaders has left its mark on too many organisations and institutions in our country.
While the 20th century’s mantra was economist Milton Friedman’s argument that the social responsibility of business was to make profits, this is not the case in the 21st century.
Economic growth and market expansion must be reconciled with social justice, poverty eradication and environmental protection.
Effective leaders will be those who practise ethical, values-based leadership in the pursuit of sustainable development. The foundation of such leadership is a fundamental understanding of the interconnectedness of economic, human, societal and environmental advancement. This requires business schools in South Africa to place the teaching of business ethics at the core of what we do.
We must take every step necessary to help our students develop a personal moral philosophy that cares deeply about the future of South Africa and the continent. Such an ethic of caring will help managers do the right thing not just for shareholders, but other stakeholders as well.
Stella Nkomo is a professor in change leadership, leadership in human resource management and is the head for human resource and leadership at Unisa’s Graduate School of Business Leadership