Business ethics: Modern day morality tales

There was a time when roars of laughter might have greeted the juxtaposition of the words "business" and "ethics" in the same sentence. Wags within earshot would have contributed other such absurd oxymorons as "government efficiency" and "small fortune" .

These attitudes were at their peak in the "loadsamoney" Eighties, but persisted well into the following decade. Now, in a new millennium, the atmosphere couldn't be more different, at least in the public domain. No company with pretensions can survive without stating its commitment to making its money in an ethical fashion, from start to finish.

And there's been a parallel transformation in the MBA world. Although business schools still stress the earnings dividend associated with acquiring the qualification, nowhere is it suggested that business comes without responsibilities.

"There is certainly an increasing awareness among business schools that senior executives need to understand the importance of ethical conduct and professional integrity in the workplace, and that they need to demonstrate that understanding in practice," says Jeanette Purcell, chief executive of the Association of MBAs (Amba). Amba insists that accredited MBA programmes address ethical issues, either within an explicit module, or by integrating the ideas in the teaching of other subjects.

The mainstream acceptance of this stance can be traced back to 1999 when MBA programmes first began to be ranked on their business ethics credentials. That was when the Aspen Institute, a non-profit organisation promoting leadership, launched its bi-annual Beyond Grey Pinstripes survey, assessing the commitment to "social and environmental stewardship" on MBA programmes.

The current list, with Stanford in top spot, is dominated by schools in the US. But in second place, and way ahead of all European competition, is Esade, based in Barcelona, where 105 students are currently on the full-time MBA, split evenly between those studying in the English language and those in Spanish.

Ethical issues come up all the time, in lectures, group discussions and even in the cafeteria, according to Daniel Arenas, a professor in the Institute of Social Innovation. But the eye-catching component of the course is the mandatory, week-long intensive module on business ethics and corporate social responsibility, led by Arenas himself.

This forces students, in a number of ways, to examine their own attitudes to human values and those of businesses they have encountered, whether as employees or outsiders. Guest speakers have included a senior figure from the Inditex Group, best known for the Zara clothes shops, who outlined how the firm strives to ensure maximum ethical standards are enforced throughout its long chain of suppliers.

Students also watch, and unpick, the Hollywood film The Insider, which tells the true story of an executive of a tobacco firm who blew the whistle on how it covered up its knowledge of nicotine's addictive and harmful effects.

"We've been teaching this course for five years, and when we started the students' attitudes were very sceptical about its worth," explains Arenas. "Now we have seen an enormous change. People are aware that business is not just about maximising profit. However, it's less fun to teach now because there's not so much opposition!"

A slightly different picture emerges at London Business School (LBS), where every full-time MBA cohort of 300 students takes a five-week compulsory course in business ethics and corporate responsibility.

"About 30 per cent of students are really enthusiastic, 40 or 50 per cent consider it a necessary evil, and the rest are cynical about it," reports Professor Craig Smith, who teaches the course. "But that's why we have the course right at the start of the programme, because it sends the signal that we think it's important."

However Smith concedes, frankly, that LBS still has some way to go before the ideas of business ethics are embedded throughout the MBA curriculum, as he'd like.

Many schools attempt this, and go without an explicit ethics module, reasoning that if students encounter the issues in the course of their consideration of, say, HR and finance, they are more likely to see the relevance to the business world.

At Durham Business School, where just over 70 students are currently on the full-time programme, Peter Hamilton, who teaches HR on the full-time MBA, says ethical issues run right through his module: "The kind of recruitment and selection methods used by a business, and the ethical questions surrounding the transfer of jobs in outsourcing operations are the most obvious examples."

However, there are those who see nothing particularly new in the whole theme. Among them is Gordon Murray, professor of entrepreneurship at Exeter Business School, who's taught MBA students for 20 years. "What changes is language," he argues. "Governance has now become the über-word, but the underlying principles of operating in a moral dimension haven't changed at all."