Instilling Social Responsibility in the Business Leaders of Tomorrow

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Friday, October 16, 2020
By Abigail Berk, Richard Custin
Photo by iStock
In a world in need of responsible leaders, business educators must teach responsibility as a business core while also guiding students' desire for impact.

This article originally appeared in MBA International Business magazine on July 19, 2020.

What is “social responsibility” or “responsible business”? How is this concept understood?

A socially responsible business must act for the greater good of society. In practice, this means redefining how to treat employees, govern a business, deliver products, and impact the environment. A PwC survey found that global CEOs believe the most successful organizations make social responsibility core to their companies. Accordingly, over 90 percent of Fortune 500 companies engage in corporate social responsibility initiatives. Our research on small and medium businesses found a similar level of participation in socially responsible practices, even if they were not specifically labeled as socially responsible.

The financial markets are also rewarding responsible businesses through socially responsible investing (SRI) and benchmarks such as the Dow Jones Sustainability Index. Bringing these practices into the classroom is facilitated by studying successful companies that strategically incorporate social responsibility into their business practices, such as CEMEX, Natura, and Unilever. Current business leaders clearly understand that a business must be socially responsible, so we need to ensure that business students also develop this important understanding.

Is it possible to teach ethics and social responsibility in an MBA program?

Absolutely! It is not only possible but also necessary to teach ethics and social responsibility in an MBA program. Exposing students to the principles of responsible business is an essential part of any business education. Students need to grasp the foundations of theoretical and practical knowledge while also reflecting on their personal values and decision-making processes.

In 2007, the United Nations launched the Principles of Responsible Management Education (PRME), a program calling for business schools to teach ethics and social responsibility. As of 2019, over 7,000 business educators are participating in PRME to ensure that business students around the globe are learning the values of sustainability, responsibility, and ethics.

Fortunately, administrators, faculty, and students now are interested in courses addressing ethics and social responsibility. In the 1990s, many highly regarded MBA programs made little mention of social responsibility, and the study of ethics was confined to an elective course with limited enrollment! The current expectations of a business education have evolved so that ethics and social responsibility are now integral to the MBA experience.

At the University of San Diego School of Business, social responsibility is not only part of the MBA curriculum; it is embedded in all of our graduate and undergraduate programs as well as in our school’s mission and vision. Our school aims to develop leaders, entrepreneurs, and business executives who will make an impact in the world focusing on wealth creation through the penta-bottom-line approach: people (socially inclusive), planet (environmentally friendly), profit (financially solid), peace (harmonious society), and prosperity (fostering a sustainable economy).

Nobody creates a company to do charity work. In that way, what is social entrepreneurship? Is it the same as incorporating philanthropic actions in the business enterprise? Is it something more?

While people may not create a business to do charity work, there are many businesses created to benefit society. Indeed, the distinction between charity and business is increasingly blurred. The legal classification of a for-profit business versus a nonprofit charity remains, but the purpose of the business and the metrics of success overlap. For example, we are seeing rapid growth in B Corporations—for-profit companies that adhere to the highest standards of social and environmental performance. Since 2007, over 2,700 businesses across 150 industries in 60 countries have become certified B Corporations. TOMS, a for-profit shoe manufacturer, has championed this business model with its corporate ethos of “improving lives through business.” TOMS generates over 400 million USD in annual revenue and has donated over 35 million pairs of shoes to people in need, aptly demonstrating how a for-profit business can benefit society.

Entrepreneurs seeking to start their own businesses can join the social entrepreneurship movement using principles of business to deliver solutions to global issues. Unlike a nonprofit charity, these social ventures are self-sufficient organizations that generate revenue to fund their operations and deliver social benefit. Ashoka, Acumen, and the Skoll Foundation are examples of organizations that actively promote social entrepreneurship with significant infrastructure and financial resources.

