Business ethics is an area of business studies that entails the moral and right policies and practices in sensitive areas of entrepreneurship. These areas include corporate governance, stock fraud such as insider trading, discrimination as well as fiduciary and corporate social responsibilities. The American defence industry, being by far the biggest in the world has over time been dogged by major ethical issues (Lockheed Martin Corporation, 2016). When the scandal regarding this unethical conduct broke out, major industry player Lockheed was at the center of the scandal. Even after a landmark merger with Martin Marietta to form Lockheed Martins, ethical issues still dogged the new merger due to Lockheed’s erstwhile misconduct (Lockheed Martin Corporation, 2016). The company has however, turned the tables in the advent of the 20th century and is now recognized as an industrial leader in the area of ethics.
Lockheed Corporation began in 1912 as a family business with aviation interests with its key people being brothers Allan and Malcolm Loughead. By the end of the Second World War, the company had set itself apart as a major aviation supplier to the American military juggernaut. It supplied more than 4000 military planes; a major achievement by any standards. By this time however, the company had grown exponentially with a huge infrastructure and tens of thousands of employees. It was in the attempt to remain relevant in the post-World War II business environment that Lockheed began applying unethical principles to win business.
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The first scandal emanated from the F-104 Starfighter. Designed to make a difference in the Korean War, the project flopped and the key customer to wit the US military bought 70 jets against an anticipated 2600 jets. To avert disaster, Lockheed turned to the international market where it used brokers to pay bribes to many governments in the world to buy the Starfighter. Finally, Lockheed also sold to erstwhile enemies of the United States and this saved the project and by extension, the company, since over 2000 Starfighters were sold.
The second ethical issue emanated from a Jumbo jet race that also involved the successful Boeing 747 and the equally disastrous MacDonnell Douglas DC10. Lockheed decided to also manufacture a Jumbo jet in the name and style of the L-1011 TriStar and the Jumbo jet project seemed to be financially doomed when American aviation giant United Airlines opted for the fierce competitor’s DC10. To avert disaster, Lockheed turned to former US enemy Japan and in a reprehensible corrupt move that involved inter alia Lockheed vice president Carl Kotchian and the Japanese prime minister. Once again the project was saved through massive bribery.
Finally and from a domestic perspective, massive acts of corruption and bribery between Lockheed management and military operative at the Pentagon was ongoing. Military contracts would increase even tenfold after contracts were already signed. As opposed to the international contracts that were only about unfair competition, the local scenario also meant theft of taxpayer dollars. In the mid-1970s however, all the scandals were revealed and it is at this point that Lockheed’s name became synonymous with corporate corruption and unethical conduct.
CEO Daniel Haughton and Vice President Carl Kotchian were in the eye of the bribery allegation scandal but they did not show any remorse and made strong arguments to justify the corruption. The first argument was that no laws had been broken and this was essentially true since the Foreign Corrupt Practices Act of 1977 (FCPA) had not been passed. They also argued that Lockheed was playing by the same rules as their competitor, thus what they were doing was not wrong and that no one had been hurt due to the bribes. The individuals also argued that their action was in the interest of its workers as it saved jobs of the thousands who worked for Lockheed.
From a philosophical perspective under normative ethics, the argument that the evil committed was mitigated and justified by essential good, falls under the theory of utilitarianism. Under this theory, Lockheed acted ethically with its end of saving jobs justifying the wrong of paying bribes. The argument that no one was hurt falls under the normative ethics principle of consequentialism which is closely related to utilitarianism. These two principles clearly seem to support the conduct of Lockheed in overcoming competition through underhand tactics.
However, for the general world and particularly the business world to operate in harmony, ethics must be based on morals. Kantian ethics indeed creates a connection between ethics and morals (Johnson & Cureton, 2016). From a general perspective, for an act or omission to be considered ethical, it must also be moral in nature. The three formulations of category imperatives under Kantian ethics further dictate what amounts to morals and ethics. This totality is that one ought to act in a way that if the whole world acts thus, there would still be harmony while treated. The second and third entail treating everyone else as one would expect to be treated, and be seen as a means rather than an end (Johnson & Cureton, 2016). It is, therefore, my contention that Lockheed’s conduct was immoral under Kantian ethics, therefore, unethical.
Clearly, Lockheed despite fervent defence agreed that their conduct was unethical as they initiated an ethics program as early as early 1970s. This program was however, more of a public relations gimmick than a genuine effort since it is based on the concept of ethics on individual employee rather that the corporation. However, the ethics program did not entail proper sensitization of the employees on issues of ethics, hence was more of a blame generating programme. Indeed, over 20 years after the initiation of the program and the passage of anti-bribery law, Lockheed was till found guilty of massive bribery to get contracts.
Further, with most of the competitors in the defence business also engaging in bribery, it was difficult for a singular player like Lockheed to overcome temptation. This situation was solved when majority of defence contractors agreed on a joint code of ethics under the Defence Industry Initiative on business ethics and conduct dubbed DII. Under this deal, a level playing field would be set where contracts would be competed for through merits. DII currently involves 77 corporate defence contractors who continue to work together to rid the industry off bribery, corruption, and the unethical conduct.
The Lockheed bribery spree however, generally continued until the landmark merger with Martins Marietta in 1995. Among the major benefits of the merger was the eventual appointment of Norman Augustine who believed that ethics should be practiced as a matter of principle and not to avoid the consequences of unethical conduct. By the time Norman took over however, Lockheed, and by extension Lockheed Martins had been placed on a three year administrative agreement that placed it on a sort of ethics probations. The first step taken by Norman was sensitization of all staff members on ethical conduct (Lockheed Martin Corporation, 2016). This was a monumental undertaking that required an innovative way to carry out successfully.
This innovative means was finally created by Steve Cohen, an employee training consultant working for Lockheed Martins. He created a game dubbed the ‘ethics game’ based on comic characters Dilbert and Dogbert (Lockheed Martin Corporation, 2016). The game would allow players to informally discuss ethical issues raised by Dilbert, with Dogbert providing very comical points of view on the questions. With the support of CEO Norman, the game was made compulsory for all members of staff for at least one hour annually. The success of this stratagem was great as ethics became a matter of continuous debate and discourse in the company (Lockheed Martin Corporation, 2016).
In conclusion, DII made it possible for a defence contractor like Lockheed Martins to operate ethically with no risk of losing business thereby. Norman Augustine made ethics a matter of basic principle at Lockheed that must be followed by all employees and the ethics game introduced by Dilbert and Dogbert enabled the 200,000 employees to have a basic understanding of ethical conduct. These moved Lockheed Martins in general from being an ethical pariah to being an ethical conduct yardstick in the industry,
References
Lockheed Martin Corporation. (2016). Ethics . Retrieved from <http://www.lockheedmartin.com/us/who-we-are/ethics.html/>
Johnson, R. & Cureton, A. (2016). Kant’s moral philosophy. Stanford Encyclopedia of Philosophy . Retrieved from <http://plato.stanford.edu/entries/kant-moral/>
