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Journal of Business Ethics
ISSN 0167-4544
J Bus Ethics
DOI 10.1007/s10551-013-1755-6
The Role of Business Schools in Ethics
Education in Iceland: The Managers’
Perspective
Throstur Olaf Sigurjonsson, Vlad
Vaiman & Audur Arna Arnardottir
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The Role of Business Schools in Ethics Education in Iceland:
The Managers’ Perspective
Throstur Olaf Sigurjonsson •Vlad Vaiman •
Audur Arna Arnardottir
Received: 25 September 2012 / Accepted: 11 May 2013
ÓSpringer Science+Business Media Dordrecht 2013
Abstract This article explores managers’ views on various
ways in which business schools can contribute to providing
solid ethics education to their students, who will ultimately
become the next generation of business leaders. One thousand
top level managers of Icelandic firms were approached and
asked a number of questions aimed at establishing their view
on the relationship between ethics education and the role of
business schools in forming and developing business ethics
education. Icelandic businesses were badly hurt by the 2008
crisis, and therefore Iceland provides an interesting founda-
tion for an empirical study of this sort as the aftermath of the
crisis has encouraged managers to consciously reflect on the
way their business was and should be conducted. Based on the
results of the survey, a few main themes have developed. First,
it appears that according to practicing managers, business
schools should not be held responsible for employees’
unethical behavior. Nevertheless, managers believe that
business schools should assist future employees in under-
standing ethics by including business ethics in teaching cur-
ricula. Second, managers believe that the workplace is not
where ethics are learned, while also insisting that former
students should already have strong ethical standards when
entering the workplace. Third, managers call for business
schools not only to contribute more to influencing students’
ethical standards, but also to reshape the knowledge and
capabilities of practicing managers through re-training and
continuous education. Based on the results of the study, the
article also offers some recommendations on how to begin
reformulating the approach to business ethics education in
Iceland, and perhaps elsewhere.
Keywords Ethics Higher education Business schools
Iceland
Introduction
This article attempts to add to the multitude of perspectives
on ethics education in business schools. We will explore
different ways in which business schools can contribute to
providing a solid ethics education to their students from the
viewpoint of managers, whose perspective is rarely con-
sidered in the literature. Finally, we will offer some rec-
ommendations on how to begin reformulating the approach
to teaching business ethics in tertiary education.
In order to address these issues, one thousand senior
managers of Icelandic firms were approached, and asked a
number of questions aimed at establishing their view on the
relationship between ethics education and the role of
business schools in forming and developing business ethics
education. Of course, both individually and as a group,
managers cannot necessarily be seen as an ultimate
authority on either ethics or business education. In addi-
tion, it is also acknowledged that there are many different
stakeholders in business education whose opinions would
also be very interesting to gauge, not just managers. Nev-
ertheless, a manager’s view is important, and therefore one
of the objectives of this study is to shed some light on what
and how Icelandic managers think about ethics and busi-
ness education in general, as well as to draw conclusions
(albeit perhaps more indicative than decisive) on what
T. O. Sigurjonsson (&)V. Vaiman A. A. Arnardottir
School of Business, Reykjavik University, Reykjavik, Iceland
e-mail: throstur@ru.is
A. A. Arnardottir
e-mail: auduraa@ru.is
T. O. Sigurjonsson
Copenhagen Business School, Copenhagen, Denmark
123
J Bus Ethics
DOI 10.1007/s10551-013-1755-6
Author's personal copy
should be changed in these areas. Overall, the authors feel
that there is a clear need to address the issue of ethics from
the viewpoint of practicing managers and to see whether
there is a gap between what academics propose and what
businesses actually want and need.
The managers in this study were asked to address four
important issues that business schools have full or partial
control over, namely (a) do universities play a role in estab-
lishing and maintaining the ethical standards of students?
(b) what is lacking in the ethical standards of current business
graduates? (c) what is lacking in the attempt of business
schools to strengthen good ethics in business graduates? and
(d) how should business ethics be taught in business schools?
The literature indicates that businesses have little interest in
ethics education and not much belief in its practicality (Dyck
et al. 2011). On the other hand, the results of thissurvey show a
different attitude from businesses, which will be discussed in
later sections of this article.
Ethical Standards and the Role of Education
Ethics and Business Education
Education is a key social institution. Like the family
structure, its main function is to introduce many of the
important socialization functions, such as conveying prin-
cipal societal norms, beliefs, and traditions from one gen-
eration to another (Messner and Rosenfeld 1997). These
basic norms and beliefs normally discourage selfish con-
duct and encourage important values such as respect,
politeness, and general moral behavior. Furthermore, it is
necessary to mention that exposure to formal education
(not business education though!) should generally chal-
lenge the materialistic and individualistic values that
encourage achievement by any means possible. So, how
does this discourse relate to business education? The
answer is straightforward. By providing a comprehensive
education in management, business schools should be able
to encourage their students to champion post-materialist
values, and discourage them from engaging in ethically
suspect behaviors (Cullen et al. 2004). This is especially
important in the post-crisis period, when it has become
necessary to re-evaluate existing approaches to many
things, including formal education. Whether business
education in Iceland plays a prominent role in teaching and
encouraging ethical behavior is discussed further on.
What do the Experts Say?
Theories regarding the role of ethics in business have been
around for quite a long time, but in the past ten years the
discourse has become more common in both major
corporations and academia. These ideas range from a
complete denial of business ethics due to the perceived
fundamental unethical nature of business, to an all-
encompassing embrace of ethics in all facets of business.
However, many industry experts agree that the impact of
ethics might be limited in many organizations (Vaiman
et al. 2011; Bartlett 2003). This limited impact might be
explained by a significant gap between theory and practice
in the field of business ethics. Further to this, it can be
argued that the academic field of business ethics does not
do a good job in recognizing all the complexities of a
contemporary business organization, and therefore does not
provide both scholars and managers with adequate con-
ceptual and practical frameworks for ethical decision-
making (Bowie 1991,2000).
