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by RONALD ALSOP | March 10, 2009

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Business schools have struggled in the post-Enron era to incorporate more content related to ethics and social responsibility in their curricula. Many have added a stand-alone course on corporate responsibility, but some academics consider that insufficient. M.B.A. Track columnist Ron Alsop discussed the challenge recently with Craig Smith, senior fellow in marketing and ethics at London Business School and the academic leader on a project with the European Academy of Business in Society to "mainstream" corporate responsibility.

WSJ: How do you believe business schools ought to be addressing corporate responsibility?

Dr. Smith: Every subject covered in the business-school curriculum, from economics to operations, needs to deal to some degree with social and environmental impact. There should be a course focused on ethics and corporate responsibility to provide fundamentals such as theories of moral philosophy. In other courses, professors need to say how ethics and social responsibility are relevant. In an accounting course, for instance, you could cover how companies measure their social and environmental performance and report on it. Or in a marketing course, you could look at specific issues like product safety and truth in advertising.

WSJ: How would you assess the performance of most schools in teaching corporate responsibility?

Dr. Smith: I believe it's pretty poor. Corporate responsibility is a missing piece of the puzzle in a lot of courses. The metaphor I like to use is that it's a bit like trying to teach people to drive on empty roads without experiencing the impact of other drivers.

WSJ: How would you grade your own school on its teaching of corporate responsibility?

Dr. Smith: London Business School was ahead of the curve in having a required course -- "Business Ethics and Corporate Responsibility" -- in the full-time M.B.A. more than 10 years ago, and we added it to the executive M.B.A. around 2003. But we've got some way to go. We have offered electives in sustainable development and corporate social responsibility, but student response was pretty modest, with only a dozen or so people in each course. If recruiters more actively expressed a desire for students with training in corporate responsibility, we wouldn't have such a low take-up on the electives. After all, a lot of students are coming to business school to get into high-paying jobs, and that's their primary concern.

WSJ: Some schools have tried mainstreaming ethics and social responsibility throughout the curriculum with at best mixed results. Why has such integration proven so difficult?

Dr. Smith: Part of the problem has been the lack of case studies for the basic courses like finance, organizational behavior and strategy. We did an audit and found about 1,000 cases out there with something on corporate responsibility, but many are not usable because they're dated or because social responsibility is only tangential to the case. Also, some were written primarily for ethics and social-responsibility classes, not the mainstream courses. There's also the problem that some professors are reluctant to go outside their comfort zone and teach about ethics and social responsibility. It can be difficult for some teachers to manage a discussion of ethical issues. When you're questioning students about their values and deeply held beliefs, you need to foster debate but not let yourself become a lightning rod for student anger and discomfort.

WSJ: How will the European Academy of Business in Society project help schools do a better job of mainstreaming corporate responsibility?

Dr. Smith: Major European business schools are developing 10 -- maybe as many as a dozen -- case studies that will fit the core business classes. Starting later this year, we will disseminate these cases to as many potential users as possible through the academy, case-study Web sites, a book and conferences. For example, I am writing a case on Unilever's collaboration with the relief organization Oxfam, which was quite groundbreaking. Unilever and Oxfam studied the company's Indonesian operations and their impact in alleviating poverty. That case could be used in marketing, strategy or macroeconomic courses. Another case about Microsoft and technology for senior citizens is expected to cover strategy, marketing communication and finance issues.

WSJ: Will the project go beyond case studies?

Dr. Smith: We're also hoping to do an audit of pedagogies and share our findings. We would look at other methods people are using to teach about ethics and corporate responsibility. For example, a number of schools are using films like "The Corporation" and "Enron: The Smartest Guys in the Room." There are also role-playing exercises and games. I have a lesson on Wal-Mart that includes students role playing management, customers, members of a labor-rights organization and other stakeholders.

WSJ: Do companies want schools to cover corporate responsibility more thoroughly?

Dr. Smith: That's certainly why companies like IBM, Johnson & Johnson, Unilever, Microsoft and Shell are sponsors of the European Academy of Business in Society. Corporate responsibility used to be in the public-affairs ghetto, but that's changing as businesses give it more attention day to day. They need M.B.A. students who appreciate how corporate responsibility and ethics figure into all parts of the business. It's not uncommon for senior management to feel frustrated that the middle-management ranks are not as focused on social and environmental responsibility as they would like.

WSJ: Skeptics believe some schools have added courses on ethics and corporate responsibility as mere window dressing. Do you think some courses will prove to be a short-lived response to the wave of corporate scandals?

Dr. Smith: To some extent, schools are open to such criticism. But I think interest in such courses should continue, with the primary reason being globalization. The pressures on companies, especially large multinationals, to be socially and environmentally responsible aren't going away.

WSJ: Some M.B.A. students and corporate recruiters are critical of courses on ethics. In The Wall Street Journal/Harris Interactive recruiter survey this year, for instance, one respondent commented, "If you're not ethical by the time you're 27, no classroom experience is going to make a difference." What do you say to such skeptics?

Dr. Smith: It's not a matter of preaching about right and wrong. It's about helping students understand how ethical issues arise in business and giving them some tools to make choices. There are certainly bad apples out there, but many people make the wrong decisions because they don't see the big picture and what the consequences could be for themselves, their companies and society. I like to give students a list of steps toward ethical decision making, such as thinking about their character and integrity, identifying the consequences of their potential actions and, finally, checking their gut. Is it instinctively the right decision?

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