What role does business ethics play in the alignment of business education to business hiring needs? : an employer’s perspective

August 11th 2014

E. Federici & S. Pajic

Academic year 2013/2014

Bachelors’ Thesis

Semester 2 block 3

Gian Lie 0165387

What Role does Business Ethics play in the Alignment of Business Education to Business Hiring Needs?:

An Employer’s Perspective

ABSTRACT: There exists a misalignment between the quality of graduates supplied by business

schools and the needs of their prospective employers. The teaching of business ethics is one of its

components. In this qualitative investigation, a context is laid out for the subject of business ethics

being taught, providing reasons for why and suggestions for how this should take place. The

perspective of the employer is represented by way of five semi-structured interviews. Employers’

unique perspectives are coded and analyzed for their own explanatory value and next to each other.

These perspectives are also laid next to a literature review that documents the context of why and how

business ethics should be taught. Solutions in practice by all participants cover ethical risks each in

their own way, with some similarities. The difficulty to control for every possible professional ethical

risk in the workplace leads to usage of a variety of arbitrary and pragmatic solutions. This workplace

heterogeneity also complicates standardization of ethical education. Because of this employers

require a limited level of ethical awareness of business graduates when they first start working.

Contents

1. Introduction .

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2. Literature review

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2.1.1. Brief history of research on EDM

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2.1.2. Empirical support for individual factors

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2.1.3. Empirical support for situational factors

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2.1.4. Empirical support for moral intensity .

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2.1.5. Limitations of the model

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2.2. Dynamics of teaching ethics

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2.3. Corporate Ethics Programs and Codes of Conduct

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2.4. Current demand for business graduates’ ethical development

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3. Methodology .

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3.1. Data collection

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3.2. Structure and content of the interviews

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3.3. Discussion of the semi-structured method .

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3.4.1. Coding .

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3.4.2. Use of memos .

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4. Results .

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4.1.1. Job description and employers’ expectations about ethical development

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4.1.2. The methods in the organization of implementing an ethical standard

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4.1.3. Recruitment and selection

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4.1.4. Participants’ general opinion of business schools

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4.1.5. The role of business ethics in the business school curriculum .

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4.2. Applying the theoretical framework

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4.2.1. Individual and situational factors

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4.2.2. Corporate policies, codes of conduct and value systems

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4.2.3. Demand for ethical development

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5. Discussion of results and limitations .

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6. Conclusion

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7. References

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8. Appendix 1: Interview questions and declaration of confidentiality .

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9. Appendix 2: Coding table

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10. Appendix 3: Interview transcripts including coded fragments

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1. Introduction

Youth unemployment is a global issue: as of 2012, among OECD countries, out of their youth of ages 15

through 24 seeking employment, an average of at least 16% is unemployed, not in school or receiving any

other type of professional training. Part of the way forward is to give heed to the misalignment of job

requirements and skills provided by education (McKinsey, 2012). More specifically, the key issues are

asking what skills exactly should be built with students and how they should be trained. Furthermore, this

report by the McKinsey consulting firm shows that the problem of job skills misalignment is exacerbated

by a wide lack of communication between employers and education, which causes different perspectives

about what they need from each other to happen.

Business schools can be criticized for focusing too much on academic ‘hard skills’, mathematical

and analytical, and as a consequence producing students that are inadequately prepared for the real world

of the corporate environment (Bennis & O’ Toole, 2005). In the reality of a professional environment

hard data is not always readily available to make for an effective analysis of every situation, and there is a

need for other ‘soft skills’, like leadership, emotional control, and having an ethical standard. Business

ethics is the subject of the business school curriculum that aims to develop the ethical standard of

students.

Business ethics represents a global need for a more responsible corporate world, which has

produced scandals in recent years that have threatened the global population’s trust in corporations and

even the stability of the global economy (Worldcom, 2002; Enron, 2001; B. Madoff, 2008; Lehman

Brothers, 2008). During the past decades since the 1960s, scientific literature on the subject of business

ethics has grown in response to the acknowledgement of societal issues created by business practice (De

George, 1987; Ma, 2009). Because business ethics is a relatively new part of the MBA curriculum, it

presents a good opportunity to investigate the gap between employer and education. The science of

business ethics has not directly grown out of an explicit need of the business community, which makes it

interesting to gather their perspective on the usefulness of teaching business ethics. The main question of

this research is if higher education can realign itself with the needs of employers. Therefore, this research

will suggest leads for improving the teaching of business ethics, by putting more emphasis on its practical

application.

The purpose of this research paper is to provide a framework of how business ethics education

plays a role in the issue of job skills misalignment. The employers’ requirements can be expected to be

different from those of the researchers and business schools, because employers need the knowledge to be

applied in their professional atmosphere. Framing the needs of employers will provide a lead on how

educators may proceed in realigning their teachings to those needs. To construct the framework, this

research will gather qualitative data through semi-structured interviews, which enable the perceptions of

employers to be preserved optimally. The analysis of these interviews can be expected to result in

similarities and idiosyncrasies about what employers believe to be the best way to ensure ethically

responsible behavior of their current and future employees.

To answer the main question of where realignment of educator and employer can take place, the

interviews will seek to chart different aspects of the quality of business ethics of recent graduates that

employers take in. To achieve this there are four main lines of interview questioning that collectively aim

to answer the main question of possible realignment. First, the questions will probe for what employers

expect to come out of new employees that have recently graduated and their level of ethical decision

making (hereafter abbreviated as EDM). The emphasis here is an attempt to uncover any expectations

employers might have, which is indicative of their views on business ethics. Second, the importance of

the quality of EDM when allocating newly hired graduates is questioned. Employers can be expected to

have their own way of dealing with the building of trust after hiring. It can be expected that new hires

either do not receive much responsibility as a precaution, or they do get responsibility because the

employer might trust their recruitment effort. Third, the interviews will ask how employers ensure their

standard of EDM when hiring. This line of questioning is intended to expose the practices employers use,

and the extent to which it is possible to ensure an ethical standard in the relatively short term of the hiring

process. Lastly, the interview will inquire into what the employers their general opinion is of business

education, and how it currently fits their needs. A more detailed outline of the interview questions will

follow in paragraph 3.2. and the full set of 14 interview questions is enclosed in Appendix 1. Together

these questions will allow for the construction of a unified perspective of the employer of the quality of

graduates EDM. After an analysis of this framework, recommendations can be made for business schools

where they might need to adjust.