Amongst a variety of conceptual frameworks for ethical
decision making in organizations, a popular model by
Trevino (1986,1992) is often applied. Her model postu-
lates that ethical decision making is the product of inter-
action between individual and situational factors, such as
ego strength, field dependence, and locus of control (indi-
vidually-based moderators) and immediate job context,
organizational culture, and work characteristics (situational
moderators). Other influential models of ethical decision
making revolve around the same concept of interrelations
between individual components, such as age, gender,
nationality, education, and personality, and situational
components, such as organizational culture, industry type,
codes of conduct and behavior, and type of ethical issue at
hand (Bartlett 2003). Let us now turn our attention to
business education and its role in business ethics.
In general, the role of business education appears to be a
common subject in the bulk of literature on business ethics
(Swanson and Fisher 2011). With the recent increase of
allegations of unethical conduct by business people
involved in a variety of corporate scandals, business
schools have come under additional public scrutiny (Ferrell
et al. 2006). According to many authors, business schools
bear a degree of moral responsibility for the unethical
decisions taken by their graduates in the corporate world,
and are therefore strongly recommended to include busi-
ness ethics education in both their graduate and under-
graduate programs (Brinkmann et al. 2011; Heller and
Heller 2011; Swanson and Fisher 2008).
Warren and Tweedale (2002) argue that historical
experience should also play a significant role in manage-
ment education. Business schools need to make sure that
past events are used to inform students and guide their
actions both in the present and in the future, when they
enter the corporate world. It is the responsibility of busi-
ness educators to show students how past mistakes have
influenced both the business environment and society, so
that similar missteps are not repeated in future. If informed
T. O. Sigurjonsson et al.
123
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by historical experience, then business students will better
understand the all-encompassing issues of corporate ethics,
managerial behavior and decision making, as well as eth-
ical dilemmas that managers face in their day-to-day
activities.
However, other experts suggest that the unethical con-
duct of leaders does not necessarily stem from the lack of
ethics education in business school curricula or from erro-
neous pedagogical approaches, but evolves from the
worldview that business schools propagate. Giacalone and
Thompson (2006) argue that the basic worldview underly-
ing modern business education goes against the key prin-
ciples of ethics, such as well-being and harmony among all
organizational stakeholders, i.e., employees, investors, the
government, and society. Instead, business educators, offer
students an outdated worldview, centered on the organiza-
tion, and organizational wealth creation. In the opinion of
the authors, this perspective serves as fertile ground for the
majority of unethical conduct we have been witnessing in
recent times. Therefore, the authors contend, that before
thinking about the methodology and pedagogy of business
ethics, we should first adapt a newer, more humanistic-
oriented worldview as a basis for business education. It will
then be possible to show students the difference between the
two worldviews, and explain that only by advancing and
focusing on society’s well-being and best interests will we
be able to pull out of the ethical difficulties we are in right
now (Giacalone and Thompson 2006).
Business schools are often mentioned when people are
asked what and who may be to blame for many of the
corporate scandals, resulting in damaged reputations,
financial harm, and job losses (Dyck et al. 2011). Business
schools can deflect some of that blame by illustrating the
connection between the client ‘‘orders’’ for educated and
skilled employees and the people who graduate. However,
when looking at the bigger picture, it becomes clear that
some people believe that it is the schools’ responsibility to
produce graduates with both professional qualifications and
high ethical standards and that only by focusing on both
these components of management education will business
schools be able to both reduce organizational risks and
ensure their own long-term relevance.
International accreditation bodies, like AACSB Interna-
tional (the Association to Advance Collegiate Schools of
Business), now require business schools to pay close
attention to ethics in their curriculum. However, since these
standards do not include the exact prescription of how it
should be implemented, the approach to ethics education in
business schools varies widely (Evans et al. 2006). Some
business schools promote stand-alone courses, while others
argue for a more integrative approach, where ethics-related
issues are spread across the entire curriculum. The inte-
grative approach seems to be the most popular choice
among students, since most of them do not see a single
course as a core subject that is directly related to their
business education. Some business educators see value in
integration, since it can show the practical relevance of
ethics in a variety of business disciplines, while opponents
of this approach argue that integrating ethics into different
subjects will transfer the responsibility of its teaching to
educators who are not interested in the area, and that this
might leave students with a somewhat fragmented view of
business ethics, as opposed to a comprehensive perspective.
Other experts, like Swanson and Fisher (2008), go even
further and support combining single courses on business
ethics and integrated ethics topics spread throughout the
curriculum. Their justification for such a high concentra-
tion of ethics-related subjects is the hope that the topics
discussed will influence future business people to consider
ethical implications of their actions on the different
stakeholders of their organizations. Interestingly, there is
little consensus among business faculties about the real,
practical value of ethics education, either as a stand-alone
course or as an integrated component (Evans et al. 2006).
Furthermore, in the literature the focus appears to be
mostly on the supply of ethics education, i.e., what we
teach, how we teach and what the best teaching format is.
However, there seems to be little research regarding the
demand for ethics education. Few scholars are actively
seeking the perspective of people in business, or trying to
assess if business actually requires what universities are
attempting to achieve in ethics education. Posing questions
directly to business, regarding what it sees as lacking in
ethics education and what real-life ethical dilemmas they
face, might either reinforce current educational practices,
or inspire new methods or themes in teaching ethics. The
response of business to these questions needs to be
acknowledged by educators and incorporated in a new
focus on business ethics at universities, post-crisis. The
focus of this study is to receive feedback from managers
regarding these issues, and to make recommendations
based on their responses.
Business Managers’ Views in the Context
of the Financial Crisis
It is important to discover whether we, as business edu-
cators, can influence the ethical behavior of our society in
general and that of the business world in particular. Like
the majority of western countries, modern Iceland pos-
sesses the cultural values of achievement, individualism,
universalism, and economic materialism. According to
Cullen et al. (2004), these values tend to promote the
weakening of social ties and norms, through placing per-
sonal achievements and material possessions before the
The Role of Business Schools
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well-being of society. This, in turn, may ultimately lead to
self-serving and generally unethical decision making. In
addition to these cultural values, four social institutions
greatly influence the susceptibility of individuals to engage
in, and justify, unethical behavior. These institutions are
the economic environment, the political environment, the
dominant family structure, and the education system
(Cullen et al. 2004). Neither the political nor the economic
environment in Iceland promoted ethical behavior among
its citizens.
