The National Catholic Review
Gerald F. Cavanagh
The ethical legacy of Catholic business schools
Image

In a number of public financial scandals over the past decade, chief executives of such companies as Enron, Adelphia, Qwest, WorldCom and Imclone have gone to jail. Yet recent revelations concerning the subprime loan debacle and speculation by hedge fund and private equity firms show that ethics and social responsibility are still missing within the business sector. Many executives of the firms garnering negative publicity for their actions are graduates of our “best” graduate business programs. Have business schools in the United States failed to convey ethics, social responsibility and good moral habits to their graduates?

Most business schools would claim that that is not their purpose, nor do they have the skills to imprint such habits. Increasing profits, including the short-term share price, is the goal presented by most business programs, and especially by economics and finance teachers. This narrow goal promotes outsourcing, layoffs, sweatshops and pollution, while neglecting research, development, the reputation of the firm and the future of the business and the community. Ethics and moral principles might moderate this short-term, competitive viewpoint, but less than one-third of U.S. business schools require students to take courses in ethics or social responsibility, even after a cascade of ethical disasters in the last decade.

A Catholic Difference

What can we say about Catholic business schools? Are they better than others at communicating that the goal of business is to serve people, and that profits are merely one measure of that service? In a number of ways, they are slightly better than their peers: nearly all Catholic business schools require a course in ethics and social responsibility; and most of the textbooks on business ethics and the social responsibility of business are written by authors who have been educated at Catholic business schools or teach at them. This is true in the United States and in much of the rest of the world. Liberal education with a core in the humanities, philosophy and theology can provide a foundation from which educators can clarify ethical issues and provide critical principles to aid business people. Catholic schools run centers that study and communicate business ethics to faculty, students, business people and the general community, such as those at Santa Clara University, Boston College, the University of Notre Dame and Duquesne University.

Many of the schools underscore global business responsibility. They highlight the work of Muhammad Yunus, the Nobel Prize-winning economist who makes tiny loans to poor women in developing countries (microlending), and the new interest in providing goods for poor people “at the bottom of the pyramid.” They examine the work of Lester Brown, a well-known environmental leader, who provides an outline of global ecological problems and solutions in his book Plan B 3.0: Mobiliz-ing to Save Civilization.

Many professors use other tools to stress the importance of social justice in the world of business. These include Berlin-based Transparency International’s annual ranking of the nations of the world from least corrupt to most corrupt, which is an attempt to reduce bribery by embarrassing those nations and leaders at the bottom of the list. Some use two sets of global ethical codes for business: one by the Caux Round Table of top business executives, and the other by the United Nations Global Compact with Business. While the first is more detailed, each provides a benchmark for global business responsibility.

Most Catholic business schools encourage students to engage in “service learning,” which takes them into the inner city to work with people at soup kitchens, homeless shelters and struggling schools. This is often an eye-opening experience for young professionals. It broadens horizons when an ambitious young business student recognizes that “this homeless person could have been me, if not for the good luck of where I was born.”

Business programs were first established at Catholic universities to provide the knowledge and skills that immigrant Catholics needed to succeed in their careers. Today most Catholic business schools are located in large cities. They are interreligious in terms of faculty and student body, which widens their influence considerably beyond the Catholic community.

The Wealth of Church Teaching

How does the Catholic character of a school affect teachers, courses and other activities? This question was addressed in June 2008, when 250 business faculty members met at a conference entitled Business Education at Catholic Universities: The Role of Mission-Driven Business Schools, initiated by St. Thomas University in Minnesota and held at the University of Notre Dame. The participants came from 118 universities and 24 countries on six continents. A month later a second conference, Business and Education in an Era of Globali-zation, brought another 200 faculty members and deans of Jesuit business schools from around the world to New York City. Formal papers and discussions at these two conferences raised such issues as global ethics, stewardship, service learning and moral formation, and how such an emphasis can provide a competitive advantage to Catholic business schools as students choose which school to attend. Many of these presentations are on the Web site of the Catholic studies program at St. Thomas University.