In order to help frame the results coming out of the interviews, a literary review will provide a context of

why and how business ethics should be taught. This review will incorporate the work of previous research

on the current practice of employers in corporate ethics and codes of conduct, the aspects of teaching

business ethics, and the central construct of EDM. Also an effort is made to exhibit other research that

characterizes employers’ current demand for what they require out of education, in general terms and

regarding EDM specifically. In this way the literary review will allow to build on the efforts of previous

research.

The literary review will be detailed in the following paragraph, after which an in-depth justification of the

methods used will be given. The results from the interviews will follow in the subsequent paragraph,

followed by an interpretation through analysis. Finally any limitations of the results and concluding

remarks will round out this paper.

2. Literature review

Before the methods of the interview are further explained, in this paragraph a review of the relevant

literature is put forward to create a better sense of what can be expected from the employer’s perspective,

and to better understand what the participating employers express. This review will be based on previous

research that details a context of ideas and theories which surround the main lines of interview

questioning.

The first part of this review will discuss empirical science about ethical decision making (EDM)

in organizations. Because EDM represents a distinct and measurable part of business ethics, results from

the broad base of research on EDM can be used to provide meaning to the results of this investigation. In

order to clarify the theoretical constructs underlying EDM, this review will take a look at how EDM can

be taught, by examining articles about methods from practice from both business schools and

corporations. Additionally, some of the intricacies of teaching ethics are mentioned concerning the issue

of teaching objective norms versus teaching good ethical behavior. This part of the review will primarily

support knowledge about what to expect out of the interview results. A secondary purpose is to allow for

a framing and/or classification of the answers given to the interview questions.

After the theoretical framework for EDM is established, an overview of research will follow that

characterizes current demand for business student skills, with particular attention to any form of ethical

development. Next to this, there will be an examination of how different employers generally go about

looking for signs of ethical development in their future employees. Lastly, an effort will be made to

summarize any research attempting to chart the importance of the ethical development of future

employees, relative to other selection criteria.

The literature review will guide the way the interview questions will be posed and after the

interviews have been completed it will assist the analysis in adding value to the meaning of the results.

2.1.1. Brief history of research on EDM

Ethical decision making in organizations is a well-documented concept of empirical business ethics. EDM

Although EDM research is not a valid representation of the whole of business ethics, it does provide an

empirical base for the part that it measure. It is worthwhile to mention these empirical findings because

the results from the interviews can be expected to provide at least some similar outcomes.

A number of reviews have been written that record the overall progress on both theoretical

modeling of EDM and empirical research regarding its predicted outcomes (Ford and Richardson, 1994;

Loe et al., 2000; O’Fallon and Butterfield, 2005; Trevino et al., 2006; Tenbrunsel and Smith-Crowe,

2008). The essential similarity of these reviews is that they build upon summarizing results of empirical

research papers that examine the same theoretical model, the four-step model of EDM by Rest (1986).

The review by Ford and Richardson (1994) makes a practical division of all the factors influencing EDM

that have been researched empirically up until that point. Factors fall in to one of two categories:

individual factors that pertain to the individual making decisions and situational factors that describe the

environment within which the decision is made.

As mentioned above, the whole of empirical research is centered on the four-step model that was

first introduced by Rest (1986). These reviews contain empirical research that has largely focused on

operationalizing individual and situational factors affecting the four-step process in different ways. Jones’

(1991) addition of moral intensity (an individual factor) serves as an example that illustrates the workings

of the four-step model and how it is being built upon by other authors. At the core of Jones’ model lies

the theoretical groundwork laid by Rest, alongside the work of others (Hunt and Vitell, 1986; Dubinsky

and Loken, 1989; Ferrell, et al., 1989).

Figure 1. A model of EDM in organizations as presented by T.M. Jones (1991).

At the center of Figure 1 are the four distinct steps of the process an individual goes through

when making ethical decisions. The individual (1) recognizes a moral issue, (2) makes a moral judgment,

(3) establishes his/her moral intent and (4) engages in moral behavior. Rest underlined that success in any

one of the steps does not imply success in any other step, for example, an individual making a moral

judgment (step 2) may or may not partake in behavior congruent to the moral judgment afterwards(step

4).

Jones (1991) then adds to this central process the level of moral intensity which is a group of

factors that influence the process at every step. Moral intensity influences EDM through the combined

effect of six distinct characteristics of a moral act: (1) magnitude of consequence is the relative impact of

the benefit and harm caused by a moral act, (2) social consensus is the degree of awareness of socially

agreed upon norms that pertain to the moral act, (3) probability of effect is the likelihood that the act will

actually take place and that any harm or benefit is likely to follow from that act, (4) temporal immediacy

is the timeframe between the moral act and its consequence, (5) proximity is the experience of how close

the moral actor feels to the victims or beneficiaries, either physical or psychological (individual, social or

cultural pressures), (6) concentration of effect is negatively related to the number of people affected by

the act.

Ford and Richardson (1994) also mention other individual factors examined by empirical research

such as personal attributes (age, nationality, and sex), employment and education background,

personality, beliefs and values (Machiavellianism, locus of control). A later review by O’Fallon and

Butterfield (2005) covering the period after 1996 up until 2003, adds more individual factors that have

been researched, including philosophy or value orientation, and job satisfaction.

Proceeding with the distinction made by Ford and Richardson (1994), the situational variables are

the second category of variables. The situational factors explain the environment that influences the

individual in the process of making an ethical decision. Organizational factors are an example of this;

they describe the influence of social pressure through leadership and socialization, as shown in Figure 1

beneath the four steps. Other examples of situational variables include referent groups (top management

influence, peer group influence), systems of rewards and sanctions, and professional codes of conduct.

This allows for the creation of an expanded diagram that includes more variables (Figure 2). This

expanded diagram is a collection of factors that can be described by the employers in the interviews.

Figure 2. An adaptation of Jones’ (1991) issue-contingent model.

