SLOW Movement

Fortune: MBAs get schooled in ethics

MBAs get schooled in ethics

Business schools respond to the crisis by changing their curriculums. But are they just paying lip service?

By David A. Kaplan, contributor

October 19, 2009: 9:01 AM ET

(Fortune Magazine) -- Rod Kramer thought it was going to be just another dinner at the Stanford Executive Program last summer.

An affable, popular professor at the business school, he had given his usual talks on influence and persuasion in the realms of politics and business.

Then came the wrap-up social event. But the wife of an important corporate executive -- "with the help of some wine," as Kramer recalls -- lit into him "for not teaching morality to MBA students."

That failure, she told him and then told him some more, was the cause of the global financial meltdown. It was an illustration, says Kramer, currently a visiting professor at Harvard's Kennedy School, of how much "disenchantment" there is about MBAs these days.

Indicting business schools and management education has become a blood sport. "If Robespierre were to ascend from hell and seek out today's guillotine fodder," wrote Philip Delves Broughton in a widely cited piece in the Sunday Times of London earlier this year, "he might start with a list of those with three incriminating initials beside their name: MBA."

A Harvard Business School graduate himself, Broughton said that MBA stood for "Me Before Anyone" and, citing the likes of former Merrill Lynch CEO John Thain and former SEC chairman Christopher Cox, said "the Masters of Disaster have their fingerprints on every recent financial fiasco."

HBS was none too pleased the piece got so much pickup. Yet the B-school itself, in a soul-searching case study for a faculty workshop last spring, mentioned Broughton's brief as an example of unavoidable public perception.

Business schools around the country have undergone similar self-examination. At Dartmouth, the Tuck School of Business now has a mandatory ethics and social responsibility requirement. The New England College of Business and Finance, which offers an online master's in "business ethics and compliance." New York University's Stern School of Business added a class on policy responses to the financial crisis. (The Great Depression is also a popular NYU course.)

Others have exploited curriculums that had been coincidentally revamped before the crisis to become less theoretical and less technical, and more interdisciplinary and more focused on real-world social consequences.

At Stanford, for example, in small classes called Critical Analytical Thinking, students are considering whether Google (GOOG, Fortune 500) ought to put its servers inside China: Local servers mean better service for the Chinese but also government oversight of Google search content. "How the company should handle that tradeoff is what students explore," says dean Garth Saloner. In a different time or at a different school, the question might only be what's immediately best for shareholders.

Stanford's curriculum reform was instituted two years ago, Saloner says, in response to concern that "future business leaders" were being trained too narrowly, within artificial specialties. Similarly, at the Yale School of Management, old and traditional "silos" like finance, marketing, and accounting were replaced with broader, more integrated core courses such as The Investor, The Customer, The Competitor, and The Employee.

Harvard, the Bigfoot of MBA education, is tiptoeing into curriculum adjustments. Its upcoming January program for students will include courses in moral leadership, distressed debt, and global real estate. But dean Jay Light, deriding "splashier" changes elsewhere, says specific courses aren't really the point.

"Curriculum is to learning as an organizational chart is to a company," he says. "Learning has to do with what goes on inside the classroom." He says that what came out of last spring's faculty workshop was a "renewed appreciation that things can go wrong at all levels" and that his school hadn't spent enough energy addressing that reality.

Curriculum at most professional schools is a matter of pedagogical fashion, as well as student demand. After the rise of Michael Milken (Wharton MBA '70) and the fall of Enron (Jeffrey Skilling, Harvard MBA '79), there were predictable cries for more vigilance in the academy, as if the professoriate alone could curb hubris. Elective courses in ethics, responsibility, and moderation followed scandal-plagued eras.

Maybe some of the customers paid some attention. Yet Light points out that in recent years attendance in Risk Management at HBS was so low the course was canceled. No surprise it's back now. We'll see for how long.

Reporter associate: Beth Kowitt 

Find this article at: http://money.cnn.com/2009/10/16/news/economy/mbas_ethics_classes.fortune/index.htm

WSJ: Web Ads Hidden Under Cloak of Invisibility

ADVERTISING

OCTOBER 12, 2009

Web Ads Hidden Under Cloak of Invisibility

By EMILY STEEL

Kraft Foods, Greyhound Lines and Capital One Financial have bought some strange ads on the Internet lately. What's so strange about them is that they're invisible.

The companies might not have known about their invisible display ads—the kind that are supposed to appear alongside content on Web pages—if not for Ben Edelman, an assistant professor at Harvard Business School who studies Internet advertising.

Mr. Edelman says his research shows that all three marketers, and many others, have fallen victim to Web sites that use such ads as a way to sell more ad space than they have.

The Web sites can get away with it, he says, because online advertisers don't always audit their campaigns for proof their ads are appearing. It isn't clear how common these ads are or how much they cost marketers.

Mr. Edelman and other Internet-security experts say the ads are created with the use of computer code that makes it look to marketers as though their ads are showing up on legitimate Web sites. But consumers who visit those sites can't see the ads because they have been placed on invisible Web pages.

In one example, visitors to a site called MyToursInfo.com saw an ordinary-looking Web page with one ad for Verizon Communications and another for a weight-loss product. But, Mr. Edelman, who studied the site in January, said software code running behind the scenes opened more than 40 Web pages, each including three ads from marketers such as Domino's Pizza and Capital One, which were invisible to visitors.

Digits

• It's 10 P.M.: Do You Know Where Your Online Ads Are?

Mr. Edelman's analysis of the code was confirmed by computer-security experts at Symantec and McAfee as well as online-ad advisory firms DoubleVerify and Anchor Intelligence.

MyToursInfo.com has since shut down, and efforts to identify its operators were unsuccessful.

Domino's Pizza says it is aware of sites like MyToursInfo.com and is taking steps to protect against them by buying display ads it pays for only when a consumer clicks on them. Capital One said it wasn't familiar with the situation but said it keeps "a close eye" on its online ads.

Verifying that ads appear is an issue that has long plagued traditional media, particularly commercials on local TV stations. But a single online ad campaign can appear on thousands of Web sites, making verification even harder.

Advertisers often buy display ads based on the number of times they are loaded onto a page, rather than the number of clicks they get. Over the past, year, an increasing number of scams have sought to take advantage of that pricing system as advertisers have started buying more of their online ads via middlemen called ad networks, instead of directly from the Web sites themselves. These networks sell ad space at cheap rates across thousands of sites, and they don't always weed out illegitimate players.

Several such networks, including Burst Media and Tribal Fusion, sold ads that appeared on the MyToursInfo.com site, Mr. Edelman says, according to his analysis of computer code.

Tribal says MyToursInfo.com isn't included in its network now but can't say whether it was in the past. Burst says MyToursInfo.com was included in its network earlier this year but isn't now part of its network.

The ad networks say they use a combination of high-tech scans and manual processes to ferret out unscrupulous sites.

