It was inevitable that one outcome of the recession, aside from the devastation of the economic hurricane, would be deciding who or what truly was to blame. The truth is there is no one factor or person. However, as the smoke begins to clear, there is increasing blame being attributed to the financial leaders of our generation, specifically the mighty who have fallen.
We have all been witness to major financial scandals over the last couple of years. Many of these scandals have been perpetrated by key figures in the upper echelon financial world, individuals with impeccable credentials, or so we thought. To the dismay of both the public and academia, a good number of these individuals bore MBA's – seemingly their license to direct the financial community – from some top business schools.
While no pattern has emerged, a number of questions have arisen regarding MBA programs and the students therein. While there are no guarantees, an MBA from a top business school is a tremendous stepping stone to a lucrative career. The question is how desperate are students to obtain that coveted degree.
In a 2006 study released by the Academy of Management Learning and Education, an astonishing 56% of MBA students admitted cheating, far exceeding any other major discipline.
The focus of many major MBA programs is quite straightforward – your sole obligation is to make as much money as possible for your stockholders, within the parameters of the law. Unfortunately, a decided absence of ethical teachings has caused many graduates to ignore the legal obligations of earning money. The argument that students want to earn as much as possible in order to repay their expensive education doesn't hold much water. Were that the case, medical students would be dropping like flies in insurance scams.
Many business schools acknowledge that a lack of classes in business ethics may be part of a larger problem and some, indeed, have begun to change their curricula to reflect a necessary change. Others schools have tightened their application processes to help weed out potential "future problems." Overall, the fall of the giants has helped remind us that, in a democratic society, we are all equally accountable for our actions.
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Thursday, February 25, 2010
Did Lack of MBA Ethics Cause the Recession?
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Academy of Management Learning and Education,
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Dont know why people blame Financial institutes or MBA or brokers and Bond traders.... i believe everyone was acting with the same premise that "I am smarter than the next guy.... so I can make some money and get out before it all crumbles"... the common man down the street buying google shares for $400 was exactly doing the same thing, that the real estate analysis who approved $400K loan for someone making $40K a year...
ReplyDeleteremember, every transaction has a buyer and seller
Gordon Gecko said it best -"Greed is good". Some very smart people created some very arcane products that other smart people trusted without doing enough analysis. They thought that their "investments" were safe as derivatives backed them. Who backed the derivatives? If a deal seems to good to be true, it is!
ReplyDeleteThe only thing there was a "lack of" were the enforcement of pre-existing controls and meaningful legal deterrents. The ethics were never there to begin with. If a credible study says "56% of MBA students admitted cheating" then its safe to assume the other 44% are cheating AND lying.
ReplyDeleteI do remember from those Economics studies in years gone past the very basic premise was the sole motivator was the best interest of self or those who self is acting for - or words to that effect.
ReplyDeleteThere's absolutely nothing wrong with those motives and the outcome of those actions - when we live in a bottle. Which we don't.
It might be suggested the US crashed and burned in many ways - and that does have a tendency to happen when people lose sight of the risks versus the rewards.
One might suggest a look at how other economies fared might be a supplier of a wealth of information. MBA programs exist a plenty in Canada for example and even though Canada is economically tied to the US in a very large way it was one of the last countries to recession and one of the first countries to come out of a recession.
Every transaction has a buyer and a seller and everybody is motivated by self - it's how we proceed after our motivations kick in that determine how we impact the lives of others.
Perhaps our government leaders should be more accountable, there is scandal everywhere with no real ramifications, thus offering little incentive to be ethical or honest. It is time for persons in power (private and public figures) to be held personally accountable for their actions, spending, and any behaviour affecting others.The common person is held accountable yet very few with power are. I think our economic woes are a result of misdirected blame, underhanded self serving sell outs and private deals with very little to do with ethical training in obtaining an MBA
ReplyDeleteI agree about holding our politicians and civil servants accountable. It's a sad state of affairs when elections become nothing more then trying to decide which "devil" will harm one least.
ReplyDeleteMuch is said low voter turnouts but it's really darn hard to get excited when all one sees is civil servants and politicians voting themselves defined pensions and defined benefit packages - regardless of how well or poorly they do their jobs.
The argument that civil servants and politicians should not be accountable to the merit system doesn't hold credibility any longer - especially when the only thing we can absolutely rely and expect a politician or civil servant to do extremely well is not do what they promise and do what they promise they wouldn't.
We are victims of our own apathy so it's hard to blame others when one won't help themselves.
In any analysis leading to an assignment of blame, responsibility must be considered. Blame will attach to those who did not live up to their responsibilities.
ReplyDelete"MBAs" as a group have no responsibilities.
Professional accountants (CAs, CPAs, CGAs, etc) do have responsibilities. Allowing others (politicians, pirates, etc) to influence accounting principles means the "professionals" have a lot to answer for.