This paper examines the association between the quality of management schools and sustainability and investigates whether ethical behavior of firms moderates relationship between the quality of management schools and sustainability.
The sample consists of 500 country-year observations over the period of 2014-2017. Sustainability is collected from the Global Sustainable Competiveness Index reports for 2014, 2015, 2016 and 2017, while the quality of management schools and ethical behavior of firms are collected from the Global Competiveness Report for the same years.
The findings of this study suggest that the quality of management schools is positively associated with sustainability. When testing for the moderating effect of ethical behavior of firms on the association between quality of management schools and sustainability, results show that the positive association becomes positive and more significant for countries where firms operate with high ethical behaviors, while the association becomes insignificant for settings where firms operate with low ethical behaviors. Findings also show that the quality of management schools and ethical behavior of firms play a complimentary role in improving sustainability.
The findings emphasize the role played by business schools and business ethics in improving sustainability. These results may have policy implications for governments aiming to improve sustainability by emphasizing on education for sustainable development in management schools’ 2019 programs enforcing standards dealing with business ethics and controlling firms’ 2019 compliance with them.
The findings of this study highlight the importance of education, as proxied by the quality of management schools, in the development of sustainable societies and economic systems. To the best of the author's knowledge, this is the first study that tries to empirically link business schools programs to sustainability efforts and how business ethics may affect this association.
1. Introduction
Sustainability has been gaining momentum as a common concern for stakeholders and policy makers (Guidara, Ammari, & Khlif, 2022). It is generally defined as the capability to respond to human requirements without compromising future generation’s needs, economic, environmental and social issues (Tilbury, 2007). Given the increasing concern of policy makers about sustainability, it is crucial to identify its determinants in order to assist governments in their efforts to improve sustainability levels.
Recently, there is a common consensus that education plays a critical role in the development of sustainable societies and economic systems (Müller, Lude, & Hancock, 2020). The global sustainability agenda has called for the establishment of new pedagogies in school education that foster sustainability actions and increase students’ awareness about the complexities and uncertainty of the surrounding world (Mogren, Gericke, & Scherp, 2019). Akrivou and Bradbury-Huang (2015) suggest that “there is now widespread consensus that conventional business activity needs to be reformed with an essential purpose to genuinely generate new ways of valuing and acting to enable virtue in the economy and the society”. For instance, Žalėnienė and Pereira (2021) suggest that higher-education institutions have a great responsibility to form future leaders committed to sustainability. They add that higher-education institutions are key for the implementation of sustainability principles in practical life. Buil-Fabregá, Casanovas, Ruiz-Munzón, and Leal Filho (2019) posit that academic staff members at higher-education institutions have the incessant challenge of finding new methods to increase students’ awareness toward sustainable development.
Since education may support the development of a more sustainable manner of thinking, working and living (Al Dhaen, Stone, & Mahmood, 2022; Müller et al., 2020), examining its effect on sustainability represents an important research question. More specifically, examining the effect of the quality of management education in higher-education institutes, as proxied by the quality of management schools, on sustainability may represent an interesting research topic that tries to explore how the transition from the academic world to practical life may affect graduate students’ commitments to sustainable development in labor market.
While there are some empirical enquiries in the literature that have examined the determinants of sustainability reporting at company level (e.g. Niu, Zhou, & Pei, 2020; Kuzey & Uyar, 2017) and country level (e.g. Koirala & Pradhan, 2020; Guidara et al., 2022), we are not aware about any empirical enquiry that has been specifically devoted to this research topic.
Therefore, the objective of this paper is to examine the effect of the quality of management schools on sustainability and test whether ethical behavior of firms moderates this relationship for a cross-country dataset. Focusing on the quality of management schools is particularly appealing as higher education in business provides any economy with some future actors who may operate as managers, accountants, auditors and businessmen (Khlif & Guidara, 2018). In addition, new business school graduates will face an economic reality that may diverge from values that have been acquired from the academic world. Therefore, we expect that the environment where they will operate, and more specifically the ethical behavior of firms, may affect the association between the quality of management schools and sustainability. The choice of business ethics as a moderator is mainly justified by the fact that recent studies (Guidara et al., 2022; Khelil, Guidara, & Khlif, 2022) have considered this variable as a factor that may affect the determinants of sustainability. In order to test the empirical validity of these theoretical predictions, a sample of 500 country-year observations over the period of 2014-2017 is used.
The rest of the paper is organized as follows. Section 2 develops theoretical bases for the association between quality of management schools and sustainability and how ethical behavior of firms may affect this relationship. Section 3 describes the research design. Section 4 analyses the empirical findings of this study. Finally, section 5 concludes the paper.