Note that in this diagram, individual factors are separated from moral intensity, because individual factors

concern the person and moral intensity concerns the moral dimensions of the decision, they can be

considered a separate influence. Situational factors are another separate group of context variables

including the organizational factors that were originally mentioned by Jones (1991).

In Figure 2 factors are grouped according to the individual-situational scheme that O’Fallon and

Butterfield also applied (2005). The review by O’Fallon and Butterfield provides a useful overview of

which factors empirical research are statistically significant, either positively or negatively related to

EDM.

In the next paragraphs there will a summarized report of the findings of O’Fallon and Butterfield

which covers empirical research into factors of influence to EDM from 1996 until 2003. Their review

includes an extension and comparison of two similar investigations that have collected empirical findings

until 1994, by Ford and Richardson and until 1996, by Loe et al. (2000). O’ Fallon and Butterfield’s

review, counting 174 papers, is the most useful to report on because it is the most recent and inclusive. It

will suffice for the for the analysis of the interviews to refrain from covering every single empirical paper

that is included in these reviews. Empirical support will be mentioned, the nature of the found relationship

and an indication of the number of studies supporting it.

2.1.2. Empirical support for individual factors

In the analysis of empirical findings by O’ Fallon and Butterfield (2005), out of 49 findings, Gender is

usually found to have no difference for EDM, although when any significant difference had been

reported, it favored women. In 42 findings about value orientation, studies show that idealism and moral

studies are positively related to EDM, and conversely, teleological views (‘the end justifies the means’, or

Machiavellianism), relativism and economic learning are found to be negatively related to EDM. For 41

empirical studies of knowledge background the authors note that in general, more education and work

experience are positively related to EDM. Consistent with these findings, the authors would add that some

studies comparing the results from practitioners to students found students to be less ethical, a fact that

should warn future researchers in choosing their sample carefully. Concerning nationality and based on

25 findings, the review notes that research is difficult to compare because most of it has been examining

different nations with different cultures. Research on nationality seems to have a balance of mixed effects

on EDM; some reports suggest positive influence on and others negative. Nevertheless, all 25 papers on

nationality provided significant results. Age also gives mixed results, out of 37 results, 14 were not

significant, 10 found a positive relationship and 6 revealed a negative relationship between age and EDM.

O’Fallon and Butterfield’s reason that age as an independent variable might be too broad and therefore

may not effectively explain the behavioral factors at play. The authors conclude that both cognitive moral

development and ethical judgment influence EDM positively, based on 23 findings. 15 Studies were

included that reported a positive effect of cognitive moral development on ethical judgment. One study

reported a negative relationship; three studies were mixed, whilst four of the studies found insignificant

results. For and Richardson commented that cognitive moral development is be a difficult variable for

study, in part because of too little explanatory research. When considering locus of control, 4 out 11

studies find no significance in the results, 7 others relate inner locus of control positively to EDM. In

opposite these 7 studies also relate external locus of control negatively to EDM. For the personality trait

Machiavellianism, 7 out of 10 results show a negative relationship to EDM, 3 found insignificant results.

Nine out of 14 studies reporting on religion found a positive relationship with EDM. Lastly, a few other

individual factors are mentioned, but have relatively little empirical research supporting them (awareness,

biases, conflict, intent, need for cognition, organizational commitment, other personality factors,

professional affiliation, significant others).

2.1.3. Empirical support for situational factors

Professional codes of ethics are largely supported by research to have a significant positive relation to

EDM. Out of 20 studies, 2 produced no significant results, whereas 6 were mixed, 11 positive and 1

negative. Ethical climates or corporate culture is somewhat supported by empirical research as having a

positive effect on EDM. 12 Out of 16 studies found at least one aspect of ethical climate to positively

affect EDM. The other 4 produced insignificant conclusions. 8 Out of 9 findings under industry type are

significant, the remaining 1 being insignificant. All the research on industry type however, has been

conducted in different industries, making the findings unsuited for comparison. Research on

organizational size has given 5 out of 7 mixed results and two insignificant. O’ Fallon and Butterfield

argue that because of this inconclusive evidence, there should be more research examining the effects of

organizational size on EDM. The relationship of EDM and systems of rewards and sanctions is

undeniably supported by the evidence of research; 6 out of 7 studies show punishment of unethical

behavior decreases unethical behavior, and likewise rewarding unethical actions is likely to increase its

occurrence.

2.1.4. Empirical support for moral intensity

Since its introduction in 1991 by Jones, the concept of moral intensity has been slowly gaining traction

over the years following. In regards to the six characteristics of moral intensity (as explained in paragraph

2.1.1) out of 32 studies under review, the authors found social consensus (12 studies) and magnitude of

consequence (14 studies) to have the most prominently supported positive relationship (O’Fallon and

Butterfield, 2005). Concentration of effect was also found to positively affect EDM consistently, but in

less published empirical research (4 studies). The remaining three variables, probability of effect (4),

temporal immediacy (4) and proximity (5 studies) showed mixed results.

To aid the qualitative analysis, there is now a basic theoretical framework of ethical decision

making (Figure 2), based on the current literature, and a substantial amount of empirical research

supporting the relationships of factors of influence to EDM.

2.1.5. Limitations of the model

It is worth mentioning that Tenbrunsel and Smith-Crowe in their critical review of business ethics

literature (2008), make a considered argument to move away from the paradigm set by Rest’s four-step

process (1986), onto a newly proposed theoretical framework. Their main point of contention is that

research up until now has avoided the philosophical question of defining what is ethical in a normative

sense. Business ethics research has pursued a merely descriptive ideal in favor of naturalistic

determinism, which is to say an approach to objectively describe the phenomenon, and staying clear of

intentionality and moral judgment, which is subjective and introduces opinions of what organizations

should and should not do. By focusing on objective description using empirical methods, business ethics

has attempted to establish its legitimacy as a science. However, as Ghoshal argues, business management

involves people making value-laden (ethical) decisions as opposed to, for example, biological cells that

are incapable of doing so. Therefore, business ethics should prescribe a standard of morality (2005). The

Tenbrunsel and Smith-Crowe add that as a consequence, by relying on an undefined construct of what is

ethical or moral, business ethics produces research which is inconsistent, incoherent and atheoretical.

