Business schools must spurn rewards culture that shamed the City

Through its failure to reward academics for their social responsibility, the RAE is encouraging moral bankruptcy, argues Stefano Harney

November 20, 2008

The financial crisis that brought about the current deep recession should be an occasion for business school scholars working on corporate social responsibility to step to the fore. It should be a time for the business school to provide an analysis, not just of what went wrong technically, but of what went wrong morally.

Yet so far here in London, in one of the epicentres of the crisis, we have heard very little. And there is a reason for that: research and teaching on corporate social responsibility and business ethics remain marginal in most business schools in Britain.

At my own school, on the very day that the US Congress voted through its historic rescue package for the banks, my colleagues voted overwhelmingly not to include a module on business ethics in the core curriculum of our postgraduate programmes.

There was nothing malicious in their vote. They simply did not see the central importance of ethics to the programmes they teach on marketing, management, accounting and finance.

It would be easy to conclude from this state of affairs that before we can have corporate social responsibility we would have to have socially responsible business schools. But it is not that simple.

In British universities, teaching follows research. My colleagues, and scholars like them across the business schools, are conditioned by a system of rewards that dominates the business school.

Like the skewed system of rewards that bedevilled the banking system, this academic system does not favour behaviour that has an eye to the greater good, to the stability, health, or happiness of society, but technical cleverness and the exploitation of unrecognised margins, niches and gaps.

This academic rewards system is the national research assessment exercise, and its latest results will be published next month. Money, respect and promotion flow from the way the RAE rates departments and, indirectly, individual scholars on their research.

If the last RAE, in 2001, is anything to go by, this one will once again reward business scholars not for their social responsibility but for their technical innovation, much as a banker might be rewarded for a new financial instrument, not for stable and equitable investment climate.

Along with two colleagues, I studied 2,300 articles published in 2003 and 2004 in the journals regarded most highly by British business schools in the last RAE, journals that represent the profession's verdict on what is important in scholarship. The results, as reported in Times Higher Education (25 September) confirm that social responsibility is at best a peripheral concern in these journals.

Of the articles, 85 per cent mentioned nothing about corporate social responsibility or business ethics while 2,037 said nothing on the relationship between business practices and the distribution of wealth in society.

Because the RAE is run by academics, they make the judgments and assign the ranks. It is self-regulation at its most complete, like the City - at least, until recently. For all those looking to business education as part of the solution to the present crisis, this should be a worrying comparison.

Can we expect the physicians of the business school to heal themselves? Given that the articles we studied were published after the great Enron and World.com scandals, there is little evidence that current events will push business scholars toward social responsibility this time around.

Like City traders, the business school academics who run the RAE panels and participate in the submissions seem to be captured by a perverse incentive scheme and a culture that values individual success at the expense of the common good of society.

Government will now step into the City to try to restore this balance, although there are obvious implications for academic freedom if it tries to intervene in higher education in a similar way.

But it is, perhaps, time for the university itself to step in and to admit that the business school may not always be the magic solution to its financial woes, but it may instead have contributed to this mess.

It is time for the business school to be brought back into a larger system of self-regulation in the university where established disciplines with broader perspectives and deeper traditions of inquiry can judge, guide, and reform business scholarship and teaching.

The university, steeped in the heritage of ethical, social and critical thinking, from law to sociology to literature, needs to bring this errant discipline back into the fold of the university.

Indeed, it may be time for the university to remind the business schools that, in the words of Immanuel Kant, "morality is not really the doctrine of how to make ourselves happy but of how we are to be worthy of happiness".

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