Overview

1. The Problem

Concerns about high levels of corruption as well as a lack of public and private sector transparency and accountability continue to dominate both public and private sector agendas. These issues are seen as chief contributors to the global financial crisis that we are experiencing, and the impact has been demonstrated by various high profile major company ethical failures.

At academic and practise levels, two global anti-corruption and transparency trends are emerging. First, management is gaining recognition as a profession that has generally accepted standards of admission and appropriate conduct. As this consensus develops, business practise will increasingly be governed by ethical principles to which practitioners are expected to adhere (see, for example, the Harvard Business School MBA Oath). Second, there is a shift in the prevention, detection, and enforcement burdens from government to business enterprise brought about by the privatisation of norm-making first promulgated through governmental incentives by the United States Federal Sentencing Guidelines. Variations of this approach are now pursued in such diverse jurisdictions as Australia, Italy, the United Kingdom, Switzerland, Canada, South Africa, and Korea.[1]

Understanding of these trends is crucial for practitioners, as they will greatly influence business practises in the near future and will require managers to have an appropriate set of skills to ensure transparency and accountability. Including business ethics course material in undergraduate and graduate management education curricula is a key step in ensuring an effective business response to this growing private enterprise compliance role. As an organised body of knowledge, this educational enhancement is of recent origin and may be foreign to experienced managers, while Executive Education students can supplement the Masters and Bachelors business education that they received with timely, issue specific materials. Traditional liberal arts subjects such as Economics and Political Science can be enriched with research and discussion that focuses on the many facets of corruption and efforts to curtail it. In sum, there is a need for teaching and research guidelines for this growing body of knowledge that includes suggested content, methodology, and framework for administering it in business schools at different levels of management and liberal arts education.

2. PRME’s Solution

The mission of the Principles for Responsible Management Education (PRME) initiative is to inspire and champion responsible management education, research, and thought leadership globally. The primary objective of the PRME Working Group on Anti-Corruption is to develop a toolkit for use by business schools to design or adapt anti-corruption modules, or to integrate anti-corruption content with existing curricula, with specific reference to MBA programmes.

A freestanding course is vital to the successful integration of anti-corruption topics into management curricula. Fifteen to twenty years ago, when business ethics was emerging as a credible discipline and one to which students should be exposed, the initial method (where it could be found) was to discuss the ethical dimensions of issues that arose in existing subjects.

These treatments were superficial because they lacked the anchor of a disciplined approach to the ethical issues that arise in the performance of traditional functions. For example, an accounting professor, when asked if he taught ethics in any of his courses, replied: “I like to kind of bring up issues, but I don’t have an ethics component per se in the course. And I don’t think that it would be appropriate in an MBA core course.”[2] “Kind of bring[ing] up [ethics] issues” suggests that the classroom conversation was limited to issue identification and superficial analysis. For example, if the topic of bribing were to arise in a classroom setting, the discussion could bring up the following arguments: (1) That bribing is permissible because it is the standard way of doing business in the country; that out of respect for local custom and the need not to put the company at a competitive disadvantage, it is justified; and (2) That bribery is always wrong, and is therefore unacceptable no matter the cultural context. Without an established ethics component, however, the discussion might end there, as there is no opportunity in this exchange for a rigorous analysis of a well-defined problem.

Integrating anti-corruption topics into the management education curriculum requires focused discussion on subject matter and method:

Subject matter – much of business education focuses on functional problems and issues (e.g. finance, marketing, administration) and not on topical areas (corruption). Thus, there is a twofold challenge in integrating anti-corruption subject matter into the management education curriculum: (1) It belongs to no one area of functional expertise, and corruption’s multiple causes necessitate an interdisciplinary treatment; and (2) As corruption resistance, prevention, and detection is not the province of a single function, there is a challenge in making the case that it is a free-standing discipline that is entitled to its own faculty and resources.

Yet in the global business arena with 24-hour media scrutiny, unethical behaviour can affect the key elements of business success – profitability, productivity, and brand. As such, an appropriate course in the recognition, analysis, and resolution of ethical issues is a vital part of the business curriculum, and within that area of study, corruption in all its forms is a necessary subject of conversation.

Method – Utilisation of the case method is an essential strategy in business education because it teaches students to identify moral issues in situations that are common to them with verbal precision, and in so doing, to develop rules that are derived from analytic methods. Optimal case study discussion scenarios focus on actual incidents. Like any difficult decision, these scenarios require the student to deal with problems where critical facts are missing or ambiguous and in which irrelevant elements (so-called red herrings) confuse and divert the discussion. The best scenarios enable students to identify relevant facts, make reasonable assumptions about information that is lacking (as is the case with all decisions), and (importantly, in this instance) to articulate moral responses to ethical dilemmas.