They also add this interesting quote to support their argument:

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As Sandelands (2007) stated, “The MBA teaches that business is essentially pragmatic,

motivated by what works. This pragmatism is its own morality” (p. 10). By not seriously

addressing the “normative” in values, we are promoting a non-normative morality,

suggesting that such considerations are irrelevant to the study of business and ethics.’

Here Sandelands (2007) criticizes the absence of normative ethics for management education, which

likely leads to pragmatic and shrewd decision makers in the workplace. Business ethics research

contributes to this development because it is the base of knowledge which is taught to students.

While advocating the development of a moral standard for business ethics, Tenbrunsel and

Smith-Crowe (2008) do not offer a full solution to the problem. They do suggest enlisting the deontological

ethics of theology and moral philosophy. A normative construct taken from moral philosophy of what is

ethical and what is not could be useful in classifying dependent variables, because it provides a universal

construct that would not change across different studies.

This fundamental issue of business ethics does not seem likely to meaningfully impact the

outcome of this qualitative research. The answers to the interview questions are expected to remain at the

descriptive level, or when interviewees describe their standard of ethics, then that would only represent

their individual or company perspective. It is important to be aware of theoretical limitations when

employing any theoretical model, yet the vast body of empirical research available based on the core

four-step process of EDM by Rest (1986) makes this model more useful for the analysis of the interviews.

Moreover, because the competing model of EDM offered by Tenbrunsel and Smith-Crowe is too recent

and not yet as well-founded by empirical research, we decide to not use it when framing our results.

2.2. Dynamics of teaching ethics

When it comes to teaching ethics,

Cragg (1997) proposes that an individual primed (i.e. cognitive scripts

pre-exist) for ethical reasoning is more susceptible to effectively receive ethical behavior training. A

competing framework by Oddo (1997) suggests that an ethical ‘habit’ can be trained, regardless of any

ethical priming. Ritter (2006) notes in her review of teaching business ethics literature that empirical

evidence is mixed for both of these perspectives. A possible reconciliation between perspectives is

offered by Churchill (1982), who emphasizes the distinction between ethical reasoning and moral values.

Ethical reasoning is the reflective and theoretical part, which can be taught, moral values on the other

hand are determined at a young age, and would take considerable time to instill.

Ritter argues that despite the ambiguity concerning trainability, there is still a basic need for

guidance on how to best implement ethics in business school programs. Even if science provides no

conclusive answer on how to train ethics, there is no lack for reasons why when looking at the economic

turmoil brought about by corporate scandals of recent years.

A study among the curricula from the

Financial Times 50 top business schools worldwide, reveals increasing interest for the teaching of ethics,

next to CSR and sustainability (Christensen et al., 2007). These authors note that going forward,

universities need to attempt to integrate ethics with CSR and sustainability, for it to become most

effective.

Based on his findings from a case study where a university attempted to implement ethics,

McDonald proposes that when other business schools look for a similar integrative approach towards

ethics, they would do well to first define their learning outcome goals. Institutions need to establish a

central committee, assess their current staff for ethical skills and whether they have a sufficient basis for

teaching throughout all the major disciplines.

As for the classes themselves Felton and Sims (2005) offer more guidelines to follow. Principally,

ethics learning should be inductive, drawn from case studies, real life examples or experiences, as

opposed to deductive, which is to say learned from concepts and theory. Ideally, classes should be

interactive (i.e. debating) and challenging students to examine their own value system, and they should

cultivate a safe environment for students to speak out.

2.3. Corporate ethics programmes and codes of conduct

Valentine and Fleischman (2008) provide a summary of methods used by modern day corporations for

ethics training. The standards of ethics and business practices a company applies to uphold ethics are

labeled organizational ethics. To this end, a company can have an explicit value system that fosters an

ethical culture, a set of codes of conduct that guides and limits specific behaviors or it can utilize ethical

training programs for employees to undertake. Given the wide variety of organizations and their possible

variations on how to instill ethical behaviors, more than the general possible avenues available will be

noted here. It can be expected that the companies represented in the interviews describe their company’s

way of upholding the ethical standard as a mixture of the available variants, made to fit the type of

activities and industries the company deals with.

To determine the effectiveness of codes of conduct on positively influencing ethical behavior,

Somers (2001) surveyed 613 management accountants. Somers found support for his hypothesis that

unethical behavior is less prevalent in organizations that make us of corporate codes of conduct than in

those that do not. Reporting perceived wrongdoings however, appeared to be unaffected by the presence

of codes of conduct. In a different study, McCabe et al. (1996) surveyed alumni grouped as either having

experienced a collegiate code of conduct or not about their current professional experience. The

self-reported data supports the notion that there is less unethical behavior in organizations with a code of

conduct. The data also suggests a negative relationship of ethical behavior and both the strength of the

code of conduct implementation as well as the extent to which it is ingrained in the corporation. In broad

terms, these reports justify the presence of having corporate codes of conduct.

2.4. Current demand for business graduates’ ethical development

If business ethics research has been steadily developing because of societal issues creating a need for a

higher moral standard for business practice (

De George, 1987; Ma, 2009)

, surprisingly little has been said

at the employers end. In order to evaluate effectively whether more or less emphasis on business ethics, or

an altogether different approach for teaching business ethics is called for, it is appropriate to incorporate

the perspective of the employer. After all, employers are the primary demand market for the graduates

supplied by business schools. The interviews later in this paper will increase our knowledge of the

employers’ perspective directly. Regardless, it will also serve to increase knowledge about what

employers require from graduates by consulting prior research.

As was mentioned in the introduction, Bennis and O’ Toole (2005) critique business schools for

placing too much emphasis on research skills and their pragmatic teaching of business ethics. They also

assert that because of this, graduates know more about the process of scientific knowledge than how to

properly function in their occupation. According to them employers are now responding to this

misalignment by providing in-house training and corporate universities.

