The MBA oath helps remind graduates of their ethical obligations

While the oath is neither revolutionary nor perfect, it's a good and necessary start.

(See also, “The oath demands a commitment to bad corporate governance.”)

In response to the economic crisis, in 2009 a group of graduating Harvard MBAs proposed that all MBA students sign an oath of professional conduct. It pledges, among other things, to “contribute to the well-being of society” and to “create sustainable economic, social and environmental prosperity worldwide.”

The oath has since been taken by students at more than 250 schools around the world, and while it is not a revolutionary thing, not a perfect thing, it is definitely a good thing. Of course, not everyone thinks so. The MBA oath has been assailed by three kinds of critics: ones who say it is too demanding, ones who say it is not demanding enough, and ones who say it shouldn’t be necessary in the first place. Each group is, in its own way, badly off-target.

First, consider the critics who say the oath is too demanding. To them, the oath embodies a radical departure from the tenets of economic theory and the requirements of corporate law. There is, after all, a clause under which MBAs promise to protect the planet, and implicitly to do so even when that’s not in the best interest of shareholders. But such critics are being perversely literal. Nothing in the MBA oath exhorts MBAs to turn their backs on their fiduciary duties to shareholders, nor even to push in that direction beyond the minimal expectations of decency.

Second, there are critics who say the oath requires too little. Follow the law? Obey contracts? Pay a little attention to the consequences of your actions? Is that all MBAs aspire to? How about a real commitment to social and economic justice? And besides, how much can really be accomplished by a voluntary code, absent any form of enforcement? These critics, too, are off-target. To begin, they ignore the potential impact of getting ethical concerns explicitly onto the business executive’s agenda. But perhaps more important, they underestimate the depth of legitimate debate over the way even public-minded MBAs ought to put their values into action when at work. The ethical obligations of business executives are not, despite what the critics say, obvious and easy.

The third group of critics says an oath should not be necessary in the first place. After all, should anyone really need to be told to be ethical? More particularly, shouldn’t people who have graduated from an MBA program already know just what is expected of them, ethically, in the environments for which they’ve been so extensively and expensively trained? Again, the criticism is off-base. For the point of an oath such as this is not to remind the MBA of the details of his or her ethical obligations. It is an affirmation that the MBA intends, in the face of competing pressures, to keep those ethical obligations firmly in mind — something that all available evidence suggests is harder than it sounds. So the MBA who signs the oath signals that, for him or her, ethics wasn’t just a compulsory course to pass and then forget about.

None of this is to say that the MBA oath is perfect. It arguably has too little to say about principal-agent problems, and about how MBAs ought to handle the conflicts that will inevitably arise between the oath’s various injunctions. Note also that the oath insists on the duty to avoid “business practices harmful to society,” which is so painfully vague it borders on the vacuous.

But overall, the main problem with the MBA oath isn’t really a problem with the oath at all — it’s a problem with people’s expectations. Dismissive critics say that no oath will solve the deep and abiding moral problems that beset the world of business. That’s surely true, but no one could seriously have thought otherwise. It’s trite, but also true, to say that the world of business is increasingly complex. The ethical demands on business are higher than ever. In particular, business executives are called upon with increasing regularity to account for their actions and their policies, and to justify them to an increasing range of stakeholders. Add to that the enormous, lingering cultural rift regarding the proper role of corporations and markets. The MBA oath is of course not going to solve all of the ethical challenges that arise in such a context. Nor is it going to ensure that none of its signatories ever crosses the line into regrettable or disreputable or even disgraceful behaviour. But if given half a chance, the MBA oath might just turn out to play a small but not insignificant role in keeping the discussion alive.

Chris MacDonald is the author of the business ethics blog,