A. David Austill, JD, LLM, MBA, CPA
Professor of Accounting & Bus. Law
Union University
Jackson, Tennessee, U.S.A.
Why is teaching ethics necessary?
 Countrywide Financial—Mortgage lending
 Large banks dealing in mortgage-based derivatives
 Enron
 WorldCom
 Parmalat
 Union Carbide--Bhophol
 Runaway plants
 Securities fraud
 Invasion of privacy (employee and customer)
Josephson Institute of Ethics
 Institute issues biennial reports on the ethics of American
high school students. The 2008 report of 29,760 students
revealed:
 64% cheated on an exam (38% two or more times)
 36% used Internet to plagiarize and assignment
 42% lied to save money
 30% stole something from a store (20% from a friend)
 Cinicism—93% were satisfied with their personal ethics and
character and 77% affirmed “that when it comes to doing
what is right, I am better than most people I know.”
 Generally, results were getting worse.
Josephson Institute Continued
 2009 online study of 7,000 persons to assess adult behavior
regarding common issues of integrity and to determine the
impact of age, cynical attitudes about honesty, and high school
character. Conclusions were:
 Age matters: Younger generations are significantly more likely to
engage in dishonest conduct than those in older cohorts.
 Attitude matters: Regardless of age, people who believe lying and
cheating are a necessary part of success (cynics)are more likely to lie
and cheat.
 High school character matters: Regardless of current age, people
who cheated on exams in high school two or more times are
consideraly more likely to be dishonest later in life.
 Bottom line—start ethics training early to build character to last
a lifetime. This has a direct application to ethics education in
business.
Academic Dishonesty of Graduate
Business Students
 McCabe, Butterfield and Trevino found that over half
of the surveyed graduate business students admitted
to cheating during the courses of their programs.
Business Deans’ View of Integrity
and Ethics Training
 Jeffrey Garten (Yale): “…[T]he crowd is often wrong.
The height of courage and integrity is to look at your
competititon and ask whether you really want to be
swimming in that same stream.”
Views Continued
 Steven Jones (North Carolina at Chapel Hill): “…But business
people know through their experiences, and academics through
their research, that integrity is the essential foundation of a
successful career. If we are not doing our best to instill it and
nurture it, then we are not servicing our students or community.
If business schools want to be at the forefront of keeping
business ethical, we have to take action ourselves….We must
expose students to real-life examples of complex corporate
dilemmas, including many where there is no “right’ answer, to
help them identify the ethical challenges they will face in
corporate life. The key is to arm them with the skills to identify
critical ethical issues and to use a thoughtful, fair approach to
resolve them. This method will give students useful tools while
reinforcing the vital point that doing the right thing matters.
Debate Over Teaching Ethics
 Some deans and faculty believe there is no role in
teaching ethics to business students:
 Adult students have already formed their views on
ethics.
 Goes against the mission to teach business students how
to create shareholder value.
 Timothy Flynn, CEO of KPMG LLP, in response to the
question about whether integrity is a teachable trait:
 You have to use situational learning to teach ethics.
Three things contribute to ethical lapses: (1)
rationalization, (2) implied permission, and (3) fear.
 “You are the one who will set your compass. Once you
lose integrity, it’s almost impossible to get it back—but
it’s in your hands to retain it.”
Attitudes of MBA Students
 CarringtonCrisp study of 700 aspiring MBA’s in 91
countries revealed that ethics ranked in the bottom four
out of 30 factors in choosing business schools. Studying
ethics is not important.
 Only 5% thought it would be important to learn specifics
about ethics as part of their MBA education.
 They prefer to have ethics embedded in all courses.
 Compare to the GMAC study where:
 81% of respondents said the recent (2002) corporate scandals
created an atmosphere of distrust of corporations
 Regarding job search behavior, 64% said they were more
likely to accept a job offer from a reputable company versus
one under investigation
Ethics Training for Accountants
 State boards of accountancy generally require
continuing professional ethics credit.
 Ethics are more important to the profession but
universities have been less likely to offer quality ethics
training to accountants.
 Texas requires candidates for the CPA Exam to have
completed a 3-credit hour college course in accounting
ethics.
AACSB International Approach
 Association to Advance Collegiate Schools of Business
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International
Mission is to advance quality management education
worldwide through accreditation and thought
leadership.
Focuses on larger business programs
Requires training in business ethics
As of July 2010, 596 member institutions hold AACSB
Accreditation. Overall, 37 countries are represented by
AACSB-accredited schools.
