Ethics & Enterprise

Jesuit business schools tap their global network to encourage social enterprise and take care of communities.
Ethics & Enterprise

Ethics and social responsibility have become important components in many business programs, but perhaps nowhere are these topics so foundational to mission and curriculum than at Jesuit institutions. Today, Jesuit schools are intensifying their efforts by joining forces and sharing resources, says Gregory Ulferts, director of graduate business programs at University of Detroit Mercy’s College of Business Administration in Michigan.

Ulferts also is the executive director of the organization that is helping Jesuit business schools globally integrate their efforts: the International Association of Jesuit Business Schools. IAJBS is an alliance of 176 recognized Jesuit universities and institutes, as well as more than 400 additional business programs—many of them at Catholic universities—that participate at an associate member level.

The IAJBS allows its members to “find common ground and vision. As a group, we’re able to achieve more change than we could if we worked individually,” says Ulferts.

At the association’s 2009 World Forum conference in India, IAJBS member schools agreed to add global sustainability to their ethics-based mission statements, but they didn’t have a common definition of sustainability, says Ulferts. “One person would talk about it in relation to the environment, while someone else viewed it in relation to people. Our first task after that 2009 meeting was to make sure we understood what we wanted to do in that arena.”

After much discussion, Jesuit business schools now view global sustainability not just in terms of protecting the environment, but as a path to taking care of communities. Ulferts points to several initiatives and programs around the world that support this expanded perspective:

• Ateneo de Manila University in the Philippines has created a program to promote small business development, including its social incubator ACSENT, which is described on page 33 in the section “A Culture of Social Enterprise.”

• Sogang University in South Korea, Fu Jen University in Taiwan, and Sophia University in Japan send students to work with students at Universitas Sanata Dharma in Indonesia to help communities hit by the tsunami in 2004. One student from each university works on a project team, and each team works with a community group.

• The Xavier Institute of Development Action and Study (XIDAS) in Jabalpur, India, has partnered with government to help small villages where the water supply has dried up. Students and faculty come to an agreement with the village, survey for water, and drive a three-inch pipe to a water source. Villagers roll out wire to an electrical source as far as a half mile away so they can run electricity to operate the water pump.

• Once a water source is established, the villagers are given 20 plants, most of which are mango trees that bear fruit quickly. As part of their agreement with XIDAS, villagers commit to planting and cultivating their plants. Because they can access electricity only at night, they also must commit to rolling the wire back up each day. So far, the program has been established in more than 40 villages, which now have access not only to clean water, but also to their own food supply. They also have the capacity to take their fruit and vegetables to the city to sell to generate income. The cost of the entire project per village is only about US$2,500.

• Because there is not yet a Jesuit business school in Africa, ESADE in Spain, the University of Namur in Belgium, and Georgetown University in the U.S. are all partnering with schools in Africa to help develop business education on the African continent. IAJBS is collaborating with them on the project.

The association’s next step is to explore ways to engage in its efforts the approximately 14 million alumni who have graduated from Jesuit schools. For instance, to bring students and alumni together, the association is planning a student case competition on ethics and social responsibility. The IAJBS also is in the process of setting up global student and alumni associations. “We want to do more to mold our network and remind our alumni to get involved with our various activities around the world,” Ulferts says.

All Jesuit business schools “share a common purpose,” Ulferts adds. “The strength of IAJBS is our ability to find common ground—common thinking—around the world. I’m proud of our strong network. Together, we can make a difference in the world.”

The following two articles describe in more detail how two Jesuit institutions—Santa Clara University in California and Saint Louis University in Missouri—have designed programs to more deeply engrain ethics, social responsibility, and sustainability in business education. These programs are just a sampling of ways that Jesuit business schools are working to expand their missions to effect social change beyond their own campuses.

For information about IAJBS, visit www.iajbs.org.

INCUBATING FOR IMPACT

By Thane Kreiner

Social entrepreneurship is the focus of our efforts at Santa Clara University’s Center for Science, Technology, and Society (CSTS). It’s that mission that inspired us to create our Global Social Benefit Incubator (GSBI) program, through which we work with entrepreneurs on their home soil to help build sustainable, scalable enterprises that serve the world’s poor.

Since its inception in 2003, the GSBI has worked with more than 200 social enterprises that provide base-of-pyramid markets with essential goods and services. Products of GSBI enterprises have included “elephant pumps” that allow a village to manually pump clean water, high-efficiency “rocket stoves” for cooking, affordable prostheses, and ready-to-use therapeutic food.

Through GSBI, we have impacted the lives of nearly 100 million people in 55 countries. We aim to better the lives of one billion of the world’s poor by the year 2020. To reach our goal, however, we can’t just incubate promising social enterprises; we have to incubate incubators.

