Description
In this paper, I want to present the problems of the political firm by investigating how a particular firm deals with the issue of being a good corporate citizen. I have selected the US Defense industry corporation Martin Marietta that more recently became Lockheed Martin.
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The corporation as a good citizen:
A case study of Lockheed Martin
By Jacob Dahl Rendtorff, Roskilde University ([email protected])
1. Introduction: Politicization of the firm and corporate citizenship
What is corporate citizenship? There are many theoretical points of view, but few authors look at
the idea of the political firm in practice (Megone 2002). In this paper, I want to present the
problems of the political firm by investigating how a particular firm deals with the issue of being a
good corporate citizen. I have selected the US Defense industry corporation Martin Marietta that
more recently became Lockheed Martin. This firm is political in the sense that it has worked
deliberately on being a “good corporate citizen” (USSG, 1995 & 2005), which is the US notion for
corporate citizenship as a requirement of legitimacy of corporations of the government and the
general population. Accordingly, the topic of this article is to show some aspects of the problems
and dilemmas of corporate citizenship in practice by studying the activities of one particular
corporation in the US (Paine 1997). We can define corporate citizenship as “.. the process of
identifiying, analyzing, and responding to the company’s social political, and economic
responsibilities as defined through law and public policy, stakeholder expectations, and corporate
values and business strategy… [it] involves both actual results (what corporations do) and the
process through which they are achived (how they do it) (Tompson 2005).” With this definition we
may say that corporate citizenship expresses the attempt of a company to be socially responsible
and act ethically in relation to internal and external stakeholders in the corporation and in society.
The problem is what it means to be a good corporate citizen and have ethics programs and how this
is realized in the practical life of the corporation. The political firm is a corporation that wants to be
a good corporate citizen and a company that searches to have political, ethical and social legitimacy
in the political community (Driscoll & Hoffman 2000).
The theoretical framework for my study of Lockheed Martin as an example of a political
corporation that searches to appear as a good citizen corporation is - in addition to this theory about
business ethics and corporate citizenship - the theory of the political corporation as presented by
Christian Frankel (Frankel 2008). Frankel can help to situate our definition of corporate citizenship
within the framework of social theory. Frankel argues that emerging concepts like the corporate
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social responsibility, values-driven management, business ethics and corporate citizenship indicate
new forms of political activity where corporations act in political fields of influences that constitute
a second order politics where firms define what is responsible influencing the first order politics of
legislation and party politics (Frankel 2008).
The political function of corporations in society represent a kind of governance where
corporations influence the conditions of making collectively binding decisions and in this way
companies constitute their own political domains (Frankel 2008). Their increasing responsibility
implies that companies are not only lobbyists but they make political decisions that shape political
decision-making process.
This implies that politics is not only about affecting legislation. It is about branding and it is
about how to make room for decisions and companies create room of domains for legitimate
political actions. In this sense companies are becoming more responsible but at the same time we
see a process of dissolution of responsibility (Frankel 2008). We can talk about the explosion of
responsibility. The new forms of responsibility imply that corporations are made political. They
assume responsibility not only in relation to themselves but in relation to society in general
From the point of view of institutional theory and economic sociology we can argue that
markets fundamentally are political (Frankel 2008). We can say that a corporation act at a political
market implying social and political relations between actors. In this sense the corporation
searching to be good corporate citizen acts in a political field where it relates to political processes
in society.
I have selected Lookheed Martin that is a fusion of the Lockheed Corporation and Martin
Marietta because it as a large corporation with 130.000 employees is one of the companies in the
United States that has been most efficient and influential in developing an ethics program as an
illustration of an effort to act as a good business organization (Boyne 1998). Moreover, Lookheed
Martin has really been a corporation that has been searching to propose itself as a major supporter
of the US society and as such a good corporate citizen. Another reason for the choice of this
corporation is that the air planes, missile and information technology producer as a major player in
the US defense industry since the 1980s has been very active in the establishment of codes of
conduct and compliance programs in order to overcome fraud and bad management.
