Ethics – Are Business Schools the Source or Solution of Ethics Education Problems? The Process of Formulating and Adopting Separate Faculty and Student Codes of Ethics

Abstract

In 1789, the scion of business economics, Adam Smith, presciently observed in his “Wealth of Nations” “The directors of companies,
however, being the managers of other people’s money than their own, it cannot well be expected, that they should watch over it with the same
anxious vigilance [as owners] ….Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such
a company.”1 How might this relate to the present? Former Federal Reserve Chairman Paul Volcker has observed, “I was struck not too long ago
when a leading figure on Wall Street said to me, ‘What do you expect when for 20 or 30 years all our best business schools have been teaching the
ideology that the stock price is the only thing that counts.’ And it wasn’t to stretch the corollary far to say anything you can do to get the stock
price up is appropriate.” 2 If our best business schools are teaching that this is appropriate behavior, then it is not hard to see why business ethics
has become a burnt offering on the altar of stock prices among other economic misdeeds.
The Aspen Institute’s executive director of the Business and Society program, Judith Samuelson relates:
Today’s business schools are under the microscope of public opinion. Many critics, including business
schools’ own faculty, are calling for reform. A generation from now, will we be able to look back and say
we were successful at making real changes? From my perspective, this is the acid test: In a world that is
crying out for innovative and principled leaders, can they and will they come from business?3
Aside from a cornucopia of media reports of corporate ethical misconduct, evidence of mounting public opinion is reflected in polls, such
as one recently conducted by the Marist College Institute for Public Opinion finding “that most Americans—and two-thirds of executives—give
corporate America failing grades for honesty and ethics.” This same poll also reported that 76 percent of the U.S. public “believe that corporate
America’s moral compass is pointed in the wrong direction.” The poll hit home a point that should draw the attention by business faculty,
notably that “a majority of Americans, including two-thirds of executives, gave the financial and investment industries a grade of ‘D’ or ‘F’ in
ethical matters.” Asked to explain “the primary factors that drive the business decisions of executives, more than 90 percent of Americans—and
executives themselves—said that personal career advancement and personal financial gain rank equally high with corporate advantage.”4
In partial response to ethical consternation in business education, research subsequently led to the development of separate codes of
ethics by the students, faculty, and administrators of the University of South Dakota Beacom School of Business. This article identifies the
ethical code formation and adoption process that ultimately can lead to creation of aspirational student and faculty codes of ethics.