Issue of the week: Rethinking business education

The world economy is in deep recession, Ponzi schemes and other frauds dominate the headlines, and alumni of some of the world’s most prestigious business schools have led their companies to ruin, said Philip Broughton in the London Times. “Given the present chaos, shouldn’t we be asking if business education is not just a waste of time but actually damaging to our economic health?” Despite their expensive training, these “Masters of the Business Apocalypse” missed the warning signs that financial asset prices were dangerously overheated. And when it was clear that something had gone terribly wrong, their first instinct wasn’t to acknowledge fault, but to protect their big paychecks and plush offices. “If doctors or lawyers wreaked such havoc in their own professions, we would certainly reconsider what is being taught at medical and law schools.” Why should business schools be any different?

To be fair, the “internal soul searching” at business schools is well under way, said Francesca Di Meglio in BusinessWeek. In particular, educators are rethinking “the gospel of shareholder value.” Many critics say that the heavy emphasis on shareholder value has “allowed a kind of moral relativism to flourish on campus and, ultimately, in the business world itself.” Students, say the critics, learn that almost any legal or ethical shortcut is justified if it rewards shareholders. But blaming the economic catastrophe on business schools is a stretch. After all, “a lot of the corporate leaders who were among the worst offenders never came within a stone’s throw of an MBA.”

True, but business schools clearly play a role in helping to shape the mores and practices of the business world, said Oliver Staley in Bloomberg.com. That’s why it’s encouraging that some top schools are using the current economic collapse “as an opportunity for self-reflection.” Harvard Business School, for instance, has created a task force to examine whether it “is failing to teach students to understand and manage risk in the current environment.” The school already offers a course on “Corporate Accountability,” but in the past, said professor Laura Alfaro, students considered it a “class you have to take but it doesn’t really matter.” Now, says Alfaro, “we’re in a mode where it’s easy to teach this course.”

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The message does seem to be getting through, said Leslie Wayne in The New York Times. Schools such as Wharton at the University of Pennsylvania report that interest in ethics classes is soaring. Nearly 20 percent of Harvard Business School’s class of 2009 signed “the MBA Oath,” a voluntary pledge “to serve the greater good” in their business careers. Advocates hope it is the first step in the development of a professional code akin to the Hippocratic Oath for physicians or the pledge taken by lawyers to uphold the law and the Constitution. Of course, all these students still want to make money. The challenge is to reconcile that desire with a respect for fair play and a concern for the broader public interest.