Ethics Course for Masters of Business Administration

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Table of Contents

Abstract
Introduction
The importance of ethics courses to MBA students
Case study 1: The Enron case
Case study 2: The Volkswagen Scandal
Conclusion
Works Cited
Annotated Bibliography

Abstract

The inclusion or exclusion of courses in ethics in MBA programs has elicited a controversial debate among scholars. One side argues that the current MBA programs should include ethics units. However, some experts dispute the effectiveness of such training by claiming that it would be of minimal importance since ethical conduct depends on the personality of the individual. Cases revolving around employee misconduct in the workplace have grown tremendously over the past few decades, thus, prompting employers and other business experts to recommend the inclusion of ethical studies in business courses.

Some institutions have heeded the call, and they are now offering courses on ethics to MBA students as part of the curriculum. Nevertheless, some institutions of higher learning have ignored the importance of offering ethics courses to business students. This paper examines the importance of offering ethics courses to MBA students and substantiates the argument that such an endeavor would be beneficial to the future of global businesses.

Introduction

The importance of introducing ethics courses in the MBA curriculum has elicited heated debate amongst scholars. The proponents of such integration argue that teaching business ethics to the students taking MBA programs could go a long way in averting business malpractices that are currently evident in the contemporary business world (O’Boyle 287). Unethical businesses incur huge losses in terms of fines and loss of contracts in the long-term as campaigns against unethical firms intensify.

However, critics dispute the viability of integrating business ethics courses in MBA programs. The critics argue that most cases involving business malpractices involve people influenced by the organization’s culture to make the wrong decisions. Based on the mentioned view, trying to change people who do not follow ethical business practices may not have any effect on the extirpation of unethical behaviors. The inclusion of ethics courses in MBA studies addresses the overwhelming ethical issues in the contemporary business environment. Offering ethical courses to MBA students is essential since it helps in the creation of ethical individuals in the business environment.

The importance of ethics courses to MBA students

One of the important reasons for offering ethics courses to MBA students is that it may increase their employability in the long-term. Currently, most businesses are going global with the intent of enhancing their profitability and market share. The greatest constraint for multinational companies in the ethical drawbacks emerging from cultural and national differentials between customers from the parent company and the subsidiaries.

To succeed in their globalization strategies, companies are currently hiring and retaining ethically competent individuals. Some companies have been caught in crises as they try to implement their globalization agendas owing to ethical dilemmas. It is important to note that consumers are empowered to shape the policies of a company to fit the interests of the concerned populace. This goal is achieved by pressurizing the concerned company to act ethically. One of the ways that companies can ensure ethical practices is to employ individuals who have learned about ethics during their MBA studies.

Consumers may boycott an organization’s products to force it to respect the relevant ethical provisions. Such boycotts may harm the profits of the concerned company both in the long-term, thus, leading to its closure and loss of jobs. A good example is that of Pepsi Company. In the mentioned case, the US customers boycotted the company’s products to demonstrate their displeasure for its violation of the employees’ rights in its Burma subsidiary.

The firm entered Burma to exploit the cheap labor provided by the country’s citizens. The military gave the company a monopoly in exchange for funds to run the government. However, it left the country in 1986 following criticism and boycott of its products by the global citizens (Soule, Swaminathan, and Tihanyi 1048). The company was in support of the authoritarian military rule, which was evident in the country at the time, and this aspect explains why consumers boycotted its products.

The company’s employees had great business skills, but they lacked the right ethical knowledge, which prompted them to make wrongful decisions that led to the ultimate failure of Pepsi’s Burma subsidiary. Such cases are forcing multinational companies to hire employees who demonstrate ethical understanding to avert instances of boycotts or court cases related to unethical practices.

Besides, it is important to include ethics courses in the MBA programs to facilitate the ascension of individuals to leadership positions in the workplace. The earning of the MBA degree increases the chances of an individual being considered for leadership positions in different firms because merit-based promotion is subject to experience and academic credentials. With the current business environment that requires leaders to possess high integrity values, the institutions of higher learning must integrate ethical lessons to the basic MBA programs. Most MBA students today are earning managerial positions in big multinational companies.

Such leadership roles require ethical professionals to shield the company from legal costs and losses occurring due to unnecessary malpractices (Huhn 530). Currently, the campaigns for the ethical business environment are intensifying, thus, calling for ethically knowledgeable leaders.

Most countries including the US have strict legislation governing the conduct of the firms operating either locally or internationally. In most cases, non-compliance with the country’s ethical principles leads to court cases against the concerned company. Such cases, if ruled against the company, may cause huge fines or even liquidation in cases where the violation is severe. The fines will lead to reduced profits for the concerned firm, thus, violating the company’s main objective of maximizing its net gains.