PLANS WITH POTENTIAL

We look for entrepreneurs at social enterprises that already have proven business models, strong local connections, and in-depth knowledge of local needs—they just need more business training and funding to flourish. We then draw on our access to Silicon Valley executives and a global network of more than 120 Jesuit universities to provide these entrepreneurs with individualized mentoring and a structured curriculum. Promising entrepreneurs come to our campus for an intensive two-week boot camp that we hold every August as part of the ten-month GSBI. They then continue to connect with their mentors online once they return home.

The GSBI program is delivered through the efforts of 12 CSTS staff—many of whom are entrepreneurs or venture capitalists—as well as an advisory board of 12 executives and six SCU faculty. We also work with approximately 70 mentors, all executives with extensive experience in Silicon Valley. GSBI is supported by organizations such as the World Bank, Skoll Foundation, and the Acumen Fund, which help identify promising enterprises and invite them to participate in our curriculum.

About 25 percent of the GSBI’s budget comes from the university—the rest, from the support of corporate and individual donations.

When we decided to scale the GSBI to other campuses and organizations to amplify its impact, our original plan was to “incubate incubators” by replicating the GSBI at other Jesuit universities. But replication doesn’t account for geographical and cultural context. We have learned that we must tailor the program to the needs of the entrepreneurs and the capabilities of the nascent incubators. So far, we have worked with partner programs at the Escuela Superior de Administración y Dirección de Empresas (ESADE) in Spain; Villgro, an incubator in India; and Ateneo de Manila University in the Philippines.

RECOGNIZING DIFFERENCES

After Alfred Vernis, an associate professor at ESADE, came to Santa Clara two years ago to observe our boot camp, he immediately started thinking about how ESADE could implement the GSBI.

After returning to ESADE, Vernis worked with students in his social entrepreneurship class to assess the program’s potential in Spain, where the construction sector was on the brink of collapse and the unemployment rate was rising fast. Vernis drafted a proposal that focused on creating jobs for the country’s least-employable populations, including minority groups, battered women, and the disabled.

Months later, ESADE’s Momentum Project was born. Similar to the GSBI, the Momentum program works with social enterprises from outside the university system, selecting ten per year. It uses the same curriculum to train entrepreneurs, and it pairs them with experienced mentors.

But the GSBI and Momentum differ in important ways. For instance, while Santa Clara’s GSBI focuses a great deal on off-grid energy, Momentum is largely interested in job creation. In addition, at the GSBI, we match participating enterprises with our impact investment partners, such as Accion and Hub Ventures; ESADE, on the other hand, draws on its relationship with BBVA, the second largest bank in Spain. BBVA funds both the incubator and the social enterprises that go through it, offering low-interest loans via the Momentum Social Investment Fund. The bank has lent more than US$3.3 million dollars to date.

Momentum also takes a different approach to mentoring. Because the GSBI works with social enterprises overseas, its social entrepreneurs meet face-to-face with mentors during its on-campus boot camp. Because Momentum’s social entrepreneurs and mentors live in the same country, they meet for four days a month over the course of three months.

Of the mentors Momentum assigns to each enterprise, one comes from BBVA. Another mentor is typically a veteran of the relevant industry and an ESADE alum. As a final departure from the GSBI model, Momentum’s mentor teams include ESADE students as well.

HANDS-ON DEVELOPMENT

GSBI’s relationship with ESADE has been primarily a passive one—after observing our work at the GSBI, Vernis and colleagues executed the adaptation themselves. But our relationship with Villgro in Chennai, India, has been far more hands-on.

Villgro was launched in 2001 by Indian social entrepreneur Paul Basil, who believes that rural artisans and farmers are best positioned to find solutions to agricultural problems. In 2011, Villgro received a grant to create its Social Entrepreneurship and Enterprise Development (SEED) program. SEED offers six-month programs that help early-stage social entrepreneurs refine their business models and raise their first rounds of funding. Although we originally thought the GSBI model would work in India as it had in the U.S., we soon realized that it would be impractical to ask SEED entrepreneurs to attend a two-week intensive training session in a faraway city, as GSBI participants do.

Says Basil, “For many of our entrepreneurs, it’s extremely costly to travel to Chennai and remove themselves from their work and families for a two-week period.”

A solution to this dilemma could be our GSBI Online platform. Created to meet the overflow demand for our GSBI program, GSBI Online aims to allow more social entrepreneurs to receive training and interactive mentoring.

SEED assigns mentors to provide strategic guidance and fellows to work with its entrepreneurs and help them hone their execution. The fellows are mid-career professionals who have worked in large corporations and want to transition to social enterprise, says Basil.

SEED is a work in progress—the first cohort started in September 2012. Villgro has no alumni community from which to recruit mentors and investors who can help select, guide, and fund promising enterprises. But, as Villgro’s CEO, Basil can draw from a wide professional network of government officials, service providers, executives, and investors.