"Unfortunately, these bad actors are kind of like ants at a picnic. You constantly have to be vigilant," says Chuck Moran, Burst Media's chief marketing officer.

"It is one of the big challenges of running a network," says Toby Gabriner, president of Tribal Fusion. He said his company now is working with Mr. Edelman to help detect possible fraud across its network. Mr. Edelman does similar consulting work for clients including Time Warner's AOL and Microsoft.

Ads are typically rendered invisible by manipulating computer codes called iframes that determine how a Web page appears on a visitor's computer screen. Iframes allow one Web page to be built inside another, the procedure used to make display ads. But, programmers can also make iframes invisible, so that computer users don't see anything contained in them. In the case of the invisible ads, they typically use multiple invisible iframes. In the case of the invisible ads, they typically use multiple invisible iframes.

Mr. Edelman, who trolls the Web for examples of invisible ads, says ads for Kraft Foods and Greyhound Lines recently ended up buried on invisible pages on a site called MyProfilePimp.com, which offers games, photos and other ways for consumers to personalizetheir profile pages on social-networking sites like Facebook. Mr. Edelman says a visit to the site in June opened a series of invisible pages on the visitor's computer with as many as 46 ads. He says none of those ads could be seen.

MyProfilePimp.com declined to comment.

Kraft says it monitors its online ad purchases but wasn't aware of the MyProfilePimp.com ads. "We are looking into it as we would with any other possible violation of our agreements," it said.

Greyhound was similarly unaware of the case and said that the site shouldn't have been included in any of its ad-network buys. A spokeswoman says the bus line is working to "safeguard against fraudulent activity moving forward."

Write to Emily Steel at emily.steel@wsj.com

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

Fast Company: Where Your Gut Is More Ethical Than Your Brain

July 1, 2009

Why Your Gut Is More Ethical Than Your Brain

By Dan Heath & Chip Heath

If you've ever been part of a discussion on ethics, in school or elsewhere, chances are you didn't spend much time talking about your feelings. It's believed that to live ethically, we must engage our reason, which reins in the whims and follies of emotion. Ethics, then, is heavy on Spock and light on Sally Struthers. But what if unethical behavior is actually spurred, rather than prevented, by reason?

Consider a provocative series of experiments conducted by Chen-Bo Zhong of the University of Toronto. He put test subjects into interactions with an anonymous partner where they had two options: to treat their partners fairly or to lie to them. If they decided to lie, they would gain at the expense of their partners.

Before making the decision to cheat or be fair, the test subjects were given some guidance. Some were encouraged to think rationally about the situation and to ignore their emotions. Equipped with this advice, the great majority (69%) analyzed the situation and con-cluded that they should screw their partners. Others were primed to "make decisions based on gut feelings." Their guts were pretty trustworthy: Only 27% lied.

There's a twist: Even though the study shows that we would be treated better by people who trust their feelings, we're leery of them. When people were given a choice to interact with a rational decision-making partner or a gut-trusting one, 75% chose the rational partner.

Zhong concluded that "deliberative processes can license morally questionable behaviors by focusing on tangible monetary outcomes and reducing emotional influence." If only such behavior were limited to the lab.

In reality, it seems to have played a role in the Great Economic Kidney Punch we all just suffered. Mike Francis worked at Morgan Stanley before the economic collapse. He bought up scads of questionable mortgages, including some of the NINA (no income, no asset) variety, meaning that the bank giving the loan would not verify the customer's income or assets. The customer applying for the loan knew his answers wouldn't be checked, so he didn't face much risk in declaring, say, a $300,000 salary as a Taco Bell night manager. (What can I say? The people love my gorditas.)

As reported on This American Life's must-listen episode, "The Giant Pool of Money," Francis said that, with the NINA loans, the banks were "setting you up to lie. Something about that feels very wrong. It felt wrong way back then, and I wish we had never done it. Unfortunately, what happened ... we did it because everyone else was doing it."

When you're getting rich, it's pretty easy to soothe the ol' gut. If you need a rationalization, your mind will provide one. For instance, many bankers clung to their analytical models, which "proved" that their investments would be okay even if default rates reached historically high levels. Unfortunately, because it had never occurred to the bankers of yesteryear to give $500,000 loans to minimum-wage workers, the historical models weren't all that accurate. You've got to love the logic, though: Historically, the most weight I've ever gained in a year was 2 pounds, so I might as well start eating a quart of Ben & Jerry's every day for breakfast.

Looking back on the subprime-mortgage debacle, it seems the only accurate information in the whole ecosystem was Francis's bad feeling. And one suspects other people had it, too. What if a few dozen others in the chain had listened to that feeling?

A different industry provides a lesson in the value of heeding your gut about ethical choices. In 1987, Paul O'Neill took over as CEO of Alcoa, the world's largest producer of aluminum. On his first day, he announced that no one who worked at Alcoa should ever be hurt at work. The acceptable rate of accidents was no accidents. This raised a lot of eye-brows. Working with aluminum is a dangerous business, and there are plenty of ways to get injured. And Alcoa already had a good safety record, in the top third of companies. O'Neill recalls the skeptical hallway conversations among senior managers: "When the next tough economic time comes, he'll shut up about this."

He didn't. O'Neill walled off the topic of safety from the "deliberative processes" that Zhong warned about. "If anyone ever calculates how much money we're saving by being safe, they're fired," he told his team. Safety wasn't a priority; it was a precondition. He told people, "From now on, don't budget for safety." O'Neill's resolve paid off. Alcoa became one of the safest companies in the world, despite the aluminum industry's inherent risks.

Guts aren't perfect. For instance, we tend to feel so much empathy for individuals that it can doom our efforts to be impartial and consistent. But in the business world, we've tipped too far toward pure rationality. We need an emotional counterweight -- and we already have it. When you're in an ethically loaded situation and your gut talks, listen to it.

Dan Heath and Chip Heath are the best-selling authors of Made to Stick: Why Some Ideas Survive and Others Die. Want to share a Made to Stick column with your team? Go to fastcompany.com/madetostick [0].

Article location:http://www.fastcompany.com/magazine/137/made-to-stick-in-defense-of-feelings.html

NY Times: A Promise to Be Ethical in an Era of Immorality

I am not a skeptic, but I sincerely hope that they will not forget the oath and walk the talk. Having worked in a finance industry and also witnessing most, if not all, go to B-schools by thinking about money. 

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May 30, 2009

A Promise to Be Ethical in an Era of Immorality

By LESLIE WAYNE

When a new crop of future business leaders graduates from the Harvard Business School next week, many of them will be taking a new oath that says, in effect, greed is not good.

Nearly 20 percent of the graduating class have signed “The M.B.A. Oath,” a voluntary student-led pledge that the goal of a business manager is to “serve the greater good.” It promises that Harvard M.B.A.’s will act responsibly, ethically and refrain from advancing their “own narrow ambitions” at the expense of others.

