Question

What is the difference between ethics, social responsibility and sustainability in business context?

Answer 1

“Management education as well as management is deeply troubled, but neither can be changed without changing the other.” This extract from Henry Mintzberg’s book, Managers and not MBAs, was written at a time when the current economic crisis had only just started to set off (2003) and the world was far away from revealing the big scandals and failures of global banks that peaked in 2008. Following these failures, the contemporary business and management education landscape is now at a crucial crossroads.

Ethics, responsibility and sustainability (ERS) are essentially about understanding and acting to link society, the economy, education and the environment. The current economic crisis has deeply challenged many societies on all continents, and management education institutions have been widely criticised for failing to educate responsible managers that are able to respond adequately to the needs and interests of all stakeholders and society at large. This criticism hits business schools after nearly half a century of strong developments, prosperity and success worldwide.

A narrow focus

Until today, the majority of business schools struggle with the development and integration of ERS into all major academic and administrative areas. They continue delivering a narrow view on capitalism, while many of their stakeholders, such as students, faculty, employers and society at large demand a greater sense of purpose. Meanwhile, the minority of schools which have integrated ERS into their core activities in recent years struggle to connect their new activities to the wider context. Worse, there is little knowledge as to how business schools’ development in ERS actually impacts the overall sustainable development in society. It is time for business schools to address these criticisms and to develop new pedagogy for practical problem solving in leadership, entrepreneurship and statesmanship and become more responsible and sustainable in order to maintain a relevant and competitive position in the higher education landscape.

Importance of teaching communal values

Many different approaches have been taken recently to reconnect management education with business and society. Buzzwords such as corporate social responsibility, corporate citizenship, business ethics, social entrepreneurship, corporate sustainability and conscious capitalism are widely used and common in business school marketing and communication plans. However, beside the many commitments and discussions, most business schools continue to teach a particular biased content in business functions, often ignoring the fact that these functions have negative impacts on the sustainability performance of companies. Many management education institutions ignore public interest in favour of private interests. The schools value personal enrichment over communal values and do not teach their students how to deal with natural resources, energy and the common good. The definition and understanding of ERS depends largely on cultural background and values, which are common in particular environments. It is therefore not surprising that ERS are differently interpreted throughout the management education world.

Future requirements for international business schools

Recent studies from the Globally Responsible Leadership Initiative (GRLI) and the 50+20 Group suggest three main future requirements that business schools have to respond to in order to drive their ERS developments and to overcome the internal and external barriers:

• The schools need to foster faculty diversity to include a wider range of academics and non-academics with experience and focus on ERS related issues.
• The business schools also have to reassess their current value proposition to the different stakeholders and define new criteria for quality and success. Establishing outcome-oriented measures would be the right starting point to evaluate differently the educational criteria as well as research outputs, on the basis of impact on critical issues in business and society. A stronger role from external policy organizations, accreditations and rankings would be supportive in defining new quality and success measures, but are not a prerequisite.
• The schools should develop stronger leadership and change management that is guiding the challenging process most institutions currently face. Creating the capacity for strategic change in relation to conditions that encourage new thinking and action are critical for business schools. A strong and well-experienced leadership is therefore key for successful change management and to overcome internal and external barriers. However, leadership, vision and strategy cannot be successful without the full endorsement and support from faculty and administrative staff.

Business schools, like any other educational institution, have to reflect on all aspects of the society by training students to act responsibly to environmental challenges, in the same way, as they have to be able to react adequately to socio-economic issues.

The current challenge for business schools is to regain trust and confidence from their main stakeholders – trust which has been lost after numerous corporate scandals when graduates from elite business schools were found responsible for mismanagement and irresponsible behaviour. However, business schools are so deeply beholden to corporations, ideologically, financially and for employment of their graduates, making radical change difficult. It is not one element or another that needs to be changed, but rather the whole ecosystem of business schools has to shift – the funding model, faculty, curriculum, research and administration.

Resources for developing ERS in management education

Around business and management education, a number of non-profit organisations have emerged in recent years that are influencing schools in their development of ERS:

• The United Nations Global Compact (UNGC) / Principle of Responsible Management Education (PRME) was founded in 2000 and is an initiative to engage companies and business schools worldwide to adopt sustainable and socially responsible policies but also to report on their implementation.
• The Globally Responsible Leadership Initiative (GRLI) is a global partnership of companies and business schools that are actively searching for a change in business schools by reframing the purpose of management education.
• The 50+20 Initiative is a collaborative effort of the GRLI, PRME and the World Business School Council of Sustainable Business (WBSCSB) that searches for new ways and opportunities for management education to transform and reinvent itself by asking critical questions about the purpose of business and the crucial role of leadership.
• The Academy of Business and Society (ABIS) links companies with academic institutions that allow businesses to benefit from research findings and address their knowledge needs with leading academics and business peers.\