2. Hypotheses development
2.1 Quality of management schools and sustainability
Education is a key device that offers possibility to young generations to acquire knowledge, attitude and skills for building a sustainable future (Mahajan, 2020). More specifically, management education is supposed to prepare future leaders and managers for the corporate world (Mahajan, 2020). Business professors focus more on materialistic thinking in their classes (Haski-Leventhal, Pournader, & McKinnon, 2017). Nevertheless, this way of teaching and delivering knowledge to business graduates is no longer functional as it fails to serve humanity in ways that are sustainable (Haski-Leventhal et al., 2017). As a consequence, even if ethics and sustainability principles are taught, they are simply referring to business ethics as principles that may be taken into account by future managers in their decisions and not an entire objective to achieve ethical ends (Haski-Leventhal et al., 2017).
The call for business schools to emphasize on sustainability and business ethics and to educate their graduates only shareholder value ideology (Matten & Moon, 2004, p. 323) has been gaining momentum after several corporate scandals in both sides of Atlantic (Crossan, Mazutis, Seijts, & Gandz, 2013; Giacalone, 2007). In his speech, the president of Texas A and M University, Robert Gates, put more emphasize on sustainability and business ethics in management education after the Enron’s collapse: All actors committing these cheating affairs are graduates of our universities. Accordingly, the university community should adjust their programs to alert students about the importance of ethic dimensions and sustainability (Gates, 2002).
Accordingly, business schools may play an important role in shaping economic attitude towards sustainability as several actors acting within an economy in one country represent the output of management schools including accountants, auditors, managers and some businessmen (Khlif & Guidara, 2018). In this regard, Badea, Serban-Oprescu, Dedu, and Piroscă (2020, p. 3) posit that “the evolution of Education of Sustainable Development (ESD) in higher education can be traced by following six levels which address issues related to: (1) policy, administration and planning; (2) education (courses and study programs); (3) research; (4) operation of the university campus; (5) services; (6) evaluation and reporting at the institutional level”.
The primary objective of management schools is to ensure high degree of mastery of technical knowledge and professional training through the interaction between top researchers in specific fields and professionals with high level of expertise (Khlif & Guidara, 2018). Top business schools have a custom to invite qualified experts to present true case studies that aim at enhancing students’capabilities to understandthe real world of business in terms of professional activities and engagements (Khlif & Guidara, 2018). However, these management schools have received a lot of criticism and have been blamed for their over focus on the concept of “profits-first”, while neglecting social and environmental issues (Neubaum, Pagell, McKee-Ryan, & Larson, 2009). Management schools have come under increasing scrutiny as ethical considerations and sustainability in business were neglected in students’ training programs (Adler, 2002). In this regard, Rutherford, Parks, Cavazos, and White (2012, p. 175) suggest that “the concern seems well-founded given not only the ethical crisis in the business community, but also the fact that business majors make up an increasingly large percentage of undergraduate degrees”.
Mogren et al. (2019, p. 1) suggest that “the global sustainability agenda challenges traditional pedagogies and calls for a school education that fosters awareness of the complexities and uncertainty of the surrounding world”. Top management schools have responded accordingly by integrating the concept of education for sustainable development in their teaching programs, emphasizing sustainability and education for sustainable development in the everyday life of the school, supporting teaching staff in the application of education for sustainable development and offering to students the possibilities to launch their own initiatives (Müller et al., 2020).
As sustainability becomes a leadership issue (Müller et al., 2020), high quality management schools encourage reciprocal cooperation with diverse stakeholders to find shared sets of values as an important aspect of education for sustainable development implementation through, for example, fostering students’ cooperation with the local municipalities find solutions to the acidification of ecosystems (Mogren et al., 2019). Khlif and Guidara (2018) posit that beyond technical knowledge and professional training, high quality business schools emphasise on business ethics and sustainability issues. Accordingly, highly qualified managers, auditors will reduce the propensity to act opportunistically by prioritizing the overall welfare of their country. This implies that courses specifically dedicated to business ethics and education for sustainable development implementation will give more incentives to current students of management schools, who will be the future actors in the economy, to act ethically and improve sustainability. Badea et al. (2020) suggest that students’ sustainable behaviors are mainly influenced by their perception of sustainable campus initiatives and teaching staff involvement in business ethics. They further provide evidence that the awareness of sustainable development-specific concerns acquired through responsible business learning increases students’ commitments towards sustainability in the Romanian setting.
As an illustrative example of top business schools commitment to emphasize on sustainability in their teaching programs, educators in Harvard Business School have discussed with their students the economic consequences of Volkswagen Emissions Scandal and its adverse effect on Volkswagen financial and market performance. For instance, this automaker has deliberately installed “defeat devices” in many of cars sold in North America enabling them to cheat on federal and state emissions tests. Following the discovery of this cheating affair, Volkswagen has reported its first quarterly loss in more than 15 years and its stock prices has seriously decreased. More importantly, the automaker has abandoned its strategic long-term objective to become the world’s largest automaker and top managers where replaced (Lynch, Cutro, & Bird, 2016) [1].
