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Corporate Scandals Revive Interest in Ethics Courses at US Business Schools - 2002-07-27

The recent business scandals at a number of American corporations, including Enron and WorldCom, have caused accounting experts and business executives in other countries to start seriously questioning American accounting practices. Those practices have been held up by business schools in the United States as a model for countries looking to develop and expand their capital markets. But experts in the United Kingdom and Russia are now suggesting that model may be flawed.

In spite of the criticism, American schools have not begun to rethink the way they teach accounting. But some of them have begun to rethink the way they prepare their students to deal with the ethical dilemmas that many people say are inherent in capitalism.

Five years ago, Howard Frank left his job with the U.S. Defense Department, where he managed a $300 million budget, to become the Dean of the University of Maryland's School of Business. Before he worked for the government, Dr. Frank managed a major American corporation. He says so far, none of the executives being investigated for improper and illegal behavior have graduated from the University of Maryland. Nevertheless, Dr. Frank points out their behavior reflects badly on all American corporations and business schools.

"I can tell you from a personal point of view, I find it deeply embarrassing," he said. "Because the organizations that I've always been associated have been, you know, tremendously ethical. We teach it, we practice it, and somehow it goes wrong anyway."

Indeed, it does go wrong anyway. Enron president Jeffrey Skilling, who's currently being investigated by the United States' government about his role in Enron's collapse, graduated from Harvard Business School, which has been integrating ethical discussions into its various MBA classes since the late 1970s. Since 1988, Harvard business students have had to take a three-week mini class that specifically explores ethical dilemmas in business. But the students aren't actually required to take a semester-long course devoted entirely to business ethics. School officials say they're considering such a requirement, but Harvard isn't alone in not having one right now.

Most business schools in America don't require semester-long courses in ethics, and for Howard Frank that's a bad idea. He notes at the University of Maryland, all MBA students are required to take an ethics course before they graduate and to visit a so-called "white collar" prison, to meet with business executives who've been convicted of corruption.

"These are some quite sobering experiences for these students," he said. "And they would come back very shaken, because they weren't dealing with the type of people you think of as criminals. You're dealing with people who look very normal, who started with very normal careers, and then who edged over the line, and all of a sudden, they're in jail."

Like Harvard, George Washington University in Washington, D.C. is beginning to rethink the way it deals with the issue of ethics. Faculty members have resurrected a course on ethics that was dropped a few years ago, because very few students chose to take it. Officials say the low enrollment may have been because many students are reimbursed by employers for the cost of MBA classes, and employers weren't willing to pay for non-required courses in ethics. The revived course still won't be a requirement, but Jeff Lenn, who taught the earlier course and chairs the school's business curriculum committee, says bringing it back is a step in the right direction.

Dr. Lenn says hopes to convince students that ethical behavior is just as important to business as mathematical and research skills are. He points out that American corporations depend on investments for their capital, and says people won't invest in corporations, if they don't feel they can trust executives.

"Business itself is built on a philosophy that self-interest is OK," he said. "And once you elevate self-interest into a position of prominence, it can lead to greed. The system itself will only work if there's a limitation. So if I pursue my self interest to the point that I deny you the pursuit of self interest, then our system simply doesn't work."

But while no one is suggesting that ethical discussions are unimportant in business school, some business professors believe it's impossible to teach MBA students to engage in ethical behavior. Patrick Rogers, who teaches at North Carolina Agricultural and Technical College, says schools shouldn't and can't be held responsible for scandals like the ones making headlines now.

"There are just bad people sometimes that make really bad decisions," he said. "There are people that are just simply self-interested. And to take a corporate executive who's fifty-five years old, who maybe wrapped up and finished their MBA twenty-five years ago, and to suggest that had Harvard School of Business done a better job of teaching corporate ethics, they wouldn't have made these lousy, stinking decisions, just doesn't seem very logical to me at all."

Harvard officials say they agree with that assessment. But they are still considering making some changes in their ethics curriculum. For his part, Jeff Lenn of George Washington University says he's looking forward to seeing whether, in view of the scandals, there will be more interest this year than there has been in the past in a non-required course in ethics.