A CULTURE OF SOCIAL ENTERPRISE

Philippines launched its incubator shortly after Rudy Ang, dean of the AM School of Management, and colleagues visited Santa Clara to observe the GSBI. The Ateneo Center for Social Entrepreneurship (ACSENT) has become an incubator aimed at promoting social entrepreneurship among young professionals in the Philippines.

But so far that has proved challenging in a country unaccustomed to the idea. “People come to us and say they want to be social entrepreneurs, but most of them don’t really understand what that means,” Ang says. “They often think, if I start a business and hire poor people, I’m a social entrepreneur. We try to explain that the product or service itself should improve the lives of the poor. That’s been a struggle.”

Like SEED and Momentum, ACSENT has a large pool of potential mentors, many drawn from its faculty, and it also has the support of the larger university, which has made the social entrepreneurship program a priority. “This is a matter not just of intellect but of heart,” says Ang.

It may be years before ACSENT demonstrates a significant impact on the lives of the poor. As we help them adapt the GSBI for their needs, we’re also looking at ways GSBI alumni enterprises can offer their products and services in the Philippines. If a social enterprise has achieved meaningful social impact in, say, India, its same products or services might be able to benefit the poor in the Philippines.

SCALING UP

So far, we have been pleased with GSBI’s success rates. Ninety-five percent of more than 200 enterprises started by GSBI alumni are still in operation. For 50 percent, revenues are growing faster than expenses, which means that they are having impact on their local economies. Among this group of small enterprises, 28 percent are focused on off-grid energy, 20 percent on communications technology, 18 percent on economic development and training, and 12 percent on healthcare. The rest operate in sectors such as education, water quality, and microfinance.

And because social entrepreneurs value social impact more than financial returns, there is potential for open source social enterprise franchises. In-country incubators such as ACSENT could play a vital role in such a strategy.

We know that replicating social enterprises will require adaptation. For instance, McDonald’s is opening two vegetarian restaurant franchises in India—in that way, the global company is adapting its product to the local context. Can we do the same? That is, can we reach the massive markets of the global poor more rapidly by franchising social enterprises that are adapted to the local context?

We don’t yet know, but it seems like an experiment worth trying, especially with its potential to benefit a billion lives. A network of incubators adapted from the GSBI could provide a global-scale learning laboratory for practical social justice. The great news is that there are many more Jesuit universities and other organizations ready to incubate social entrepreneurs who will, in turn, build sustainable ventures that serve the planet’s poor.

EXPERIENTIAL ETHICS

By Nitish Singh and Thomas Bussen

Now that the likes of Bernie Madoff, Enron, and WorldCom have dominated headlines, the secret is out—white-collar crime could be anywhere, at any time. Public outrage at the billions stolen has fed politicians’ appetites for stronger penalties, for both individuals and the companies employing them.

The most well-known iteration of this legislative upheaval is the Federal Sentencing Guidelines for Organizations (FSGO). Post-Enron amendments to the FSGO reward organizations for good behaviors and punish for bad behaviors. In addition, organizations now are being held accountable not just for their compliance programs, but also for their ethical cultures.

In response to this trend, we recently offered for the first time “Reclaiming the Human Spirit: Prison Experience and Learning from White Collar Offenders,” a semesterlong MBA elective at Saint Louis University’s John Cook School of Business. The course educates students about corporate fraud issues and heightens their ethical awareness. It combines online training, class discussion, and field immersions that take students out of the classroom and into the world of white-collar crime. The course goes beyond teaching MBA students about the causes and nature of white-collar crime. It gives them a newfound appreciation for the realities of life during and after prison.

COURSE STRUCTURE

The course was made possible by support from Douglas W. Burris, Chief U.S. Probation Officer of The Eastern District of Missouri–St. Louis and the Federal Probation Office in St. Louis. The probation office allowed students firsthand looks into the way the federal correctional system works, from the first charges against offenders, through their sentencing and incarceration, to their probation and unsupervised release.

Coordinating site visits required a small class size—our first class had only eight students, including an accountant, insurance broker, banker, management analyst, a JD/MBA, a healthcare/MBA, and two full-time MBA students. The group was diverse, but they all recognized how prominently regulation, ethics, and compliance will feature in their professional lives.

We were able to support the fluid structure of the course by using a “flipped” format. Students learned the fundamentals of the course on their own time by watching previously recorded videos on business ethics, international ethics, and fraud prevention. Class time was devoted largely to discussion, and our field immersions brought students experiences that no in-class or online lecture ever could.

Students completed two papers, a quiz, and a presentation, and they were graded on their ability to connect the lessons of their site visits and classroom experiences to the learning goals of the class.

