Time to roll out real-world business studies?

Executive cufflinks? Rob Best, CC BY-ND

Today in Britain there is hardly a major business that has not been accused of wrongdoing. From the banks to GlaxoSmithKline and BP, both of whom have had their coffers lightened somewhat after paying fines, to G4S and Tesco who face investigations for alleged offences, the list goes on and on.

But where does this leave the 100,000-plus students who are studying business? Economics students have protested against an irrelevant economics curriculum, but little has been heard from those studying business even as the enormous scale of bad and/or criminal behaviour by the world’s biggest companies stares us in the face.

There is a structural problem here. Business schools could be about business but too often they have to present themselves as for business. They demonstrate the importance of a business agenda in higher education. Students are encouraged to see themselves as entrepreneurs even though the chances of their being involved in genuine business entrepreneurship are small. Courses tell them about leadership when the best that most of us can achieve is some form of followership.

We preach about opportunity but practice hierarchy and social selection. Indeed given the diminishing patterns of social mobility in the UK, and the preference for those with public school and Russell Group backgrounds, the prospects are poor for students in most ordinary university business schools to rise anywhere near the top.

Company of wolves

Business schools seem to treat bad behaviour as the exception rather than the rule. But is it? In the 1930s Edwin Sutherland risked his academic career in the US by keeping a set of index cards about the prosecutions of major companies. With this simple research method he was able to make the explosive argument that business violation of the criminal law was common. More, many major corporations were recidivist, serial offenders.

His work became a sociological classic. But Sutherland made less impact in the world of business studies where men in suits still struggle to ethically negotiate the “triple bottom line” of profit, people and planet, guided by their sense of corporate social responsibility.

Horsing around. andy a, CC BY

But “crime in the executive suites” has always been bigger than “crime on the streets”. Events since 2008 have revealed how colossal today’s ongoing corporate crime wave is. The investment banks almost brought down the major economies. Then we learned that they had also been fixing the world financial casino. The high street banks have practised endless and systematic mis-selling – fraud by another name. The level of PPI compensation alone suggests that on average each high street branch of a UK bank may have been involved in mis-selling policies worth millions. And we know from Lloyds that this often involved senior staff browbeating low-paid junior employees into doing their organisation’s dirty work.

Swathes of private companies are essentially corporate welfare subsidy junkies. UK corporate welfare costs have been estimated by one critic to run to £85 billion a year. Corporate hand-outs extend from cushy PFI deals to direct and indirect subsidies, tax breaks and even a bit of free labour thanks to the UK benefits system.

Company performance, even when masked by creative accountancy and boosted by low pay for the bulk of their workers, is often lamentable. Yet bosses filch ever more, supported by indulgent boards and compensation committees whose real function appears to be sustaining grotesque pay levels. And when activity involves criminality that falls within the scope of UK law and law enforcement, then it is rare that any serious sanction follows. Margaret Hodge has rightly questioned why Serco and G4S are able to bid for more contracts while both being investigated for alleged fraud. And taxes – well to paraphrase Leona Hemlsey – only little people, and little companies, pay taxes.

Student moans

Some good research is done in business schools – ironically driven there by the very irrelevance of much of the work in economics departments. One of the most important centres of critical analysis in the UK, for example, is Manchester Business School’s Centre for Research on Socio-Cultural Change. At Essex University, Professor Prem Sikka has played an important role in challenging many accountancy fiddles.

Required reading. failing_angel, CC BY

Almost every university has a business school where many times more people study than in economics departments. Yet our courses barely reflect the problems that we have with business. Perhaps to understand this students might better invest in a subscription to Private Eye than another glossy textbook.

What we need is a new Sutherland for 21st-century business schools. It would not be difficult. Think how many index cards we could fill with tax avoidance. Or what about money laundering? London is reckoned to be the world’s biggest money laundering centre. And it has been the storm centre for the dodgy dealing behind many a global financial collapse – some say back to the South Sea Bubble. Then what of the cards for the super-rich? The idea that the UK is “open for business” means any oligarch can use the UK to hide their wealth, buy up assets and deploy the courts and the law to fight their legal battles.

Business schools need to confront this world of business as it is. Our students might be our best allies. Many of them will be in low-paid part-time jobs; they will be living in buy-to-let properties or in private halls owned by multinationals. They will be worrying about debts that extend into the foreseeable future. And social inequality in the jobs market and the nepotistic social hierarchies of UK higher education institutions will loom ever greater as they get closer to graduation. Real-world business studies can also start close to home.