Social justice is best communicated when most faculty members integrate the subject into their class discussions in all disciplines. Not all teachers at Catholic business schools, however, support an emphasis on social justice; some think that it clouds an otherwise clear result of “running the numbers” to determine the most financially profitable option. The core of those who are less enthusiastic tend to teach finance and economics. Even so, Catholic social thought, which takes its origin from Jesus’ teachings, provides a wealth of insights for business teachers and business people.

Catholic social teaching stresses the common goals of all nations, religions and peoples. The accumulated wisdom of Jesus, the fathers of the church and countless theologians since provides an excellent test for assessing ourselves and our world. The dignity of every human person is the most basic of these principles. It is reflected in ethical principles of justice, rights and duties and caring; these norms are used in making decisions. The principle of the common good or solidarity is a critical balance for our self-centered, individualistic selves. We see the need for appreciating the common good when we realize how rarely—even during discussion of national policy—we hear the common good mentioned. Yet recognizing the importance of the common good is essential for any community, whether small or global, if it is to survive.

Subsidiarity, or placing responsibility for actions and policy on the people who are closest to the problem, is another insight derived from Catholic social thought. Subsidiarity requires individuals, families, neighborhoods and local communities to take responsibility for local issues and urges organizations and government hierarchies to support such local control. Unfortunately, here we find a paradox, because the Catholic Church itself often violates this principle. Two decades ago the Catholic bishops of the United States inspired more interest in social justice than at any time before or since when they wrote their two highly regarded pastoral letters on world peace and economic justice. The bishops wrote two initial drafts of each and asked for comments from laypeople, clergy and religious before issuing a final letter. Vatican authorities, however, told the bishops that they were not to write such letters again without Vatican approval. Another apparent violation of the principle of subsidiarity occurred recently when the U.S. bishops requested a certain English translation of the liturgical eucharistic prayers, and the Vatican insisted on a centralized version.

‘Catholic’ as a Brand

Catholic social teaching is a treasure, but there is an obstacle to naming it. The word “Catholic” does not speak well to students in Catholic universities, either in the United States or in Europe. To many young people the word suggests “what one may not do,” especially prohibitions with regard to sex. Teenagers are naturally rebellious, so given the church’s overemphasis on sexual ethics and its own sexual abuse scandals, it does not help to call an emphasis on moral or ethical principles Catholic. The label can be a hindrance. For this reason, many professors explain the social principles without identifying them as Catholic. They judge that communicating the content of the teaching is more important than identifying its origins. That is unfortunate, because the church’s influence and the authors of the teaching deserve to be known. Many instructors wait until after their students begin to appreciate the social principles; then they reveal their origins in Catholic tradition.

For similar reasons some Catholic universities do not explicitly acknowledge their Catholic roots in their mission statements, although they certainly do not try to keep them a secret. To many in our rationalistic, postmodern nation, the word “Catholic” does not suggest free inquiry and a willingness to ask tough questions, which are at the heart of any university. Pope Benedict XVI may be gradually changing that perception. Meanwhile, most Catholic universities settle for simply indicating their Dominican, Mercy, Benedictine, Jesuit or diocesan origins even as they highlight ethics and social responsibility in their curricula. Catholic universities support spirituality in business, and scholars support business firms that encourage voluntary groups to gather to pray on company premises, but not on company time.

Catholic universities and business schools also support the development of personal character. The ethical failures by the managers of Enron, WorldCom, Adelphia and Qwest, as well as those of so many executives in hedge funds, private equity and financial services, have made it clear that some business executives suffer from a lack of character. One might loosely define a person’s character as a constellation of that person’s virtues and vices. Virtues and vices are moral habits, and habits are developed by repeated actions. An atmosphere in which students deal with peers and teachers in an honest, one-on-one way, and have opportunities to help others, including the poor, is an environment that encourages the development of good acts and moral habits. Whenever our schools provide such an environment, they contribute to the development of ethical and socially responsible business practices at home and around the world.