With this activity Lockheed Martin is a corporation that goes beyond first order politics -
understood as traditional politics where representatively elected political bodies are setting the rules
for neutral and silently obedient economic actors – towards second order politics where the
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corporation contributes actively towards formulating its own ethical and political field in society.
This is because this corporation does not only seek to obey legislation but makes its own value
strategies and develops ethics programs for corporate citizenship in order to be a good citizen
corporation. The distinction between compliance programs and ethics and values programs is very
important for understanding the increased political involvement of a corporation from passive
acceptance of legislation towards active engagement of good corporate citizenship. Compliance
approaches are about preventing and detecting and punishing violations of the while value and
ethics-based approach is about values and inner motivation to comply with laws and regulations. A
value-based approach seems to be more effective because it defines the shared values of the
corporation rather than external measures of rules. Values-driven management contributes to self-
governance and self-regulation of the corporation and this expresses the effort to acquire legitimacy
in society.
To move from compliance programs or legal programs to obey the law towards values-
driven management (proactive values for active political activities) as a new approach to
compliance illustrates how the corporation is acting within the domain of a field of second order
politics where it seeks to influence its environments by creating the brand value of being a good
citizen corporation. We can say that the effort to realize good corporate citizenship the corporation
makes a close link between ethics and compliance and this model of business ethics may indicate
the possibilities and limits of the political firm as based on business ethics issues. Moreover, it
illustrates the difficulties and necessities of ethics in large industries with products (defense industry
articles) that sometimes may be controversial from the political perspective.
In this sense, this paper aims at showing how the effort to become a good citizen corporation
illustrates how the corporation is politicized in modern complex society. However, I also want to
show ambiguities and paradoxes of the use of values-driven management and ethics programs as an
instrument of corporations to manifest themselves as political actors in society. In the end of the
article we will discuss the usefulness of ethics and values in order to promote good corporate
citizenship in the corporation.
My methodology and framework for this analysis of corporate citizenship is a case-study
approach based on the Harvard case-method that can conceived as a hermeneutical reading
(Gadamer 1960; Jonsen 1989) and reconstruction of the context of a specific corporation (Richman
1989; Damle 1989; Megone 2002, 2). The empirical basis for this reading is the text about their
ethics programs produced by Lookheed Martin and other written material of the corporation, in
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particular annual reports. In addition to this I have used secondary sources of literature about
business ethics. What is at issue in the perspective is the identification of particular political ethical
problems and issues of corporate practice and the organizational and institutional response to these
problems. So the analysis is based on hermeneutical understanding and reconstruction of the way a
corporation faces ethical and political dilemmas and problems (Damle 1989; Richman 1989;
Megone 2002).
2. Martin Marietta: Corporate citizenship as good business ethics
Martin Marietta was in the 1980s an important contractor to the US government and in this sense
had a close relation with the state and the need to appear as an attractive business partner for the
state may be one of the reason for the focus on corporate citizenship (Boyne 1998; Badaracoo et al.
1991). With these initiatives to develop a written code of ethics and conduct and install a set of
measures to ensure implementation of ethics programs in different organizations systems of ethics
offices Martin Marietta was very important for the US Defense Industry Initiative on Business
Ethics and Conduct from 1986. This initiative was an effort to make the defense industry
corporations appear as good corporate citizens and in this sense the corporations was given a space
for self-regulation and development of their own ethical policies. The Reagan administration had
been critical to the defense industry in the 1980s while this administration wanted to use money on
defense. In order to ensure better products the administration asked the defense industry
corporations to set up ethics codes for the entire industry. This led to an agreement where 18 and
shortly after 32 and in 1990 55 defense industry contractors gathered together in order to formulate
a code of conduct for the defense industry (Defense Industry Initiative) (Paine 1997, 194). In this
context Martin Marietta also took initiative to coordinated audit planning and a contractor risk
assessment guide in order to be more collaborative with regard to worries of government auditors.
