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Your Turn The Corrosion of Corporate Purpose dals of the past three years may have tempered the strident rhetoric of some who doggedly put shareholder wealth first. Yes, corporate gover- nance has received greater attention and some ethics and governance courses have been developed. But many of those courses, such as those on Enron or WorldCom, promise to have limited shelf life. Furthermore, they haven't eroded the pervasive influence of this ideology within business schools. The shareholder- driven ideology remains unchanged. Consider the results of a recent What has led seemingly moral business leaders to conduct unethical, and even criminal, acts? In many cases, the seeds were planted by the country's most prestigious business schools. When these leaders were students, many of them were indoc- trinated with a near-religious ideolo- gy: the belief that maximizing share- holder wealth is a corporation's rea- son for existing. Today, this dogma continues to be the unofficial reli- gion of business education, even though it's at the expense of moral courage and inspirational purpose. The high-profile corporate scan- by Richard R. Ellsworth roots in the business school war of reputations and rankings that began in the 1960s. Many leading schools found that nothing had greater impact on their standing than increasing the quality and visibility of their finance faculty, since the finance field was becoming more aligned with theoretical economics than with the practice of manage- ment. Certainly the increased rigor of financial theory has benefited stu- dents, corporations, markets, and individuals alike; but it has also had critical unintended consequences. In many schools, intense, yet Aspen Institute survey. When incom- ing MBA students were asked about the primary responsibility of a corporation, the most frequent answer was to satisfy customer needs. However, by graduation, their responses had changed—most answered that the highest ideal was to maximize shareholder value. Business schools' emphasis on shareholder wealth—and its surro- gates, ROI and the discounted net present value of investments—has its 66 BizEd MARCH/APRIL 2004 graduating indoctrinated in a nar- row, largely unchallenged set of beliefs about the basic purpose of the enterprise. Professors who ground their theories and teaching in an alternative set of beliefs are widely marginalized. Debate on true corporate purpose has slowly disap- peared from the mainstream curricu- lum, except in courses on business ethics. Even those courses often are appendages to the curriculum and on the periphery of faculty interest. These business-school phenome- subtle, struggles ensued between "tough-minded" finance professors and "soft," managerially oriented fac- ulty. As finance faculties grew increas- ingly powerful and their theories became widely lauded, an intellectual arrogance arose that chilled opposing points of view regarding the purpose of corporations. Other courses like strategy, management, organizational behavior, and marketing, which should have challenged this ortho- doxy, did not. Consequently, the shareholder-first ideology became the dominant business school doctrine. to complex problems, the doctrine of shareholder wealth is beguilingly simple, clear, and quantifiable. It allows students to ignore the real- world complexities and responsibili- ties that many find difficult to com- prehend, much less appreciate. They never need to confront the messy necessity of pitting one corporate na, which work to silence dissent, have clear parallels in today's corpo- rate scandals. Those who had the courage to speak up internally about their organizations' misdeeds—such as Enron's Sherron Watkins and WorldCom's Cynthia Cooper—were silenced or pushed aside. Their boss- es chose ideology over good judg- ment and felt these people did not grasp the ideology's first imperative. Maximize shareholder wealth! Like many seductive "solutions" tion of the firm's current share price—effectively supplanted the long-standing belief that serving cus- tomers' needs was the prime func- tion of the enterprise. One unfortu- nate result of the emergence of the stockholder-first faith has been a bifurcation between people and eco- nomic issues. People are increasingly seen as a means to financial ends. As a result, MBA students are This new religion—the maximiza-