What happened to making money?

That, of course, is still at the heart of the Harvard curriculum. But at Harvard and other top business schools, there has been an explosion of interest in ethics courses and in student activities — clubs, lectures, conferences — about personal and corporate responsibility and on how to view business as more than a money-making enterprise, but part of a large social community.

“We want to stand up and recite something out loud with our class,” said Teal Carlock, who is graduating from Harvard and has accepted a job at Genentech. “Fingers are now pointed at M.B.A.’s and we, as a class, have a real opportunity to come together and set a standard as business leaders.”

At Columbia Business School, all students must pledge to an honor code: “As a lifelong member of the Columbia Business School community, I adhere to the principles of truth, integrity, and respect. I will not lie, cheat, steal, or tolerate those who do.” The code has been in place for about three years and came about after discussions between students and faculty.

In the post-Enron and post-Madoff era, the issue of ethics and corporate social responsibility has taken on greater urgency among students about to graduate. While this might easily be dismissed as a passing fancy — or simply a defensive reaction to the current business environment — business school professors say that is not the case. Rather, they say, they are seeing a generational shift away from viewing an M.B.A. as simply an on-ramp to the road to riches.

Those graduating today, they say, are far more concerned about how corporations affect the community, the lives of its workers and the environment. And business schools are responding with more courses, new centers specializing in business ethics and, in the case of Harvard, student-lead efforts to bring about a professional code of conduct for M.B.A.’s, not unlike oaths that are taken by lawyers and doctors.

“I don’t see this as something that will fade away,” said Diana C. Robertson, a professor of business ethics at the Wharton School of the University of Pennsylvania. “It’s coming from the students. I don’t know that we’ve seen such a surge in this activism since the 1960s. This activism is different, but, like that time, it is student-driven.”

A decade ago, Wharton had one or two professors who taught a required ethics class. Today there are seven teaching an array of ethics classes that Ms. Robertson said were among the most popular at the school. Since 1997, it has had the Zicklin Center for Business Ethics Research. In addition, over the last five years, students have formed clubs around the issues of ethics that sponsor conferences, work on microfinance projects in Philadelphia or engage in social impact consulting.

“It’s been a dramatic change,” Ms. Robertson added. “This generation was raised learning about the environment and raised with the idea of a social conscience. That does not apply to every student. But this year’s financial crisis and the downturn have brought about a greater emphasis on social ethics and responsibility.”

At Harvard, about 160 from a graduating class of about 800 have signed “The M.B.A. Oath,” which its student advocates contend is the first step in trying to develop a professional code not unlike the Hippocratic Oath for physicians or the pledge taken by lawyers to uphold the law and Constitution.

Part of this has emerged by the beating that Wall Street and financiers have taken in the current economic crisis, which can set the stage for reform, Harvard students say.

“There is the feeling that we want our lives to mean something more and to run organizations for the greater good,” said Max Anderson, one of the pledge’s organizers who is about to leave Harvard and take a job at Bridgewater Associates, a money management firm.

“No one wants to have their future criticized as a place filled with unethical behaviors,” he added. “We want to learn from those mistakes, do things differently and accept our duty to lead responsibly. Realistically, we have tremendous potential to affect society for better or worse. Let’s humbly step up. We are looking out for our own interest, but also for the interest of our employees and the broader public.”

Bruce Kogut, director of the Sanford C. Bernstein & Company Center for Leadership and Ethics at Columbia, said that this emphasis did not mean that students were necessarily going to shun jobs that paid well. Rather, they will think about how they earn their income, not just how much.

At Columbia, an ethics course is required, but students have also formed a popular “Leadership and Ethics Board,” that sponsors lectures with topics like “The Marie Antoinettes of Corporate America.”

“The courses make people aware that the financial crisis is not a technical blip,” Mr. Kogut said. “We’re seeing a generational change that understands that poverty is not just about Africa and India. They see inequities and the role of business to address them.”

Dalia Rahman, who is about to leave Harvard for a job with Goldman Sachs in London, said she signed the pledge because “it takes what we learned in class and makes it more concrete. When you have to make a public vow, it’s a way to commit to uphold principles.”

Copyright 2009 The New York Times Company

NY Times: Smile and Say 'No Photoshop'

See also: Parody of Dove's 'Campaign for real beauty'

May 28, 2009

Smile and Say ‘No Photoshop’

By ERIC WILSON

MOST readers of fashion magazines are aware that all photographs, at least to some degree, lie.

More often than not, images have been altered — historically with painstaking tricks of lighting and exposure and, more recently, with retouching software that can make celebrities and models look thinner, taller, unblemished, with brighter eyes and whiter teeth. Seemingly perfect. Advances in digital photography have made it so easy to manipulate photographs that cover models often resemble weirdly synthesized creatures or, as the photographer Peter Lindbergh described them this week, “objects from Mars.”

No one could reasonably argue that Gwyneth Paltrow’s skin is indeed made of Silly Putty, as it appeared to be on the May 2008 cover of Vogue, or that Jessica Simpson’s body comes with only one hip, though her left one was suspiciously missing on last September’s cover of Elle, or wonder how the shape of Reese Witherspoon’s chin, dimples and eye color could change so drastically from her angelic Marie Claire appearance in February 2008 to her polished Vogue cover in November to her kittenish Elle pose this April.

Some popular blogs have made a sport of identifying egregious cases of Photoshop abuse, but the degree to which changes are made is rarely disclosed (and usually only when a magazine is caught). But as retouching has become more blatant and bizarre, sometimes resulting in bodies that defy the natural boundaries of human anatomy, a debate over photo manipulation has spilled into public view, with Mr. Lindbergh, one of the world’s most famous image makers, leading the charge against the practice.

“My feeling is that for years now it has taken a much too big part in how women are being visually defined today,” Mr. Lindbergh said in an e-mail exchange. “Heartless retouching,” he wrote, “should not be the chosen tool to represent women in the beginning of this century.”

Last month, Mr. Lindbergh stirred the pot by creating a series of covers for French Elle that showed stars like Monica Bellucci, Eva Herzigova and Sophie Marceau without makeup or retouching. The issue struck a nerve with readers in France, where health officials were already campaigning for a measure to force magazines to note when and how images are altered. But editors of American publications, who last year resisted such a proposal within their trade group, the American Society of Magazine Editors, have also noted a backlash against images that appear manipulated to push an idealized standard of beauty.

It now seems fresh, even exclamation-worthy, when a magazine presents an unvarnished image. Last month, for example, an issue of Life & Style took the unusual step of declaring that a cover photograph of Kim Kardashian was “100 percent unretouched,” as if it had done a great service to the cause of pseudo-celebrity journalism. And People, in its “100 Most Beautiful” issue this month, included images of 11 celebrities “wearing nothing but moisturizer.”