Martin Marietta shows itself as a leading company in trying to make the industry have stronger and
better compliance programs.
In the Defense Industry Initiative the corporations agreed to possess a written code of
conduct, train their employees in the codes requirements, encourage employees to report violations
of the code without fear of retribution, monitor compliance with the federal procurement laws and
adopt procedures for voluntary disclosure of violations to the appropriate authorities, participate
annually in an industry wide Best Practices Forum in which ideas were freely exchanged, provide
for public accountability by outside review of company programs (Paine 1997). This code of
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conduct is a very good illustration of a second order politics where corporations are becoming self-
regulating with regard to the norms and practices for their industry.
In this sense the ethics programs initiatives of the defense industry corporation may be seen
as a reaction to potential government action. Due to certain scandals and in order to avoid
government involvement in company affairs the corporations took initiatives for corporate
citizenship with self-regulation through compliance programs (Boyne 1998). These programs can
be considered as effort of the corporations to show themselves as good corporate citizens and
honest businesses in order to avoid scandals and prevent illegal behavior. This approach is oriented
towards values-driven management as going beyond compliance as a necessary action to stay in
business rather than a strong desire to be prudent and virtuous. Accordingly, in compliance outside
pressure is stronger than inner motivation.
The implantation process of the ethics and values-driven management in order to go beyond
compliance programs in Martin Marietta and other defense industry corporations in order to make
them good corporate citizens soon faced important problems. The one was the effectiveness of
employee reporting of violations and wrongdoings. How could the corporation avoid that
employees would fear retaliation and retribution if they reported other employee’s wrongdoing to
management? How could ethics officers and their offices help to facilitate this process? Another
problem was how to measure the effectiveness of the program with regard to the prevention of
wrongdoing.
The ethics program was evaluated in an annual report and a hotline to the ethics office was
established so that employees could have easy contact with ethics officers. The corporation
emphasized that every request for the ethics office should be taken seriously (Terris 2005, 107). All
high level managers should be informed about the ethics programs and the ethical policies of the
organization. Also the firm established a voluntary program where employees could disclosure
freely eventual misconduct. The ethics program of Martin Marietta is an example of the use of US
compliance programs for large industries in order to promote corporate citizenship. In the years
following the ethics program Martin Marietta experienced an increase in economic growth. Martin
Marietta was ranked among the best of government contractor companies in 1990 and it was
considered as one of the most profitable companies in the industry (Paine 1997; Boyer 1998).
If we apply the concept of the politicization of the corporation (Frankel 2008) to the US
Defense Industry Ethics Initiative we can argue that it represents an external and internal effort to
make defense industry corporations appear as good corporate citizens. With the ethics programs we
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see an effort to make second order politics of self-regulation by endorsing employees to follow
values that are promoted by the corporation. The corporation seeks not only to improve internal
values but externally it seeks to appear with a societal brand of being a politically responsible
corporation taking seriously its role as a good citizen. We can argue that this represents an
extension of the sphere of legitimate responsibility where the firm takes responsibility in relation to
society. Moreover, it represents an effort to build a brand of the corporation as an actor that is
institutionally legitimate in US society.
However, critical voices say that these efforts do not really lead to good corporate
citizenship but made the organization turn into a bureaucratically controlled surveillance firm where
employees became more cautious rather than a firm with a free spirit of collaboration and
entrepreneurial spirit (Paine 1997, 169; Boyne 1998). Other critics argue that the efforts to do self-
regulation of citizenship are not efficient because they are too close to traditional compliance
programs rather than being genuinely based on ethics and values (Driscoll & Hoffman 2000).
According to this criticism the Defense Industry Ethics Initiative was not radical enough because it
stayed within the framework of traditional compliance programs. In order to contribute to corporate
citizenship ethics programs should create motivation and personal engagement than mere
compliance with legal regulations (Paine 1994; Paine 2003). According to this criticism an ethics
program should be more than compliance, monitoring and supervision, but include experience and
training in ethical judgment so that employees are capable of making the right decisions in difficult
situations.