Moreover, it is very difficult for individuals in a society
to influence both a country’s politics and its economics in
the short term. Thus, the remaining two institutions, the
education system and the family structure, play a large role
in instilling morals and ethics in individuals. Business
schools have no influence over the dominant family
structure, so therefore we must turn our attention to edu-
cation. Cullen et al. (2004) argue that education is the most
important predictor of moral development in a society, and
concludes that formal education provides a perfect setting
to encourage students to take more interest and responsi-
bility in their society. The importance of education is also
supported by Bitros and Karayiannis (2010) who point out
that in a small society like Iceland, its size and composition
meant that the ethical health of a whole nation was in the
hands of a very few individuals whose morality and ethical
conduct were, again, significantly influenced by their
education. The education system and its responsibility to
instill ethics in business students should therefore be
scrutinized.
It is important to reiterate that business people who have
strong ethics are essential for their organizations, since they
affect both the company’s prosperity and longevity in a
positive way. However, conditions where the entire business
culture in a society does not promote ethical behavior and
perpetuates unethical behavior may have devastating results,
such as the collapse of a whole system. This is what happened
to the financial sector in Iceland in 2008. Some industry
experts agree that the unethical behavior of Icelandic busi-
ness people prior to 2008 was mostly influenced by a weak
business culture in Icelandic society (Vaiman et al. 2011).
Weak business culture is defined as the lack of tradition
and consideration toward the explicit and implicit rules that
facilitate business interactions in a society. In Iceland,
weak business culture was magnified by lack of diversity,
close personal networks in managerial relationships and
ownership, as well as heavy state interference in business
affairs (Vaiman et al. 2011; Special Investigation Com-
mission 2010; Wade 2009a). These close links between
politics and business and the disregard for business stan-
dards commonly accepted in more established business
communities made civil service attempts to regulate the
business environment impotent, making both regulation
and oversight close to impossible. This lack of supervision
led to an unsustainable expansion of Icelandic financial
institutions, which prompted the financial crisis (Sigurj-
onsson 2010).
One of the explanations for the weak business culture in
Iceland may be its lack of maturity: the business culture is
much younger than that of other European nations, since
Iceland was able to transform itself from a very poor
farming society to an advanced economy in roughly one
century (Eyjolfsdottir and Smith 1996). For that reason,
Iceland’s business culture was not as strong, open, and
transparent as that of many other developed countries.
Even by 2008, a system of checks and balances was not
fully developed, which was a serious flaw in Iceland’s
economic structure (Sigurjonsson 2011).
The weak business culture in Iceland was maintained by
business people, specifically by those who lacked ethical
standards. Their actions perpetuated the fragility of the
business culture; by apparently being successful through
demonstrating unethical behavior, they inadvertently
encouraged unethical behavior in other business people,
thus creating a vicious circle. The weakness of the Icelandic
business culture is widely acknowledged, and therefore has
created a useful opportunity to examine business ethics.
Managers, who are now more aware of ethics, were asked to
generate ideas on how business ethics can be improved, and
what role business schools could play in improving them.
The uniqueness of Iceland’s business culture should be kept
in mind when examining the conclusions and assessing
whether they would be appropriate for other countries (Si-
gurjonsson and Mixa 2011; Wade 2009b).
The focus of our empirical study is to examine whether
business schools can contribute to providing solid ethics
education to their students, who will ultimately become the
next generation of business leaders. This will be based on
the opinions of Icelandic managers (the ‘‘demand side’’),
Managers were asked to evaluate four important issues
which business schools have full or partial control over,
particularly (a) Do universities play a role in establishing
and maintaining ethical standards of students? (b) What is
lacking in the education of current business graduates,
regarding their ethical standards? (c) What is lacking in the
attempt of business schools to strengthen good ethics in
business graduates? and (d) How should business ethics be
taught in business schools?
Methodology
Participants
Empirical research was conducted by sending a survey
to 1,000 managers of Iceland’s largest organizations.
T. O. Sigurjonsson et al.
123
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The managers were asked 38 questions aimed at estab-
lishing the relationship between ethics education and the
ethical standards of business students, as well as looking
into the roles of business schools in forming and devel-
oping those standards. The questions were divided into four
major themes: business ethics in Iceland today, whether the
2008 financial crisis has led to improved business ethics in
Iceland, a self-assessment of business ethics in respon-
dents’ own firms, and the role of business schools in
teaching business ethics. The questionnaire is provided in
Appendix.
For the purposes of this article, the last theme is the most
relevant one. However, the other three themes are also of
interest since they provide managers’ views on how busi-
ness ethics has evolved since the 2008 financial crisis. In
this article, they are only used as supporting data.
The survey was conducted between December 3 and
December 17, 2010, and out of the 1,000 people
receiving the questionnaire, 419 replied; some respon-
dents did not answer all the background questions, and
therefore there are various participant numbers behind
later analysis. Women were 40 % of the respondents. The
year of graduation from business school of the partici-
pants mirrors the demand for business education over the
last decade, with 44 % of the respondents graduating in
the years 2003–2008, 16 % graduating after 2008, and
41 % before 2003. This is reaffirmed in the age distri-
bution of the respondents, where 20 % are younger than
35 years of age, 38 % are between 35 and 45 years old,
31 % are between 46 and 55 years old, and 10 % are
older than 56.
Most respondents, or 36 %, categorize themselves as
senior managers. Middle managers are 26 % of the
respondents, specialists are 23 %, and others are 11 %.
Respondents come from a variety of industries with 16 %
from finance, 2 % from accounting, 11 % from the man-
ufacturing/fishing industry, 14 % from services, 10 % from
retail, and 8 % from IT. Table 1provides an overview of
the independent variables used in this research.