“Fashion magazines are always about some element of fantasy,” said Cindi Leive, the editor of Glamour, “but what I’m hearing from readers lately is that in fashion, as in every other part of our lives right now, there is a hunger for authenticity. Artifice, in general, feels very five years ago.”

Oddly, so does this debate. It was in 2003 that one of the most famous retouching controversies arose when Kate Winslet asserted that the British edition of GQ had excessively altered a photograph of her to make her look thin. That episode was followed by many more: Andy Roddick’s enlarged biceps on the cover of Men’s Fitness, Katie Couric’s streamlined promotional photos and the slimming of Faith Hill in Redbook, the latter exposed in a 2007 competition by the fashion Web site Jezebel to uncover retouching sins. Glamour, too, has faced photo-tampering accusations, including a charge, which the magazine denied, that it digitally shrank the actress America Ferrera on the cover of an issue in 2007 dedicated to techniques for readers to flatter their figures.

And yet a raw-celebrity movement has been slow in coming. That may be because, as several editors said privately, celebrities’ publicists almost always demand retouching of wrinkles and visible cellulite. As a result, a celebrity can look different from one magazine to the next.

“There’s no question that images have been altered so significantly that, at times, it’s so apparent it’s transparent, actually,” said Dennis Freedman, the creative director of W, a magazine that intentionally features photographs of both extremes: Juergen Teller’s patently unretouched portraits on one hand and the digitally stylized work of Mert Alas and Marcus Piggott on the other.

“These are covers that look like Breck ads,” Mr. Freedman said. “But my question is, did they intend for them to look like Breck ads? Is there irony? Is there subversion? Because there is no question they are retouched beyond any possible reflection of what’s actually in front of the camera.”

The ethical issues of retouching have been discussed at least since the 1930s, when George Hurrell manipulated characteristics of Hollywood actresses in photographs to make them into icons of glamour. But technology has changed the scope of the debate, fueling a long-held criticism that magazines are promoting an unattainable standard of beauty.

In the early 1990s, as the first programs for digital manipulation came into use, some art directors began exploring the potential for creating images with a heightened sense of reality, actually as a reaction against the prevailing images of supermodels that looked too perfect. They were interested in creating images like those achieved through special effects in movies. Magazines like The Face championed a style coined by its art director, Lee Swillingham (now the creative director of Love), as “hyper real,” with photographs by Norbert Schoener, Inez van Lamsweerde and Mert and Marcus that seemed to share an affinity with Mannerist paintings. Models were presented as grandes odalisques, with impossibly long necks, or waists reduced to sizes against nature. They were not suggesting that the look should be attainable.

“We were trying to create a future fashion,” Mr. Swillingham said. “You could do something that looked gritty and real or something that looked like plastic.”

No one could have predicted how quickly that future would come. Suddenly, images could be changed even as they were being made, replacing backgrounds and filters with the touch of a button, turning night into day. It follows, then, that the next logical step in fashion would be a reaction against all that. For a coming issue of Love, Mr. Swillingham just commissioned a shoot where the brief to Glen Luchford, the photographer, was to make images that look like his early work in 35-millimeter film, using a digital camera to recreate a pre-digital style of photography. Some cutting-edge photographers now say that they, too, would like to see images that are more real.

“Anybody with a few days’ experience on Photoshop can drop in a new background or remove a pimple off a girl’s nose,” said Phil Poynter, who shoots campaigns for Tommy Hilfiger and editorials for Love and Pop. Still, he noted, “the big discussion in the fashion business has always been about should we retouch girls, should we create a portrait of a girl that is not achievable by a real girl.”

That issue came up in a revealing moment from the recent “60 Minutes” profile of the Vogue editor Anna Wintour — actually from an outtake of Morley Safer’s interview with her that was posted online — when she described an Irving Penn photograph, used to illustrate an article about the dangers of obesity, as one of the most beautiful ever to appear in her magazine. The starkly lighted image shows not a model in haute couture but an obese woman who is naked.

“It’s the kind of picture that really is going to make people stop and pay attention and have them just be provoked, which was really the point,” Ms. Wintour told Mr. Safer.

The implication here is that what can be considered a provocative image in a fashion magazine today is one that shows something real.

Undoubtedly, the most compelling photographs are ones that show real character, said Mr. Freedman of W. Nevertheless, he questions whether there will be a remarkable change as a result of the media attention following Mr. Lindbergh’s French Elle covers. Fashion magazines, to some extent, thrive as an escape from reality, a window to something that exists outside the ravages of time.

“I wonder how long that’s going to last,” he said. “It raises an interesting point, but that in and of itself becomes a kind of gimmick. I would not bet my life savings that it is something they are going to continue.”

Copyright 2009 The New York Times Company
    

FT: Greed is here to stay - learn to work with it

Greed is here to stay - learn to work with it

By Charles Jacobs

Published: May 18 2009 03:00 | Last updated: May 18 2009 03:00

Blaming MBA programmes for encouraging the behaviour that has led to the current economic crisis is a popular pastime. But from the perspective of neuroscience, such criticism is misplaced, as are most of the attempts at reforming the programmes. It would be better to help students pursue their natural inclinations rather than vainly trying to thwart them.

We fault MBAs for their short-term focus, greed and unethical behaviour, but how could they be otherwise? An MBA education is not designed for those with an abiding love of scholarship in the field, nor for those focused on the betterment of mankind. Students enrol to enhance their ability to make money and we must expect them to behave in line with that goal.

In response to the public outrage, many schools have revamped their curriculums to emphasise "holistic thinking", "values" and "ethics".

But these efforts are unlikely to succeed because they run counter to the fundamental purpose of the programme. It is questionable that one can teach ethics or values, but it is even more doubtful that students with neither would be converted by a required course, particularly if it interfered with their ability to make money. Nor is it likely that those exclusively in pursuit of profit would willingly exchange it for the greater good.

If we want MBA students to change their thinking and behaviour, we have to make the case that longer-term thinking, a different set of values and ethical behaviour will help them to realise their goals.

It has been assumed that short-term thinking is a result of the pressure for quarterly results, but research in neuroscience suggests it is caused by the corporate preference for objective, unemotional decision making.

Experiments have demonstrated that effective decision making is driven not by reason, but by emotions. When we disregard our emotions, as we do in the corporate world, we cannot access what we have learnt from our past experience and our thinking becomes myopic and short term.

This could be demonstrated in the classroom and would make students less certain of their individual decisions and forecasts for the future. Being prompted to acknowledge what they don't know might lead to a more prudent management of risk and could encourage them to consider potential consequences of their actions or decisions.

Learning about the activity of mirror neurons would drive students to reconsider the value of ethical behaviour and its link to organisational performance and profit.

These specialised nerve cells mimic the mental state of those we come in contact with. We sense those who are greedy or who are interested in the common good and tend towards those that have our interests at heart.

