There is a need to infuse ethics into India's MBA landscape

The educated criminal is the most dangerous kind.

―John G. Diefenbaker

Wharton dropout Nirav Modi embezzled Rs6,498 crore from the Punjab National Bank through fake documentation. Former ICICI Bank CEO Chanda Kochhar was arrested for misusing Rs1,700 crore for personal gain. Yes Bank’s Rana Kapoor spent four years in prison for bank fraud.

These incidents illustrate white-collar crimes―financially motivated offences by educated individuals in positions of trust. Such crimes encompass deceit, hiding information and violating trust through activities like fraud, money laundering, cybercrime and insider trading. White-collar criminals know the potential consequences, and are often driven by greed. Alarmingly, the National Bar Association reports a 15 per cent annual increase in white-collar crimes in India.

Society views modern managers as savvy, affluent and impressive. For many Indian families, b-school is the ticket to this lifestyle. MBA graduates from top schools join a privileged class, shouldering major responsibilities and earning hefty pay checks. White-collar crime happens when graduates misuse their education. The relentless focus on profit creates immense pressure and opportunities for quick, unethical gains. This leads to financial traps that can ruin both themselves and others.

This trend stems from intense focus on profit and a drive to outshine others. It is unclear if these traits draw students to b-schools or if schools foster them. Professor Janet Walker at Portland State University says that students attracted to the MBA program are “self-interested utility maximisers” who believe that the degree enhances their employability and future prospects. Researchers Simmering & Wilcox find that MBA aspirants are self-directed and expect fruitful careers. Aspirants expecting competence development from the programme aim to make a mark in society, while those expecting career benefits desire wealth. Wharton psychologist Amy Wrzesniewski believes that aspirants aim for personal power, prestige, social status and esteem. Meanwhile, leadership expert Venkat Krishnan finds that the two-year MBA enhances self-oriented values like comfort, intellectualism, independence and status while reducing other-oriented values like loyalty, family security, friendships and respect for elders among Indian students.

A study of 5,000 b-schools reveals that MBA students cheat more than their non-MBA peers, with Columbia’s William Bowers finding that two-thirds admit to cheating through methods like copying and plagiarism. Research from the American Economic Association indicates honesty declines after just one economics course. At Cornell, students assessed their ethical decision-making before and after a course, reporting a 40 per cent decrease in the likelihood of correcting a billing error and a 21 per cent drop in returning lost cash. Those exposed to game theory show even less honesty, as a focus on self-interest promotes “moral muteness”. Wharton professor Adam Grant finds that exposure to economic terminology diminishes compassion, especially among business students. Cheating can lead to unethical management, tarnishing reputations across the board. This aligns with former Stanford professor Hal Leavitt's view that business education warps students into “critters with lopsided brains, icy hearts and sunken souls”.

The ethical orientation of business students is central to navigating ethical dilemmas. This foundation should include an understanding of social control and the consequences of unethical choices. Research indicates that unethical behaviour is often calculated, driven by an internal cost-benefit analysis rather than impulsive actions. A study of MBA students in India found that while bribing causes internal conflict, employees are more likely to resort to it when their welfare is at stake. In cultures where bribery is normalised, managers may feel pressured to comply, but they are less likely to engage in such practices when facing potential customer backlash or legal consequences.

This behaviour may stem from pluralistic ignorance, where individuals mistakenly believe their ethical views diverge from the majority. For instance, a student opposed to alcohol might think everyone else supports it. Within organisations, these misconceptions can lead ethical employees to expect unethical behaviour from others, ultimately justifying their own misconduct. By enhancing students’ sense of social responsibility through focused ethics education, b-schools can better prepare future managers to make ethical and legal decisions. Fostering a sense of purpose and community is essential for aligning student ambitions with ethical standards.

Incorporating ethics into business curricula has ignited intense debates, particularly in India. In Managing India: The Idea of IIMs and Its Changing Contexts, Profs Rajiv Kumar and Vidyanand Jha highlight that the integrity issues among b-school students reflect failures in foundational education. Others, like Prof S.K. Chakraborty, advocate for ethics courses, noting that many parents lack the knowledge to teach about complex issues like corporate wrongdoing.

XLRI pioneered India's first compulsory business ethics course in the 1980s, and while IIMs and other institutions have followed, efforts remain scattered. Besides a few courses and resources, there is a noticeable absence of cohesive nationwide initiatives to embed ethics in MBA programmes. Chakraborty also points out the limited collaboration between Indian businesses and academia on ethical research and consultancy.

Incorporating ethics into MBA programmes through scattered course segments is a start, but it is not enough to fully instil ethical orientation. A culture of ethics must start with administrators and faculty. For example, Duquesne University in Pennsylvania requires standalone ethics courses for both BBA and MBA programmes, and even offers an MBA specialising in business ethics. They involve students and faculty in co-creating a code of ethical conduct, and the dean appoints ethical advocates to monitor student behaviour informally. Students engage with local communities by serving the infirm and the elderly, and they regularly interact with business leaders known for their ethical behaviour. Similarly, the University of Colorado’s MBA programme includes mandatory courses on the social impact of business, day-long professional ethics seminars, social responsibility awards and required participation in ethics-focused case competitions.

Studies show that starting MBA programmes with mandatory courses on ethical principles and business sustainability, then weaving these topics throughout the curriculum, is effective. Parallel to professionalising business education and improving rankings, b-school effectiveness must be evaluated on parameters broader than securing lucrative employment offers for students. Instead of reinforcing self-interest, academics must discuss scepticism and critical thinking. For instance, in statistics classes, professors may highlight how data might be misrepresented. Harvard’s leadership and corporate accountability course places ethics at the core of the MBA experience, extending discussions through case studies on leadership, governance and legal responsibilities. Columbia University takes a dramatic approach with ‘Scenes from the Slippery Slope’, where actors portray scenarios like an investment banker asked to falsify accounts, prompting students to evaluate the ethics of the banker’s decisions. Locally, educators could draw lessons from the Tata Group’s culture. The Tata Code of Conduct, reflecting J.R.D. Tata’s vision, guides the group’s operations―from installing water dispensers in factories to handling crises involving employees’ lives. For over a century, the Tata Group has been India’s leading business house, renowned for its stellar reputation.

As businesses globalise, so do white-collar crimes, prompting calls for enhanced ethics training. Education experts suggest that programmes should include cognitive skills to identify dilemmas, behavioural skills for making ethical choices, and managerial skills for guiding others. Engaging methods like debates and case studies are essential, as moral reasoning thrives on interaction. Given MBA students' packed schedules, educators could introduce one credit or condensed courses and graded seminars. With half of the top 50 US MBA programmes now requiring ethics training, it is clearly a priority. As Amartya Sen wisely noted, a purely economic focus risks making one a “social moron”.

The writer is associate professor of practice (organisational behaviour and human resources) at IIMK.