Sometimes when you're an educator, you get to say provocative things just to try to stir up discussion. And that's what I'm about to do.
So here goes...
And remember, I'm just trying to provoke you.
A group of Harvard MBA students is circulating the MBA Oath. In part, the idea is to remedy the black eye that the recent financial crisis has given to schools of management, by having MBAs promise to work to enhance social value.
I'm not sure what I think of this idea. (Actually, I am sure, but I'll save that for later.)
At the suggestion of a friend who is a professor at another b-school, I wrote up a competing Oath. Here it is:
I, the undersigned graduate of so-and-so business school, recognize the inherent tension between value creation and value capture. Private enterprise has little incentive to create value unless it is allowed to capture at least some of it. Our capitalist system recognizes this tension, and allows firms to pursue profits self-interestedly, subject to many limitations imposed by the legal and regulatory system. As a manager, I realize that it is not my role to determine what is an "appropriate" or "inappropriate" profit-making opportunity; in our society, the political, legal, and regulatory processes make that determination. I therefore pledge to maximize shareholder value (subject to all applicable laws and regulations), and recognize that I serve a great social purpose in so doing.
Now that I've provoked you, tell me what you think. Which Oath is better? Which one would you sign? Should managers work for social value or shareholder value? What the heck is social value, anyway?
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5 comments:
Didn't Arrow (1963) establish the impossibility of a social welfare function? Lacking a yardstick against which to measure social welfare, how will we know if MBAs are being true to their oaths?
I'll share this with Dr. Abe in our ethics class tonight and get his take on this...but I wouldn't be surprised if you two have already discussed this.
I agree with Doug. The problem is that there has not been and doesn't seem to be any accountability once executives do make decisions. Aside from that I don't think there would be an effective solution to add accountability in private industry or even public corporations. Our government is supposed to be open and transparent, yet elected officials are rarely held accountable and rhetoric often out ways the truth of their decisions. If we cannot get accountability factored into this system, how much more complicated would it be to incorporate it into a company that withholds information in order to maintain a competitive advantage. These oaths are "ethics washing" and are likely to do little other than stir up some positive PR to b schools and MBA students. I think I'll add it to my resume though.
Alternatives to shareholder value really bug me. I blogged (somewhat clumsily) about this at chadjardine.net . Just like you point out in your alternative oath, the problem is that everyone wants to perform all the functions. They aren't happy just focusing on shareholder value, they need a higher purpose--one to which they can coerce the rest of us who are less moral, less intelligent, and driven by our own coarse self-interest. The problem is that they tinker with the mechanism behind the invisible hand and so in stead of pushing it toward the good of society, it gets sidetracked and starts pushing the collective society in a different direction. My .02
Thanks for keeping the discussion going, Scott! Wish I was still in school, so I could catch your new class.
Chad Jardine
Thanks for opening up this debate. I am a UofU alum and recent graduate from Thunderbird (www.thunderbird.edu), the originators of the MBA oath although Harvard is now taking the credit (typical), and I signed the "MBA Oath" and I am glad I did. I admit that I do not remember every detail of it. It's almost impossible too, but like most things you learn in B-school the over-arching message sticks with me. Business needs capitalism to function but we as managers need to continually think about the consequences of our decisions and actions as they impact our shareholders and society. The oath does not instill that we must sacrifice shareholder value for social value, but merely there should be, and is, a balance between the two that creates synergistic value for the benefit of the world.
Thank you again for opening this debate.
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