3. Lockheed Martin: improvement of the ethics program
The company is to day known as Lockheed Martin Corporation and was formed in 1995 when two
of the world’s premier technology companies Lockheed Corporation and Martin Marietta merged
(Lockheed Martin 2001). In contrast to Martin Marietta it is not conceived only as a defense
industry corporation, but also as a corporation developing many products for civil purposes. For
many years the corporation had a turnover of more than 25 Billon US dollars and in 2007 the
turnover was 41 Billion US Dollars. Due to the changed security situation in the world the
company’s sale have increased rapidly after September 11. As a leader in the defense industry the
corporation produces weapons and materials for the armed forces (Lookheed Martin 2005). In 2001
the corporation expresses its willingness to be a good corporate citizen and fight and help “serving
those who fight for freedom” (Lockheed Martin 2001, 11). Lockheed Martin Corporation developed
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and refined the model of ethics and corporate citizenship that was proposed by Martin Marietta. The
idea is that ethics is straight-forward thing about helping people to “do the right thing” (Terris
2005a, 2). This approach that should be the basis for the good citizen corporation can be
characterized as a values-driven approach with a strong focus on corporate ethics. We can
document this by a short description of the dimensions of the ethics program at Lockheed Martin.
Elements of the ethics program at Lockheed Martin:
What are the elements of the ethics program at Lockheed Martin? This is indicated by the values that we find in the
value declarations, ethics programs and annual reports of the corporation: “Ethics, Excellence, “Can-Do”, Integrity,
People, Teamwork” (Lockheed Martin 2005b). Lockheed Martin defines the value of ethics as very important for its
concept of corporate citizenship. Ethics is integrated in the values of the corporation in the following statements that
illustrate the effort of the corporation to be a responsible economic and political actor in society: “We will be well-
informed in the regulations, rules and compliance issues that apply to our businesses around the world. We will apply
this knowledge to our conduct as responsible employees of Lockheed Martin, and will adhere to the highest standards of
ethical conduct in all that we do” In this sense, ethics is closely to follow the law and comply with the standards of the
state. Excellence is considered as a value of high business performance: “The pursuit of superior performance infuses
every Lockheed Martin activity. We excel at meeting challenging commitments even as we achieve total customer
satisfaction…” (Lockheed Martin 2005b).
In this context the value of Can-do is about individual leadership and the commitment of employees to the
opportunities and challenges of the organization. Integrity as a basic value is related to commitment, respect for dignity,
truthfulness and trust (Lockheed Martin 2005b). The value of people indicates that the corporation regards employees as
very important and that the corporation works for life-long personal and professional development. Finally, the value of
teamwork relates to the collective accountability and team spirit of the organization, which however should not oppress
individual talent and creativity (Lockheed Martin 2005b). These values are defined as fundamental to all kinds of
policies and strategies of the firm. They are considered to define the accountability of the employees and of the
organization as a whole.
The ethical principles that we find in the value statements are regarded as central to the vision of corporate
citizenship in the ethics programs of the organization are: “Honesty (to be truthful in all our endeavors; to be honest and
forthright with one another and with our customers, communities, suppliers, and shareholders), Integrity (To say what
we mean, to deliver what we promise, to fulfill our commitments, and to stand for what is right), Respect (To treat one
another with dignity and fairness, appreciating the diversity of our workforce and the uniqueness of each employee),
Trust (To build confidence through teamwork and open, candid communication), Responsibility (to take responsibility
for our actions, and to speak up – without fear of retribution – and report concerns in the workplace, including
violations of the laws, regulations and company policies, and seek clarification and guidance whenever there is doubt),
Citizenship (To obey all the laws of the countries in which we do business, and to do our part to make the communities
in which we live and work better” (Lockheed Martin 2005b).