CLASS DISCUSSION

We asked students to explore white-collar crime from an organizational perspective. Class discussion centered on the so-called “fraud triangle,” which holds that three factors must be present for most white-collar crimes to occur: the pressure to break the law, the opportunity to do so, and the rationalization of the wrongdoer to justify the behavior.

Students learned about common pressures that precede employees’ bad behavior, such as decreases in pay or work hours, the perception of mistreatment, or ethically complacent organizational cultures. Students then learned ways to reduce the opportunity for wrongdoing by better identifying, preventing, and responding to violations.

Students also gained a more nuanced view of the U.S. justice system. Classroom discussion focused on the sheer number of imprisoned individuals—nearly 1 percent of the U.S. population is currently in prison. Students wrestled with difficult ethical questions: How should punishments differ for different crimes? Is financial crime less dangerous than violent crime? Does prison deter white-collar offenders more than other criminals? They explored the role of rehabilitation and the ethical implications of punishing one offender to prevent others from committing similar acts.

THE PRISON IMMERSION

A highlight of the course was the tour of Greenville Federal Prison in Illinois. As students walked the prison grounds, many were struck by the fact that white-collar offenders, once imprisoned, are treated no differently than violent offenders. Student and insurance broker Karl Steinage said that he thought “the best way to deter white-collar crime would be for more people to tour prisons and see the consequences of corporate malfeasance.”

Despite the real dangers of life inside a federal prison, students were almost uniformly impressed by the rehabilitative facilities at Greenville. Students saw the football-field-sized manufacturing plant where men are paid to make U.S. military uniforms. The students toured the building where the men make cabinetry for Habitat for Humanity and learned that these offenders earn carpentry degrees that vastly improve their post-prison employment opportunities. They also sat in on classes where offenders can improve their résumés, learn skills, and earn GED credits.

Students then visited the female minimum-security side of the prison, where there are no perimeter walls; the women walk freely throughout the grounds. As if to further emphasize the parallels with a college campus, housing is dormitory style. Many students were shocked when, upon entering the dormitory, they were met by a long row of cages housing playful Labrador puppies, which the women care for and train to become aids for the handicapped. During a recent dormitory visit, many of the inmates were eager to introduce the class to their dogs and talk about their lives. They “could be my friends, sisters, mothers, or aunts,” said student Scott Schumaier.

HALFWAY HOUSE INSIGHTS

A few weeks after the prison experience, students visited a halfway house, where they sat in on interviews with recently released offenders. These offenders ran the gamut, from young men with mental illnesses to elderly individuals attempting to reintegrate into a whole new world; from sophisticated white-collar offenders to naive men and women who could rightly be categorized as victims themselves.

One released offender, a former lawyer and community activist, authorized his employees to defraud investors, though the offender did not profit himself. Today, he cares for the children of his extended family, expresses remorse for his actions, and seems beaten by his experiences. The reverse rags-to-riches story led students to question how far any of us are from making such destructive, life-changing decisions.

One prison official admitted that for ex-convicts with families to feed and few opportunities for employment, returning to a life of crime is sometimes unavoidable. After seeing the hard work that many prisoners put in to return to society only to be given no opportunity to succeed, student Jason Pride said that as a future employer he would consider hiring ex-offenders.

WHAT WE LEARNED

Early on, these students often asked, “Why would any good person commit a crime?” After the field visits, students had a better understanding and a bigger dose of empathy. “It is easy to forget that criminals are people who deserve to be treated with dignity regardless of the poor decisions that they have made in the past,” said JD/MBA student Morgan Taylor.

For students in this blended-experiential MBA class, white-collar crime is no longer theoretical. They learn how to reduce violations in their organizations. More important, they better understand why some break the law and how stark the consequences of those actions can be.

“When you look at someone as a human, you are more likely to feel an obligation to them and their situation. No longer will I ever write someone off ... just because they have been found guilty of a crime,” Schumaier said. For our university, that response may be the best part.

Thane Kreiner is executive director of the Center for Science, Technology, and Society at Santa Clara University in California. He also is an executive and entrepreneur who founded two biotechnology firms in Silicon Valley. The GSBI now has 11 partners in India, Mexico, Israel, the Philippines, Taiwan, Spain, Italy, and Colombia. It currently is finalizing an agreement in Hong Kong.

Nitish Singh, an associate professor in business, created the “Reclaiming the Human Spirit” course and serves as director of program innovations and program lead for the Cook School’s certificate in corporate ethics and compliance management at its Boeing Institute of International Business.

Thomas Bussen, a compliance consultant and practicing attorney, directs the course and serves as co-representative for Saint Louis University’s certificate in ethics and compliance management. The authors wish to acknowledge the support of Kenneth Parker, associate professor of theology and director of SLU’s Prison Program, which provides educational offerings to the staff and inmates of Missouri correctional institutions.