I am not sure I agree with this assessment. Larry Ribstein's blog (yesterday) has a nice quote from a new article by Robert Reich:

"the new interest in so- called "corporate social responsibility" is founded on a false notion of how much discretion a modern public corporation has to sacrifice profits for the sake of certain social goods, and that the promotion of corporate social responsibility by both the private and public sectors misleads the public into believing that more is being done by the private sector to meet certain public goals than is in fact the case."

The issue isn't so much business school education that creates the incentive for profit maximization at the expense of ethics, but rather the structure of the game that business people engage in. Business people have to be profit maximizers if they hope to be successful. This is analogous to Milton Friedman's famous example of the billiard's ball player. Regardless what business school teaches, successful business people will focus on profits by definition of the fact that they are a successful business person.

I think there's a role for ethics. From a purely instrumental perspective, it provides branding. And from a "how does the world work" perspective, businesspeople follow ethical principles - trust, fair treatment, have-your-say, and so on all the time. If they didn't, they'd likely be unsuccessful.

Not that none of these facts incentivize liability rules, though.

Thanks for that comment, Brian. I agree with you, and that was the main thrust of my Emory article and my Shareholder Primacy Norm article. In the post, I was trying to make the point that corporate law is not an important deterrent to socially responsible decision making, but I failed to note that markets exert a tremendous pressure on corporate executives.

If it's required by law, the behavior couldn't really be called "socially responsible" or even ethical. Behavior of this type is regulated and therefore takes the choice out of the behavior altogether. Ethical actions, almost by definition, require some sort of agency, which is missing when the law constrains choice. This is not to say that the government should never regulate corporate behavior in order to improve public goods, but I think a discussion of corporate ethics ought to be considered apart from legal institutions.

Brayden, This reads like Henry Manne, who made this point in his oft-ignored discussion of corporate social responsibility. I am not sure whether your comment was triggered by the post or the other comments, but it seems to me that the topic of ethics usually arises from the other direction: whether law compels irresponsible behavior.

Gordon,

Although I agree with Brian's comment, I do see a role for the teaching of, or at least discussion about, business ethics in business schools and universities.

Business schools and universities do have an important influence upon the future of management thought and practice, and the teaching of ethics could make a contribution toward the advancement of ethical business leaders in the future.

With full respect to Brayden, I do not agree with his comments. In my view, compliance with all relevant legislation is part of ethical behavior.

True, companies should view legal compliance as a bare minimum and should seek to go above and beyond that. But complying with the law is, in my view, one step toward becoming an ethical corporation.

Cheers
Andrew

Maybe this is too simplistic an observation, but it seems as though some in the business community are regarding law as a hurdle they must clear rather than (more accuratly) a bare minimum standard that must be complied with. Regarding legal compliance as a hurdle makes clearing it seem like an accomplishment. Very few of us, though, would brag that we or our kids are good people for having stayed out of jail. When we regard our economic system with approval as a driving social force (relying on invisible hands and market corrections and whatnot)that will do a fine job of shaping society, and at the same time we want to exempt it from regulation or (in the board room)hesitate to impose ethical considerations beyond the law, what sort of society are we likely to end up with?

This is an interesting post to me because the business ethics class I teach in the Marriott School promotes a "toolbox" approach to ethical dilemmas. All of the business ethics sections here cover a broad range of ethical tools including utilitarianism, social contract, virtue ethics, deontology, stakeholder theory, and so on. We discuss the strengths and weaknesses of these tools as applied to business cases.

We also specifically have a discussion about shareholders vs. corporate social responsibility. I use this great article to spur discussion:

http://www.reason.com/news/show/32239.html

What deserves more discussion, in my opinion, is that shareholders' interests are not homogenous. An executive waiting for his restricted shares to vest has very different interests than the retiring worker investing in his 401k. Certainly maximizing shareholders' wealth upholds a real ethical duty, but not all shareholders want the same kind of wealth (ex. short-term appreciaton at a long-term cost vs. slow and steady appreciation).