"Bright Line" at the Business School

Harvard Business School has prohibited faculty members from having a "financial interest" or "formal position" in enterprises launched, run, or...

clark_dean_kimHarvard Business School has prohibited faculty members from having a "financial interest" or "formal position" in enterprises launched, run, or owned by students who are studying at the school. The first restriction means no ownership of equity, options, or debt in such ventures; the latter precludes serving on a board of directors or advisers, or as a consultant, employee, or executive. For fledgling businesses seeking credibility or venture capital, of course, association with name professors can be an important asset. And the returns are enticing: Akamai Technologies, hatched by an MIT professor and a Ph.D. student, made billionaires of both.

Emblematic of the times, the policy--publicized in December--made the Wall Street Journal and prompted student grumbling. In fact, it is more restrictive than those in place at such entrepreneurial hotbeds as the business schools at MIT and Stanford, where professors are precluded from becoming financially involved with their own students, but not with other students at their institutions. HBS dean Kim B. Clark spoke of the need to "draw a bright line." He told the student newspaper that student-led business formations had increased to between 80 and 100 in the last academic year--an exciting development, but one fraught with ethical peril. Asked by the newspaper whether he had considered policies at other schools in drawing up the HBS guidelines, or would back down in face of unanimous student opposition, Clark said no, citing matters of principle about which "we feel very strongly."

 

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