In addition to these values and ethical principles the corporation proposes a decision-making model in its
material for ethics education with the following components: “1. evaluate information 2. Consider how your decision
might affect all involved 3. Consider what company values and ethics principles are relevant 4. Determine the best
course of action” (Lockheed Martin 2005b). This code of ethics and conduct is said to apply to all employees,
managers, executive officers and corporate board members of the corporation.
The code of ethics and business conduct that should express the intention of the corporation to be a good
corporate citizen was adopted by the board of directors as universal principles to guide the actions of the enterprise
everywhere in the world. The corporation emphasizes personal integrity as ethical commitment as an important part of
its way to do business and here can see that the corporation develops what Lynn Sharp-Paine call an “integrity strategy
for corporate citizenship” (Paine 1994). The code of ethics seems to apply to external corporate actions but indeed
mostly also to internal actions of employees. The code is formulated as an instrument to ensure sound individual ethical
judgment and common sense of employees and their capacity to confront ethical dilemmas in their professional
activities (Lockheed Martin 2005b). It is characteristic that citizenship and the concept of the good citizen corporation
are considered as an important ethical principle of the corporation and that the technology and defense system producer
wants to ensure its commitment to serve the political community. Employees, customers, community, shareholders,
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suppliers and partners are mentioned as fundamental stakeholders that determine the commitments of the enterprise
(Lockheed Martin 2005b, 8).
An important part of citizenship proposed in ethics statements and declarations is to comply with law and
regulations, but this is only considered as a minimum to a much more uncompromising ethical responsibility (Lockheed
Martin 2005c). Among others the corporation emphasizes its willingness to obey anti-trust laws and respect the rules of
fair competition at free markets. The corporation regards it important to comply with the US International Traffic in
Arms Regulation (ITAR) and the US Foreign Corrupt Practices Act (FCPA), which prohibits any kind of bribery
(Lockheed Martin 2005a). We can also mention the US Federal Sentencing Guidelines for Organizations (1991) where
government emphasizes the need for corporate self-regulation with ethics programs and the Sarbanes-Oxley regulation
that puts emphasis on the need for increased control with corporate accounting. This effort to follow the law implies
careful relations with foreign officials and representatives from corporations. It also emphasizes its obligation to follow
national laws of the countries in which it operates (Lockheed Martin 2000). All employees are encouraged to involve in
civic affairs in their free time even to the corporation does not give any money to political parties and organizations.
The ethical principles fundamental to citizenship are regarded as essential to create a workplace that respect
and honor diversity and cultural difference and exclude harassments or discrimination of any kind. The code of ethics
promotes the principles of honesty, integrity, respect, trust and responsibility as integrated part of daily activities of the
corporation (Lockheed Martin 2005a). The virtues of a health and drug free work environment with safety are also
promoted. Any kind of misrepresentation or falsification of data or lying to stealing or doing theft is sharply condemned
by the code of conduct. Employees and supervisors are responsible for keeping honest and true records of their
activities (Lockheed Martin 2005a, 16). The ethical principles are used as instruments to ensure a better and more
conscious performance at work. It is considered important that employees run, negotiate and perform contracts very
carefully (Lockheed Martin 2005a, 22).
Bribery and gifts are stressed as very controversial and employees should not accept improper gifts of a very
high value, because these gifts may be used as pressure or instruments of corruption. Lockheed Martin goes far as to say
that employees are not required to give gifts to government business connections for more than 20 dollars (reflection of
government ethics regulations). The same is the case of restaurants meals and refreshments (Lockheed Martin 2005a,
24). In case of doubt or exceptions to this rule employees are encouraged to consult laws and regulations and to contact
superior managers and the ethics office of the corporation. Indeed, employees of Lockheed Martin are not allowed to
receive gift by other persons or companies for more than 100 dollars. In some cases of doubt they would have to ask
ethics officers if it may be appropriate to accept the suggested gifts
Another important issue that plays a large role in the code of ethics of Lockheed Martin is the question of
conflict of interests (Lockheed Martin, 2005a, 34). Individuals should work to avoid that they are placed in situations
where they are in conflicts of interests and they should make fair decisions with regard to the people involved. This
implies when family relations, ownership relations or personal interests are involved in the situation. In particular,
employees should be aware of the problems of conflicts of interests when they work with government officials or
former government officials, due to the position of the company as a major government contractor.