The European report

The Employability of Higher Education Graduates: The Employers’

Perspective (Humburg et al., 2013) identifies employer demand trends by sampling 900 employers across

nine different EU countries. Regardless of the fact that employers from six different industries were

surveyed, none of the general demand trends uncovered by the analysis reported EDM or any other form

of ethical development. It is outside the scope of this research to speak for industries other than those

where business graduates are hired, nonetheless it remains a curious fact that this recent continent-wide

survey exposes the relative unimportance employers explicitly place on EDM. For the relevant industries,

Accounting, Financial and Investment there is also no specific mention of employers looking for EDM.

For Accounting this seems appropriate, by way of the professional oath, but for Financial and Investment

hires one would expect at least some ethical development is explicitly sought for. This could either be

because of a deficiency in what business schools impart on their students, leading to subsequently low

expectations on behalf of employers, or employers expect ethical behavior to develop with hired

graduates over time, by grooming them in corporate culture. The interviews will take these points into

account.

An examination of literature performed by Bernardi et al. (2008) shows that over the 20 years

prior, published articles about ethics in accounting and marketing journals steadily increased from 1991

onward, while in financing journals ethical reports have leveled off. This further delineates the point that

business ethics development specific to finance is running behind when compared to other business

school disciplines. The authors suggest that finance scholars perceive the potential impact of the subject

of ethics to be low, causing rejection from finance journals when deviating too far from what is

considered appropriate ‘basic research’. Alternatively, finance publications provide insufficient

encouragement for more ethical research and should take notes from the accounting and marketing fields

that have successfully incentivized more ethical research. On these accounts it can be expected that results

will differ for different employers, depending on the specific economic discipline the graduates have

pursued.

In an empirical examination Hellier et al. (2004) have surveyed employers asking them what they

required out of economics students, with the objective to offer a solution to the decrease in student

enrolment to economics. Out of 29 respondents, they visualized their findings in the following diagrams.

Figure 3 is an overview of the importance employers placed on a set of skills which notably does not

include ethical development. Figure 4 presents an overview of performance ratings on this set of skills of

newly hired graduates. Even though their data was gathered for a different objective, the data also clarify

the questions of this investigation about the relative importance of business ethics in what employers

require. It is telling that business ethics is omitted in the skill set in Hellier et al.’s research. The

interviews in this investigation however, will include questions about business ethics and may shed some

light as to why it is not even considered a relevant requirement. An argument could be made that ethics is

ingrained in several of these requirements and perhaps interpersonal skills and being able to work alone

cover it. Ethical behavior after all, is a social phenomenon which requires both an actor and someone to

be the judge of it. In any case, this data will provide a convenient reference for the analysis of the

interviews.

Figure 3. as presented by Hellier, Keneley, Carr & Lynch (2004)

Figure 4. as presented by Hellier, Keneley, Carr & Lynch (2004).

In a different examination of employer satisfaction with business college graduates, Paranto and

Kelkar (2000) identified four target categories of ‘core skills’ that possibly indicate employers’

willingness to hire. At the top of their ranked measurement of employer satisfaction with skills possessed

by graduates was business ethics, which was also ranked as third most important (Figure 5). This was

based on a mail survey that produced 136 usable responses among organizations that had recently hired

business graduates in the 1990-1994 timeframe. Among the employers, 26.6% were in Accounting,

29.4% were in General Business or Management, and 11.9% were employers in Finance. This would

seem to skew the data in favor of EDM’s reported importance through accountants, whose profession

revolves around upholding ethics, and general management, whose average task description includes

making impactful and value-laden decisions. As a consequence, financial firms are left relatively

underrepresented by the data.

Figure 5. Adopted from Paranto and Kelkar (2000), exhibiting employer satisfaction and relative importance of skills

Figure 6. Adopted from Paranto and Kelkar (2000), exhibiting employer four categories of core skills

As shown in Figure 6 through factor analysis, skills can be grouped in four distinct categories that

correlate. The factor group PERCHAR, short for personality characteristics including business ethics and

professionalism, has a mean importance score of M=4.60, making it the highest ranking of important

employee attributes that are grouped. In a paired t-test PERCHAR was reported to be more important for

employers than any other factor group (statistically significant at the .005 level).

A lot of research has been carried out on documenting employer preferences when hiring business

graduates. Wherever key competencies for graduates or general employability are researched, business

ethics gets either a singular mention among all other factors that comprise employability (Bridgstock,

2009, p. 34; Gault et al., 2010, p. 5, p. 7) or frequently no mention at all (Stewart & Knowles, 2001; Nabi,

2003; Raybould & Sheedy, 2005; Rae, 2007; Andrews & Higson, 2008; Wilson, 2008). This is caused by

either researchers not asking for the role of ethical development, because they believe it is not important

or they have EDM covered (in part) by other variables (f.e. Hellier et al., 2004). Yet another cause for

EDM not being reported is employers themselves not listing EDM. In any case, the relative lack of EDM

in employers’ preference leads to the expectation that a lot of employers do not actively seek for it. This

in turn, might be caused by employer codes of conduct that are considered sufficient to impart ethics to

the graduate from the point of hiring onward. The interview questions will probe for confirmation of this

possibly being the case.

3.

Methodology

3.1.

Data collection

Data for analysis will be collected through semi-structured interviews. This means that there will be open

questions that can be supplemented during the interview with guiding questions at the discretion of the

researcher. There will be five interviews with four different employers of business school graduates.

Organizations were selected through 83 e-mail invitations, 15 phone calls and 3 weekday afternoons of

inviting people in person that were present in a public area of a business district (G. Mahlerplein,

Amsterdam). The e-mail addresses and phone numbers were compiled from an internet search for

consulting, accounting, actuarial, investment and banking firms. The invitation mail featured an upfront

description of the subject being business ethics, the practical requirements of the interview and an

announcement of guaranteed anonymity. Invitations also included a specific request for meeting a

supervisor of business graduates or an HR staff member that deals with business graduates. These types

of professionals are expected to be the most informed about business graduates and how their

organization deals with ethical development issues. Three of the interviews were set up through e-mail

correspondence and two interviews were arranged through an acquaintance of the researcher. The first

three participant organizations arranged for HR staff members and the other two interviews were with an

HR staff member and a senior finance manager of the same firm. More than half of the organizations that

were invited did not respond, and the remainder responded with either having no time available or no

interest in participating. For processing purposes the audio transcripts will be divided into four parts,

corresponding with the four themes of questioning mentioned in the introduction and explained in the

following paragraph.

