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Can the MBA Brain be changed?

Can we make business more ethical through brain science?

 

Gordon Gecko and disciple
Gordon Gecko and disciple

While the oil pours out of BP's deepwater well and blustering, self-justifying ads pour out of BP, I've been wondering about the managers and executives who work there. Are they totally without ethics? They're hardly the first executives to cut corners: just look at Massey Energy, Enron, AIG, in the financial markets. Shortsightedness, greed, indifference to others - where do these people learn these things? In business school?

What do you think of when you see the letters M-B-A? Do you start constructing new meanings, like Me Before Anyone or Management By Accident? "Greed is good," said Gordon Gecko (here's his speech), and his audience all looked like M.B.A.s-in-training.

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For an out-of-academia perspective, I checked in with my daughter Kelley Holland.  She's been a reporter and editor at Business Week and the business section of The New York Times, where an article she wrote on business education stirred up heated discussions about how business schools should operate.  Here’s her take:

An M.B.A. from an elite school has long provided a first class ticket to the fast track - even, in one case, to the White House. But as business disasters have piled up, employers and deans and even university presidents are taking a harder look a whether something is rotten in business school. (Apologies for the Shakespeare mangling, Dad.)

Take agency theory, for example. For decades now, many business school courses have been built around this concept, which analyzes the relationship between managers and shareholders. Michael Jensen, a professor emeritus at Harvard Business School, gained renown by forcefully articulating agency theory, arguing that managers' interests need to be aligned with shareholders' because managers - indeed, all of us - are naturally governed by self interest. "Like it or not, individuals are willing to sacrifice a little of almost anything we care to name, even reputation or morality, for a sufficiently large quantity of other desired things," he wrote in a highly influential paper called "The Nature of Man."

Jensen's thinking has evolved considerably since then. But agency theory, and Jensen's arguments, form the basis of many a business school class--and infuse many an MBA's thinking.

As the financial crisis has turned into a grinding recession, however, critics of business education are speaking out. Rakesh Khurana of Harvard Business School charged at a recent Fordham University conference, where I moderated a panel with him, that agency theory has "removed any notion of considering managers' actions in terms of any transcendental values such as duty." He is calling for a renewed sense of professional responsibility for M.B.A.s.

Edward Freeman of the University of Virginia believes that business schools need to do a better job of educating the whole person. They need to inject some liberal arts education into a curriculum overly focused on technical and financial skills.

The good news, then, is that change is coming, albeit slowly, to business schools. The most tantalizing hint of impending reform came in May, when Harvard chose a reform-minded professor named Nitin Nohria as its new business school dean--partly at the behest of alumni who argued forcefully for someone with fresh ideas. Nohria is widely expected to inplement significant changes. And since Harvard is, well, Harvard, many other business schools will probably follow suit.

Research by Dan Ariely, the MIT behavioral economist who also blogs for PT, has performed a series of experiments, described, that indicate that people do respond to explicit references to a moral code. For instance, he found that students' cheating in an experiment dropped to zero if they recalled the ten commandments ahead of time.

Thus, brain science offers hope that ethical teaching might improve M.B.A.s' and business's behavior. Evolution has apparently built into our brains some sense of responsibility toward others. Most of us have heard about Marc Hauser's research. In the human animal, evolution uses emotions generated by the ventromedial prefrontal cortex and belief attributions in the right temporoparietal junction to support moral actions. John Mikhail of Georgetown University Law Center argues that this new knowldge should be extended to the way we conceive of torts, contracts and criminal law--and, presumably, corporate law and standards of corporate behavior.

In a review article, Jonathan Haidt of the University of Virginia points to certain core principles: emotional intuitions of morality; understanding one's actions as functioning socially (rather than truth-seeking); and "the coevolution of moral minds with cultural practices and institutions that create diverse moral communities." We can all understand this intuitive morality as involving harm and fairness. Haidt would add loyalty, authority, and purity.(Incidentally, you can test your own morality.)

As far as the M.B.A. is concerned, this brain research is showing that we humans have an evolutionary drive to do the right thing, but we fit the right thing to the community we are in. We can build on that positive evolutionary base in our brains. If we change the community, if we change the ethics taught in business schools, we can form more moral business organizations. Let's have no more BPs or Masseys or AIGs.

Norman Holland, Ph.D., specializes in the psychology of the arts. His latest book is Literature and the Brain.

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