The Past Speaks

Professor Edward L Queen, who is the Director of Ethics and Servant Leadership Program at Emory University, is clearly a smart guy and accomplished scholar. He has authored some important scholarly works on US religious history. Unfortunately, he has also published a highly problematic article on the VW scandal in the New Republic. The article, “Business Schools Breed Unethical Businessmen An ethicist explains why the Volkswagen scandal didn’t shock him” basically blamed the amoral curriculum taught to generations of MBAs in the United States for the ethical lapses that led to the scandal about emissions rigging that has engulfed the German automaker .

For the past five to six decades, epigones of Milton Friedman have been emphasizing that the only duty of a corporation is return on investment (regularly ignoring his caveat of doing so within the law and social norms).

This lesson, drilled into generations of business school graduates, now drives tsunamis of corporate malfeasance. Data regularly demonstratesthat business school students are more likely to cheat on examinations and assignments than their peers, although–and this is of interest for the Volkswagen case–they are closely followed by engineering students.

There is certainly an element of truth in some of the claims of Professor Queen. Indeed, his New Republic piece echoes ideas that were published in an academic journal by the late Sumantra Ghoshal. Professor Ghoshal’s 2005 essay on the pernicious social consequences of some of the theories that management schools teach to future business executives has been frequently cited and has had an impact on the management school curriculum. Ghoshal’s seminal essay was particularly critical of agency theory and the belief that the sole function of a company is to make money for its shareholders. One could argue that the reform of the management curriculum in the last decade, which has included more teaching about business ethics, has been inspired in part by Ghoshal’s paper.

While Edward L. Queen’s article is not completely out of left field, there are several problems with his attempt to link the insights of Ghoshal to the case of Volkswagen.

First, it presents a caricature of business education in the United States, the UK, or any of the other countries with education systems I’m familiar. Very few management schools nowadays preach the Milton Friedman view that a company’s sole function is to maximize shareholder value. Indeed, most business schools try to expose students to rival stakeholder theory of how companies ought to operate. Business ethics has become an increasingly important part of the curriculum since the Enron scandal. Many business schools professors now teach something called the Triple Bottom Line (people, planet, and profit), meaning that managers need to balance the interests of shareholders, other stakeholders, and the environment. The fact that an op-ed on the VW scandal by three tenured professors at Canada’s oldest business school (Tima Bansal, Michael King, and Gerard Seijts of the Richard Ivey School of Business) uses the term “the triple bottom line” suggests that ethics are part of the mainstream management school curriculum.

Second,  while I am open to the possibility that the amoral theories of management that Anglo-American business schools began to teach in the late 1970s likely contributed the business scandals of recent decades (e.g., Enron), the argument for this thesis is still largely circumstantial. Moreover, Professor Queen’s piece in the New Republic overlooks the fact the VW’s now departed CEO Martin Winterkorn has a PhD in metallurgy and does not have an MBA or indeed any other degree in management. Like many business leaders in Germany, Winterkorn never attended any business school, German, US or otherwise. He studied science, then learned management on the job. It is agreed by all concerned that Winterkorn was himself blameless and had no knowledge of the scam some VW engineers were running. We don’t yet know the identities of the culpable individuals, but once their names have been published, it will be easy for journalists to find out where they were educated and whether they were ever exposed to the morally corrosive ideas that Professor Queen alleges is a staple of mainstream management education.

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Ghoshal, S. (2005). Bad management theories are destroying good management practices. Academy of Management learning & education, 4(1), 75-91.