UC Irvine Business Ethics Class: In a Word, Enron

Over the past two decades, business schools have increasingly emphasized ethics as part of the curriculum. But professors from a number of major business schools say the host of scandals over that same period suggests that schools should do more to moderate a culture in which profits and stock prices are valued above all.

"Business schools have trailed the development of the business culture in the [United States] rather than led it," said Kirk O. Hanson, executive director of the Markkula Center for Applied Ethics at Santa Clara University. "Business schools are creatures of the dominant culture rather than creatures of a better culture."

Hanson said ethics classes were introduced in major U.S. business schools in the 1970s after revelations of illegal contributions to Richard M. Nixon's 1972 presidential campaign and later of U.S. companies paying bribes overseas to get business. Since then, the number of professors teaching ethics in business schools has climbed from 20 to more than 700.

But in the meantime, the country has seen one business scandal after another--from insider trading to the savings and loan debacle, starring characters from junk bond king Michael Milken to Enron Chief Executive Kenneth Lay.

While business schools must teach ethics to be accredited, it doesn't have to be a separate course, and it's often pushed to the side.

Ben Hermalin, interim dean of UC Berkeley's Haas School of Business, said his is one of the few schools that requires MBA students to take an ethics class.

Success and Setbacks

And W. Michael Hoffman, executive director of the Center for Business Ethics at Bentley College in Massachusetts, said his college is one of the few in the country where students can choose a specialty in business ethics. Hoffman said he couldn't convince faculty members that ethics should be a required course.

"Everybody liked the idea, but nobody wanted to give up their part of the academic pie to do it," he said. Instead, ethics is folded into other courses.

The professors need ethics training before integrating it into their courses, said Hoffman, who also founded the Ethics Officers Assn., a group of more than 800 such corporate specialists.