Ethical leaders garner more support and get more done, so their organisations perform at a higher level and make more money.

Other research on the role of neurotransmitters would influence students to reconsider their values. The neurotransmitter dopamine, responsible for pleasurable feelings, is released not when we receive a monetary reward for our work, but when we are fully engaged in the work itself.

Studies have also found that once our basic needs are met, there is no correlation between the possession of wealth and happiness.

We will never eliminate greed from human nature, nor dissuade those that follow a course of study to make money from trying to make money. But we can make the case for behaviour that benefits the individual and society.

We can teach how to better anticipate the consequences of our actions, how ethical behaviour is more profitable and how balancing the drive for profit with a love of the work itself will lead to greater happiness.

Rather than trying to prevent people from doing what they're going to do anyway, we need to teach them how to achieve their goals by helping us achieve ours.

Charles S. Jacobs is the author of Management Rewired: Why Feedback Doesn't Work and Other Surprising Lessons from the Latest Brain Science, published by Portfolio

www.ft.com/soapbox

Copyright The Financial Times Limited 2009

FT: A bright idea that helped India's poor

A bright idea that helped India’s poor

By Amy Kazmin

Published: February 24 2009 22:42 | Last updated: February 24 2009 22:42

Harish Hande’s first installation of solar-powered lights in a rural Indian home was a stealth operation. The founder of Selco India, then a 26-year-old engineer, believed passionately that millions of Indians living in darkness at night could have their lives transformed by solar technology. But he needed a customer who could afford to pay the high up-front costs of solar lights and testify to their merits.

In September 1994 Mr Hande asked a wealthy betel nut farmer in the southern state of Karnataka for permission to install the lights in his house. The farmer, who had never heard of solar energy, refused. But Mr Hande sensed the farmer’s elderly mother, who had listened attentively, was intrigued.

A few days later, Mr Hande returned while the farmer was away and – with the mother’s connivance – surreptitiously installed the lights. Returning a week later, he was greeted ecstatically by the farmer, who handed over the Rs15,000 ($300, €240, £210) payment.

Since then, Selco has sold solar lights to about 95,000 village households, and to schools, orphanages and religious institutions.

Given the hundreds of millions of Indians still dependent on sooty kerosene lamps for light each night, such figures are modest. Yet after years spent educating rural consumers and lenders about solar power – and battling with foreign shareholders focused more on profit than on social impact – Mr Hande is poised for a dramatic expansion of Selco’s operations.

In recent months, the company has received $1.4m in equity financing from the Good Energies Foundation, the Lemelson Foundation and E+Co – all social investors supporting the effort to develop a solar energy business to cater to the rural poor.

Mr Hande’s target is to sell solar lights to 200,000 more rural families within the next four years, a significant jump in pace. But he regards other aspects of Selco’s model of social enterprise as equally important. The company’s technicians, for instance, provide regular after-sales service, checking each installation twice a year, and aim to respond to breakdowns within 24 hours.

“We know that our contribution in terms of numbers will be tiny, but what we want to do is show a path that others can follow,” he says.

The seeds of Selco were planted on a trip to the Dominican Republic, while Mr Hande was pursuing graduate studies in energy engin­eering at the Center for Sustainable Energy at the University of Massachusetts. “I saw these very poor people using solar lighting,” he recalls. “In India, people were less poor or equally poor. And if people there were using solar, why couldn’t we?”

Soon afterwards, Mr Hande contacted Neville Williams, who founded the non-profit Solar Electric Light Fund (Self) to promote solar energy in developing countries. In 1993, Self received a $40,000 grant from the US-based Rockefeller Brothers Fund to install solar lights in 100 rural Indian houses and invited Mr Hande, who was still working on his studies, to run the project.

Sustainable repayments: why solar light sales need the right loans

An engineer from the prestigious Indian Institute of Technology, Harish Hande was writing his PhD thesis, “Rural Electrification in India: Does Solar Make Sense?”, even as he started to turn his theorising into practical action.

Dealing with India’s rural poor is traditionally the preserve of government or non-profit charities – or rapacious money-lenders ready to step in with emergency loans at extortionate interest rates.

But after two years of research in rural villages in India and Sri Lanka, Mr Hande was convinced the poor would pay for solar lights, in spite of their hefty cost, if they could obtain affordable loans with repayment schedules that reflected their cash flow. “If you create appropriate financing and appropriate products, the people will pay,” he says.

Much of Mr Hande’s energy has gone into persuading rural loan officers in state banks to provide credit to families to buy solar lights. But he remains awed by villagers’ willingness to spend the equivalent of a full year’s income on his product.

“Think how much time we take to make a decision to spend a whole year’s salary,” he says. “But the poor are willing to pay.”

But Mr Hande was concerned about the long-run servicing of the lights, which he felt only a company could guarantee. Bringing the $40,000 grant into India also proved complicated, given New Delhi’s then strict capital controls.

So he obtained a single solar lighting system on credit from Tata BP Solar, an Indian solar panel manufacturer. He sold that system to the betel nut farmer, raising his first cash. “We were desperate for money,” he says. “We had got one system on credit, but I knew we couldn’t get more than that.”

For the next 2½ gruelling years, Mr Hande travelled across rural Karnataka by bus, explaining how solar lighting worked and installing systems – obtained on credit, with the grant money, which was still stuck in the US, as a guarantee – in the homes of wealthier farmers, who could afford them.

He also pleaded with rural bank officials to lend money to poorer families wanting to buy the lights, which cost at least Rs10,000. “It was hand to mouth,” he says. “I had to create the seeds of faith in rural areas that this technology works.”

After Mr Hande had personally installed 400 solar light systems, Selco received a loan of about $128,000 from USAid, through its partner Winrock, to finance its first three rural service centres to sell, install and service solar lights. This was the first step towards building the sustainable rural delivery system that Mr Hande envisaged. “This can succeed only if you have doorstep service and doorstep financing,” he says.

Between 1999 and 2001, Selco India received a $750,000 equity infusion, after Mr Williams raised funds from boutique investors in the US for solar light promotion in India and Vietnam. The ownership of Selco India was transferred from Self to a US for-profit company; with the new investors in control, Mr Hande was given a 2.5 per cent stake. Meanwhile, Selco India received a $1m loan from the International Finance Corporation, the private lending arm of the World Bank, in 2003.

Selco broke even for the first time in March 2001 and then earned small cash surpluses for several years. But by 2004, Mr Hande was under pressure from foreign shareholders over the company’s profits, which peaked at $88,380 in March 2005. The real crisis came, though, when Germany’s solar power subsidies created a global shortage of solar cells, causing prices to rise by 47 per cent.

In 2007, Mr Hande, who by then had 120 workers and 25 rural service centres, needed to raise new capital. “We were bleeding,” he says. “We had clients but we couldn’t do the sales – we had no supplies.” The foreign shareholders wanted him to shed staff – which he refused to do – and rebuffed his appeal for fresh funds as they sought to sell out.

