[An edited and shortened version of this article was published in The Guardian.]
Although topics in business education such as accounting and finance may seem merely technical, they often bear major ethical implications. Business education should therefore aim to make students aware of the moral side of business decisions.
As a university teacher of management accounting, I see the world through a particular lens. When I read about the sales scandal at Wells Fargo, I can’t help but think about the people who naively designed the incentive schemes that triggered this type of unethical behavior. Also, when I hear about tax avoidance by companies like Amazon and Starbucks, I start wondering which specific transfer pricing methods they used and whether those who built the complex schemes were aware of the effects they generated. In other words, I see a strong connection between ethically disputed business practices and accounting techniques.
The dominance of technics
In the textbooks that are used in most elementary management accounting courses, this connection is either neglected or only marginally discussed . In my recent paper on this topic, I distinguish between technical aspects of accounting education – understanding the formulas, definitions, mechanics and calculations – and its ethical aspects – understanding the moral implications of accounting techniques and being able to critically reflect on them. While ‘the technical’ seems to receive a lot of attention in business programs and textbooks, ‘the ethical’ is frequently neglected or presented as an “add-on” in a an isolated chapter, introduction paragraph, or in an entirely different course on business ethics.
For instance, let’s consider transfer pricing. Transfer pricing is the practice of setting a price for a good or service delivered by one organizational unit to another – when these units are located in different tax regions, the chosen tranfer price affects the amount of tax that has to be paid. Various accounting textbooks discuss the technical aspects of transfer pricing: ‘How can multinationals minimalize their taxes payable by using the ‘optimal’ transfer price?’ Yet, the ethical aspects of using this method – is it ‘fair’ to use this technique to avoid paying taxes – and the moral consequences of using them – how are, for instance, developing countries harmed by multinationals that hardly pay taxes – receive hardly any attention, even though they are well acknowledged in the literature .
This overemphasis on ‘technical’ aspects in business education may lead students (and graduates and managers) to believe that business decisions are indeed only technical – and bear no ethical implications. The moral philosopher Alisdair MacIntyre also points to this problem when he critiques managers and educators who “conceive of themselves as morally neutral characters”, because business decisions almost always bear ethical implications. Business decisions may, for instance, trigger the deterioration of work conditions (elsewhere in the supply chain), create a ‘profit-justifies-the-means’ culture and, on a larger scale, increase inequality on a global level.
Ethics as an add-on
Sometimes, the aforementioned problems are indeed addressed in business education. Often, however, this happens as an “add-on”: in a separate chapter or course on business ethics. Although such an “add-on” is arguably better than having no discussion of ethics altogether, it may also result in the ethics class becoming an ‘afterthought’ or an ‘ethical island’ – detached from the actual business topics it tries to reflect on. Furthermore, real-life business decisions also involve ethical and technical aspects simultaneously – so why should we discuss these dimensions isolatedly in business education?
Integrating ethics and technics
I’m in favor of a stronger integration of ethical considerations in business education. For instance, a discussion on the technics and ethics of transfer pricing in one and the same accounting class, using a case that highlights both aspects. Kate Raworth (author of Doughnut Economics) furthermore suggested that business education should challenge its own underlying assumptions about human behavior more, and Martha Nussbaum (author of Not for profit) proposes to bring in other disciplines such as the humanitites to stimulate more critical reflections on taken-for-granted business practices.
Of course, it remains of paramount importance that business students acquire technical skills – a lacking understanding of the technical side of business and technology may produce problems of its own. Also, universities should not be paternalizing students by dictating what is ethical and what is not. Instead, a more critical and integrated debate about the moral implications of, for instance, financial instruments, accounting techniques and new technologies should play a central role in business education.
In Jurassic Park, dr. Ian Malcolm illustrates the problem of only paying attention to technical aspects when he stated that “scientists were so preoccupied with whether or not they could, they didn’t stop to think if they should.” I would like us, business educators, but also students, managers and accountants, to not make that same mistake. Let’s take that step back every once in a while to reflect on the ‘ethics’ of the ‘technics’.
Berend van der Kolk, IE Business School Madrid (Twitter: @berendvdkolk)
Dr. Berend van der Kolk is an assistant professor at IE Business School (IE University) in Madrid. He teaches and researches management accounting and business ethics, and this article is based on his recent paper in “Accounting Education”.
 Van der Kolk, B. (2019) Ethics Matters: The Integration of Ethical Considerations in Management Accounting Textbooks. Accounting Education. http://doi.org/10.1080/09639284.2018.1543602.
 Mehafdi, M. (2000) The Ethics of International Transfer Pricing. Journal of Business Ethics. https://www.jstor.org/stable/25074427