The Value of Virtue ; Students Size Up Businesses in a New Course on Corporate Social Responsibility

Article excerpt

When Gail Snowden talks about making profit off the "disadvantaged" in "poor neighborhoods," like Harlem in New York and Roxbury in Boston, not a single person in the classroom flinches.

Most of these 40 graduate students at Brandeis University are in business school precisely because they want to learn how to make money. And today, their pencils are flying.

But Ms. Snowden, president of the FleetBoston Financial Foundation in Boston, isn't discussing profit alone. A black woman raised in a family of social activists, Snowden spent years convincing corporate higher-ups that underserved communities would prove a vibrant resource for Fleet. Today she heads Fleet's Community Investment Group, which directs resources into low- and moderate- income communities.

Her work is just one proof, she says, that corporations can make money by being socially responsible.

This reinforces the two-fold message of Prof. Michael Appell's new course, "Corporations and Communications": Not only do businesses have a responsibility to behave ethically, but virtue itself can pay.

"We focus on the subject of return on responsibility," Mr. Appell says. "Overall, companies that take CSR [corporate social responsibility] seriously outperform those that do not."

The concept of CSR has been a part of some business school curriculums since the 1970s, but it has earned a more prominent place in the wake of recent business scandals. CSR is distinct, however, from business ethics, an older term that deals with misbehavior, such as fraud, within a company. CSR examines the impact a corporation has on the world around it - by, say, reviving an abandoned neighborhood or improving the working conditions of its factories in a developing country.

"I want my students to set aside whatever assumptions they have about NGOs [nongovernmental organizations] and business," Appell says - specifically, the notion that NGOs do good work while businesses make money, and that the two are mutually exclusive.

The students' own backgrounds help to challenge that dichotomy. They come from a dozen countries and two very different graduate programs - one focused on business and another on international development.

Many of the students were drawn to the class because it explores the potential overlap between these two disciplines.

"Most of the courses an MBA has to take include corporate finance, management, competition strategy," says Babar Lakhani, from Karachi, Pakistan, who studies at Brandeis's Graduate School of International Economics and Finance.

"This is something very different. It focuses on how, if everyone is good, the bottom line will be better, and stronger, because everyone is happier in a sense."

Deanna Becker, a student in the Heller School for Social Policy and Management and one of the few Americans in the class, is taking the course to learn more about the way businesses operate.

"I'm in the sustainable international development program, and we talk about all sorts of paths toward development," she says.

"But one of the things that often gets left out is that there's the force of business out there. I wanted to be in a class that actually addresses the impact that businesses have."

Decades in the making

"Business ethics" has long been considered an oxymoron. In 1906, historian Ambrose Bierce defined the corporation as "an ingenious device for obtaining profit without individual responsibility."

In 1970, soon after the term "corporate social responsibility" was coined, economist Milton Friedman echoed Bierce's sentiments in The New York Times: "There is one and only one responsibility of business - to use its resources and engage in activities designed to increase its profits."

But in the mid-1970s, with the Watergate brouhaha still echoing and a string of business scandals revealing massive fraudulence and waste, the mere discussion of ethics was deemed insufficient. …