The writer is professor of organisational behaviour and head of the faculty of management at Bayes Business School, City, University of LondonFor more than a decade, I taught a course on business ethics. Each year, I would start with a simple question: why do corporations exist? “To maximise returns for shareholders,” one student would answer. Then another would explain that corporations have other stakeholders, such as customers and the local community.
Things always became trickier when I gave them a real business problem: what if you are running a company facing increasing competition from foreign rivals with a lower cost base? Should you reduce dividends or cut labour costs? Often the answer was the latter.
It seems my students are not alone. A recent study by Daron Acemoglu of the Massachusetts Institute of Technology, Alex Xi He from the University of Maryland and Daniel le Marie of the University of Copenhagen found that managers educated at business schools were more likely to favour shareholders over employees.