Harvard Business School

Without a clear set of ethical guidelines, there can be no profession. An important part of the evolution of medicine, for example, was the embrace of modern versions of the ancient Hippocratic Oath. Lawyers, too, adopted their version of “first do no harm,” pledging to put their clients’ interests before their own.

The founders of Harvard’s business school were high-minded and accomplished individuals, steeped in the culture of Boston and New England. The “Boston Brahmin” culture, in particular, influenced the thinking of that group.

Harvard President Charles W. Eliot, for example, was the scion of a prominent Boston family (although his father had lost his fortune in the Panic of 1857). Of the 89 members of his Harvard College graduating class of 1853, 15 enjoyed highly successful business careers. His successor, Abbott Lawrence Lowell, was the grandson of Abbott Lawrence, who helped build a textile empire in the north-central Massachusetts cities of Lawrence and Lowell.

The Brahmins comfortably integrated ethics and the world of practical affairs, on which their fortunes had been founded. In many cases, they used those fortunes to support various kinds of non-commercial activities. By the late 19th and early 20th centuries, they shared an implicit ethical outlook, which was woven into the fabric of the new school.

But very quickly, the School’s supporters demanded more than simply an implicit code. They argued that HBS had to provide explicit ethical training—an assignment that the School’s first dean, Edwin F. Gay, tackled personally, and found frustrating.

A related issue was the accreditation of schools of business, which necessarily included some articulation of the ethical framework that lay behind a business school and its curriculum. In 1916, Dean Gay took the first steps to address the lack of an accrediting body, when he brought together 16 business school deans in Chicago. That group formally organized the “American Association of Collegiate Schools of Business,” to focus on three shared challenges: purpose and professionalism, curriculum and faculty, and research. The AACSB began accrediting schools of business in 1919, after adopting its first formal set of standards.

Meanwhile, HBS continued to benefit from the efforts of Boston’s Brahmins when it came time—in the 1920s—to construct a separate campus for the School. William Lawrence, the bishop of the Episcopal Diocese of Eastern Massachusetts, headed the fund drive. Among his key targets was George F. Baker, president of the First National Bank in New York. Baker (unlike some other business figures who made their fortunes in the Gilded Age) was a figure of towering rectitude. In soliciting Baker, Lawrence sounded this theme, ultimately with great success. Baker’s decision to pay for the entire HBS campus put his implicit moral “seal of approval” on the School, and greatly increased its stature.

But the challenge of defining and teaching a business code of ethics remained difficult, even intractable. Early in his tenure, the School’s second dean, Wallace B. Donham, declared (in 1922) that ethics could and should be taught. Within two years, however, he told a Boston Globe reporter that business as a profession was barely out of the “frontier stage,” and that while some aspects of business—such as banking—had developed clear codes of conduct, the sheer diversity of business activities hindered the formulation of an effective, all-encompassing ethical code.

And should ethics be taught in a separate course, or should it permeate the School’s curriculum? In 1928, HBS offered its first formal elective in ethics, taught by Harvard philosopher Carl F. Taeusch. The course attracted few students, and was discontinued in 1935. “Desire outruns performance,” Donham said unhappily of his school’s efforts to teach ethics, “all along the line.”

Although World War II interrupted the evolution of an ethics-oriented curriculum, the “Subcommittee on Objectives” of the Educational Policy Committee—the group tasked in 1943 with planning the School’s postwar curriculum—argued strenuously in its report for a focus on ethical considerations. Dean Donald K. David, writing in 1948, argued that a solid ethical grounding was a critical foundation of executive leadership, and that the School should offer “steadfast encouragement” in the development of ethics.

This assertion resonated with (for example) Stanley F. Teele, who became David’s second-in-command in 1945, and assumed the deanship in 1955. “We must help make men develop open-mindedness,” he wrote of first-year curriculum reforms in the early 1950s, “plus the capacity to make value judgments.”

Lawrence E. Fouraker, dean in the 1970s, sounded much the same theme. “Personal integrity and social sensitivity are implicit in the idea of professionalism,” he wrote in 1979. “Nor has the School ever doubted that the concept of professionalism includes the components of social responsibility and accountability.” Coincidentally, that was the same year that Professor Howard Raiffa became embroiled in a controversy regarding his Competitive Decision Making elective. Was telling lies at HBS (as a Wall Street Journal headline implied) really a “matter of course”? Did negotiations involve “strategic misrepresentation,” and was that a real-world necessity?

In the late 1980s, former investment banker and S.E.C. chair John S. R. Shad (MBA ‘49) funded a program for the research and teaching of business ethics and leadership at HBS. This was only part of a larger effort, sponsored by Dean John H. McArthur and carried forward by faculty members Thomas F. Piper, Lynn S. Paine, Joe Badaracco, and others. New teaching materials were developed and introduced into both the required and elective curricula.

The corporate excesses of the later 1990s and early 2000s prompted yet another round of reflection, both at HBS and in the larger business community. Inevitably, several HBS alumni were caught up in the nets that closed in around companies like Enron, WorldCom, and Adelphia. Were those highly visible cases aberrations, or were they part of a bigger pattern? For their part, HBS alumni had little doubt about the critical importance of ethical instruction—and ethical behavior. A 1999 survey revealed that they thought that “morals, ethics, and values” were by far the most important subject that business schools should teach. Dean Kim B. Clark, who took over the leadership of the School in 1995, agreed. With his faculty colleagues, he launched a “Corporate Governance, Leadership, & Values” initiative in 1997 that gained momentum in subsequent years.

But the School continued to struggle with the question of how to teach ethics: as a freestanding subject, or a part of every course? The answer, ultimately, was “both.” In the 2005-06 academic year, “Leadership and Corporate Accountability” was introduced in the required MBA curriculum. “It’s not just a matter of teaching,” Lynn Paine told an alumni gathering. “Ethics must be built into the culture to work. That is the challenge we’re helping our students grapple with.”

Over the School’s first century, clearly, progress had been made in establishing the ethical foundation of the profession of business. But just as clearly, much work remained to be done.