Discussing these sustainability issues with students in the one of the best business schools worldwide may increase students’ awareness about the importance of sustainability in business world to preserve firm’s reputation in the eyes of its stakeholders. This example highlights also how top business schools have integrated ESD a key component of their teaching programs.
Based on these theoretical predictions, we expect that a high quality of business schools in one country will increase students’ awareness about sustainability through education for sustainable development. As the output of management schools (e.g. accountants, auditors, managers and some businessmen) will represent a significant part of the economic actors in one country, we expect that high quality management schools will positively enhance sustainability effort in one country.
From an empirical standpoint, we identify one study dealing with the economic consequences of the quality of management and tax evasion at country level conducted by Khlif and Guidara (2018). In their empirical enquiry, these authors document a negative relationship between the quality of management schools and tax evasion. Since tax evasion and sustainability are inversely related (Khlif, Guidara, & Hussainey, 2016), we expect that the quality of management will be positively affect sustainability level. More recently, Nimer, Uyar, Kuzey, and Schneider (2022) provide evidence that the quality of management schools reinforces the negative relationship between e-government and tax evasion.
Therefore, the following hypothesis is tested:
The quality of management schools is positively associated with sustainability.
2.2 The moderating effect of the ethical behavior of firms on the association between the quality of management schools and sustainability
Moving from academic atmosphere to a turbulent business world, graduate students will be confronted to an economic reality that can either reinforce the principles of education for sustainable development learned in management schools or diminish their willingness to follow sustainability values (Khlif & Guidara, 2018). The economic environment and more specifically firms where these new graduates operate will play an important role in their behavior.
Business ethics represent a cornerstone for any control environment conceived at firm (Guidara et al., 2022). For instance, Lashley (2016, p. 1) suggest that “business ethics provides a potential analytical framework through which to evaluate management practice in general and sustainability in particular”. Even if new graduates are educated in high quality management schools where they are alerted about the importance of sustainability in nowadays economy, it is always possible for them make a deviation if they operate within a company that adopts an unethical behavior by prioritizing the concept of “profits-first” at the expense of firm’s environment and employees’ welfare (Guidara et al., 2022). For example, it is well known that US business schools are among the best ranked worldwide. Nevertheless, Ambrose (2019), the energy correspondent of the Guardian, reports that a large number of companies making environmental sustainability infractions and concealing them are located in USA.
Recently, Guidara et al. (2022) document that ethical behavior of firms moderates the association between the strength of auditing and reporting standards and sustainability as the positive association between both variables is more pronounced for countries characterized by high ethical behavior of firms. Accordingly, we expect that the positive association between the quality of management schools and sustainability will be more prevailing for countries characterized by high ethical behavior of firms.Thus, the following hypothesis is formulated:
The positive association between the quality of management schools and sustainability is more (less) pronounced in settings characterised by high (low) ethical behavior of firms.
Figure 1 below illustrates the conceptual framework for the associations explored in this study.
3. Research design
Data for this study are collected from a wide range of public sources (e.g. The Global Competiveness reports, the Global Sustainable Competitiveness Index reports). Table 1 provides details about the data used to measure the different variables and their various sources.
Data description and sources
| Variable | Description | Source |
|---|---|---|
| SS | The sustainability score is a measurement for social, environmental and economic development. Since this variable varies from 0 to 100, we divide each score by 10 to be in line with other independent variables that range from 0 to 10 | The Global Sustainable Competiveness Index 2014–2015; 2015–2016; 2016–2017; 2017–2018 |
| QMS | In your country, how do you assess the quality of business schools? (1 = extremely poor – among the worst in the world; 7 = excellent – among the best in the world) | The Global Competiveness report 2014–2015; 2015–2016; 2016–2017; 2017–2018 (country profiles) |
| EBOF | In your country, how would you rate the corporate ethics of companies (ethical behavior in interactions with public officials, politicians and other firms)? (1 = extremely poor – among the worst in the world; 7 = excellent – among the best in the world) | The Global Competiveness report 2014–2015; 2015–2016; 2016–2017; 2017–2018 (country profiles) |
| SARS | In your country, how strong are financial auditing and reporting standards? (1 = extremely weak; 7 = extremely strong) | The Global Competiveness report 2014–2015; 2015–2016; 2016–2017; 2017–2018 (country profiles) |
| COR | The weight of corruption as the most problematic factor in doing business (a percentage). The information is drawn from the 2014, 2015, 2016 and 2017 edition of the World Economic Forum’s Executive Opinion Survey (Survey). From a list of 16 factors, respondents were asked to select the five most problematic ones and rank them from 1 (most problematic) to 5. The results were then tabulated and weighted according to the ranking assigned by respondents | The Global Competiveness report 2014–2015; 2015–2016; 2016–2017; 2017–2018 (country profiles) |
| EOLF | Efficiency of legal framework in challenging regulations. In your country, how easy is it for private businesses to challenge government actions and/or regulations through the legal system? (1 = extremely difficult; 7 = extremely easy) | The Global Competiveness report 2014–2015; 2015–2016; 2016–2017; 2017–2018 (country profiles) |
| MKS | The size of the national domestic and foreign market in an index ranging from 0 to 7 | The Global Competiveness report 2014–2015; 2015–2016; 2016–2017; 2017–2018 (country profiles) |
| SIP | Strength of the Investor Protection Index on a scale of 0–10 (best) | The Global Competiveness report 2014–2015; 2015–2016; 2016–2017; 2017–2018 (country profiles) |
3.1 Sample
The initial sample consists of 138 countries included in the Global competitiveness reports (GCR) for the following years 2014–2015; 2015–2016; 2016–2017 and 2017–2018. The Global Sustainable Competitiveness Index reports considered are for 2014-2015-2016 and 2017 and they incorporate 180 countries. Accordingly, we consider 138 countries. We further remove 13 settings which are not included in all the GCR included in our study. Thus, our final sample encompasses 125 countries over the period of 2014-2017 yielding 500 country-year observations (125×4). Table 2 presents more details about the sample selection process and the list of countries examined in this study.