3.2.

Structure and content of the interviews

The interviews are of approximately 20 to 30 minutes in length total, recorded in audio, transcribed

(Appendix) and subsequently coded for analysis (paragraph 4). Interviews are preceded by an

off-the-record declaration of confidentiality and guarantee of anonymity to protect the interests of the participant

organizations. Only after the participant of the interview fully agrees with this does the recording start. To

achieve this, names of participants and the organizations and revealing operational activities are changed

in the transcription and analysis. The four lines of questioning are based around four central themes of

codes of conduct and recruitment and selection, with an emphasis on the role of ethical development in

the business graduate. There are a total of 14 prepared interview questions based on the four themes

(Appendix 1). During the interview, the researcher can steer off of the 14 preconceived interview

questions if an opportunity arises to shed more light on important issues, or oppositely if the answers

stray too far from what the researcher considers important. The collective aim of the themes is to answer

the main research question of what role business ethics plays in the misalignment of education and

employer, by creating a unified account of employers’ perspectives on this matter. The four themes are:

1. Setting the tone of the interview: a job description by the participant and the participants’

individual expectations about ethical development in business graduates

2. The methods in the organization of implementing an ethical standard

3. Recruitment and selection

4. Participants’ general opinion of business schools

The first theme includes general questions about the participant and the nature of their tasks in their

organization and also the participants’ individual expectations about the ethical development of the

graduates they hire. This is meant to start the conversation about ethical development and standards,

getting the participant to become more comfortable if necessary and setting the tone for the interview.

The expectations that an employer has regarding the quality of EDM is indicative of what they require.

This can provide leads for guiding questions and creates an opportunity for the issues to emerge that are

relevant from the participants’ point of view. The second theme is specific, and is meant to uncover the

methods the organization uses for implementing their ethical standard. The questions are aimed to allow

the participant to describe how newly hired business graduates are trusted with responsibility, which may

reflect the firms’ attitude towards upholding ethical standards. In the first two themes together there is an

opportunity for the expectations of the quality of ethical development of business students to emerge,

which is part of answering the main research question. Next, the third theme is similarly specific, aimed at

the criteria and practices of recruitment and selection. This will inquire into the relative importance the

employer places on ethical development and how they look for signs of ethical development. The last

theme of questioning is general and is meant to uncover the participants’ overall opinion of business

graduates. This will allow for framing the role of business ethics in a larger scheme of how employers

view the quality of a business degree. Other elements that are part of the misalignment of educator and

employer are expected to emerge here, mainly what employers require out of business schools or

otherwise feel that is missing. The perspective of the individual participant is seen as the perspective of

the employer; the participants have been selected on the basis of being able to speak with authority on this

part of the organization, which makes them adequate representatives.

3.3.

Discussion of the semi-structured method

The semi-structured setup is suitable for multiple reasons. First, having open questions allows for

acquiring a description of the relevant variables in the words that employers use. Open questions are

questions that are designed to elicit long-form answers. Using the employers’ own phrases as codes for

analysis ensures the reliability of the results to optimally reflect the employers’ professional language and

knowledge of their corporate ethical systems and culture. Second, this type of investigation has not been

done in prior attempts to document employers’ requirements. As mentioned in the literature review

(paragraph 2.4), all of these papers have employed surveys with closed questions and rating scales. The

semi-structured interview will provide an opportunity to uncover elements that do not readily fit the

standardization that is imposed by a survey. The matter of business ethics is complicated and is ingrained

into many different aspects of corporate culture. The subtleties of this reality are better preserved by

making use of open questioning. Furthermore, the semi-structured format includes the opportunity of

guiding questions. The guiding questions are vital to ensure the results remain on topic as much as

possible to ensure that answers are valid and provide meaning to the main research question.

The mail or electronic survey has an advantage over semi-structured interviews in collecting a larger

sample more easily, because the involvement of participants is smaller. Another benefit to using surveys

is that closed questions and Likert-5 point scales make for less time-consuming analysis. Such a

quantitative study would not suit the research goal of attaining a unified perspective as much as a

qualitative investigation. The qualitative nature of this study is deliberately chosen to favor experiential

data of the corporate culture and corporate attitude towards ethical standards. The participant representing

the employer is also subjected to these organizational influences and the results of a qualitative study may

reflect that.

3.4.

Methods of analysis

3.4.1. Coding

The transcription of the interviews will be analyzed by the process of coding. Coding means that relevant

excerpts of text will be labeled for categorization. These codes that arise from the data are known as

inductive codes. The choice for the code is taken from the words of the participants to reflect their

perspective. To ground the results in the prior research, important elements from the literature review

(paragraph 2) are taken to form deductive codes. The content of the interview transcripts will be also be

analyzed for the presence of fragments that relate to the deductive codes. The codes are summarized in a

table (Appendix 2) and provided with a number. The important text fragments are marked off in the

transcripts using brackets and the number that corresponds to the coding table (Appendix 3). Once all the

interviews are fully marked off, fragments of the same codes are compared and contrasted to each other.

The results of these comparisons are presented in the next paragraph according to their relation to the

themes of the research questions and the topics of the literature study. This analysis of codes will portray

the similarities and differences between the participants with regards to the research questions.

3.4.2. Use of memos

Memos will be made throughout the transcription process. Memos are research notes containing concepts

that are constructive to the methodology and analysis. Examples of these are preliminary ideas for codes

and possible relationships that are inspired by the process of both interviewing and transcription. The

transcription itself is the first opportunity for the researcher to reflect on the value of the data to the

research question. The opportune moment for creating memos is when the transcription is performed

shortly after the interview has finished. In this way the researcher can ensure that the conversation is still

fresh in mind that and any constructive ideas that did not materialize during the interview can still be

captured. Concerning the methodology, memos contain constructive ideas on how to improve interview

questions. Furthermore notes are made for how the answers relate to the literature, how answers relate to

each other and parts about the communication that are lost in audio recording, f.e. the experience of the

interviewer and what is communicated between takes.

4.

