Business Law and Ethics

By Chris Quirk

Adhering to ethical standards should be the sine qua non for practitioners of any profession. The problem in business, asserts Associate Professor Miguel Alzola, Ph.D., is that gray areas abound, and there is a lack of agreed-upon guidelines. “In many professions, such as law, engineering, or accounting, there is a clear code of ethics and students are required to take several courses to ensure they understand their legal and ethical responsibilities,” he said. “There is no such code in business.”

To prepare students for the real-world challenges they will face in business, Alzola and other faculty members in the Gabelli School’s Law and Ethics area are using their courses as platforms for important conversations about how to navigate often uncharted ethical waters. While these dialogs can be challenging and the results sometimes counterintuitive, the desired outcome is to provide students with the tools to operate effectively and ethically in novel and dynamic business situations.

Alzola created and teaches the M.B.A. course Markets, Business, and Society, which plunges students into the murky ambiguity that industry leaders can face in complex business environments. “This isn’t Sunday School,” he cautioned. “I tell students that my role is to facilitate conversations around decisions that corporations and executives have had to make in these gray areas.” Alzola deliberately chooses case studies for analysis that are controversial, those where reasonable claims could be made for opposing points of view. “I encourage my students to frame and pursue problems as win-win if you can, but sometimes you have to make tradeoffs. That’s what you need ethics for,” he said.

In that vein, it’s not so much the classroom content but principles that will stick, said Professor Ken Davis, J.D., which is why he focuses on challenging his students to reason and process information in an evenhanded way in case studies he discusses in the classroom. It’s more than likely, Davis asserts, the students won’t recall many of the granular details of what they learn in his class, absent active use of the knowledge.

“What I really hope they will retain are problem-solving and dispute-resolution techniques, as well as critical-thinking skills,” he said. Students need to think on their feet in fast-moving conversations. “Critical thinking simply means that when you’re confronted with a new problem, you seek creative solutions, and recognize the flaws in arguments that are made that oppose you. You need to have an open mind, and be able to adjust your position.”

“Normative ethics goes into the ‘should,’” said Assistant Professor Matthew Caulfield, Ph.D., whose research and teaching focus on corporate responsibility and the intersection of morality and business. “We don’t just describe the world as it is, but how it ought to be, and that’s an entirely different enterprise. So, we’re not just surveying people to figure out what they think is ethical, or just trying to give people an understanding of psychological biases or descriptive norms that exist in the business world,” he explained. “We want to give students the skills to think about how the business world should be, how one should act, what it means to be a good business person, and what it means to flourish.”

To illustrate this point, Caulfield offered the example of a “sweatshop,” a term used to describe a factory where laborers are often underpaid and work in squalid conditions. Uncommon in the U.S. due to strict labor laws, in emerging economies these situations abound, and workers face the dilemma of toiling in a sweatshop or making money in other illicit and dangerous ways. In this case, students were tasked with evaluating this grim reality, and explored whether these sweatshops should be closed or remain open for those who struggle financially and have no other option to survive.

John Wee, an undergraduate business student, recalled the moral predicament of this scenario covered in the Ethics and Business course he took with Caulfield. “Are the other alternatives worse jobs with less pay that subject workers to greater abuse? Will they have nowhere to go and live if the sweatshops are closed?” he pondered. “We read a paper on this issue so we could understand the tough choices workers faced. This is something I never would have thought about. It was an amazing class, and Professor Caulfield is a great teacher.”

Classroom conversations can at times be contentions, said Professor Kevin Jackson, J.D., Ph.D., and while diversity of views is expected, so is mutual consideration. “If I cast the DEI topic through the lens of our Constitution, it elevates the debate above the kind of ideological clamor you normally have. I even go beyond that because I have [students] read theories from the philosophy of law, where alongside of originalists, you have people so radical they say that the Constitution is racist, so we should replace that with something else,” he explained. “Let’s throw that into the debate hopper and see if you can argue it, and see what the counterarguments are. But let’s be civil with one another. No one’s going to be throwing red paint on me or anyone else,” Jackson said, laughing. “We’re going to respectfully listen to opposing viewpoints.”

Cases like these and the changing business environment show why legal and ethical training is such a vital part of the curriculum across the Gabelli School of Business. “[Law and ethics] are closely related. Nearly every law has an ethical underpinning,” said Davis. And having a department with both lawyers and ethicists is advantageous for the faculty and the students. “We benefit from the expertise of our colleagues. The ethics professors learn about relevant legal concepts, such as the rules of corporate governance, which have ethical implications. Similarly, law faculty members benefit from the expertise of the ethics faculty by learning philosophical rationales for legal principles.”

The system also ensures that philosophically minded people are teaching ethics, added Caulfield. “Elsewhere, in many cases, a business ethics class will be taught by a psychologist rather than an ethicist, and they’ll teach ethics and biases from a psychological point of view. That doesn’t really get to the core of the issue, which is thinking about values and how they apply in daily practice.”

To provide some experience in this regard, Alzola created the Fordham University Business Ethics Case Competition in 2015, which pits teams of students against each other to present and defend complex business ethics scenarios in a brisk question-and-answer format. This year, the winning team of undergraduate business students—Seve Perez, Saif Virani, and Ashley Yoshii—took on issues of nepotism at LVMH Moet Hennessy Louis Vuitton. The team went on to compete in the International Business Ethics Case Competition in Newton, Massachusetts, on April 17–19, mentored by Carolina Villegas-Galaviz, Ph.D., an expert in AI ethics and visiting research scholar in the Gabelli School’s Law and Ethics area. “I was so impressed with how well-prepared and eloquent the students were,” Alzola said. “This is really down to their creativity and engagement with the topics. They answered some tough questions very well. They had done their homework.”

Beyond virtue being its own reward, business benefits can accrue when consumers reward corporate citizenship or a company can attract and retain top talent. “Being ethical creates reputational benefits because people are interested in the behavior of institutions, especially today,” Davis said. “When members of the public perceive that a company is behaving ethically, they are more likely to do business with that company.”

Jackson, who wrote a book called Building Reputational Capital after the Enron scandal just over 20 years ago, goes further. “I argued that a company’s reputational capital is its most valuable, invisible asset. It’s intangible, but in terms of its value, it surpasses anything that would appear on the balance sheet.”

Faculty members in the Law and Ethics area often speak of what it means to be a leader. For Jackson, a key part of being a virtuous person is having compassion and empathy. “You’re not only focused on self, but on the interests and needs of others, and you have love for other people,” he said. “To me, that’s really the quintessential leader—a person who cares for others as they do themselves.”

Chris Perera, a student in the Executive M.B.A. program, is an executive producer in the television industry who co-owns a business that produces lifestyle and travel shows. The most critical takeaway from a course he took with Jackson is that business leaders need to think broadly about the ethical impact of their industries. “He teaches us to extend our ethical considerations beyond our stakeholders to include the broader community, highlighting how a series of ethical lapses can infect the culture at large. An example of this was the predatory lending that snowballed into the 2008 financial crisis,” Perera said. “I particularly like that he advocates for ethical virtue as both a means to fulfill regulatory requirements and as a strategic investment into the long-term strategy of any business that seeks to be an industry leader.”

“When it comes to grand challenges facing business and the world today—climate change, human rights violations, ethical corporate governance, fair wages, business ethics in war, and emerging disruptive technologies,” said Caulfield, “none of them can be discussed without values, and Fordham’s Gabelli School of Business demonstrates its commitment to looking at those values closely and critically, in the Jesuit tradition of free and open truth-seeking inquiry.”

— Chris Quirk is a freelance writer based in Brooklyn.