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MBA Students Must Set The Agenda For Corporate Social Responsibility

B-school professors say MBAs can put pressure on companies to practice what they preach

By  Robert Klecha

Tue Jan 9 2018

Ten years after the global financial crisis, the public has become increasingly vigilant about holding corporate leaders’ feet to the fire. Then it may come as no surprise that Corporate Social Responsibility (CSR) has become such a hot-button topic, particularly within MBA curricula.

When the Lehman Brothers capsized in 2008, many blamed a rapacious corporate culture in which tycoons in free-fall could deploy “golden parachutes” while taxpayers picked up the tab. The blame was extended to the educational institutions that filled corporate ranks. Many business schools took the criticism to heart and offered sincere responses…

Clinton Free, the academic director and interim director of Sydney’s Australian Graduate School of Management (AGSM), explains: “In an age of increasing cynicism about big business, CSR is an important way for businesses to signal a commitment to society and generate goodwill. Research has consistently demonstrated that CSR can increase profitability, reduce the cost of equity, reduce firm risk, and influence consumer-buying behavior to varying degrees.”

It’s not revolutionary for a large company to publicly align itself with a cause to make it appear more humane. Take, for instance, the greenwashing phenomenon exemplified by Walmart’s “go green” campaign or the Coal Industry’s “Clean Coal Initiative.” This tactic is often a (very expensive) cheap ploy for companies to have their cake and eat it too—without having to reflect on its business practices.

Clinton concurs. Despite PR campaigns that lean heavily on CSR tactics, he argues there are simply not enough incentives for companies NOT to engage in unethical behavior. “We still see continued bad behavior from big businesses and institutions, [ranging from] tax evasion, collusive activity in the banking sector, and child labor abuses to environmental damage wrought by mining companies and privacy breaches by technology companies,” Clinton says.

Perhaps this is because CSR highlights a very real discrepancy between what corporations believe they owe to the various systems that sustain them and the expectations consumers have of the companies they support.

For now, there has never been a better time for citizens to speak truth to power. Social media has given us unprecedented access—and influence—over abusive industries. Carl Craen, vice president and managing director of EU Business School, believes the overwhelming need to hold the powers that be accountable has changed the game in ways that we are just beginning to understand.

“It may be more difficult than ever before to practice CSR because this level of social responsibility didn’t exist before.” The role of Facebook in the last presidential election, for example, was such an unprecedented turn of events that no one—least of all the social media behemoth itself—knew exactly how to respond.

The fact that there’s a conversation about transparency and sustainability happening on such a massive scale represents an enormous cultural shift, according to Carl. “The increase in transparency brings a lot more scrutiny and pressure on companies, but this is a fundamental necessity in modern business and a welcome challenge for the most innovative, forward-thinking companies,” he says.

This large-scale attitude adjustment has become a major goal for business education. Whereas business schools were historically caricatured for their lack of concern for issues beyond the boardroom, the MBA industry wants to take steps to expand the aims of doing business.

For Carl, there’s an urgent need to find ways to force companies to put their values into practice, but he’s also realistic about who might actually turn that switch on and when.

“What [we] need is a fundamental shift in mentality. The real responsibility will lie with the younger generation—our future business leaders—who will lead the world through some of the most difficult environmental and social challenges that our planet has ever faced.”