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The Upside: A Better Way for B-Schools

The old ‘Greed is Good’ mantra of Wall Street may be going the way of big hair. A movement among business managers and executives of tomorrow to sign a voluntary pledge to uphold the common good today has created a soul-searching stir in academe and beyond.

Fed up with revelations of Ponzi schemes, rampant fraud, and predatory practices, a group of Harvard MBS students launched a plan in 2009 to bring ethics back into business.  They created a shared code of professional ethics based on the Hippocratic Oath taken by doctors. The “Harvard MBA Oath” commits students, among other things, to “strive to create sustainable economic, social, and environmental prosperity worldwide”. In 2009, more than half the graduating class at HBS signed on.

During the boom years, B schools tended to emphasize the supremacy of the individual. But now there’s a trend towards recognizing community bonds and upholding the greater good.  Since ’09, the Harvard MBA oath has gone viral, spreading to NYU Northwestern and across the pond Oxford University and beyond. 239 student in Egypt are taking the pledge in Arabic and English this year.

There’s no mechanism for enforcing the oath, but many take it as a good sign that students are driven to see the financial world within a broader social and moral context.  Max Anderson, the HBS student who came up with the idea, doesn’t want to be part of a profession that’s seen as preying on society. “We want to be known as professionals,” said Anderson, “who look after the best interests of their clients, customers, employees and shareholders.”

But can morality and business really mix? The Oath is not without controversy — some see an anticapitalist, liberal political agenda lurking in the language.  HBS student Andrew Sridhar does not believe in the professionalization analogy with oaths in law, medicine, or the clergy. “Your liberty, your life, or your soul may be at risk in (these) cases, but rarely are the stakes so dire in business.”

And some B-school profs, like Theo Vermaelen, see the Oath’s commitment to the social good as at odds with the fiduciary duty of business managers towards shareholders. Isn’t the point to maximize shareholder wealth no matter what? Vermaelen also bristles at the assumption that Wall Street is crooked, maintaining that while business managers may have displayed ignorance during the boom years, they were “not crooks.”

Others, like Charles P. Green, rejoice at a new perspective among students. The Oath “will come to be seen as a declaration of a new way of thinking, and will significantly prevent future misdeeds,” wrote Green.  He welcomes a shift in emphasis among students from competition to common interests..

As Americans reset their ethical barometers, it will be interesting to see who will win the day, the Sridhars and the Vermaelens, or the Greens and the Andersons?