Articulation is only the first step. Given the dynamic nature of knowledge evolution in this area, curricula that link research to context-specific situations based on the experiences of target audiences are needed. There is an active conversation within the business education community regarding the best ways to provide students with methods for operationalising the ethical choices that they have made. As one business ethicist observed about business students and ethical problems: “Instead of asking ‘what would you do?’ ethical case discussions should ask the question ‘what if I were going to act on my values? What would I do and say? To whom? How? In what sequence?’”[3]

For reasons underscored by this comment, curricula also need to explore the degree to which an ethical temperament is innate and whether and what environmental factors can be used to enhance it. (See description of study topic 4, p. 5.)[4] Further, it suggests that the decision-making command structure requires detailed attention. The notion that the tension between two different facilities produces decision-making outcomes is the subject of much comment. One example of how this process works compares decision outcomes to the effort needed by a rider to direct an elephant from an intuitively chosen path. As this example illustrates, optimal conditions for ethical choice depend on the interplay of three factors: (1) rider (decision maker); (2) elephant (institution); and (3) path (business objectives).[5] Another similar approach known as prospect theory postulates that decision making is a shared function between System 1 (fast, automatic, intuitive) and System 2 (slow, deliberate, analytical).[6]

3. Resources and Institutional Capabilities

The PRME Working Group on Anti-Corruption was created at the end of 2008 by a group of business schools committed to integrating issues raised by the UN Global Compact Tenth Anti‐Corruption Principle into business curricula. Today, within the broader framework of PRME, the group involves over 30 academic institutions and its work is divided among core discipline subgroups (Economics, Ethics, Law, Management, Behaviour, Politics) to develop a ten-module management education curriculum that relies on the core disciplines for: (1) core concept readings; (2) case studies; (3) primary source documents; and (4) scenarios for class discussion. Each of the modules also includes suggested study questions for classroom discussion. Instructors worldwide will select readings and questions from these recommended texts and questions. The curriculum is designed to be flexible. Instructors can select elements from the resources identified and integrate them into their own courses. In a crossover section at the end of the Toolkit, teaching methods suggestions are offered that can be utilised in a variety of different cultural environments and classroom settings.

4. Deliverables

The Curriculum/Toolkit utilises a mix of core concept readings (e.g., Linda N. Edwards & Franklin Edwards, Economic Theories of Regulation: Normative vs. Positive), detailed case discussion (e.g., Weighing the Trade-Offs in the Goldman Settlement), primary sources and documents (e.g. Transparency International [2008], Business Principles for Countering Bribery: Small and Medium Enterprise [SME Edition]), and scenarios devised for class discussion which rely on Socratic and Case Method teaching to discuss core concepts, methods, and problems. Each of the ten study modules includes a long list of these resources to allow faculty of different countries to design a course that is appropriately suited to the necessities of his/her students.

  1. Fundamental Concepts: The recognition and framing of ethics dilemmas and social responsibility and their importance in strategic decision making.
  2. Economics, Market Failure, and Professional Dilemmas: Economics and market failure in its various forms and how it is manifested in corruption.
  3. Legislation, Control by Law, Agency, and Fiduciary Duty: What is a fiduciary obligation? To whom is the agent/fiduciary obligated, and for what? Many of the agency issues to which corruption gives rise flow logically from improper gifts, side deals, and conflicts of interest.[7]
  4. Why Corruption? – Behavioural Science: This module addresses the question: What does Behavioural Science teach us about how to design a performance incentive system that encourages integrity as well as productivity? Can Behavioural Science research be used to develop a consultant client relationship system that reduces corrupt practises?
  5. Gifts, Side Deals, and Conflicts of Interest: Legislation and cases to understand gifts, side deals, and conflicts of interest and the lying and obfuscation that is often used to conceal them.
  6. International Standards and Supply Chain Issues: Frameworks and analytic methods for discussing the problems that companies face in the need to respect moral standards across borders, local customs (e.g. giving and receiving gifts), and bribery. Are there optimal supply chain management measures for resisting these kinds of corrupt practises?
  7. Managing Anti-Corruption Issues: Designing, implementing, and overseeing corporate ethics and compliance systems in response to local and global compliance regimes.
  8. Functional Department and Collective Action Roles in Combating Corruption: The functional departments examined include human resources, marketing, accounting, and finance.
  9. Truth and Disclosure, Whistleblowing and Loyalty: These topics raise issues of timing and context as to what point and under what circumstances it is permissible for an agent or employee to blow the whistle on corruption. What procedures do companies need for this process? What kinds of protection are required for the whistleblower and for the safeguarding of information?
  10. The Developing Global Anti-Corruption Compliance Regime: Topics include (a)global public policy principles and how are they promoted/enforced (e.g. UN Global Compact’s 10th Principle and UN Convention against Corruption [UNCAC]; OECD Anti-Corruption Principles); and (b) links between corruption and forms of state failure such as deprivation of human rights and environmental degradation.[8]