Measures and Methodology
The total number of questions in the survey was 38 ques-
tions, but the number of questions related to the central
themes of this article was 16. All the questions were
measured on a 5-point Likert scale, from 1 (disagree) to 5
(agree), except when participants were asked to assess
different methods of teaching business ethics, where the
scale was 1 (very important) to 5 (not as important). In
addition, three open-ended questions supplemented ques-
tions related to the role of business schools in dissemi-
nating business ethics, and to how it should be taught.
Descriptive statistics and non-parametric testing, Mann–
Whitney and Kruskal–Wallis, were used in analyzing the
data due to violation of the assumptions of normal
distribution.
Results and Discussion
The results of the survey are discussed below, the fre-
quency of answers are to be found in Fig. 1, and Mann–
Witney and Kruskal–Wallis test results for the first two
questions are to be found in Tables 2and 3.
Questions Related to Ethical Standards of Students
and the Role of Universities
One of the themes addressed in the questionnaire is whe-
ther business schools (as presumptive providers of business
ethics education) are to blame for the poor ethics of their
graduates, which led to the crisis of 2008 (questions 7 and 8
in Appendix). Just under half of the respondents (47 %) do
not think that business schools are responsible for unethical
Table 1 Independent variables
Independent variables Total number %
Gender
Male 252 60
Female 167 40
Age
Under 35 years old 84 20
35–45 162 38
46–55 132 31
56 years old or older 43 10
Graduation year
Before 2003 170 41
2003–2008 184 44
After 2008 65 16
Occupation
Top level manager 150 36
Mid-level manager 110 26
Specialist 97 23
University teacher 17 4
Other 44 11
Industry
Accounting 9 2
Financial/banking 66 16
Manufacturing/fishing 44 11
Professional services 57 14
Retail 41 10
IT 33 8
Other 168 40
The Role of Business Schools
123
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behaviors displayed by their graduates, while roughly the
other half either believe this is the case (29 %) or is neutral
(24 %), indicating that just under a third of managers link
business schools with the poor ethics of their graduates,
which is consistent with Swanson and Fisher (2008) find-
ings, which was discussed above. Mann–Whitney and
Kruskal–Wallis’ analysis did not show significant differ-
ences on this issue, accounting for participants’ gender,
position, age, graduation year, or industry.
Furthermore, managers believe it is the responsibility of
business schools to assist their students in becoming more
socially responsible and more ethically sensitive, with
92 % of respondents supporting such a statement. There is,
however, a significant difference depending on the age of
the respondents [H(3) =20.097, p\.01]. Mann–Whitney
tests were used to follow up on this finding, with a Bon-
ferroni correction for level of significance. It appears that
the older participants are stronger in their belief (M=4.61
and M=4.42) that this is the role of business schools than
those who are 35 years old and younger (M=4.06). One
possible explanation is experience: older managers see a
stronger need for improved ethics of graduates. The
respondents were also given the opportunity to answer
whether it is in the workplace where business ethics should
primarily be learned. The findings presented in Table 4
show that 60 % of managers do not support that statement.
The open-ended questions show that managers believe it to
be a variety of external factors, not only the workplace,
which mold the ethical standards of business students.
Incidentally, this is consistent with the findings of Cullen
et al. (2004). These external factors include the economic
environment, political environment, dominant family
structure, and the education system.
The next question examines whether or not managers
demand better business ethics education for business grad-
uates, by asking if business students should have strong
ethical standards before entering the workforce. The
majority of respondents (90 %) agreed with that statement.
Analysis did not show a significant difference when it comes
to participants’ gender, management level, or industry, but a
Kruskal–Wallis analysis demonstrated that the view toward
ethical behavior differed significantly across the age levels
[H(3) =14.175, p\.001]. Comparison of the age levels
indicates that the older managers (M=4.51 and M=4.60)
were significantly more in agreement with the statement than
the youngest managers (M=4.13). Again it shows that
more experienced managers are stronger in their views
50% 43%
30% 31% 24%
17% 30%
27% 27%
17%
14%
15%
22% 22%
18%
10%
8%
12% 16%
16%
10% 5% 9% 4%
24%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
5. Least important
4.
3.
2.
1. Most important
Fig. 1 Distributions for
approach to teaching business
ethics
Table 2 Mann–Whitney test for questions on business ethics at
universities by background variables
Uvalue Zvalue Sign. Effect size (r)
Business schools are responsible for the unethical
business behavior displayed by their graduates
Gender 20,043 -.605 .545
It is a responsibility of business schools to help their students
become more socially responsible and ethically sensitive?
Gender 19,834 -.885 .376
Business ethics is mostly learned at a workplace
Gender 20271.5 -.307 .759
Business students should have strong ethical standards
before entering the workforce
Gender 19,057 -1.640 .101
Business graduates are more ethical now than before 2008
Gender 19064.5 -1.162 .245
It should be mandatory for business students to learn
about ethics at university
Gender 18,022 -2.686 .007*** Male \female -.13
*p\.10, ** p\.05, *** p\.01
T. O. Sigurjonsson et al.
123
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regarding bringing into the workforce students that are more
prepared in their ethical outlook.
A follow-up question about whether business graduates
are more ethical now than before the financial crisis of
2008 revealed that only 19 % of respondents agreed that
ethics standards have improved. Most, or 57 %, do not
report any changes and 24 % are neutral about the state-
ment. There is no significant difference identified in the
independent variables.
In light of the general discussion since the financial crisis
of 2008, it does not come as a surprise that managers believe
it should be mandatory for business students to learn about
ethics at universities, with 91 % of the respondents sup-
porting this statement. Women feel stronger (M=4.64) on
this issue than men (M=4.32), (U=18,022, p\.001,
r=-.13). The younger respondents (M=4.23) feel that
this issue is significantly less important than older respon-
dents (M=4.52 for 35–45 years old, M=4.65 for
46–55 years old, and M=4.62 for 56 years and older),
[H(3) =12.028, p\.001]. These results might be of
interest, since nearly half of the respondents have never had
any business ethics education or training of any sort. Out of
those who have, less than 10 % of have received both
specific courses on business ethics and ethics as a part of
various courses. There is a difference between younger
respondents (62.6 %) and new graduates (65.6 %) who
have received more training and the older managers
(47.1 %) who have not received much ethical training in
their respective studies. The reason behind the difference is
most likely that these subjects have been in greater demand
during the last decade. It is also interesting that there is a
significant difference between genders, as women (61.2 %)
have received more education and training in business
ethics than men (48.8 %), v
2
(2, N=413) =6.412,
p=.041. This might imply that women show more interest
than men in business ethics education and training by
choosing more electives within this field.
