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Re-thinking Ethics Education in Business Schools in the post-Financial Crisis Epoch: An Icelandic Perspective
Abstract
This chapter deals with a multitude of perspectives on ethics education in business schools and provides a compelling example of Iceland, where unethical behavior of its business elite and the total disregard for commonly accepted ethical rules of conducting business led to unsustainable expansion of the financial industry and its subsequent collapse in the fall of 2008. The authors examine whether ethics education or more precisely, the lack thereof, played any role in this financial collapse, and whether business schools should contribute to molding moral characters of their students, who will ultimately become the next generation of business leaders. Here are a few important highlights of what has been found. First, a consensus seems to have been reached that business schools have an important role in developing the moral character of their students, something they haven't practiced sufficiently according to managers. Second, business schools ought to take a more direct part in a society's discourse on business ethics and perhaps be in the forefront of these discussions. Third, there is a clear need for not only asking business schools to contribute to molding the moral character of students but to reshaping that of practicing managers through re-training and continuous education.
Purpose
The purpose of this paper is to examine the extreme case of the Icelandic banking crisis in relation to critical governance issues at governmental, industry and civil society levels.
Design/methodology/approach
This is a case study of the Icelandic banking collapse in 2008.
Findings
The examination of governance failures within the Icelandic banking system reveals that government institutions need to find a balance between entrepreneurial growth, risk exposure and sustainable societal development. A euphoric attitude of laissez‐faire, where risk issues and issues of balanced development are largely ignored, creates challenges for sustainable banking. The findings suggest that achieving the necessary balance requires stressing governance issues on three levels; at the government level; at the industry level; and at the civil society level.
Practical implications
The paper illustrates why some of the corporate governance challenges facing sustainable banking should be addressed at multiple levels. Government should strive for realistic information and evaluation of societal risks; government should implement adequate regulatory frameworks; the finance industry itself should have effective self‐regulatory procedures and mechanisms; and, from a civil society point of view, the public at large should have realistic expectations and be adequately alerted as to the potential risks of governance failure.
Originality/value
The paper examines interactions between governance failures at different levels and has important implications for governance and policy makers, particularly those faced with re‐structuring national financial industries.
This article examines the effects on national homicide rates of political efforts to insulate personal well-being from market
forces. Drawing upon recent work by Esping-Andersen and the institutional-anomie theory of crime, we hypothesize that levels
of homicide will vary inversely with the “decommodification of labor.” We develop a measure of decommodification based on
levels and patterns of welfare expenditures and include this measure in a multivariate, cross-national analysis of homicide
rates. The results support our hypothesis and lend credibility to the institutional-anomie perspective. The degree of decommodification
is negatively related to homicide rates, net of controls for other characteristics of nations.
This book is a sequel to Advancing Business Ethics Education in the Ethics in Practice IAP book series. The focus on assessment in this second book is a timely response to the urgent search among business schools for ways to teach and assess ethics at a time when the public's faith in corporations and business schools has been undermined greatly by the failure of both to respond to widespread corruption and scandals in the business sector. Although no one expects business education alone to resolve these problems, the distinguished scholars represented in this book advocate that business schools should at least do their part by exposing their students to decision models that incorporate ethical dimensions on behalf of corporate stakeholders and society at large. As the book's title conveys, it is then important to assess key learning objectives to insure that business students graduate knowing ethics fundamentals and armed with the ability to recognize ethical dilemmas and possible solutions during the course of their careers. This book will speak to all who are interested in accountability for business ethics education, especially business school deans, university administrators, faculty members, students, and prospective employers. This audience will find that the enterprise of assessing business ethics education is advanced in three ways. First, the book functions as a venue for distinguished scholars to share the innovative ways that they are assessing ethics coverage in courses and degree programs. Second, these authors identify what needs to be assessed and the means for doing so. Third, the book serves not only as a guide to assessment, but also as a platform for expanding and improving ethics coverage in business schools. Moreover, an important take away for readers is the provision of a simple formula, first advocated by Diane L. Swanson and William C. Frederick (University of Pittsburgh) in 2005, for delivering ethics education that minimizes assessment errors. By following this formula, business schools can provide assurances that ethics will not be assessed as being sufficient when it is woefully inadequate or even missing in the curriculum and that it cannot be distorted, diluted, or trivialized by uninformed coverage and still pass inspection. Avoiding these assessment errors is critical in an educational environment in which weak accrediting standards for ethics go hand in hand with spotty, uniformed coverage that would not be tolerated for other business disciplines.
The article focuses on the creation of ethical sentinels in business schools. Particular attention is given to the ethics of students, the choices confronting business educators, as well as the significance of shaping student world views and interests. The author argues that educators are following the implicit orders of powerful interests in creating student world views to fit those who control the resources. He continues by stating that students are taught on behalf of organizations and socialized to think and act as organizations want. Topics include ethical students as organizational priorities, a realistic interpretation of what educators should do, the three ethical sentinels, and the reality of educators' responsibilities.
While the topics of business ethics and social responsibility education have received much attention in scholarly and pedagogical literature (although less in the pedagogical literature), the authors argue that the core teaching problem has not been discussed, that is, the worldview underpinning all of management education. The authors discuss this worldview, propose a more ethics-friendly worldview, and provide some considerations of its implication.
The saga of Iceland’s largest banks begins with deregulation and privatization. Although it is incorrect to blame these two factors entirely for the subsequent collapse, the liberalization process of financial markets and capital market integration in the 1990s (which followed Iceland’s membership of the EEA (European Economic Area)), created an environment where the Icelandic financial service industry could thrive and enjoy the fruits of its risk-taking and an adventurous business culture.
The amount of attention given to ethics in the curricula of MBA programs varies widely. In this study we utilize both neoinstitutional theory and an internal view of power and politics to investigate the factors - from inside and outside the business school - that influence whether MBA programs attend to ethics by including ethics courses in their curricula. Our results from analysis of over 200 full-time MBA programs reveal support for institutional influences, such as the positive influence of a program's prestige and religious affiliation. Findings also reveal power and political effects, such that in business schools with a relatively larger percentage of faculty from the marketing and management areas, the amount of attention to ethics in the MBA curriculum is greater. Implications for future research and for management education are discussed.
Although BEQ is celebrating its tenth anniversary, business ethics is considerably older than that. Business ethics has been a staple of Catholic thinking on business for most of this century at least. For most philosophers, however, business ethics is about twenty-five years old. Philosophers became active in the field in the mid-1970s. I have chosen as my topic for this essay the role that the discipline of philosophy could play in the future.
An interactionist model of ethical decision making in organizations is proposed. The model combines individual variables (moral development, etc.) with situational variables to explain and predict the ethical decision-making behavior of individuals in organizations. A major component of the model is based on Kohlberg's cognitive moral development model which provides the construct definition, measurement tools, and theory base to guide future business ethics research. Research propositions are offered and practical implications are discussed.