Results

Results of the interview are presented as the outcome of the coding process. In this paragraph some of the

text fragments are extracted from the transcripts to illustrate the most important points. The entire

transcripts (Appendix 3) are classified by fragment for meaning with inductive and deductive codes using

a numbered coding table (Appendix 2). The meaning of the text fragments is determined by the relevance

to the four themes of questioning, the main research question and the knowledge gained from the

literature review. To reiterate the four themes:

1. Setting the tone of the interview: a job description by the participant and the participants’

individual expectations about ethical development in business graduates

2. The methods in the organization of implementing an ethical standard

3. Recruitment and selection

4. Participants’ general opinion of business schools

4.1.1. Job description and employers’ expectations about ethical development

Out of the four different companies that were interviewed, two were HR staff members of the consulting

firms, ML and CB, one other in the financial services industry, JT, and the remaining represented by the

financial division, MH and DB. Ages of the participants were 39 to 57, not all off tenure and industry

experience were reported (code 1). The objective of setting the tone for the interview was achieved for all

five conversations, because in all cases part of the conversation was about defining business ethics. This

led to every interview proceeding on its own definition of business ethics. In response to the question of

what they expect out of graduate ethical development, all participants spoke of codes of conduct and

policies (code 5). This part of their business ethics definition is similar, strongly suggesting that this is the

main association of participants with business ethics. Despite this, anything further led to descriptions

such as:

ML1:[laten we eens ervanuit gaan dat iemand bij een klant, .., een project doet, dat ie ..,

dingen tegenkomt waar die dan eigenlijk over twijfelt, of dat dat eigenlijk niet zo goed is. Dan

zijn dat wel dingen die besproken worden bijvoorbeeld met een engagement manager of met

een klant uiteindelijk…..….of dat voldoende is, dat weet ik eerlijk gezegd niet.]

MH1: [ik vind A, dat integriteit zit ook heel erg in de persoon…dus wij kijken tijdens

selectiegesprekken, kijken wij van…hoe eerlijk, betrouwbaar integer komt deze persoon op mij

over. Het feit dat die een academische studie of economie heeft afgerond dat geeft al absoluut

een bepaalde basisgevoel van nou, dit is een persoon met de juiste kennis, die heeft gewoon

een goed niveau van kennis…we doen ook wel steekproeven zeg maar met diploma’s…dus

over het algemeen iemand moet diploma’s en getuigschriften en allerlei spullen mee sturen bij

sollicitatie dus daar zie je al van dat daadwerkelijk dat diploma er ook is. En we doen dus

steekproeven over de echtheid van die documenten.]

Here ML attempts to set a common ground of a business ethics definition, describing a

hypothetical situation in which any employee might be faced with an ethically ambiguous decision. MH

as another example starts describing the core competence integrity which is part of their recruitment

screening procedure. Based on the answers that were given, the concept of what business ethics means is

in part consensual, as far as discrete policies and codes goes. For the remaining part it is described in

different ways as having to do with what is right and wrong in the workplace. This is close enough for a

working definition to bear no detrimental effect on results based on this partly loose interpretation.

Only MH had some definite expectations regarding the ethical development of graduates when

asked directly. MH stated that graduates they hire are regarded as highly ethical (code 11). Others had no

such clear and direct answer, they responded by describing their codes and policies. These results do not

support the idea that an employer would make an inference of ethical development based on education

history.

4.1.2. The methods in the organization of implementing an ethical standard

The participants all gave accounts of procedures and practices that ensure the ethical standard from the

point of hiring onward. Newly recruited graduates are allocated to roles where their tasks are monitored

by others, thereby ensuring performance including ethics.

CB2:[in principe hebben wij het zes-ogen principe, wij werken in klanten-teams, waarbij ..

er altijd een meer junior persoon is die echt de berekening doet en het werk uitvoert, de medior

persoon die een beetje bijstuurt en een controle doet, en dan nog een senior persoon die dat al

heel vaak heeft gedaan en nog een keertje kijkt of het wel echt klopt als het af is.]

MH1:[Ik vind dat ons bedrijf daar heel, ja ook positief mee omgaat…dat die meteen al

best wel verantwoordelijkheid geven aan deze mensen, met deze studie achtergrond. Het hoort

gewoon bij het financiële vak, waar deze mensen ook over het algemeen te werk gesteld

worden, dat daar altijd…ja, zeg maar vier-ogen principe, dus er zijn altijd verantwoordelijke

personen die daar boven zitten en die meekijken in de praktijk. Maar ze krijgen wel meteen al

ook echte verantwoordelijkheid toebedeeld.]

In these examples both CB and MH, from different companies speak of a common practice, the

four-eyes/six-eyes principle, which describes the monitoring task of supervisors where at least four or six

eyes have a say in finalizing decisions.

DB2:[Dan raad ik bijvoorbeeld de trainees, wij hebben bij de DEF trainees, die we

aannemen, financiële trainees, die hebben… over het algemeen geen andere achtergrond dan

dat ze afgestudeerd zijn aan de universiteit en eventuele stages hebben gelopen tijdens

een…studie, en die worden aangenomen. En dan in de eerste functie is dan niet een

leidinggevende functie, ze moeten eerst de DEF leren kennen, hun ervaring opdoen, en …we

moeten leren kennen wie de persoon is…interviewen is een, maar als iemand bij je werkt dan

zie je uiteindelijk natuurlijk veel beter wat iemand….hoe iemand is. En dan na

een….misschien…de eerste functie duurt twee jaar, dan zijn er nog geen leidinggevenden, de

tweede functie zou al kunnen, weet je wel, dat je dan al beperkt leiding geeft,…maar om een

derde functie dan gebeurt het dat je gewoon leiding gaat geven aan een…aan een groep

mensen.]

In another example here DB gives his company’s procedure to let newly hired graduates first gain

experience and allow the company to assess character and skills before giving more responsibility.

Throughout all five interviews there is a heavy emphasis on policies and codes. DB donated the

researcher an elaborate document of the intricate corporate policies of his organization. This example

portrays an ethical standard heavily ingrained into the corporate value system.