What is Lacking in the Mindset of Current Business
Graduates in Terms of Their Ethical Standards?
In an open-ended question about what is lacking in the
mindset of current business graduates (question 10 in
Appendix) a common theme emerged, as many respon-
dents feel that business schools should now play a more
robust role in instilling ethical standards than they have
done in the past. It is the managers’ belief that business
schools are in the unique position of being able to influence
future and current managers by positioning themselves as
role models for high ethical standards. They also believe
that business schools have not acted as the motivators of
good business ethics as they perhaps could and should
have. This claim is consistent with our previous arguments
that educational institutions in general and universities in
particular are one of the four social institutions that can
greatly influence the likelihood of the individual to engage
in and justify unethical behavior.
Respondents also note that ethical decisions should be
made not only based on intuition, but also on such
important managerial capabilities as analytical strength and
quantitative skills, and even more importantly, strong
value-based leadership skills and abilities to solve prob-
lems in an ethical manner. According to managers, these
capabilities are absent in the aptitude of recent business
graduates when they need to solve complex ethical
dilemmas, and they feel that universities should do a much
better job in teaching students how to apply these important
skills in resolving such dilemmas. Similarly, managers
believe that business graduates lack understanding of what
Table 3 Kruskal–Wallis test for questions on business ethics at
universities by background variables
Hvalue df Sign. Kruskal–Wallis
with Bonferroni
corrections
Business schools are responsible for the unethical business behavior
displayed by their graduates
Age 3.593 3 .309
Management level 5.016 4 .286
Industry 9.869 6 .130
It is a responsibility of business schools to help their students become
more socially responsible and ethically sensitive?
Age 22.097 3 .000*** 35 \46, 35 \56
Management level 4.980 4 .289
Industry 7.619 6 .267
Business ethics is mostly learned at a workplace
Age .337 3 .953
Management level 8.874 4 .064
Industry 9.852 6 .131
Business students should have strong ethical standards before entering
the workforce
Age 14,175 3 .003*** 35 \46, 35 \56
Management level 3.609 4 .462
Industry 2.749 6 .840
Business graduates are more ethical now than before 2008
Age 3.375 3 .337
Management level 3.493 4 .479
Industry 5.716 6 .456
It should be mandatory for business students to learn about ethics at
university
Age 12.028 3 .007*** 34\all groups
Management level .824 4 .935
Industry 3.700 6 .717
*p\.10, ** p\.05, *** p\.01
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constitutes acceptable behavior when it comes to practicing
good business ethics. Some respondents think that this is a
general weakness in the Icelandic business culture, and as
such not exclusively related to graduates. Taking into
consideration the previously mentioned weak business
culture in Iceland, this could very well be the case.
Managers complain about a general lack of indicators
that can be used for measuring ethical behaviors. Their
argument is that without clear indicators, it will always be
difficult, if not impossible, to assess the limits of ethical
behavior in business and therefore difficult to give
instructions to business students.
The question of whether or not to teach business ethics
in business schools seems to be influenced by the financial
crisis of 2008. Managers are currently asking for a different
approach by universities. They believe that students are
missing a general understanding of the social responsibility
of the firm, and the manager’s role therein. Hence, grad-
uates may be lacking an understanding of their potential
accountability. Respondents agree that prior to the financial
crisis of 2008, neo-capitalism was dominant, and a weak
business culture did much to cause the devastating results.
Respondents claim that universities’ curricula were influ-
enced by the same weak business culture and were lacking
courses in corporate social responsibility, corporate gov-
ernance, and business ethics. Furthermore, the respondents
highlight that universities have a role in re-educating
practicing managers, many of whom were heavily influ-
enced by the neo-capitalistic era of the pre-2008 economic
boom. They believe that there was a significant lack of
good role models, and to improve, the managers them-
selves should allow for re-training in ethics and corporate
governance.
What is Lacking in the Attempt of Business Schools
to Strengthen Good Ethics in Business Graduates?
Even though major international accreditation bodies, and
business faculties cannot agree on what should constitute an
appropriate curriculum in business ethics, the message from
our managers-respondents is clear (64 %): universities
should teach business ethics, and not only as a single, stand-
alone, course, but also as an integrated part of the entire
curriculum (questions 9 and 11 in Appendix). Furthermore,
when answering the open-ended questions, managers
expressed their belief that it should not be the responsibility
of an individual faculty member to decide whether and how
business ethics are delivered in his/her course, but that this
should be a part of an overall strategy and embedded in the
structure of the school. The managers seem to believe that
societies deserve more than manufactured students trained
in quantitative subjects who simply seek the highest finan-
cial rewards upon graduation. Managers today ask for
graduates who have the conviction that their obligation is to
be honest and valuable members of society.
When discussing how to support the universities as
institutions responsible for educating future managers, the
respondents argue in favor of the universities playing a
bigger part in the social discourse on ethics in business.
Managers want to see the universities, and business schools
specifically, as independent institutions placed at the
forefront in criticizing poor behavior, whether in business
or elsewhere. Managers claim that the universities must
take part in the day-to-day discussions of acceptable and
unacceptable behaviors within society. If anyone should
foster and develop the ideology of good business ethics,
then it should be the universities, they argue.