Sample description
| Panel A. Sample selection process | |
|---|---|
| Countries included in the GCR 2014-2015 | 144 |
| Countries included in the GCR 2015-2016 | 140 |
| Countries included in the GCR 2016-2017 | 138 |
| Countries included in the GCR 2017-2018 | 140 |
| Initial sample (I) | Minimum (144; 138) = 138 |
| Countries are not available in all GCR | 13 |
| Initial sample (II) after eliminating the countries which are not available in all GCR | 125 |
| Countries reported in the Global Sustainable Competitiveness Index reports | 180 |
| Final sample | Minimum (180; 125) = 125 |
| Panel B. List of countries included in our sample | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Albania | 19 | Cape Verde | 37 | Georgia | 55 | Kazakhstan | 73 | Mexico | 91 | Philippines | 109 | Switzerland |
| 2 | Algeria | 20 | Chad | 38 | Germany | 56 | Kenya | 74 | Moldova | 92 | Poland | 110 | Taiwan, China |
| 3 | Argentina | 21 | Chile | 39 | Ghana | 57 | Korea, Rep. | 75 | Mongolia | 93 | Portugal | 111 | Tajikistan |
| 4 | Armenia | 22 | China | 40 | Greece | 58 | Kuwait | 76 | Montenegro | 94 | Qatar | 112 | Tanzania |
| 5 | Australia | 23 | Colombia | 41 | Guatemala | 59 | Kyrgyz Republic | 77 | Morocco | 95 | Romania | 113 | Thailand |
| 6 | Austria | 24 | Costa Rica | 42 | Honduras | 60 | Lao PDR | 78 | Mozambique | 96 | Russian Federation | 114 | Trinidad and Tobago |
| 7 | Azerbaijan | 25 | Croatia | 43 | Hong Kong SAR | 61 | Latvia | 79 | Namibia | 97 | Rwanda | 115 | Tunisia |
| 8 | Bahrain | 26 | Cyprus | 44 | Hungary | 62 | Lebanon | 80 | Nepal | 98 | Saudi Arabia | 116 | Turkey |
| 9 | Bangladesh | 27 | Czech Republic | 45 | Iceland | 63 | Lesotho | 81 | Netherlands | 99 | Senegal | 117 | Ukraine |
| 10 | Belgium | 28 | Denmark | 46 | India | 64 | Lithuania | 82 | New Zealand | 100 | Serbia | 118 | United Arab Emirates |
| 11 | Bhutan | 29 | Dominican Republic | 47 | Indonesia | 65 | Luxembourg | 83 | Nicaragua | 101 | Sierra Leone | 119 | United Kingdom |
| 12 | Botswana | 30 | Egypt | 48 | Iran, Islamic Republic | 66 | Madagascar | 84 | Nigeria | 102 | Singapore | 120 | United States |
| 13 | Brazil | 31 | El Salvador | 49 | Ireland | 67 | Malawi | 85 | Norway | 103 | Slovak Republic | 121 | Uruguay |
| 14 | Bulgaria | 32 | Estonia | 50 | Israel | 68 | Malaysia | 86 | Oman | 104 | Slovenia | 122 | Venezuela |
| 15 | Burundi | 33 | Ethiopia | 51 | Italy | 69 | Mali | 87 | Pakistan | 105 | South Africa | 123 | Vietnam |
| 16 | Cambodia | 34 | Finland | 52 | Jamaica | 70 | Malta | 88 | Panama | 106 | Spain | 124 | Zambia |
| 17 | Cameroon | 35 | France | 53 | Japan | 71 | Mauritania | 89 | Paraguay | 107 | Sri Lanka | 125 | Zimbabwe |
| 18 | Canada | 36 | Gambia | 54 | Jordan | 72 | Mauritius | 90 | Peru | 108 | Sweden | ||
3.2 Dependent variable: the sustainability score
“The Global Sustainable Competitiveness Index (GSCI) is a measurement for social, environmental and economic development”. (GSCI report 2017, p. 8). The sustainability score includes 5 components of equal importance which are: natural capital, social capital, resource management, intellectual capital and governance efficiency. It should be noted that the United Nation General Assembly has focused Sustainability Development Goal as follows: (1) no poverty, (2) zero hunger, (3) good health and well-being, (4) quality education, (5) gender equality, (6) clean water and sanitation, (7) affordable and clean energy, (8) decent work and economic growth, (9) industry, innovation and infrastructure, (10) reducing inequality, (11) sustainable cities and communities, (12) responsible consumption and production, (13) climate action, (14) life below water, (15) life on land, (16) peace, justice and strong institutions, (17) partnerships for the goals [2].
