Ethics: ‘One-size-fits-all' or a customized outfit?

“Ties That Bind”
Thomas Donaldson & Thomas W. Dunfee
Harvard Business School Press


A manager for an airplane manufacturer is considering a payment of $5 million to go personally to the minister of defense of a developing country to “win” a contract for jetfighters. Does this act of bribery become acceptable in a country that views it as part of “culture”?

One market research firm, hired by a client, falsely projects itself as an independent research group among respondents. The firm said that it was necessary to make use such deception so that it can get “unbiased” responses. Does the end justify the means?

Suppose Adolf Hitler won the war and now dominates the world. Will his anti-Semitic policy now become an acceptable social practice following the principle that he who has the gold (or gun) rules and that “might is right”?

These questions – and many more – are dealt with by this book, “Ties that Bind” subtitled “A Social Contracts Approach to Business Ethics.” Authorship of this tour de force study is shared by two faculty members of the Wharton School: Donaldson, legal studies professor and director of the Wharton School and Dunfee, social responsibility professor and director of the Zicklin Center for Business Ethics Research.

Their academic background and professional development explain the depth of scholarship and their intellectual and philosophical range – assuring the reader of a virtual walk-through into schools of though in ethics as applied to religious, social, political and economic fields.

Handled by less enlightened minds, business ethics could take one of two forms:

One, it could be a set of dogmas of immutable principles that should universally apply to business – never mind if they are irrelevant or unworkable. Two, ethics could be set of shifting codes of conduct or tentative agreements that spring from situational ethics of from a group consensus, never mind if it assaults universally accepted norms.

Apply these ethical issues to the world of business, and you and inevitable led to passionate debate on what is right and what is wrong – in the light of “business realities.” Discuss the ethical questions faced by global firms operating in different environments, and you get arguments as “when in Rome, do as the Romans do.”

“Corporate leaders face ethical dilemmas everywhere, but nowhere is their challenge greater that in the global stage,” the authors point out. They cite the case of a global oil firm which earned the ire of the people of one African nation simply because it remained silent over the execution of a noted environmental activist.

Should it take a stand on human rights issues? Shall it use its leverage on host governments to promote the ends of justice? In the past, these global firms were called names because they threw their weight around.

Beyond many business ethical dilemmas that are abundant in this book, this piece of work actually “takes the bull by the horns,” because it confronts the tension between “empirical” and “normative” ethics.

The former is a matter of group agreement, the latter a matter of universally accepted principles. Said plainly, an act becomes right or wrong either when the group decides one is “wrong”; or it is universally accepted to be intrinsically right (like murder).

However, the book says mere group consensus as an ethical basis would justify. For example, a neighborhood tacit agreement to oppose any colored family to enter its enclave.

And fundamental principles of dogmas of not “lying” cannot apply when one withholds the truth from a criminal looking for your father. Author Dietrich Bonhoeffer in his book “Ethics” advances an arguable but helpful point: “You don’t give the truth to someone who will misuse it.”

“A one-size-fits-all” template for business morality is an illusion,” the author say. Thus out of this ethical predicament, the authors offer the “Integrative Social Contract Theory” – or ISCT.

They proceed from the principle that members of a certain community (including the business community) can enter into a “social contract” about how they can strengthen the “ties that bind” them, by agreeing to be governed by certain principles of living together. However, the authors emphasize that the same community must be governed by “hypernorms.” These are “higher principles” that govern other ethical codes of a community.

The book has the lucidity of clearly enunciated and explained theories, taking the reader back to philosophical thoughts from as far back as Plate to modern day theologians as Hans Kung.

And they construct tables for decision-making processes. We are used to schematic diagrams and process charts for production flows and organizational relationships – but these “ethical tables” invite corporations to confront moral issues systematically – using the social contract theory.

The question always remains. What is the leeway of an enterprise in deciding what is right or wrong? What are non-negotiable moral choices? How does one arrive at an ethical decision so that the enterprise reflects the moral code of the community where it operates? How do you keep alive the virtues of truth, freedom, honesty, integrity, fair play and caring – and reconcile them with the goals for efficiency, economic viability and market competition?

The authors are not giving the answers. But they sure are offering a menu of concepts, processes, experiences and examples – but leave the decision to the enterprise or the larger community.

The value of this book? It gives, only one – a way of constructing one’s ethical code. Beyond doing what is inherently right, the enterprise will-sooner, not later – realize that conducting business ethically makes good business sense.