Table 4 Response data for question on business students (question 7)
Business schools are responsible
for the unethical business behavior
displayed by their graduates (%)
It is a responsibility of business schools
to help their students become more
socially responsible and ethically
sensitive (%)
Business students should have strong
ethical standards before entering the
workforce (%)
Disagree 20 2 1
Rather disagree 27 2 1
Neither 24 5 8
Rather agree 23 42 38
Agree 6 50 52
Business ethics is mostly
learned at a workplace (%)
Business graduates are more
ethical now than before 2008 (%)
It should be mandatory for business students
to learn about ethics at university (%)
Disagree 8 13 1
Rather disagree 17 11 0
Neither 35 57 8
Rather agree 30 14 26
Agree 10 5 65
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Respondents in the survey seem to agree with our earlier
comment that there is a significant gap between the theory
and practice of business ethics. Managers seek practical
coverage on the subject of ethics, as they find graduates
lacking both the analytical skills to understand ethical
dilemmas and the capability to solve them. They recom-
mend the use of case studies and practical assignments,
which they believe could help in bridging the gap between
universities and industries. Another recommendation is that
faculty members should be equipped with real-world
experience, such as having personally grappled with ethical
dilemmas in the workplace. The demand is that a univer-
sity’s teaching approach must be closer to practice, and in
that way more relevant.
A general view of the respondents is that business ethics
should be taught both as a mandatory course as well as a
part of as many other courses as possible. In the survey,
managers confirm the assumption that the subject of busi-
ness ethics is found in every facet of business life, be it
finance, accounting, marketing, strategy or human resource
management. The goal, therefore, should be to show the
students how they cannot really escape encountering ethi-
cal considerations. Managers stress the importance of
finding real-life examples of questionable business ethics
in a variety of subjects to show graduates the importance of
keeping ethics in mind at all times in all situations. How-
ever, in using such examples or case studies, universities
should avoid the pitfall of over-simplifying how business
ethics are practically applied (an argument also made by
Bowie 1991,2000), and thereby avoid graduating naı
¨ve
students.
Furthermore, managers argue for strengthening stu-
dents’ self-confidence in making ethical decisions, as they
believe this is missing. Managers claim that universities
have emphasized quantitative subjects to the detriment of
more behavioral subjects. Behavioral issues, they state in
the survey, is ‘‘what provides the firm with its long-term
prospective.’’ Some of the respondents even go so far as to
request that universities scrutinize students’ ethical stan-
dards and not graduate those who fail such a test. In a
similar vein, managers ask for better behavior from uni-
versities themselves to establish a role model for students
and industry. Some of the respondents assert that there is a
lack of clear examples of good practices by universities,
just as in the business world.
Questions Related to the Teaching of Business Ethics
Managers were asked to provide their own views on how
business schools should teach business ethics (see
Tables 5,6for non-parametric tests, Mann–Whitney and
Kruskal–Wallis analysis). Five different types of methods
were offered for consideration, and the respondents were
asked to prioritize their importance. Highest in importance
according to the respondents was the use of real-life cases
(M=2.01), where ethical dilemmas are being dealt with.
This is not surprising, since managers are looking for
recent graduates who are capable of applying their skills in
solving ethical dilemmas in the workplace. On the other
hand, it is curious to note that the respondents ranked the
possibility of learning the fundamentals of business ethics
as a close second on the list (M=2.12). This might
indicate that the foundation of moral reasoning may be
lacking amongst students. Next in importance, according to
the respondents, is the ability of students to openly share
their views on ethical issues (M=2.35), and women
(M=2.09) feel stronger on this issue than men
(M=2.53), (U=19,057, p\.001, r=-.18). Inviting
guest lecturers who have dealt with ethical dilemmas in
business themselves was ranked fourth (M=2.43). There
was a sizeable difference depending on respondents’ age,
[H(3) =10.451, p\.05]. The younger managers were in
significantly greater agreement (M=2.20 for 34 and
younger and M=2.28 for 35–45 year old) than those who
were older (M=2.68 for 46–55). The reason might be that
younger managers have simply been exposed to fewer
ethical dilemmas than the older ones, and therefore see
greater need for the input from those with more experience.
Finally, ‘‘Providing practical tools on how to analyze and
solve ethical dilemmas’’ was seen as least important
(M=2.99). This choice was further analyzed to see if
participants with previous ethics education answered dif-
ferently from those participants with no ethics education.
No significant difference between the two groups was
found (see Table 5).
How Should Business Ethics be Taught?
In responding to the open-ended questions, managers pro-
duced a variety of ideas when asked to suggest how busi-
ness ethics should be taught. The most common answer
was to use past events to demonstrate how bad business
ethics can ruin both firms and individuals. Another popular
opinion is that faculty members should have practical
experience in solving ethical dilemmas in business (which,
some of them indicated, might be gained through writing
case studies and technical notes, perhaps for the more
theoretical angle of the case). Managers also insist that it
should not be the responsibility of individual faculty
members to decide whether to integrate the subject of
business ethics into a course, but rather the decision should
be strategic and come from the top down.
Another matter that managers mention is the potential
overlap of courses, such as business ethics, corporate social
responsibility, and corporate governance. They do not dis-
approve of such overlaps; in fact, they favor learning about
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possible common points, but the repetition is seen as a
problem. Using guest lecturers from industry, principally
people who have dealt with some serious ethical dilemmas,
should inspire greater interest in students. Furthermore, the
little and often well-hidden ethical dilemmas managers
have to cope with every day must also be introduced
to students. Major occurrences, such as the Enron and
AOL cases, are not representative of every-day matters,
according to the managers.
Underpinning these discussions is the managers’ request
that universities encourage faculty members to preserve
their own ethical standards (honesty and reputation). Fac-
ulty members must be seen as good role models, in regard
to both students and industry. Similarly, some managers
think that universities should make students pass exams
where their ethical standards are judged. Many respondents
also argued in favor of graduates signing an ethical code of
conduct upon graduation. Some went so far as demanding
that universities screen applicants by using ‘‘ethical stan-
dards exams,’’ where those students who do not pass this
exam are not accepted. Even though these desires are
natural and quite understandable, they are not necessarily
easy to implement, since they raise additional questions,
both practical and ethical in nature.