Since this variable varies from 0 to 100, we divide each score by 10 to be in line with other independent variables that range from 0 to 10.The minimum score is obtained for Taiwan with 2.970 in 2015 and the maximum score is for Sweden and it accounts for 6.090 in 2016.
3.3 Independent variable: the quality of management schools score
The Global Competitiveness Reports for 2014–2015; 2015–2016; 2016–2017 and 2017–2018 measure the quality of management schools based on a survey conducted among business leaders who were asked to respond to the following question “In your country, how would you assess the quality of business schools? (1 = extremely poor – among the worst in the world; 7 = excellent – among the best in the world)”. For each country, a weighted average score is computed. The high score for the quality of management schools is for Switzerland in 2017 (6.400) and the lowest score is observed for Egypt (2.000).
3.4 The moderating variable: the ethical behavior of firms
The score of ethical behavior of firms (EBOF) is scaled from “1” extremely poor level of corporate ethics to “7” indicating an excellent level of corporate ethics of companies (ethical behavior in interactions with public officials, politicians and other firms). The lowest value of ethical behavior of firms is obtained for Mauritania (2.400) in 2015, while the highest value is observed in 2014 for New Zealand (6.500). The median of score of ethical behavior of firms amounts to 3.900.
3.5 Control variables
We consider five control variables including the strength of auditing and reporting standards, the level of corruption, the efficiency of legal framework in challenging regulation, the market size and the strength of investor protection. First, the strength of auditing and reporting standards may increase sustainability level in one country (Guidara et al., 2022). Second, the incidence of corruption may reduce the sustainability effort made by government. For instance, Morse (2006) provides evidence that level of corruption reduces environmental sustainability. Third, the efficiency of legal framework may create a favorable environment to oblige companies to be seriously committed to undertake sustainability actions. Fourth, we control for the level of economic development, as proxied, by the market size. Finally, the level of investor protection can also play an important role in improving sustainability (Herda, Taylor, & Winterbotham, 2014).
3.6 Models specification
To test the empirical validity of the hypotheses formulated above, we conduct a balanced panel data analysis.The following regression model is performed:
Where:
Dependent variables:
= Sustainability score;
Independent variable:
= The quality of management schools score;
Moderating variable:
= The ethical behavior of firms score;
Control variables:
= The strength of auditing and reporting standards score;
COR = Corruption level;
= The efficiency of legal framework in challenging regulation score;
= Market size;
= The strength of investor protection.
3.7 The moderating effect of ethical behavior of firms on the relationship between the quality of management schools and sustainability level
To test for the moderating effect of the ethical behavior of firms on the relationship between the quality of management schools and sustainability level (H2), we divide our overall sample into two groups: (i) low ethical behavior of firms group (inferior or equal to the median of EBOF) and (ii) high ethical behavior of firms group (above the median). A test of hypothesis H2 consists of observing a significant positive association between the quality of management schools and sustainability level only for high ethical behavior of firms sub-sample, while the same relationship becomes insignificant for low ethical behavior of firms sub-sample. Accordingly, model 2 is constructed as follows for high and low EBOF environments:
A complimentary test has been conducted for the moderating effect of the ethical behavior of firms on the association between the quality of management schools and sustainability level. It consists of using an interaction variable analysis by multiplying the test variable by the moderating one (QMS*EBOF). The higher the values of these two variables, the greater the result of their multiplication will be. Therefore, we expect that the association between the interaction variable (QMS*EBOF) and sustainability will be stronger and more significant. This complimentary test is performed as follows in model 3:
4. Empirical results
4.1 Descriptive statistics
Table 3 displays descriptive statistics for all variables included in the model. Sustainability score variable has an average score of 4.375 and varies from 2.970 to 6.090. The quality of management schools has a mean of 4.337 and ranges from 2.000 to 6.400. Ethical behavior of firms has an average of 4.163 and ranges from 2.400 to 6.500.Finally, the means of the strength of auditing and reporting standards, corruption, efficiency of legal framework in challenging regulations, market size and strength of investor protection are 4.729, 9.058, 3.565, 3.983 and 5.629, respectively. Table 3 reports more information about descriptive statistics concerning all variables considered in this study.
