'Business Education has Become an Industry'

So here we are. As hot as the weather is in New York, as hotly contested is the role which business education has played recently in making for more responsible companies. At the PRME 'side event' of the UNGC Summit some rather soulsearching questions were raised. Rakesh Kurana from Harvard made it quite clear that one of the dilemmas of b-schools in fact is that they have come to see their students rather as ‘customers’ then people who need education and at times been served a diet that needs some acquired taste. Just to blame the business world for lack of demand for issues of CSR and ethics is not enough in a world where the public increasingly worries about the status of wider societal impacts of business.

While the Accenture Study (in cooperation with the UNGC) of the opinion of more than 800 CEOs suggest a slightly different picture, it leaves us with one general problem: Since business education, certainly at postgraduate/MBA level is in fact privatised and ‘purchased’ by students or their companies, this inherent tension cannot be denied. One of the reasons I personally have started to dislike teaching on MBA – or worse – executive MBA – programs is exactly that it is a tough challenge to make students think, reflect about things unknown or strange to them and, most notably, to read. And the issues the UNGC is concerned about fall exactly in this category.

Interesting comments came from India, delivered by Jamshed Irani, Director, Tata Sons Limited. In his view, since business schools don’t do a good job (in general) at talking about climate change, ethics etc. corporations should have their own universities and b-schools. Yes, you havn’t misheard. I guess this reflects a tradition of a great company with a long tradition of philanthropy and ethics, such as Tata. But what about a b-school run by AIG, BP or Lehman Brothers? Just imagine the type of ‘leaders’ we would get from there...

So far the UNGC summit (i.e. this fringe event) put the finger on one important thing: with delegating responsibility for public goods (and education used to be one) in the hand of private actors, we have opened a pandora’s box. Its irreversible, I think (as the Hewlett Packard Chair in CSR, no less). But we need new criteria for private responsibility for public goods in order to change this focus within b-schools. How this will be achieved – no real answers so far from New York.

Ratan Tata: corporations in the developing world have to be more paternalistic

In the last decade, the business case for CSR (i.e. that attention to social issues needs to make sound business sense) has become something of a mantra for corporate responsibility advocates. Deviation from this script is rare. So it was refreshing to hear Ratan N. Tata, the leader of India's largest conglomerate, Tata Sons Ltd, mark his first public engagement in Canada by speaking eloquently last night of his commitment to a different approach to responsible business.

Speaking as the guest of honour at the inaugural event of the Thomas J. Bata Lecture Series in Responsible Capitalism , hosted by our own Schulich School of Business here in downtown Toronto, Tata make it clear that in his view, the developing world presented a different type of challenge for corporate responsibility. "Building schools and hospitals," he argued, "is something you have to do" in countries like India that lack basic government provisions. For corporations, he suggested, this meant that they have had to adopt a "more paternalistic" approach than that required in the developed world.

His own company, the Tata group, has become something of an icon in the responsible business world. Sure, they've had their run-ins with environmentalists, unions, and community groups over the years, most recently with the launch of the Tata Nano. But few could deny the contribution the company has made to social and economic development in India. And despite a rapid global expansion over the past two decades that Ratan Tata has been at the helm, the company has managed to combine its business success with an impressive commitment to business integrity and community service. Last night, as he reeled off a string of successful community engagement projects pioneered by the company, Tata claimed that, "with all of this, there's been no business gain for us. Yes, it creates goodwill that no advertising campaign will ever achieve, but it's not why we do it".

Tata's emphasis on the moral case for CSR perhaps makes sense when considered in the context of his particular company, which is 66% owned by philanthropic trusts. However, his comments were also echoed by his fellow business leaders on the responsible capitalism panel, Ed Clark the CEO of TD Bank and Jacques Lamarre, the former CEO of the global engineering firm SNC Lavalin. Clark, for instance, was keen to emphasise the importance of a values-based approach to responsibility. Citing his company's sponsorship of Toronto Pride, the annual gay and lesbian festival, Clark suggested the bank had lost business from customers upset about the advocacy of LGBT issues. But, he insisted, the bank was committed to diversity and "had to stick to its values".

Of course, all this talk of corporate responsibility beyond the business case could just be only so much hot air from corporate leaders keen to spin the image of capitalism away from its "greed is good" reputation. But in a world where, as Doug Miller, the chair of Globescan commented from the audience, the public had increasingly lost faith in capitalism, it was good to see that a new way of talking about "responsible capitalism" might at least be possible.

‘Responsible Luxury’

If one takes a taxi from the airport in Bangalore, India, into the city, the first billboard you will see boasts the words: ‘Responsible Luxury!’ It's an ad for a hotel chain, presumably one of those that recently opened another 7-star hotel in the business processing outsourcing capital of the world.

Whatever this phrase means - it pretty much uncovers the enormous contrasts and ambiguities of the economic wonder in India, much of which are epitomized in the 8m population of Bangalore. On the one hand there are the shiny, super stylish office buildings – or ‘campuses’ – of many western and Indian MNCs which have made the city the world’s leading place for IT services and software development. Being on the premises of these companies feels a lot like being in an office environment somewhere in North America or Europe.

On the other hand, Bangalore is a typical ‘third world city’ with constantly jammed up streets, poverty, pollution and shanty towns. The difference between the luxuries of the ‘first’ and the plights of the ‘third’ world could be nowhere more visible.

Now, there are two ways of going about this gap. One option would be to just hermetically isolate those two worlds against each other. We mentioned this approach – referred to as ‘brazilianization’ - in another blog. By the looks of it though, this is not the way things are going in India. India is a long standing democracy, has a vibrant media scene and fairly strong civil society organizations. So what we see here is more an ongoing struggle between these two worlds.

It is interesting to see the role of business in this. For sure, there is a long tradition of business engagement for social needs in India. Companies such as Tata and others have a long legacy of philanthropy and many of the new IT ‘stars’ such as Infosys have followed their example. Talking to business people here one can see a sincere commitment to not just indulge in the luxuries brought along by a booming IT industry but rather make it trickle down to wider parts of society. Responsible Luxury, as it were. How good a proposition that is and if it works ... well, we'll just have to keep you posted.