AACSB-Accredited Schools
• 47 institutions have undergraduate programs only (8%
of accredited members)
• 52 institutions have graduate programs only (9% of
accredited members)
• 173 institutions have AACSB’s additional accounting
accreditation
• 497 institutions have both graduate and undergraduate
programs
(83% of accredited members)
Approaches to Teaching Ethics
 Small church-affiliated business schools have focused
on ethics from a human perspective.
 Corporate social responsibility has been taught in
MBA programs for over three decades.
 AACSB allows business schools to either teach a course
in business ethics or to incorporate ethics into the
business courses (e.g., marketing, management,
finance, etc.)
Continued
 Within most business programs, a chapter on ethics is
included in the first law course (usually, legal
environment of business).
 The LEB course then highlights ethical issues
throughout the course.
 This creates a cramped course with too much material
and not enough time devoted to ethics.
Global MBA Graduate Survey 2003
 GMAC survey method– 75 U.S. schools, 3225 respondents,
median age 29
 Methods used to incorporate ethics:
 Speakers
 Required core course(s)
56%
46%
 Integrated case studies w/n some courses
44%
40%
 Referred to in most courses
 Elective course(s)
40%
 Workshops
26%
18%
 Integrated case studies w/n most courses
 Outside assignments/projects
17%
 MBA students do not prefer stand alone ethics courses.
 They prefer that ethics be incorporated into other
business courses.
Institute for Corporate Ethics Study
 2006 survey of the Society for Business Ethics
members: 63 universities, 12 outside U.S.
 Findings:
 Requiring ethics course—52; ethics integrated into
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courses—41
31 had specially-focused ethics courses
Use of case studies (95%--integrated and 90%--stand
alone)
Requiring philosophy/ethical theory readings (68% and
73%, respect.)
Use of speakers (76% and 40%, respectively)
Findings Continued
 When ethics education is embedded in other business
courses, respondents felt the program was more effective
(76% either excellent or good versus only 34% of those
using stand alone course)
 In recent 3-5 year period
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there was growth in ethics training
more ethics courses are taught now
the number of ethics faculty have grown
Non-ethics teaching faculty have a more positive attitude toward
ethics education
 Generally respondents from programs using an integrated
approach were more positive than those respondents from
programs using an ethics course.
Swanson and Fisher—Advancing
Business Ethics Education
 Authors do not have a favorable view toward business
ethics education today based on:
 Failure of AACSB to require an ethics course
 Fixation on behavioral models derived from neoclassical
economics orthodoxy that emphasizes rational self-interest at
the expense of other-regarding behavior.
 Dean and faculty indifference, skepticism or opposition to
changing attitudes of adult students.
 Business faculty have a vested interest in retaining their
courses using conventional topics in curriculum.
 Agency-based conception of professional responsibility rather
than self-discovery.
What Should Be the Emphasis?
 Corporate social responsibility versus the individual ethics
versus sustainability
 Domènec Melé, Chair of Economics and Ethics, University
of Navarra, Barcelona, Spain, is a proponent of teaching
virtue ethics to managers:
 “…Given that almost every business decision affects people,
every decision has an ethical dimension. Therefore, ethics
should be covered in practically every course.:
 “…Not all faculty stress to their students the role that virtues
play in the lives of business managers. Yet I believe more
faculty need to follow this path if we want to increase the
ethical standards of our business students and, by extension,
our business leaders.”
Institute for Corporate Ethics View
 Diane Swanson (Kansas State): Recommends the
following three-part benchmark standard for business
ethics education:
 A foundational ethics course is necessary.
 Efforts to integrate ethics across the curriculum should
be a goal.
 Extra-curricular initiatives, such as offering service
learning projects, are highly desirable.
Recommended Approach
 Teach a stand alone business ethics course.
 Have the course taught by someone with a business
background but with an interest in teaching the
course.
 Make the course case oriented:
 Bring the real world into the classroom through cases
 Train the students in the mold of Aristotle—moral
growth through habit
 Remember, morality is not the same as lack of
opportunity.
Continued
 Cover the philosophical foundations/theories of ethics
as they relate to business.
 Provides for enhanced ethics training.
 Do not avoid religion as an element of moral duty.
 Cover several major religions for comparative purposes.
 Avoid utilitarianism as a one-size-fits-all approach to
analyzing ethical problems.
Continued
 Focus on personal character in ethical
decisionmaking:
 Virtue ethics is important
 Have a strong cultural or global component to the
course.
 Make the course fun and interesting:
 Classical works, movies, stories, anecdotes