ETHICS/A Wharton professor weighs in on the impact of Martha Stewart’s conviction

Happy homemaker, ruthless entrepreneur, or simply a woman persecuted because of her gender. Whatever your opinion, it appears likely that Martha Stewart, once the paragon of middle-class values and 21st-century success, is headed for a stay in a facility associated more with guard towers and barbed wire than tea cozies and mint sprigs.

Now that the incessant commentary and the hot lights of a thousand TV cameras have died down, more thoughtful reflection can be offered on the embattled domestic diva’s legacy for the future of American business. Is the Stewart verdict the first salvo in an eruption of fierce federal prosecutions, or was it just a warning shot for wayward corporate executives?

Thomas Dunfee, Kolodny Professor of Social Responsibility at Wharton, believes that the Stewart case will have small ripples in the immediate future. “Public figures will probably be more cautious and circumspect regarding tips from insiders. [They also] may be less likely to talk to prosecutors at all.  If the latter happens, it may have the ironic effect of making prosecutors’ jobs harder.”

But what about the market? Will investor confidence grow because of Martha’s fall? That may be the million-dollar question, but as of now, the jury is still out.

“ It may boost the general public’s confidence that the rich are treated in a roughly equivalent way to everyone else,” said Dunfee. “I think that the Tyco and Enron verdicts will be more important regarding confidence in our market system.”

Dunfee concedes that the case may bolster critics of business education, but he dismisses their fears. “There are those who claim that monolithic win-at-any-cost values are taught at business schools, which contributed to the recent wave of scandals. I think they are mistaken. Business schools are quite diverse places where a lot of perspectives are presented.”

Dunfee pointed out that MBA students at Wharton generally respond well to the school’s required ethics module.