Descriptive statistics
| Variables | Observations | Mean | Standard deviation | Minimum | Maximum |
|---|---|---|---|---|---|
| SS | 500 | 4.375 | 0.564 | 2.970 | 6.090 |
| QMS | 500 | 4.337 | 0.827 | 2.000 | 6.400 |
| EBOF | 500 | 4.163 | 0.919 | 2.400 | 6.500 |
| SARS | 500 | 4.729 | 0.859 | 2.100 | 6.700 |
| COR | 500 | 9.058 | 6.497 | 0.000 | 26.000 |
| EOLF | 500 | 3.565 | 0.912 | 1.200 | 5.800 |
| MKS | 500 | 3.983 | 1.153 | 1.300 | 7.000 |
| SIP | 500 | 5.629 | 1.297 | 1.700 | 9.300 |
Note(s): SS: sustainability score; QMS: the quality of management schools in one country; EBOF: ethical behavior of firms; SARS: the strength of auditing and reporting standards in one country; COR: the level of corruption in one country; EOLF: the efficiency of legal framework in challenging regulations; MKS: market size; SIP: the strength of investor protection
4.2 Univariate analysis
Table 4 displays univariate analyses. Results show that there is a significant positive relationship between the quality of management schools and sustainability level (0.330). The ethical behavior of firms is positively and significantly correlated with sustainability score (0.319). It should be noted here that the ethical behavior of firms is positively and strongly correlated with quality of management schools score (0.682).Strength of auditing and reporting standards is positively correlated with sustainability level with a coefficient accounting for 0.327. As expected, corruption variable is negatively and significantly correlated with sustainability variable with a Pearson correlation coefficient amounting to −0.263. Finally, the efficiency of legal framework in challenging regulation, market size and strength of investor protection are positively correlated with sustainability score.
Correlation matrix
| SS | QMS | EBOF | SARS | COR | EOLF | MKS | SIP | |
|---|---|---|---|---|---|---|---|---|
| SS | 1 | |||||||
| QMS | 0.330*** | 1 | ||||||
| EBOF | 0.319*** | 0.682*** | 1 | |||||
| SARS | 0.327*** | 0.695*** | 0.780*** | 1 | ||||
| COR | −0.263** | −0.591*** | −0.738*** | −0.612*** | 1 | |||
| EOLF | 0.223** | 0.632*** | 0.874*** | 0.707*** | −0.622*** | 1 | ||
| MKS | 0.249** | 0.373*** | 0.246** | 0.330*** | −0.243** | 0.220** | 1 | |
| SIP | 0.195** | 0.310*** | 0.325*** | 0.366*** | −0.221** | 0.300*** | 0.312*** | 1 |
Note(s): SS: sustainability score; QMS: the quality of management schools in one country; EBOF: ethical behavior of firms; SARS: the strength of auditing and reporting standards in one country; COR: the level of corruption in one country; EOLF: the efficiency of legal framework in challenging regulations; MKS: market size; SIP: the strength of investor protection
*significant at 10%; **significant at 5%; ***significant at 1%
4.3 Multivariate analyses
Table 5 presents the results of multiple regression specified in model (1). Findings show that the quality of management schools is positively and significantly associated with sustainability score(Coeff = 0.087; t = 2.070 [3]). This result provides support for H1 and implies that high quality management schools play an important role in the improvement of sustainability level in one country as they go beyond management technical training and emphasize on education for sustainable development by alerting their future outputs in the economy about the importance of sustainability. In addition, ethical behavior of firms is positively and significantly associated with the sustainability score (Coeff = 0.257; t = 3.800). This result is in line with that reported by Guidara et al. (2022).