This aspect will be against the shareholders’ interests and lead to negative publicity. The costs may still be incurred even if the case is not successful since the company shall have to spend a substantial amount of money trying to defend itself. Negative publicity may affect the firm’s profitability both in the short-term and in the long-term. Therefore, companies must avoid unethical behaviors if they are to achieve perpetuity and increased shareholders’ value in the long-term. One of the steps that the contemporary businesses are taking to protect themselves from unnecessary expenditures coming from unethical conduct is to hire employees and leaders, who can observe ethical business practices.

Lastly, the inclusion of an ethics course in the MBA program is important since it allows students to acquire ethical skills that may help change the current image of business leaders (Romius, Thompson, and Thompson 190).

The success of ethical business practices in any organization depends largely on the leadership. In the recent past, the business world has recorded an increase in the number of companies that are forced into liquidation due to unethical business practices. In most cases, such unethical conducts revolve around the employees of the firm, and they often result in huge losses. For instance, the MBA community conceded that its failure to teach business ethics to MBA students was largely responsible for the 2008 financial meltdown that occurred mainly due to ethical malpractices in some organizations (O’Boyle 291).

This indebtedness by the MBA community led to the creation of the famous MBA oath, which guides such students on how to conduct their affairs professionally and ethically. Besides, the public today is increasingly interested in dealing with ethical firms owing to the intensifying campaigns against unethical business practices. In light of this understanding, institutions of higher learning should produce ethically competent employees to facilitate the proliferation of a good public image for global businesses. Ethical companies tend to have positive publicity amongst the customers. The favorable publicity may lead to an increase in the number of customers, thus, leading to increased revenue.

The increase in revenues will then lead to the profitability of the firm. Therefore, teachings ethics at the MBA level will empower the students to implement ethical business practices once they become leaders in different organizations, which increases profitability. This aspect will change the wrong perspective that people have concerning the certain organization.

Case study 1: The Enron case

Enron was an energy supplying company located in the United States. The company was incorporated in 1985 through a merger agreement between Houston Natural Gas and Omaha-based Inter North companies. Since its formation, the company grew tremendously to become the largest supplier of gas in the region. However, the company lost its popularity as the world’s supplier of natural gas following huge losses coming from wrong decisions made by its managers, and it was forced into bankruptcy in 2001. One of the reasons that led to the fall of Enron was fraudulent acts by the executives, which caused the company huge losses.

The management colluded with Andersen, the company’s auditors, to defraud the firm. The company’s profits were estimated to cause an upshot of the firm’s market value of its shares in the stock exchange.

The managers offered huge salaries to its employees to prevent whistleblowing that would lead to the disclosure of the fraud to the firm’s stakeholders. Besides, auditors received huge amounts of money to issue positive reports on the company’s affairs. Such big salaries added to the cost of the company and reduced the profits, which led to its fall. The management acted unethically, and its main aim was to defraud investors.

Employees who acted in a manner that did not support the organization’s culture in place at the time were subject to firing. It is alleged that the company replaced 15% of its employees each year, and thus, employees were forced to act according to the management’s directives as a way of gaining their job security. The unethical conduct by the management and employees of the company could be attributed to the lack of ethical training, thus, justifying the need to introduce ethics courses in the MBA curriculum.

Case study 2: The Volkswagen Scandal

By the end of June 2015, Volkswagen was the leading car producer globally after overtaking Toyota, the former market leader. However, in September the same year, the Germany carmaker was accused of unethical business practices after it emerged that it had devised a way of manipulating emission tests. The US Environmental Protection Agency (EPA) revealed that Volkswagen had installed a certain device in its diesel engines to ensure that emission tests were in line with the US requirements (Lane 32).

However, the cars would emit almost forty times more of the allowed nitrogen oxide into the US environment. Therefore, this giant carmaker became the center of speculation and investigations across the world, which affected its sales. The company’s stock value fell by over 30 percent coupled with a loss of 2.5 billion euros, which was the first recorded loss in fifteen years (Lane 33). The CEO was forced to resign coupled with the suspension of other top-tier managers. This scandal revolves around ethical business practices. The company’s management should have observed ethics in its operations to avoid such losses in both revenue and reputation. Perhaps if Volkswagen had insisted on hiring and promoting ethical leaders, the scandal would have been averted. This assertion underscores the need for including ethics in MBA courses.

Conclusion

The campaigns for companies to embrace ethics have characterized the contemporary business environment with most employers emphasizing ethical practices in the workplace. MBA holders make up a great percentage of the current global workforce, and they are expected to hold high ethical values. However, since the MBA holders have dominated the global workforce with the expectation that they will propel businesses towards ethical practices, cases of unethical conduct by some companies have exhibited an increasing trend. This aspect raises questions regarding the effectiveness of the current MBA training programs in producing ethical employees.

