What’s one of the first things you learned in business school?

Below, I have paraphrased a couple of statements that I think everyone hears early on in business school…

Your responsibility as a manager is to maximize shareholder value. or wealth..and you, as a future manager, are legally responsible for this.  The shareholder is the only stakeholder that (really) counts.  Just maximize the net present value of any & every project and you will be fine.

Over time, this mindset starts to filter into the B-School student’s vocabulary & voila…a business student is born.

So what did you business students think when you heard this?  When I first heard this I basically took it in stride, thinking that maximizing shareholder value refers to driving firm stock prices higher at the end of the day…which I was OK with at the time.  After all, business is only about making money right?

It turns out that there are a few problems with the “support the shareholder at all costs” philosophy.  For example, as Maureen Scully notes, “if a firm is a takeover target and its share price spikes in the short run, that might appear to be in shareholders’ interests. However, if that same takeover strategy results in the killing of an industry category, then it might not be good for shareholders with diversified portfolios”.

And, as Scully goes on to point out…what are shareholders’ interests anyway.   Especially when shareholders:

• Hold diversified portfolios or index funds?

• Are also consumers and citizens?

• Have long-run as well as short-run time horizons

Legally, it may even partially be a myth that managers must maximize shareholder value at all costs.  According to this Inc. article, legal scholars are actually divided on whether companies are legally obligated to maximize returns to shareholders. Margaret Blair, a law professor at Vanderbilt University, calls the shareholder legal obligation a “mythology”…

Lately more & more business students are questioning the role of business in society.  So if you are an enlightened business person and you are looking for a business program that goes deeper, there is an organization called Beyond Grey Pinstripes that ranks Business School performance based on their research & curriculum around social and environmental issues.

“New” MBA Rankings: Below I have listed the latest Beyond Grey Pinstripes ranking of the top 10 MBA programs worldwide.  These schools have programs that specialize on social & environmental issues in business.  In addition to the top 10, I listed a few interesting schools that don’t traditionally make top MBA program lists, but managed a top 25 spot (e.g. Portland State & New Mexico).  Strangely, Harvard & Wharton did not crack the top 10, 25 or even the top 100.  It feels very a bit weird to not have a couple of the world’s preeminent B-Schools in the top 100 of any MBA ranking.

4.UC Berkeley
5.Notre Dame
10. IE Business School (Spain)

18. New Mexico
20. Colorado (Boulder)
21. Western Ontario
22. Portland State

And a non-profit to check out…

If you are interested in networking in this area, check out Net Impact.  NI is an international nonprofit organization whose mission is to make a positive impact on society by growing and strengthening the community of leaders who use business to improve the world.  Many Net Impact members are current and emerging leaders in CSR, social entrepreneurship, nonprofit management, international development, and environmental sustainability, etc.