Duke's B-school cheating scandal

When so many MBA students cheat, are business schools really training honest leaders of corporations?

This spring, nearly 10 percent of the 2008 class at Duke University's graduate business school was caught cheating – and this in a university known for its honor code and ethics training. The incident helps put a new focus on how "B-schools" are preparing future corporate leaders.

Poor Duke ("the Harvard of the South") just went through the wringer over now-discredited charges against its men's lacrosse team. That experience helped it react well last month in uncovering and punishing 34 MBA students for cheating on an exam. The professor who led the probe, Gavan Fitzsimons, threw this learning curve on the whole affair: "It is my utmost hope that all of the individuals found guilty of violating our honor code will learn how precious a gift honor and integrity is."

Precious indeed is the honesty that helps keep the business world in business. Enron-style scandals have pushed B-schools to look at what they teach and at student behavior – and how those may lead to misconduct in the workplace. A recent study of 54 universities found 56 percent of graduate business students admitted to having cheating – more than in other professional schools in the survey.

No wonder B-schools are quickly rolling out ethics training. They are responding to a perception that they are crucibles for overzealous greed, the kind that allows the ends to justify the means. A 2003 study by the Aspen Institute found MBA students enter school focused on learning how to meet customer needs but leave with a priority on maximizing shareholder profit – often through creative gimmicks.

Character education isn't easily taught, especially to those already in their 20s or in the hothouse competition of business schools that teach the market primacy of self-interest. But students do need to be taught to buy into an organizational culture of ethics – and create one for themselves. Many schools, for instance, make sure students help run the honor-code system. That way, they see an incentive to maintain their school's reputation.

Few B-school faculty are trained to teach ethics in their course work. Teachers often have different views on the role of ethics or social responsibility in business. And too many schools still do not make ethics training a graduation requirement.

The spotlight is now on B-schools to improve. Last year, for instance, a federal judge channeled $4 million in penalties levied on five convicted executives into a new center for business responsibility at the University of Illinois's business college.

Teaching students that they will be held accountable is essential. In 2002, Congress passed the Sarbanes-Oxley Act in the wake of Enron. It set strict internal financial controls on publicly traded companies. Most of all, it forces CEOs and CFOs to sign statements about the accuracy of their company reports. Such measures have helped boost investor confidence in business.

The Duke cheating scandal should nudge B-school deans to better help students appreciate honesty and other virtues. Deans can also better screen applicants for their ethics. (In 2005, Harvard's business school rejected 119 applicants after they hacked into the school's admissions website.)

Academic integrity in the business classroom will help pay rich dividends to corporate America.