Therefore, introducing ethics courses to the MBA curriculum would be of many benefits. Firstly, it would increase the future employability of such students. Secondly, it would facilitate the promotion of MBA holders to leadership positions in their workplaces. Lastly, such courses help avert the current customers’ perceptions regarding business leaders coupled with increasing the firms’ profitability. Therefore, it suffices to conclude that MBA ethics affects the business world significantly as explored in this paper.

Works Cited

Huhn, Mathias. “You Reap What You Sow: How MBA Programs Undermine Ethics.” Journal of Business Ethics 121.2 (2014): 527-541. Print.

Lane, Eric. “Volkswagen and the High-tech Greenwash.” European Journal of Risk Regulation 7.1 (2016): 32-34. Print.

O’Boyle, Edward. “Anderson and Escher’s The MBA Oath: Review Essay.” Journal of Business Ethics 101.1 (2011): 285-295. Print.

Romius, Tamar, Randall Thompson, and Elizabeth Thompson. “Ethics Training and Workplace Ethical Decisions of MBA Professionals.” Journal of Education and Learning 5.1 (2016): 190-197. Print.

Soule, Sarah, Anand Swaminathan, and Laszlo Tihanyi. “The Diffusion of Foreign Divestment from Burma.” Strategic Management Journal 35.7 (2014): 1032-52. Print.

Annotated Bibliography

Huhn, Mathias. “You Reap What You Sow: How MBA Programs Undermine Ethics.” Journal of Business Ethics 121.2 (2014): 527-541. Print.

The author of this article is a Professor in Logistics and Business Management at the Kühne Logistics University in Hamburg, Germany. Huhn argues that most MBA programs have underlying pedagogy and epistemological assumptions that discourage managers and business leaders from dealing with ethics in the workplace (527). Huhn’s work is a scholarly journal article, which appeared in the Journal of Business Ethics in 2012. The author adopts the qualitative approach to this study whereby he samples over 100 documented scholarly references to draw conclusions and back his claims. The audience for this article includes students and instructors studying and teaching MBA courses respectively coupled with curriculum developers.

Lane, Eric. “Volkswagen and the High-tech Greenwash.” European Journal of Risk Regulation 7.1 (2016): 32-34. Print.

The author is an experienced patent and trademark attorney in San Diego on top of being the Principal at Green Patent Law in the same city. Lane explores how Volkswagen used sophisticated software to cheat emission tests in its diesel engines (33). This source is a journal article, and it appeared in the European Journal of Risk Regulation in 2016. The author uses information from different authoritative bodies like the Environment Protection Agency (EPA). The audience for the article is anyone interested in knowing what exactly happened to the Volkswagen scandal and the idea of greenwashing in general.

O’Boyle, Edward. Anderson and Escher’s The MBA Oath: Review Essay. Journal of Business Ethics 101.1 (2011): 285-295. Print.

The author is a Senior Research Associate currently working with the Mayo Research Institute. O’Boyle highlights the importance of teaching business ethics in MBA programs by reviewing the MBA oath, which was occasioned by the 2008 financial crisis. This source is a scholarly journal article in the 2011 edition of the Journal of Business Ethics. The author reviews a book on the MBA oath and cites experts in the field of business ethics. This article targets MBA students interested in learning how to execute their duties professionally and ethically.

Romius, Tamar, Randall Thompson, and Elizabeth Thompson. “Ethics Training and Workplace Ethical Decisions of MBA Professionals.” Journal of Education and Learning 5.1 (2016): 190-197. Print.

The authors are Associate Professors in the School of Advanced Studies at the University of Phoenix. According to Romius, Thompson, and Thompson, most managers are not prepared to handle ethical issues in the workplace, which necessitates the need for the inclusion of ethics courses in the MBA programs (190). This source is a scholarly journal article, and it was published in the Journal of Education and Learning in 2016. The authors used quantitative research methods, and thus, they have qualified their arguments using statistics and quoting experts in the field. The target audience for this article includes MBA students, employers, and curriculum developers.

Soule, Sarah, Anand Swaminathan, and Laszlo Tihanyi. “The diffusion of foreign divestment from Burma.” Strategic Management Journal 35.7 (2014): 1032-52. Print.

Soule and Swaminathan are Professors at the Stanford Graduate School and the Goizueta Business School, Emory University respectively while Tihanyi is a Professor in Business Management at the Mays Business School, Texas A&M University. The authors argue that the operations of subsidiaries of multinational companies are subject to the characteristics of their home country, and they use the Pepsi example in Burma (Soule, Swaminathan, and Tihanyi 1032). The reference is a scholarly journal, which appeared in the Strategic Management Journal in 2014. The authors use statistics and cite experts in the field of multinational companies’ operations. The target audience is students and anyone interested in learning foreign divestment with reference to the Burma case.

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