But with its own $1m loan at stake, the IFC, which had another outstanding loan to the US-based parent company, staunchly backed Mr Hande and Selco India management, giving him the confidence to bring in a new set of more socially oriented investors.

With extra cash and lower solar cell prices, Mr Hande says he can now wipe out Selco’s Rs7.5m losses within two years, while expanding. But he has learnt a hard lesson about those who are driven less by ideas of social service than profits.

“Irrespective of whether you want money, you should have control of the company for the sake of the mission,” he says. “No matter how desperate you are for money, never take it from someone whose mission is not aligned with your own.”

Copyright The Financial Times Limited 2009

Seth Godin: Good guys finish...

Source: http://sethgodin.typepad.com/seths_blog/2009/01/good-guys-finis.html

Excerpt:

Spiritual business is an interesting concept. Is what you do all day at work part of who you are? Is it possible to be a deceitful crook all week but a good person on the weekend?

Can you succeed financially by acting in an ethical way?

In a competitive world, then, one with increasing light, the way to win is not to shave more corners or hide more behavior, because you're going against the grain, fighting the tide of increasing light. In fact, the opposite is true. Individuals and organizations that can compete on generosity and fairness repeatedly defeat those that only do it grudgingly.

FT: The first casualty of a downturn is truth

The first casualty of a downturn is truth

By Luke Johnson

Published: September 30 2008 19:30 | Last updated: September 30 2008 19:30

Early in every commercial career there is a moment of clarity as you learn about dishonest dealings in the business world. It is the realisation that when it comes to large sums of money, even seemingly charming fellows are capable of telling serious lies.

I lost my naivety at the age of 28. I took assurances from an audit partner that the accounts of a company I planned to invest in were accurate and prudent. I did not realise that the auditor was about to retire, and that he was far too close to the chief executive of the business – so had little to lose by misleading me.

In fact the numbers were a fiction; the company almost went bust and I lost lots of money, and became much more sceptical about who and what I believed.

I fear many of the best and most experienced investors acquire a profoundly cynical view of human nature. They have been ripped off just too often.

I know one fund manager whose faith in his fellow man was obliterated by the bursting of the dotcom bubble. A handful of directors of listed companies – people whom he regarded as his friends – were shown to have lied to him on the way up. And they were nowhere to be found when it all went wrong. He had a breakdown and has given up the profession.

It may be that those who sell things are just optimistic – but I suspect sometimes it is much more than exaggeration and rose-tinted spectacles.

This is the point in the cycle when the truth becomes rather more expendable. Be it in board meetings, annual general meetings, job interviews, contract negotiations, employment tribunals – you name it, the actualité will buckle under the pressure.

Desperation compromises the ethics. Highfalutin’ talk of moral principles from media pundits and academics means little if your company faces bankruptcy or you face the sack. As Adlai Stevenson, the American politician, said: “A lie is an abomination unto the Lord, and a very present help in times of trouble.”

We all sit transfixed by the unravelling of free market capitalism in fear and awe, while the clamour grows to find the guilty parties. Most commentators are blaming Wall Street.

Yet the heart of this wealth destruction is a collapsing subprime property market. And in that dark and catastrophic place, I suspect that there have been more lies told than by all the world’s bankers put together. It is inconceivable that the many thousands of realtors, mortgage brokers, valuers, developers, builders and other members of the great daisy chain were not in on the game.

Moreover, the homeowners themselves were also willing participants. Many lied to get mortgages and paid more for properties than they could afford, thinking they would flip them for a profit – because property only goes up in value, right?

We may be witnessing the greatest financial fraud of all time – on many levels. Western societies have been guilty of living beyond their means, and the reckoning we face is a sobering jolt. As they say: I have seen the enemy, and it is us.

The breakdown of trust in financial services is fraying the basic systems we rely on to conduct our daily lives. If citizens cannot rely upon multinational banks to safeguard their money then our way of life will grind to a halt. So many participants – executives, regulators – appear to have been negligent and some perhaps worse. In this miasma, who is delusional and who is deliberately misleading? Many of the players are themselves the losers: the staff of Lehman Brothers held $10bn worth of their own shares – now worthless.

The biggest victim in the whole shambles is not the foreclosed householder, the sacked investment banker or the devastated shareholder. It is our self-confidence and belief in the institutions that help fund almost everything. The banks do not even trust each other.

This week I must sort out a situation where a bank that turned one of our companies down a while ago as a poor credit risk is itself looking as if it might go bust – with almost £3m of our cash.

Getting angry and finding scapegoats is a waste of energy. We have all been part of the merry-go-round – and we must now grow up.

lukej@riskcapitalpartners.co.uk
The writer is chairman of Channel 4 and runs Risk Capital Partners, a private equity firm

Copyright The Financial Times Limited 2008

Economist: Arthur Galston

Exercpt:

For all his fine work at Caltech and Yale, his running of departments, encouragement of students and production of more than 300 papers on plant physiology, it was his sense of responsibility that most distinguished him. He once thought, he said, that the way to be a moral scientist was to avoid projects with bad applications. But he had changed his mind. The vital thing was to stay involved; to speak, write, testify, and make sure that research was turned not to evil, but to good.

===

Arthur Galston

Jun 26th 2008
From The Economist print edition

Arthur Galston, botanist, died on June 15th, aged 88

Courtesy of Elizabeth Galston

IT WAS the mangroves he noticed first, reduced to cobwebbed wraiths as far as the eye could see. The mud around them was clogged with their leaves, and the shellfish in it were dead. Then he saw the hills, once thick with teak trees, shaved bald like an old man’s skull. He could have seen worse: children with monstrous lolling heads and palsied, tiny limbs, adults with gnarled growths erupting from their bellies. But these were hidden away in the hospitals. The trees were less adept at concealment.

What had been sprayed on them was millions of gallons of a herbicide known as Agent Orange. Fixed-wing aircraft flew over the jungles of Vietnam in swarms, dumping the stuff, which then drifted over crops and into villages. The food that was destroyed might have fed 600,000 people for a year. But it was perfectly harmless to people, said America’s military men. They kept down the grass at bases with it, and the GIs hosed each other with it for fun. And there was no better strategy, at the height of the conflict in the 1960s, than to strip bare the river banks and forest trails where the Vietcong fought their war.

Arthur Galston was less sanguine. If you had asked him, on one of his visits to Vietnam in those years, whether Agent Orange was directly responsible for the sarcomas, lesions and deformities, he would have replied, like the careful scientist he was, that it was hard to make a connection solid enough to stand up in a court of law. But three things he was sure of. First, Agent Orange had caused “an ecological disaster” that might take decades to repair. Second, its use contravened the Geneva protocols against chemical and biological warfare. And third, he had a responsibility to speak, because this agent of horror was partly his child.