Multivariate regression analysis
| Dependent variable: SS | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Model 1 | Model 1 | Model 1 | Model 2 | Model 2 | Model 3 | |||||||
| Overall sample | Overall sample (without QMS) | Overall sample (without EBOF) | Low EBOF | High EBOF | Overall sample (QMS*EBOF) | |||||||
| Coeff | t-statistic | Coeff | t-statistic | Coeff | t-statistic | Coeff | t-statistic | Coeff | t-statistic | Coeff | t-statistic | |
| Intercept | 2.825 | 11.700*** | 2.955 | 12.640*** | 3.184 | 14.130*** | 3.006 | 9.470*** | 3.696 | 10.590*** | 3.550 | 16.590*** |
| QMS | 0.087 | 2.070** | 0.102 | 2.390*** | 0.030 | 0.570 | 0.179 | 2.730*** | ||||
| EBOF | 0.257 | 3.800*** | 0.269 | 3.990*** | ||||||||
| QMS*EBOF | 0.035 | 4.630*** | ||||||||||
| SARS | 0.067 | 1.450 | 0.095 | 2.140** | 0.121 | 2.710*** | 0.161 | 2.930*** | −0.167 | −0.220 | 0.069 | 1.520 |
| COR | 0.002 | 0.510 | 0.001 | 0.200 | −0.006 | −1.280 | 0.006 | 0.930 | −0.021 | −2.650** | 0.004 | 0.080 |
| EOLF | −0.196 | −3.600*** | −0.186 | −3.420*** | −0.052 | −1.310 | −0.119 | −1.930** | −0.023 | −0.340 | −0.160 | −3.400*** |
| MKS | 0.062 | 2.830*** | 0.072 | 3.340*** | 0.057 | 2.550** | 0.062 | 1.780** | 0.072 | 2.370** | 0.054 | 2.520** |
| SIP | 0.015 | 0.810 | 0.016 | 0.850 | 0.020 | 1.050 | 0.063 | 2.310** | −0.003 | −0.120 | 0.015 | 0.810 |
| 2014 | – | – | – | – | – | – | – | – | −0.062 | −0.640 | – | – |
| 2015 | 0.036 | 0.550 | 0.032 | 0.480 | −0.020 | −0.310 | 0.087 | 0.070 | −0.117 | −1.190 | 0.019 | 0.290 |
| 2016 | 0.193 | 2.870 | 0.196 | 2.900 | 0.126 | 1.920 | 0.223 | 2.590 | −0.030 | −0.310 | 0.167 | 2.550 |
| 2017 | 0.239 | 3.620 | 0.243 | 3.670 | 0.192 | 2.920 | 0.319 | 3.780 | – | – | 0.216 | 3.340 |
| F (p-value) | 12.090*** (0.000) | 12.870***(0.000) | 11.510***(0.000) | 6.340*** (0.000) | 6.190*** (0.000) | 13.600***(0.000) | ||||||
| Adj R-square | 18.19 | 17.64 | 15.94 | 17.47 | 14.70 | 13.60 | ||||||
| Max VIF | 7.40 | 7.34 | 2.76 | 1.61 | 3.08 | 5.79 | ||||||
| Number of | 500 | 500 | 500 | 228 | 272 | 500 | ||||||
| observations | ||||||||||||
Note(s): SS: sustainability score; QMS: the quality of management schools in one country; EBOF: ethical behavior of firms; SARS: the strength of auditing and reporting standards in one country; COR: the level of corruption in one country; EOLF: the efficiency of legal framework in challenging regulations; MKS: market size; SIP: the strength of investor protection
*significant at 10%; **significant at 5%; ***significant at 1%
With respect to control variables, strength of auditing and reporting standards, corruption level and the strength of investor protection are not significantly associated with sustainability score, while theefficiency of legal framework in challenging regulations is negatively significantly associated with sustainability level (Coeff = −0.196; t = −3.600). Finally, market size is positively and significantly related to the same variable (Coeff = 0.062; t = 2.830).
Controlling for muticollinearity, the variance inflation factors (VIFs) reported suggest that model 1 does not suffer from such a problem since all VIFs are inferior to 7.400 [4]. The overall explanatory power of the model is significantly high (F = 12.090; p < 0.000) and the adjusted-Rsquare accounts for 18.19 %.
To check the stability of results, we undertake alternative regressions for model 1 by removing the quality of management schools or ethical behavior of firms. When our test variable is removed, the association between ethical behavior of firms and sustainability remains significant (Coeff = 0.269; t = 3.990). When ethical behaviour of firms is removed, the quality of management schools becomes the most important predictor of sustainability (Coeff = 0.102; t = 2.390). These results imply that the quality of management schools and ethical behavior of firms play a complimentary role in improving sustainability in one country. It is worthy to note here that the strength of auditing and reporting standards becomes positively and significantly associated with sustainability in these two alternative regressions. This implies that the inclusion of both variables (quality of management schools and ethical behavior of firms) substitutes for the positive effect of the strength of auditing and reporting standards on sustainability.
In order to test the moderating effect of ethical behavior of firms on the relationship between the quality of management schools and sustainability level (H2), the overall sample is sub-grouped into high and low ethical behavior environments based on the median of this variable. For high ethical behavior environments (model 2), the association becomes stronger and more significant as the coefficient moves from 0.030 to 0.179 and it is significant at 1 per cent significance level (Coeff = 0.179; t = 2.730). For low ethical behavior environments (model 2), the findings show that the significant positive association between the quality of management schools and sustainability level reported in model 1 becomes insignificant (Coeff = 0.030; t = 0.570). These findings provide support for H2 and confirm that the ethical behavior of firms moderates the association between the QMS and sustainability level. This suggests that ethical behavior of firms plays a critical role in shaping the behaviors of management schools graduates even if they receive a high quality management education emphasizing the importance of sustainability. It should be noted that models 2 do not suffer from multicollinearity problem since maximum VIFs range from 1.610 and 3.080.