Conclusions and Recommendations
What we attempted to do in this research was to look at
how managers, post-crisis, view the importance of ethics
Table 5 Mann–Whitney test for questions on teaching methods for
ethics
Uvalue Zvalue Sign. Effect size (r)
Study fundamentals of business ethics
Business schools are responsible for the unethical business behavior
displayed by their graduates
Gender 18,131 -.080 .936
Ethical
edu.
18,264 -.281 .779
Cases describing ethical dilemmas
It is a responsibility of business schools to help their students become
more socially responsible and ethically sensitive?
Gender 19,834 -.885 .511
Ethical
edu.
18502.5 -.598 .550
Guest lecturers
Business ethics is mostly learned at a workplace
Gender 20271.5 -.307 .084
Ethical
edu.
18,398 -.502 .616
Training aimed at teaching students to openly share their views
Business students should have strong ethical standards before entering the
workforce
Gender 19,057 -1.640 .000*** Male [female -.18
Ethical
edu.
18791.5 -.430 .667
Providing practical ‘‘tools’’ on how to analyze and solve ethical
dilemmas
Business graduates are more ethical now than before 2008
Gender 19064.5 -1.162 .003*** Male [female -.06
Ethical
edu.
18296.5 -.670 .503
*p\.10, ** p\.05, *** p\.01
Table 6 Kruskal–Wallis test for questions on teaching methods for
ethics
Hvalue df Sign. Kruskal–Wallis with
Bonferroni corrections
Study fundamentals of business ethics
Business schools are responsible for the unethical business behavior
displayed by their graduates
Age 12.088 3 .007*** 1 [3, 1 [4, 2 [3,
2[4
Management
level
3.715 4 .446
Industry 6.636 6 .356
Cases describing ethical dilemmas
It is a responsibility of business schools to help their students become
more socially responsible and ethically sensitive?
Age 2.723 3 .436
Management
level
5.381 4 .250
Industry 1.304 6 .971
Guest lecturers
Business ethics is mostly learned at a workplace
Age 10.451 3 .015** 1 [3, 2 [3
Management
level
5.719 4 .221
Industry 2.944 6 .816
Training aimed at teaching students to openly share their views
Business students should have strong ethical standards before entering
the workforce
Age 2.015 3 .569
Management
level
7.780 4 .100
Industry 2.470 6 .872
Providing practical ‘‘tools’’ on how to analyze and solve ethical
dilemmas
Business graduates are more ethical now than before 2008
Age 8.658 3 .034** 3 [1, 2, 4
Management
level
10.792 4 .029** 4 [3, 4 [5
Industry 5.114 6 .529
Age, 1younger than 35 years, 235–45, 346–55, 456 years old and
older
Management level, 1top level manager, 2mid-level manager, 3
specialist, 4faculty member, 5other
*p\.10, ** p\.05, *** p\.01
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and where the training or education in ethical awareness
should come from. Following are a few key conclusions
regarding what has been found from the survey, along with
our recommendations on how to begin re-formulating the
approach to business ethics education in Iceland, and per-
haps elsewhere.
A few main themes emerge, based on the results of the
survey. First, it appears that according to practicing man-
agers, business schools should not be held responsible for
employees’ unethical behavior. On the other hand, man-
agers believe that business schools should assist future
employees in understanding ethics by including business
ethics in the curriculum. Second, managers believe that the
workplace is not where ethics are learned, while also
insisting that former students should have strong ethical
standards when entering the workplace. Third, there has
been no significant change in the ‘‘ethical atmosphere’’ of
Icelandic business over the last three or four years. Let us
now look at these important conclusions in more detail.
Most managers agree that business schools should not
be singled out and blamed for what happened to Iceland’s
financial sector in 2008. The respondents felt that, even
though most of the ‘‘perpetrators’’ were business school
graduates, other, more important, factors played a role in
the collapse. On the other hand, managers indicated that
business schools do have an important role in developing
their students’ ethical perspectives, which is something
they have not sufficiently succeeded in doing. Business
schools have direct access to the business people of the
future, and therefore they should take their role more
seriously and work on establishing a coherent curriculum
and enhancing the range of options to influence students.
Education in business ethics requires more synchronization
between vision, strategy, and structure, which is something
that this article hopefully assists with providing. Until now,
individual faculty members have designed and imple-
mented ethics courses based on their own priorities, as
opposed to those identified by their school. Business
schools should instead have both a clear vision of what
needs to be accomplished and a strong implementation
strategy to succeed.
However, the role of business schools should not be
overestimated. Our respondents insist that the workplace is
not where ethics are learned, while also insisting that for-
mer students should already have strong ethical standards
when entering the workplace. This means that a foundation
of ethical standards should be instilled in earlier stages of
one’s life, while formal higher education (in our case,
business schools) should simply reiterate and reinforce
these standards and ensure that the person entering the
workforce has a solid ethical base.
Business schools should also take a more direct part in a
society’s discussions on business ethics. Managers argue that
independent and honest criticism should come from business
school experts, given that they do not have any vested
interest in an industry. Demand for this more active role
for business schools might be especially high in the
countries that were hit the hardest by the financial crisis of
2008. Iceland certainly fits those criteria, and Icelandic
managers see the country’s weak business culture, which
propagated widespread unethical behaviors, as at least a
partial reason for the extent of the collapse. In this con-
text, the argument for strong, independent criticism is
understandable.
However, the question of how to implement this strategy
may be somewhat difficult to answer. This is, in a way, a
new idea and it might take some time before business
faculties feel comfortable enough to begin taking an active
part. That is because for many of them, this would be a
significant shift from the more familiar role of being
teachers and researchers. One way around this might be to
have the community agree on establishing a mixed group
of members outside of the business industry (business
school being one of those outside members) that would
serve as an independent moderator of arguments being
made and presented in a debate. The group members
should not all be university faculty, and the group should
be mixed with local people and people from abroad. For
communities like Iceland, where many people are con-
nected through familial ties, such a configuration is vital.
Members have to be trusted by different segments of the
community, and any possible conflict of interest would
need to be addressed and dealt with immediately. A group
like this would function much as an arbitration board does,
with the important difference that the group would not
come to any decisions on behalf of any party, but would
rather serve to present arguments and criticism in a clear
manner.
