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MBA Ethics, Gender, and the Diversity Effect

Tuesday, Slate ran an article on the problem of teaching MBAs ethics by Ray Fisman and Adam Galinsky. It’s a well-trodden path and this particular essay didn’t offer any really novel ideas on the topic. But seeing it queued up for me some stuff I have been reading lately about the question of getting more women on corporate boards. It seems to me that addressing the environment of MBA programs, including the makeup of both the student body and the faculty, may be a better way to address the question of ethics in business schools than the tactics being taken.

The response to ethical challenges for business schools has been to tack an ethics course on to the front or the end of the MBA curriculum.  But these authors offer, in what is not a shattering insight, that the students who apply to business schools are old enough to have already set their moral compass and probably cannot be taught a different set of ethics.

Embedded at this point in the article is an unremarked link to a study about the different decisions taken by CEOs with military experience, as compared to CEOs without it.  That research makes clear that selecting a CEO with military experience would have an impact on specific aspects of the way a business conducted itself, including its ethics.  That finding would be no surprise to anyone who has read Identity Economics, the popular book explaining the theories of Nobel Laureate George Ackerlof.  Ackerlof and his co-author, Rachel Kranton, make a big point about how military training changes the identities of the people who go through it–and, therefore, their economic behavior.

The authors of the Slate article end by making a point (not terribly well, I must say) that people are often unconscious about their ethics, especially when they are operating in an in-group environment and the recipients of their actions are an out-group.

So, I think we need to ask the question:  is there something about the population who ends up in business school that makes it more likely they will make socially destructive decisions?

One thing that is really quite clear from the (considerable, reputable) research that has been done is that the presence of women on boards is conducive to more ethical behavior.  This is a diversity effect, in my opinion, not the result of a gender trait. It is true that the women behave differently, but the men do, too, as a result of having broken the “in group” setting that otherwise causes them just to nod along.  So, getting better behavior out of the corporate sector is one–but just one–reason why governments are increasingly looking at ways to make boards add women.

It struck me, however, that the same phenomenon was undoubtedly having an effect at the MBA level.  These students are overwhelmingly male.  This is not because women are not smart or ambitious enough to be MBAs.  It’s because they don’t apply in the same numbers.  One of the reasons, in fact, that women don’t sign up for MBAs is that they see business as. . .well . . .antisocial.

As with corporate boards, however, it will probably take a critical mass of women in a school before you have a significant effect.  Based on the board research, I would guess it is likely to be about 30%.  Most business schools are not even close.

And then we have another problem:  even fewer faculty members of business schools are female.  So, here again, it is much like the board problem.  There are very few women on boards, worldwide, but there are even fewer women CEOs.  So, the women in MBA programs are in the minority, surely, but the leaders in the classroom are nearly all male and often very conservative indeed.

The authors of this Slate article  suggested that the scientific approach to management distanced students from the social impact of their decisions, rather like pushing the button for the bomb is probably easier than knifing someone in the belly.  No argument with that. Indeed, others have suggested, with eloquence, that having more qualitative and humanist inputs into MBA curricula would be one way to improve both the ethics and the quality of thinking coming out of those programs. But, in my experience, the attitude toward the humanities and qualitative methods is so negative in business schools that such tactics are facing an uphill battle.

This is partly because of the prejudices of the faculty, not only methodologically, but ideologically.  You can have an emotional impact with numbers and you can also represent highly affective issues with them.  It is the ideological impetus behind reducing everything to numbers and profit that makes the B-School environment so antithetical to discussing social impact.  The Slate article alludes to the old wisdom espoused by Milton Friedman that the only social purpose to a business is to make a profit.  But the authors didn’t point out that many B-school professors still espouse that opinion (and it is, after all, only an opinion, though the name and the notion are often invoked in the tone of prayer) and teach it in the classroom. So they avoided what seems to me like a pretty front-burner question:  is there something about the ideological environment of business schools, independent of the formal curriculum, that fosters an attitude of social irresponsibility?

The way business schools are measured also contributes a lot.  Though there are measures in the “league tables” for representation of women among both students and faculty, the main game is how much money the students make after they leave school.  So that means business schools are graded down for alums who do not-for-profit work and graded up for alums who become investment bankers.  So, MBA programs end up with a very homogeneous profile on many dimensions, something that is not conducive to critical social thinking.

And so, if we really want to improve the ethics of MBAs, maybe what we need to do is work harder at changing the environment on other dimensions likely to have an effect:  the gender mix of students, the aspirations of alumni, the ideological and methodological breadth of faculty, and the overall tolerance for diversity of people, interests, and views.

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