The folder with the code of conduct of Lockheed Martin contains an indication of “warning flags” and a
“quick quiz” based on the ethical principles to tell people whether an action is ethical. The warning flags indicated are
““Well, may be just this once”, “No one will ever know”, “It doesn’t matter how it gets done as long as it gets done”,
“Everyone does it”, “Shred that document”, “We can hide it”, “No one will get hurt”, “What’ in it for me?”, “This will
destroy the competition”, “We didn’t have that conversation”, “This is a ‘non meeting’”” (Lockheed Martin 2005a, 45).
The quick quiz “When in doubt ask yourself” contains the following questions: “1. Are my actions legal? 2. Am I fair
and Honest? 3. Will my action stand the test of time? 4. How will I feel about myself afterwards? 5. How will it look in
the newspaper? 6. Will I sleep soundly to night? 7. “What would I tell my child to do? 8. How would I feel if my
family, friends, and neighbors knew what I was doing?” (Lockheed Martin 2005a, 46). The warning flags and the quick
quiz show how Lockheed Martin is trying to base its ethics program on personal responsibility and integrity of the
employees. Their conscience and ability to make sound ethical judgment is the central aim of the ethics program.
Indeed, the code of ethics and conduct emphasize that people making a request to the ethics office will be
treated with dignity and respect and their communications with be kept confidential and that people can be anonymous
when they talk with the ethics office. Employees are encouraged to talk with the ethics office when they meet issues and
problems of ethical character in their daily activities of the organization. With this focus on the behavior of the
employees the corporation seeks to ensure that all sectors of the organization are contributing to the establishment of
good corporate citizenship.
With these elements of corporate values and ethics at Lockheed Martin we see how proactive self-
regulation of behavior is going far beyond a neutral compliance with regulation. Through corporate
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policies, training programs of employees with concrete tests and focus on values and ethics in
concrete work situations Lockheed Martin has continued the efforts of Martin Marietta to appear as
a good corporate citizen (Lockheed Martin 2005e). We can say that the code of values and the
ethics program opens for a broader field of ethical and political responsibilities of the corporation
that it was traditionally presupposed in the economic concept of the market where economic action
was totally separated from politics and ethics. With its ethics program Lockheed Martin commits to
broader social responsibilities to a variety of stakeholders including customers, employees,
suppliers and local and international community. We may say that the corporation wants to achieve
legitimacy in society as being “more than just a defense corporation” (www.lockheedmartin.com).
Lockheed Martin is forming its brand by giving it political and ideological significance as important
for the common good of society.
4. Search for Legitimacy through good corporate citizenship
This presentation of the cases of Martin Marietta and Lockheed Martin as well as the US Defense
Industry Initiative illustrates the move to integrity and value-based ethics programs in the vision of
the good corporate citizen, which has been so evident in US developments of business ethics
(Driscoll & Hoffman 2000; Paine 2003). We can see the emergence of the concept of “the good
citizen corporation” as an attempt to give the corporation responsibilities and duties as a fellow
citizen in society (Rendtorff 2006; Rendtorff 2007). The metaphor of corporate citizenship is used
as an indication of the effort of the corporation to act with responsibilities in society that go beyond
the pure economic responsibility to increase profit maximization. With its emphasis of ethics at all
internal and external levels of the organization Lockheed Martin constructs its brand identity as a
good corporate citizen that recognizes and takes seriously it’s social and political responsibility.