The birth had been accidental. As a young graduate student at the University of Illinois in 1943, he had been studying ways to make soyabeans—then a new crop plant from China—flower and set their pods earlier in the season, before the winter frosts. A mild spray with 2,3,5-triiodobenzoic acid brought them on nicely; but a stronger dose caused the plants to release ethylene, which digested the cell wall between leaf and stem and defoliated them.

Though Mr Galston soon had to go off to war himself, and then got sidetracked on the effort to find a new plant substitute for rubber, it did not occur to him that his discovery had military uses. It might, perhaps, be helpful to farmers. He was a botanist, who once spent a happy year in Stockholm isolating catalase from spinach leaves, and who patiently observed “rhythmic opening and closing in the dark in the plant Albizzia”. He believed in the inherent beauty and usefulness of science. On the other hand, he knew that any discovery was morally neutral. Society might apply it to good or evil ends.

As a plant physiologist, he was also aware that the life of plants was far from serene. They strained after light and water and struggled to cope with stress, of the sort that had made his soya seedlings drastically shed their leaves. They competed for food and saw off enemies. He watched oat seedlings warn each other of danger by releasing jasmonate acid, and tracked the dropping of poisoned leaves by the Sonoran brittlebush to ward off competition. But this did not mean, when the men from the chemical warfare unit at Fort Detrick started to exploit his findings in the 1950s, that he was happy to help wage war through and against plants.

Unanswered letters

The new potentised strain of his discovery appalled him, and the more so because it contained dioxin as a by-product of manufacture. The toxicity of dioxins was not then well understood, but Mr Galston had his fears from the beginning. From 1965 onwards, as the use of Agent Orange relentlessly increased in Vietnam, he lobbied both his scientific colleagues and the government to stop. Lyndon Johnson would not answer his letters; but Richard Nixon, faced with more suggestive statistics on the human cost from the Department of Defence, eventually agreed. In 1970 the spraying stopped. The ecological damage, and the cries for compensation from sick civilians and soldiers, continue to this day.

Mr Galston liked to call himself an accidental botanist: a Brooklyn boy, where barely a weed could poke between the bricks, who took agriculture at Cornell only because, with his father jobless in the Depression, he could go there free. He meant to be a doctor, with a sideline in playing jazz saxophone, but fell under the spell of a pipe-smoking botany teacher, and that was that.

History dictated that he also became an accidental bioethicist. For all his fine work at Caltech and Yale, his running of departments, encouragement of students and production of more than 300 papers on plant physiology, it was his sense of responsibility that most distinguished him. He once thought, he said, that the way to be a moral scientist was to avoid projects with bad applications. But he had changed his mind. The vital thing was to stay involved; to speak, write, testify, and make sure that research was turned not to evil, but to good. For more than 20 years he taught bioethics at Yale, a course he had started and which, by his last year, was one of the most popular in the college. His country forgot, but he did not, the mangrove ghosts.

BusinessWeek: Why Sharing with Competitors Is Smart

Why Sharing with Competitors Is Smart

Jim Koch, founder and chairman of Boston Beer Co., explains why it shared 10 tons of hops at cost with craft brewers

by Jim Koch

Posted on Conversation Starter: May 16, 2008 9:57 AM

Earlier this spring, we at Samuel Adams decided to share 10 tons of hops at cost with other craft brewers whose businesses had been imperiled by price hikes and crop shortages. Some business leaders may see this as enabling the competition at the precise moment we could have beaten it. I see it as both the right thing to do and smart business.

The craft beer segment is championed by a fairly close knit group of passionate brewers who operate as much like colleagues as competitors. Brewers are entrepreneurs, but they are also craftsmen and artisans who love comparing brewing tips, ingredients and beers. We also love educating consumers about what makes beer great. In turn, those curious consumers seek the variety we tell them is a hallmark of craft brewing. Variety comes through having many entrepreneurs, competitors, simultaneously innovating with new recipes.

There's a palpable sense that we succeed together or not at all. This is true for many business sectors that have a core of small, entrepreneurial players, but it's especially true when those small businesses have to compete with giants one hundred times their size, the way craft brewers have to compete with multi-national breweries like Anheuser-Busch, SAB Miller-Coors and Diageo.

Indeed, I believe it's precisely this collegial approach to business and commitment to innovation that has encouraged robust growth in craft brewing for the past five years. In 2007 alone, sales of craft beers increased 12 percent while mass domestic beer sales remained flat.

Craft brewers had been expanding and preparing to meet this increasing demand when, late last year, several new realities converged to create the industry's most clear-cut moment of vulnerability in 25 years.

The downturn struck craft brewers swiftly. First, prices for wheat and barley increased significantly as farmers opted to switch crops and grow corn to satisfy the burgeoning market for corn-based ethanol. Then, transportation costs increased dramatically due to oil and gas prices. Finally, the weak dollar combined with several seasons of low yields to send prices soaring for the aromatic hops that craft brewers prefer.

Last fall, Noble Bavarian Hops that had been selling for $6/pound were rumored to be selling for $30/pound. Samuel Adams has been fortunate. We've been around longer than most craft brewers, and we have long term contracts with hops growers, so our supplies were secure.

In mid-January we hosted a meeting of the Massachusetts Brewers' Guild, and the hops crisis was the primary topic. I heard about brew pubs that changed their recipes, small breweries that discontinued brewing some styles and others that were poised to shut their doors. It was then I realized that as the category leader it was time for us to step in and lend a hand. We decided to suspend brewing of one of our beers, the very hoppy Imperial Pilsner, and offer 20,000 pounds of German Tettnang Tettnanger and English East Kent Goldings hops to craft brewers in need.

So, I posted a message on a craft brewers' message board, and we set up a system on our Web site where brewers could apply. We didn't publicize it outside the brewers' forum.

The response was overwhelming. In short order, we received applications for 75,000 pounds of hops from nearly a quarter of the nation's 1,400 craft brewers. We felt a lottery was the fair way to distribute the hops we set aside, and in the end 108 breweries received between 88 and 528 pounds each. Worth Brewing Company, for example, a tiny brewery in Iowa that brews beer ten gallons at a time, will receive 88 pounds of hops, which Peter Ausenhus and his wife Margaret Bishop who own Worth Brewing, say will keep them in business for a year. In all, the hops we distributed will make approximately 36,000 barrels of craft beer, or 10 million pints.

Since we held the lottery, many people have asked me about the idea of helping competitors. Certainly part of the decision came from an instinctual sense of obligation. While the Boston Beer Company is one of the more senior members in this fraternity of craft brewers, I always feel close to the harsh challenges that many of these smaller breweries face as they grow, because it wasn't so long ago that I was in their shoes.

