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From left: Kellogg School Dean Dipak C. Jain, Northwestern University President Henry Bienen, Peter G. Peterson '47 and Professor David Austen-Smith at the James L. Allen Center Sept. 19, where the Peter G. Peterson Chair in Corporate Ethics was bestowed upon Austen-Smith

Prof. Austen-Smith named Peter G. Peterson Chair in Corporate Ethics

Gift from Blackstone co-founder and Kellogg alumnus aims to correct “moral” failures in business, boost school’s mission of creating socially responsible leaders

By Matt Golosinski

9/27/2007 - His words were passionate and his expectations clear: Business needs enlightened leadership and Kellogg is the place to cultivate that sort of talent.

In a no-holds-barred dinner address at the James L. Allen Center on Sept. 19, Peter G. Peterson ’47 detailed why he has made a $2 million gift to endow a chaired professorship in ethics at the Kellogg School.

"In all of my long life, I've never seen so many challenges that threaten our future, that are undeniable, unsustainable and yet, untouchable," said Peterson, whose illustrious career has spanned decades and included service as U.S. Secretary of Commerce, chairman and CEO of Lehman Brothers, and co-founder and chairman of The Blackstone Group, the prominent private equity and investment management firm.

During his remarks, Peterson surveyed today’s corporate and political landscape. What he saw displeased him. He concluded that there was “a shortage of business leadership, but most certainly no shortage of daunting and unsustainable long-term challenges crying out … for business leadership.” Among those concerns: executive greed, ethical breaches, short-sighted fiscal policies and a “dysfunctional” U.S. current account deficit that threatens the country’s future.

Quoting the German theologian Dietrich Bonhoeffer, he said, “The ultimate test of a moral society is the kind of world it leaves to its children.”

On that score, Peterson found little to recommend current socioeconomic practices.
He said a host of critical issues required concerted and enlightened action from business leaders. “Based on what is going on in America, a chair in business ethics, or morality, if you will, is clearly needed.”

Occupying this new chair is Professor David Austen-Smith of the Kellogg School’s Managerial Economics and Decision Sciences Department. In accepting the Peter G. Peterson Chair in Corporate Ethics, he called the “syllabus” set by Peterson “very daunting” and promised that collectively he and his Kellogg peers would work to solve some of those problems.

Austen-Smith, an economist who joined Kellogg in 1996 and whose research interests include positive political theory, social choice and microeconomics, provided an overview of Values-Based Leadership, the course he teaches within the Social Enterprise at Kellogg Program (SEEK). In tracing the course’s development, Austen-Smith noted the challenges of designing a curriculum that transcends “watered-down philosophy.” With the SEEK offering, he said, he and his peers have succeeded in creating a class focused on “providing students with a set of tools to manage effectively in a world of heterogeneous and fundamentally competing value propositions.”

Citing Martin Luther King Jr. as a preeminent 20th century example of a values-based leader, Austen-Smith emphasized the importance of “setting norms and examples and advocacy.”

In introducing Peterson, Northwestern University President Henry Bienen called his longtime friend “nonpartisan,” “kind and generous,” and a “citizen of the world.” Kellogg School Dean Dipak C. Jain thanked Peterson for his gift, saying that it will strengthen an important part of the school’s research and teaching, while helping produce socially responsible global leaders.

“We want Kellogg to be not just the best school in the world, but the best school for the world,” said Jain.