4. 1.3. Recruitment and selection

Selection of personnel is based on interviews, core competence assessments and content of resume. For

all the participants there is no attempt to look for signs of ethical development directly. The assessments

however, do include the core competence integrity (code 4) and this is also controlled for through use of

letters of recommendation, or in one case the assistance of a third party reference investigator (JT3).

Integrity is a part of business ethics, describing as having a personal ethical standard. A different part of

business ethics, ethical awareness (code 3) which is discussed in paragraph 2.2, can be taught but it is not

part of recruitment screening. These examples suggest that ethical development is not explicitly sought

for but it is controlled for.

MH3:[…in principe is het dan zo dat als een van die zeven competenties onvoldoende

scoort, in principe zeggen we dan van nee, niet aannemen. Maar het wil nog wel eens dat als

het bij wijze van spreke de competentie overtuigingskracht een twee heeft en de hele rest zit op

vijfen, dan zou dat nog wel het voordeel van de twijfel kunnen krijgen. Die persoon zou je dan

nog wel aan kunnen nemen. Maar als echt de competentie integriteit onvoldoende scoort, dan

neem je hem sowieso niet aan. Dat durf ik je ook voor mijn collega’s zo te stellen.]

JT3:[…iemand kan ethisch gezien nog zo aansluiten bij onze bedrijfspolicy, als iemand

de technische kwaliteiten mist, of die past totaal niet in het team, dan gaat die persoon niet

aangenomen worden. Want er zijn dingen waar je wat aan kunt veranderen. Als iemand

bijvoorbeeld niet helemaal op het niveau zit van de technische kwaliteiten die je graag zou

willen, daar kan je wat aan doen, weet je, interne training, externe cursus, van alles….maar qua

persoonlijkheid, als iemand niet zou passen in het team , ja dan gaat het gewoon niet

gebeuren.]

In these excerpts MH adds that an applicant will not be accepted, when the technical requirement

is fulfilled but integrity score is too low. JT states the same procedure the other way around, if ethical

requirements are met applicants are still not accepted if the technical skills are inadequate or if there is no

cultural fit.

Concerning ethical awareness, ML makes the following comment:

ML1: [..ik denk dat je wel mensen moet trainen…ik denk dat de awareness wel iets

belangrijks is…omdat wij de mensen die net van school komen of die net afgestudeerd zijn, dat

er misschien wel een soort normbesef is, maar niet het besef hoe het dan praktisch gezien in de

bedrijven er aan toe gaat.]

ML seems to be under the impression that graduates may have some form of value awareness, but

she does not specify whether she assumes this to stem from education or upbringing. Furthermore, she

alludes to the matter of graduates lacking real-world experience. This perceived lack of soft skills

possessed by graduates, is corroborated by CB (code 15). The other participants, MH, DB and JT speak

on the importance of soft skills, but their context remains at the level of describing procedures to control

for ethics. No statements were given that relate ethical development to education background.

ML4:[selectiecriteria hangen voor een groot deel samen eigenlijk op drie vlakken

eigenlijk met core competenties en dan gaat het eigenlijk toch een beetje over het ontdekken

van het potentieel van mensen, dat zijn eigenlijk hele praktische dingen…..… het gaat ook over

client en practice dus daar kijk je wel zie je iemand klantgericht zijn met bepaalde voorbeelden

kan je dat uit bijbaantjes halen dat soort zaken. En, ..…interviewmethodes doe ik altijd wel via

de STAR-principes dus ik probeer altijd wel te achterhalen wat was de situatie, wat deed men

toen, welke actie was er, ik check ook referenties, bijvoorbeeld om te kijken of het verhaal

klopt...is dat een antwoord op je vraag? Wat waren de criteria..ja en wat doen we heel

specifiek voor ethiek..ja ik denk dat we mensen natuurlijk wel indirect langs een soort cultuurlat

leggen. Maar hoe zeg je of iemand in staat is om committed te zijn…ja..]

As for the criteria that matter most and the ranking of ethical development within that group, all of the

participants had some comments to make. Here above ML mentions the core competencies that matter for

her organization and she tries to describe the indirect method by which ethical decision making is

controlled for through cultural fit:

ML4:[je kan moeilijk op de man afvragen ‘ vindt jij jezelf ethisch?’]

In this sentence ML refers to the difficulty of directly asking someone looking for a job if this

person considers him- or herself ethical. This obviously leads to possibly biased results but it explains

why efforts to gauge someone’s quality of ethical decision making is indirect or by triangulation of

multiple perspectives. In other cases the quality of EDM is judged over time, through the building of trust

in the professional relationship.

CB3:[G:Wordt er ook gecontroleerd voor wat ze noemen self-reporting bias, bij het

beantwoorden van deze vragen?

CB: .., dat vraag je aan een psycholoog he. .., ik denk het wel maar .. je kan nooit alle bias

weghalen. Ben ik van overtuigd. Maar ik denk dat al onze vraagstelling dusdanig zijn en op een

dusdanige manier, op verschillende manieren terugkomen, dat we wel de juiste informatie eruit

krijgen.

G: Het heeft toch nog zin om in dat kader die vraag te stellen?

CB: die persoonlijkheids vragenlijst is daar ook op gebouwd he, die controleert ook of iemand

consistent is of iemand die vragenlijst invult of..]

In this fragment, CB confirms the same challenge of assessing ethical decision making, when

directly asked if self-reporting bias is being accounted for in the procedure.

ML4:[ik denk dat dat wel iets is wat in je achterhoofd speelt, he of je iemand nou, als je

goed interviewt kan je best wel tussen de regels door lezen hoe iemand zijn houding en of

attitude is ten aanzien van vraagstukken..]

MH2:[je gaat ervan uit dat wel tijdens een studie…dat deze bedrijfseconoom, zeg maar

de economisch opgeleide mensen, dat die wel weten wat de risico’s zijn van het feit als ze een

misstap of iets niet integers zouden doen, dat ze daar dus wel tijdens hun studie, he,

vaktechnisch alles van weten, van nou ja wat zijn de consequenties als ik niet integer me

boekhouding doe, of wat dan ook. Dus daar ga je eigenlijk al van uit, dus niet dat dat ook…..ja

op vaardigheidsniveau is in de opleiding. En dat vind ik meer, dat bekijk je meer naar de