But I believe that that taking one of my beers off the market temporarily so that dozens of other beers could stay on the market was smart business, too. Of course it seemed risky for us to part with our most important ingredient—especially without yet knowing if the 2008 hops crop will be healthy. But I knew it was riskier for Sam Adams if the choices in craft beers diminish or the quality deteriorates. Rather than worrying about stealing share from each other, I was thinking about craft beers losing share overall. With just under 4 percent of the beer market, we all have plenty of room to grow.

What can leaders in other industries take away from our experience? Of course a rising tide lifts all boat, but more than that, leaders can be the gravity that lifts that tide. Leaders need to be alert to situations in which the long-term interests of their companies are best served by putting the needs of their segments or industries first, even when that means enabling competitors to better compete for your customers in the short-term.

Provided by Harvard Business—Where Leaders Get Their Edge

FT: MBA students swap integrity for plagiarism

MBA students swap integrity for plagiarism

By Philip Delves Broughton

Published: May 18 2008 17:21 | Last updated: May 18 2008 17:21

A professor at a well-known business school was recently grading papers for a required ethics course. In two of the papers he saw obvious signs of plagiarism. Students were not required to put their names on their papers, just a number identifiable by the administration. Before escalating the problem, the professor e-mailed his entire class saying that the guilty parties could avoid sanction by coming forward now. He received eight e-mails, in addition to the two he had already spotted, admitting to cheating.

Such stories bolster the academic research that suggests business students, both at graduate and undergraduate level, are more inclined to cheat than students in other disciplines. Critics of business and business education leap on such findings to say that this explains Enron, dodgy hedge funds and crooked sub-prime mortgage lenders. They say the whole system is built on fraud. This impression was reinforced further in March when the dean of Durham University’s business school in the UK, Tony Antoniou, was fired for having plagiarised academic work 20 years earlier.

However, in their enthusiasm to eviscerate, the critics may be overlooking some vital differences between a business education and one in, for example, philosophy or electrical engineering.

In spite of their long history – Harvard Business School celebrates its centenary this year – business schools still strain for academic respectability, especially in the minds of their students. For many, the purpose of attending business school is not to receive an academic education, but to get a job.

Vaues of staff put to the test

What do you do if you work in the HR department of an organisation and you know that a friend, a single parent poised to take on a very large mortgage, is about to be made redundant? Do you tell or keep mum?

This it is the sort of issue that an increasing number of finance professionals are discussing as their bosses recognise the need for training in ethics, writes Della Bradshaw.

At Instinet Europe, the Nomura global securities subsidiary, chief operating officer Clive Triance instigated an ethics training programme this year and now all 200 employees in the London office have completed the course.

To begin with some staff were sceptical about the programme, thinking it related to compliance or social responsibility issues. But on completing the one-day programme responses were very good, Mr Triance says . “I think people felt better when they left the course.”

The aim of the debate was to get to the core of employees’ values in business and life, he says.

The programme was taught by Roger Steare, visiting professor of organisational ethics at Cass Business School, London, who describes himself as a corporate philosopher.

There may be no right answers to the questions posed, but in the situation of the HR manager and the soon-to-be-made-redundant friend, there was an outcome. The HR manager told the friend about the impending redundancy, the conversation was overheard and both were fired.

“The academic values of integrity and honesty in your work can seem to be less relevant than the instrumental goal of getting a good job,” says Craig Smith, a professor of business ethics and corporate responsibility at Insead, France.

Dispiriting research, he says, indicates that MBA students actually become less ethical over the course of their education. “The focus on maximising shareholder value causes some students to minimise other important codes of behaviour,” he says. He adds that the number of graduates of prominent business schools being caught in corrupt practices has forced a “period of useful introspection” at the schools.

The accessibility of information online has affected the definition of plagiarism. Don McCabe, a professor at Rutgers Business School in the US, has conducted extensive research into plagiarism among business school students. He says that by far the most commonplace form these days is cutting and pasting from the internet. This generally involves using a few sentences from multiple sources, either verbatim or paraphrased.

“Many students are very equivocal as to whether this is actually cheating or not,” says Prof McCabe. “Especially if they paraphrase from a source.” 40 per cent of students in Prof McCabe’s research admitted to cutting and pasting, although he assumes the figure is probably higher.

He adds that students today, both in business schools and beyond, feel much freer than their forebears to define what constitutes cheating for themselves, regardless of their teacher’s instructions. One example is when a teacher requires individual work, many students see no problem in collaborating with each other.

“They argue that they can produce much better work and that they learn more when working together. Business students seem to be more ready to justify such behaviour by noting the emphasis corporations are putting on hiring people who can work together in teams. They argue that their collaboration, even when not permitted, is simply gaining practice at a skill they need to acquire to get a good job and advance,” he says. “And faculty who do not encourage or allow such collaborative work are simply out of touch.”

Prof McCabe says that from the faculty’s perspective, aside from purely ethical issues, it is hard to give academic credit to students who copy other people’s work. Whether the students cheat to inflate their grade or simply as a “time-management” solution, they become difficult for professors to grade. Different schools adopt different strategies to deal with plagiarism. Some delegate policing to faculty, while others put it in the hands of students and a strict honour code. The latter is generally more effective.

At Dartmouth’s Tuck School of Business in the US, students are taught the honour code from the first day they arrive on campus, when they must also participate in some form of community service. “It’s a way of telling them that they are not here just to learn about the bottom line, but how to become responsible citizens of society,” says Aine Donovan, executive director of Dartmouth’s Ethics Institute. Tuck’s pedagogical approach also minimises the opportunities to cheat, with lots of teamwork and few written papers. Ethics is not a required course at the school, but it is an oversubscribed elective.

“It allows students the chance to think about things which have been bothering them in the rest of their course,” Ms Donovan says.

Most ethics teaching at business schools tends to focus on cases where poor ethical judgments have been made, rather than issues of basic honesty. These cases, such as Enron and Exxon-Valdez, look at the situations in which individuals and companies made appalling decisions. They examine the twilight zone in which business decisions, subsequently seen as “ethical”, were made and the stresses on the people who made them. This tends to provide students with a sliding scale of right and wrong rather than a set of absolutes.

Addressing the more hum-drum issue of plagiarism, Ms Donovan says, can make ethics more personal. Students tend to be much harsher on each other than faculty. They know stepping outside the lines might yield enormous personal rewards, but comes with equal risk and can be lethal for a community.

Business school students are more likely to self-report cheating, she believes, because they are “more forthright, willing to say ‘sure I shave corners to get ahead’, but then have a reason for it. A philosophy or comparative literature student will never admit to cheating.”

Ms Donovan used to teach at the US Naval Academy, where cheating on an engineering test might mean being unprepared when a problem arose on a battle ship. The consequences of plagiarism were dire.

While cheating on a business school paper might not be quite so grave, “these graduates from top business schools are expected to come in to businesses and dazzle. If they’ve short-changed themselves, they will be found out very quickly”, she adds.

Copyright The Financial Times Limited 2008