Implementation:
The implementation of a global curriculum confronts programme content and staffing challenges:

Content – Although the course utilises the earlier described five introductory core topics for a worldwide curriculum with limited variation, faculty will need regional and – in the case of Executive Education – industry- or even company-specific content. Participating institutions may also combine elements from the different topics to design classes and courses that meet their own distinctive requirements. They are encouraged to promote this adaptation by utilising local networks of private (MNCs, SMEs), public, academic, NGOs, and global sector institutions such as the Global Compact Local Networks to develop a timely, focused curriculum for each region. Each of these groups needs to determine its own priorities and present them to plenary sessions for resolution on curriculum integration. Discussions are also needed with high-risk industry associations, some of which have their own initiatives (e.g. pharmaceuticals, defense, extraction, forest products) for dealing with corruption issues.

5. The Critical Support Needed from Business Institutions, Global, Non-Governmental and Local Governmental Organisations

These parties can lend vital support in encouraging academic institutions to use the PRME curriculum, sharing case studies and concerns with the PRME leadership, providing guest speakers in PRME classrooms and meetings, offering internships to promising students, and sponsoring conferences that focus on critical corruption issues.


[1] See for example, Ronald E. Berenbeim and Jeffrey M. Kaplan, The Convergence of Principle and Rule-Based Ethics Programs – an Emerging Global Trend? The Conference Board, October 2007.
[2] Jeff S. Everett, Ethics Education and the Role of the Symbolic Market, Journal of Business Ethics, Vol 76, No.3 (December, 2007), pp. 253-267 at 258.
[3] Mary Gentile: Missing the point on biz ethics, The Providence Journal, July 5, 2007. See also, Giving Voice to Values http://www.givingvoicetovaluesthebook.com and www.GivingVoiceToValues.org
[4] Evolutionary biologists have used chimpanzee experiments to suggest that certain moral traits may be innate rather than evolved. As Frans B. M. deWaal said in a May 6, 2011, NYU Paduano Seminar,”if chimpanzees show a sense of fairness maybe we didn’t have to wait for the French Revolution and the human discovery of the importance of equality”. For a discussion of de Waal and other sources, see Frances Fukuyama, The Origins of the Political Order – from Prehuman Times to the French Revolution, Farrar, Straus and Giroux (2011), pp. 31-35.
[5] See for example: www.ethicalsystems.org
[6] For elephants, see Jonathan Haidt, The Happiness Hypothesis – Finding Modern Truth in Ancient Wisdom, Basic Books (2006), for prospect theory, see Daniel Kahneman, Thinking Fast and Slow, Farrar Straus & Giroux (2011). In 2002, Kahneman was awarded the Nobel Prize for Economics for prospect theory – which he developed in collaboration with the late Amos Tversky (1927- 1996). The physicist, Freeman Dyson has postulated that Sigmund Freud (Id and Ego) and William James (once-born and twice born) have also proposed alternative forms of executive functioning that need to be considered in discussing how people respond when confronted with difficult choices.  Freeman Dyson, How to Dispel Your Illusions, The New York Review of Books, December 22, 2011, pp.40-43.
[7] Kenneth W. Clarkson, et. al, Duties of Agents and Principles, West’s Business Law, Eighth Edition, South-Western Thomson Learning. Jane P. Mallor, et. al, The Business Judgment Rule, Business Law, 12th ed., The McGraw-Hill Companies.
[8] For an “algorithm” to help multinational managers make tradeoffs between conflicting norms in home and host countries, see Thomas Donaldson, The Ethics of International Business, Oxford University Press (1991), for a contrasting view, see Minh Chau,  Decriminalization of Corporate Bribery – The Supply Side, 2008 students.wharton.upenn.edu/~mih/…/Decriminalizing%20Bribery.pdf