Many universities foster social entrepreneurship through mentoring programs, guest speakers, and funding opportunities. Since 2011, the University of San Diego has promoted the Global Social Innovation Challenge—open to students from 35 universities around the world. Student participants present their social entrepreneurship ventures to receive feedback, mentoring, a like-minded network, and the chance to win up to 50,000 USD in funding. Social entrepreneurship provides a great opportunity to apply the principles of business to address our most compelling social problems.

Philanthropy, which is donating money and/or resources to a nonprofit charity, continues to be prevalent in the business world and is integral to the functioning of nonprofits. As an example, global retailer Walmart donated over 330 million USD in fiscal year 2018 to hundreds of global and local nonprofit organizations. However, philanthropy differs from corporate social responsibility in that philanthropy provides support for external organizations to deliver social benefit, while social responsibility and social entrepreneurship require businesses to provide the societal benefit. In addition to its financial donations, Walmart also engages in an extensive global responsibility program that identifies opportunities for the business to deliver social benefit.

In our ever-evolving global world, what happens here affects the other side of the world. Thus, a business leader must have a “globalized” outlook and a good understanding of different cultures and strategies. How can we teach this in an MBA classroom?

All business is global. Therefore, all elements of a business education must incorporate a global perspective. MBA courses such as Leading Multicultural Teams, Marketing for Global Managers, and Economics in a Global Environment explicitly address a global outlook. Introductory courses in each discipline should also integrate a global outlook by studying businesses around the world.

Amazon is a fascinating example of a multinational corporation with a multitude of challenges around accounting, finance, management, and operations., one of the largest online retailers in China, faces those same challenges. By studying, MBA students learn business fundamentals while expanding their understanding of global business. The firsthand experience that students gain from international study can further enhance a global mindset.

Given the diverse nature of MBA students, study abroad courses need to reflect the diverse needs of the MBA student body. At the University of San Diego, we offer study abroad opportunities in an intensive two-week format in both January and May to enable more of our students to participate. We also offer international consulting opportunities in various countries around the world. Students have the opportunity to put their learning into practice in a 10-day consulting project at organizations such as BMW in Munich, L’Oreal in Brazil, and various B Corporations in Argentina. The short-term international programs incorporate coursework and opportunities to meet with multiple businesses and business leaders in the host country. Students frequently share that these study abroad opportunities are some of the most impactful of their MBA experience.

You work with students from Europe, Asia, Africa, and the United States. What would you say is the most enriching experience of this multicultural encounter in the classroom? And do students from all regions of the world have something in common?

The relationships that develop between students constitute one of the most rewarding aspects of a business education. We seek to foster those relationships through activities both inside and outside the classroom. Both the international and domestic students benefit from learning in a global environment. The cultural differences between students add depth and sometimes humor to our discussions.

As an example, in a recent class discussion on sustainable food sources, students reacted to the idea of insects as the food of the future. A student from the United States shared he had eagerly eaten insects while visiting China, which prompted a Chinese student to quickly respond that she would never consume insects in China or anywhere else! Despite differences rooted in culture, home country, or language, MBA students are more alike than they are different. The decision to pursue a graduate degree in business highlights a common quest for knowledge and professional development. Most strikingly, our students from all backgrounds consistently voice the desire to make a difference in the world. This consistent theme highlights the global nature of MBA students’ interest in social responsibility.

Why share your knowledge? What does that mean to you?

Just as students are motivated to make a difference, we are similarly motivated by the lofty goal of educating our future leaders. Business students are in a unique time in their lives—they can focus on acquiring knowledge and developing new insights to prepare them for their future endeavors. As professors, we feel deeply compelled to ensure that an understanding of social responsibility frames our students’ education.

We expect MBA students to develop competency in finance, accounting, marketing, and other technical areas, but we also feel a responsibility to prepare our future business leaders to strive for success based on the principles of social responsibility.

Abigail Berk
Clinical Professor of Management, University of San Diego, School of Business
Richard Custin
Clinical Professor of Business Law and Ethics, University of San Diego, School of Business
The views expressed by contributors to AACSB Insights do not represent an official position of AACSB, unless clearly stated.
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