A significant obstacle that arose in the research is the
lack of indicators to measure the level of business ethics.
Managers complain that the shortage of indicators makes it
difficult for faculty members to point business students in
the right direction, and that the situation does not improve
after graduation, when former students have to define and
categorize ethical dilemmas that they may be confronted
with on a daily basis. To find and agree on these indicators
of ethical behavior is no easy task, and further research into
the subject is needed before any preliminary results can be
reported.
Finally, most of our respondents felt that there has been
no significant change in the ‘‘ethical atmosphere’’ of Ice-
landic business over the last three or four years after the
crisis. Therefore, they call for business schools not only to
contribute more to influencing students’ ethical standings,
but also to reshape the knowledge and capabilities of
practicing managers themselves through re-training and
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continuous education. Consequently, business schools
should play a more active role in such endeavors by leading
these developmental efforts. In turn, the business faculty
will get plenty of new information on various ethical
dilemmas in the real world and on the ways how business
ethics are evolving in organizations. They will also gain
insight into how organizations are dealing with ethical
issues and use these facts to produce new teaching mate-
rials, cases, and academic articles. In order to jump-start
such endeavors, it would be necessary to start forging, or
continue cultivating, direct connections between business
schools and local enterprises, and encourage managers to
attend seminars that would introduce the latest trends and
cases in business ethics and allow managers to share their
experiences and best practices in a non-competitive
learning environment.
Examining generational differences in regard to ethics
education is an opportunity for future research. More spe-
cifically, can the differences in responses be attributed to the
older managers’ experience or to the younger managers’
understanding of the limits of the current academic curric-
ulum? At this point, the answer is not clear. Another possible
research opportunity may be to look into how and where
ethical awareness is instigated. The contradiction unearthed
in this study suggests that managers feel that, on the one
hand, employees should already have strong ethical values
entering the workforce (since business schools are not
responsible for their unethical behavior), but, on the other
hand, also think that business schools should teach ethics.
Directly or indirectly, our respondents agreed that the
unethical behavior of business leaders in Iceland was per-
petuated and encouraged by a symbiosis of the weak
business culture and nepotism of Icelandic society, and
may have been an important factor in the country’s recent
economic woes. However, as in most unpleasant scenarios,
there is a silver lining. Sometimes, it takes a serious shock
to the entire system to bring society back to reality. The
Icelandic crisis is a great example of how a major shock—a
financial crisis that nearly brought the economy to its
knees—made people finally realize the importance of
ethics in business and made them think more about the
ethical consequences of their actions.
Appendix: Questionnaire
1. General questions
Any business is inherently unethical because of its
emphasis upon profit-making.
Business ethics in Iceland is good compared to
neighboring countries.
Business ethics during the economic downturn is
weaker than in boom times.
Business ethics in Iceland has improved during
2009–2010.
In Iceland now ethics in business is better than
ethics in politics.
Business ethics in Iceland is better in the public
sector than in the private sector.
Business ethics is better in women than men.
Business ethics is better in older people than
younger.
Favoritism (nepotism) is common in Icelandic
business life.
Icelandic firms emphasize business ethics in their
strategy.
Icelandic firms practice good business ethics.
2. Please rank these industries according as how you
view their business ethics, from best (1) to worst
(6)
Financial/banking.
Auditing.
Professional services.
Retail.
Manufacturing/fishing.
IT.
3. Questions on specific organizations
Our organization promotes stakeholder-centered
worldview (i.e., aimed at benefitting employees,
customers, investors, government, etc.), as opposed
to a shareholder-centered one (i.e., aimed at bene-
fitting shareholders only).
Thinking of good business ethics is high on our
managers’ agenda.
In general, more educated people in our organiza-
tion are more ethical in their decision making than
less educated employees are.
In our organization we have formal guidelines
regarding business ethics and ethical behavior.
Managers are made responsible if codes of ethics
are broken.
Employees take the organization’s ethical stand
seriously.
There are consequences if poor ethics is practiced
in our organization.
Employees in our organization have a clear path to
follow if they notice unethical behavior.
4. During the past 2 years I have witnessed unethical
business practices in our organization
Never.
1–2 times.
3–5 times.
More than 5 times.
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5. If your answer to last question was positive, please
mention the type of unethical business practices you
have experienced in the past 2 years.
6. Please indicate in which way ethics might be lacking
in Icelandic businesses.
7. Questions on business students.
Business schools are responsible for the
unethical business behavior displayed by their
graduates.
It is a responsibility of business schools to help
their students become more socially responsible
and ethically sensitive.
Business students should have strong ethical
standards before entering the workforce.
Business ethics is mostly learned at a workplace.
Business graduates are more ethical now than
before 2008.
It should be mandatory for business students to
learn about ethics at university.
8. Business ethics was part of my curriculum at the
university as
A stand-alone course.
An integral part of most subjects in the program.
Both.
Neither.
9. The following should help students learn ethics in a
more effective way.
A stand-alone ethics course.
Ethics as an integral part of every subject in the
program.
Both.
10. What is lacking in current business graduates in terms
of their ethical standards?
11. What is lacking in attempts of business schools to
strengthen good ethics in business graduates?
12. How should business ethics be taught at business
schools? Please rank the following methods
Study fundamentals of business ethics.
Cases describing ethical dilemmas (training in
problem solving).
Guest lecturers (managers) that dealt with ethical
dilemmas.
Training aimed at teaching students to openly share
their views (training for whistle blowing).
Providing practical ‘‘tools’’ on how to analyze and
solve ethical dilemmas.
Other methods—answer in text box below
13. Other methods
Background questions
14. What is your graduation year?
Before 2003 2003–2008 After 2008.
15. What is your occupation?
Top level manager Mid-level manager Specialist
Faculty member at a university Other.
16. In what industry is your employer?
Financial/Banking Auditing Professional ser-
vices Retail Manufacturing/Fishing IT Other.
17. What is your gender?
Male Female.
18. What is your age?
Under 35 35–45 46–55 56 and older.
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