Touches of evil

Ethical downfalls are not the result of single acts, but rather the daily erosion of moral standards, says Stefano Harney

March 24, 2011

There is a simple teaching device for any module in corporate social responsibility: direct the students to the vision statement on a corporation's website. Whether the company makes toys, mines coal or lends money, the statement will inevitably include a commitment to environmental sustainability, community empowerment and human rights.

Now distribute an article about the same company being accused of bribery, using child labour or dumping illegal chemicals. The contrasts can be spectacular. Students will often say they have had their eyes opened. But have they?

Our understanding of why businesses act unethically is worth examining in the wake of the London School of Economics' recent problems. It has been criticised for its connections to the Libyan regime, and it may not be the last institution to come under such scrutiny.

Looking back, business' most dramatic ethical downfalls seem inevitable. With the global financial meltdown, for example, the financial sector claimed to be a vital engine of growth, but can easily be shown to have torpedoed the world economy. Equally, it seems obvious now that the rebranding of BP as a corporation going "beyond petroleum" hid a reckless pursuit of fossil fuel that ultimately led to the Gulf of Mexico oil spill. And the LSE now looks naive to imagine it could influence Libya's leadership.

But the lessons are not so clear. By the time the contrast between words and deeds becomes apparent, the damage has already been done.

Corporate social responsibility is not about scandals; it is about the daily erosion of ethical standards. The financial meltdown was not caused by the immoral behaviour of a few rogue traders, but by the slow accretion of a culture of blind faith in markets and the idea that the pursuit of selfish gain would enrich everyone. This gradual abandonment of concern for customers, investors and the public developed in mundane conversations in the pub, dull management meetings and the daily chatter of the financial press. There was no one evil decision. The same is true with the culture of cost-cutting and regulatory evasion at BP. And we ought to suspect something similar at the LSE, chipping away at the organisation.

This can easily be illustrated by asking your business ethics students to keep an "ethical diary". Every day they should make note of the ethical decisions they make at university, work, among friends and at home, and explain their reasoning. These diaries gradually build the case for a different kind of corporate social responsibility, one grounded in the competition of everyday life.

In diaries I have seen, students routinely record withholding module information from other students, lying to family and aggrandising themselves at the expense of others at work. They suggest they felt compelled by organisational pressures to make these ethical compromises.

Lecturers could hold a similar exercise. I know what an ethical diary would look like in my own field of business and management, which is at the forefront of many universities' overseas programmes.

If I am asked to teach human resource management in Dubai, am I to censor myself on equality and diversity in the workplace? In China, am I to avoid discussing the importance of independent trade unions? And in Pakistan, should I speak of the rights of religious minorities at work? There would be nothing spectacular in the decision to avoid any of these topics, but the rot would have set in.

Similarly, if a lecturer at my university's lucrative engineering programme in Beijing were to teach about the substandard structural engineering in primary schools hit by the Sichuan earthquake in 2008, drawing complaints from the partner university or the state, would my college leadership stand up for him? I like to think so.

But then the challenge for the globalising university does not primarily lie in Beijing or Abu Dhabi. There are plenty of locals fighting for ethical standards there. We can join them, but only if we can identify the pressure points that lead to the daily degeneration of ethical life here.

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