An additional test is performed in model 3 [5] by introducing an interaction variable (QMS*EBOF). The findings show a strong positive and significant association between the interaction variable (QMS*EBOF) and the sustainability level (Coeff = 0.035; t = 4.630). This additional test further confirms the moderating effect of ethical behavior of firms on the association between the quality of management schools and sustainability, on the one hand, and the complementary role played by the quality of management schools and ethical behavior of in enhancing sustainability, one the other side.
4.4 Discussion
Results show that the quality of management schools is positively associated with sustainability. As noted above, these findings corroborate the beneficial effect of quality management schools on other economic phenomena (e.g. tax evasion) as Khlif and Guidara (2018) have documented the quality of management schools increases tax revenues through the decrease of tax evasion. When testing for the moderating effect of ethical behavior of firms on the association between quality of management schools and sustainability, reported results suggest that the positive association becomes positive and more significant for countries where firms operate with high ethical behaviors, while the relationship becomes insignificant for settings where firms operate with low ethical behaviors. These findings corroborate recent empirical results reported by Khelil et al. (2022) and Guidara et al. (2022) who provide evidence that ethical behaviour of firms moderates, respectively, the association between the strength of auditing and reporting standards and infrastructure quality and the relationship between the strength of auditing and reporting standards and sustainability level.
Our findings highlight the importance of education, as proxied by the quality of management schools, in the development of sustainable societies and economic systems. These findings also highlight the complementarily between business schools and business ethics in improving sustainability.
5. Conclusion
This study examines the relationship between the quality of management schools and the sustainability level score and test whether ethical behavior of firms affect this relationship for a dataset of 500 country-year observations over the period of 2014-2017. Findings show that the quality of management schools is positively and significantly associated with sustainability level. This association is more prevailing in settings characterized by high ethical behavior of firms, while it becomes insignificant for countries characterized by low ethical behavior of firms. Furthermore, the quality of management schools and ethical behavior of firms play a complementary role in the improvement of sustainability level.
Findings suggest that high-quality management schools plays an important role in the improvement of sustainability level in one country as they go beyond classic management technical training and emphasize on education for sustainable development by alerting future graduates about the importance of sustainability and adopting new pedagogies and programs dealing with environmental and social concerns. Management school graduates will be more committed to respect sustainability norms if they operate within an economic environment characterized by high business ethics.
This paper contributes to sustainability literature in two ways. With respect to policy makers, the empirical findings reported in this study urge governments in developing and emerging economies to adopt programs in higher-education institutes that emphasize the concept of education for sustainable development and establish new pedagogies in school education that increase students’ awareness sustainability infractions. In addition, reinforcing business ethics standards will also lead to the improvement of sustainability efforts as these norms will limit discretionary acts undertaken by economic agents. With respect to researchers, this study extends the stream of research examining the determinants of sustainability at country level by integrating a new variable dealing with the quality of management education, as proxied by the quality of management schools, and highlighting its interactions with business ethics in improving sustainability.
This study is subject to some limitations. Firstly, our proxy for the quality of management education may exclude economic agents that have not attended a management school. Therefore, the quality of management schools simply captures a small part of economic actors operating within an economy. However, we are not aware about other proxies linked to quality of business and management education used in international reports. Secondly, variables collected from the Global Sustainable Competiveness Index and the Global Competiveness Report are based on survey methods, and this may increase the risk of measurement errors (Amara, Khlif, & El Ammari, 2020; Richardson, 2006; Guidara et al., 2022). Nevertheless, this is a common limitation of cross-country investigations and data are collected from reputable sources such as the Global Competiveness Report and the Global Sustainable Competiveness Index.
Future research may deepen the analysis by integrating a composite index concerning education quality in one country that may include, for example, literacy rate, the percentage of population enrolled in higher education, quality of management schools and their effect of sustainability. This composite index may cover the quality of education of main part of active population within an economy. Testing for the moderating effect of ethical behavior of firms may also represent an interesting research avenue to examine.
The author acknowledges the helpful assistance provided by Professor Hichem Khlif in the revision of this paper. The author is also grateful for the helpful comments of the anonymous reviewers and the editor.
Notes
Available at: https://www.hbsp.harvard.edu/product/UV7245-PDF-ENG
These goals are identified in the following website: https://www.unicef.org/sdgs.
The association is significant at 5 per cent significance level.
Multicollinearity is viewed as a serious problem when the VIF exceeds 10 (Neter, Wasserman, & Kutner, 1989).
In model 3, we exclude the quality of management schools and ethical behavior as their inclusion will cause multicollinearity problem (in case of inclusion, the VIFs associated with these two variables exceed 10).