Gerald F. Cavanagh, S.J., is interim dean and Charles T. Fisher III Chair of Business Ethics and Professor of Management at the University of Detroit Mercy. He is author of

Comments

Tom Jordan | 2/15/2009 - 5:02pm
Interesting assertion. But we need a research study to demonstrate whether the Catholic University education makes a difference in ethical behaviour. Dennis Kozlowski and Robert Brennan may be exceptions but we have enough recent experience to complete a proper analysis.
Joe Luedtke | 2/10/2009 - 3:24pm
All human beings are engrained with an ethical framework to varying degrees. This framework comes from our culture, religion, and upbringing and is reinforced daily by our friends, family, and community. Corporations on the other hand, are entities that lack an ethical framework and could be consider inherently amoral. As the author points out, the drive for short-term profit can blind the organization to the unanticipated costs of their actions. I believe discussions like this and the rise of Social Responsibility are the beginning of an evolutionary growth of an ethical framework for corporations. Corporations may find out one day very soon that having an ethical framework may be necessary to ensure their long-term survival. Our schools and universities have the opportunity to both promote and lead this evolution.
XiChang Wang | 2/5/2009 - 11:53pm
Nowadays almost everyone in the world is experiencing the unexpected and huge economics crisis. From this article, its topic is focused on the ethical principles and I agree this conclusion very much. If everyone of us could contribute our virtues but vices to this world, such bad things are supposed to be less and less. We all live in the earth which is full of all kinds of different natural disasters, so most of time man has to be engaged in a constant struggle with Nature. Even though we have to face the challenge from it, there are still so many people who are interested in gaining profits from others, their peers. Sometimes they even do not care what they do will make other innocent people injured. We may find such things very often in newspaper and web sites. In fact, a person can not keep his life for a long time. Even if he or she could own the whole world and all wealth through some immoral ways, I do not think he will be brought real happiness. Therefore, an ethical basis for education is necessary for all of us. Everyone should be taught such concept since his childhood and repeat all the time. In this way, perhaps, we could make this world better and better.
Alan | 2/2/2009 - 1:06pm
Years ago when I taught at Loyola Chicago's business school I would ask the MBA students what was the purpose of their employers' businesses. The usually said, to maximize profit, increase shareholder value,etc. I would then say I believe I can do better than your present management. They were incredulous. Then I would say, I would sell assets, reduce the work force. etc. Our profits would soar and our stock price would do likewise. This is exactly what many of the takeover specialists do.But as a result of these actions a company might not be in business the next year. Henceforth our discussion proceeded on a more balanced fashion.
JohnB | 1/30/2009 - 7:51pm
With the sexual abuse of children by catholic clergy and the subsequent coverups being found on a similar scale and conducted in a similar manner across the English speaking world and with the consistent inability of the church in any of those countries to provide an appropriate or consistent Christian, legal or humanitarian based response to eliminate the abuses and to afford reparation to victims it becomes a matter of responsibility for our governments to legislate this failed religious group out of existence or at a minimum legislate them into compliance with their own teachings.
Joe Schaefer | 1/30/2009 - 5:35pm
I would believe Catholic business schools can make a difference. It would be interesting to know if, in the current financial debacle, anyone can document that graduates of Catholic institutions made any difference -- or just went along with the rest of the crowd in producing a self-serving, take-all-you-can-make ethic that seems to brought us to the present disaster.
John Médaille | 1/30/2009 - 4:19pm
An excellent article. Let me boast of the University of Dallas's Business Leadership degree program, which requires not just an ethics course, but a course in Catholic Social Teaching as applied to business and economics. I have the honor of teaching that course, and the textbook was reviewed by John Coleman in these pages http://www.americamagazine.org/content/article.cfm?article_id=10326