How should we characterize this definition of the political corporation? Daniel Terris
contributes with a very important analysis of business ethics at Lockheed Martin in his book Ethics
at Work. Creating Virtue at an American Corporation (2005) (Terris 2005). On the basis of his
work we can make a distinction between five possible approaches to the concept of business ethics
and corporate citizenship used by US corporations that can be applied to Lockheed Martin. These
approaches are:
1. The sins of the Tycoon. This approach is mainly a critical approach that indicates that
modern corporations has so much power and responsibility, but do not take their social
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and political responsibility seriously. On this basis this approach argues that what is
needed is that top management in large corporations become aware of their ethics and
responsibility in order to make the corporation a good corporate citizen. We can
evidently see an element of this approach in the policy of Lockheed Martin. Business
ethics and values are used in order to get social legitimacy as a good citizen corporation.
2. Business conduct in the industry market. This approach focuses on the need for political
self-regulation of corporations on their economic market. In fact with the US Defense
Industry Ethics Initiative we can argue that this approach also play an important role in
the efforts of Lockheed Martin to appear as a good corporate citizen. By making a
general ethics initiative for the industry it is proposed that the industry should establish
certain general ethical rules that may be accepted by society so that industry acquire
goodwill and legitimacy in society through its establishment of goodwill in particular
political fields of action.
3. Putting workers first. This is an approach that focuses not only on the virtues of the
employees and their ability to behave decently but also consider their social wellbeing
and good working conditions as important for business ethics. This approach is less
present in the ethics program of Lockheed Martin. Employee ethics is first and foremost
an instrument to ensure good behavior of the corporation and not so much a tool to give
the employees better working conditions. We can observe that Lockheed Martin only is
interested in employee virtue as long as it ensures good ethical behavior in society.
4. Corporate social responsibility. This element of corporate citizenship emphasizes the
need to be responsible towards society and assume responsibility for the community
where the corporation acts. We can see that Lockheed Martin with its brand for corporate
citizenship is eager to assume this task. However, this is still a lot to do of the corporation
to really be socially responsible. Moreover, we can observe that Lockheed Martin needs
to develop concrete CSR tasks in order to live up to the requirements of CSR. Presently,
CSR is presented as being present in the activity of defense industry corporations as
Indicated by their contribution to the defense of the country.
5. Perils of profits. This dimension of corporate citizenship relates to the legitimacy of the
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way the corporation gets its profits and earns money. In the case of Lockheed Martin we
should not forget core earnings come from selling weapons to the state. Some people
might express skepticism to this way of earning money as being unethical (Lockheed
Martin 2005d, 21-22). It is indeed a problem that this skepticism is not present in the way
that Lockheed Martin presents its ethics program. The organization has done very little to
take up the debate of the legitimacy of war and arms sales in society.
With these different approaches we can argue that the ethics program of Lockheed Martin has
mainly been focused on avoiding the sins of the Tycoons and ensure good business conduct in the
industry market. Good treatment of workers, corporate social responsibility and extensive
discussion of the legitimacy of arms production has not played any significant role in the
construction of corporate citizenship of Lockheed Martin. In this context it is characteristic that
education of employees has been considered a key component of creating good business conduct in
the industry without putting focus on better employee treatment. We can say that corporate
citizenship has been conceived with efforts to build employee virtue so that the corporation was
represented by good, honest employees with high integrity.
The system of ethics training represented by the ethical training of employees seems to be
characterized as an effective and easy going, humoristic way to minimize misconduct among
employees (Lyttle 2001). What have been important for Lockheed Martin have been the virtues of
individual employees in order to ensure the morality of the corporation. When we look at the ethics
program in practice we can see that it can handle individual “ethical lapses” among employees, but
it is less apt to tackle issues of collective decision making and problems of corporate policies at
higher levels. Moreover, the ethics program is very silent about the complexity decisions of high
level managers and of the policy of the corporation with regard to the ethical issues of war and
defense policy (Terris 2005, 17).
We can therefore argue that the focus on the individual worker in the ethics program leaves
many important questions untouched and this is the basis for the potential vulnerabilities of the
ethics program that are related to the different conceptions of business ethics in the US that are left
untouched by Lockheed Martin. We can mention that there is little focus on corporate governance
and the power, privileges and responsibilities of corporate leaders. In particular, in the defense
industry, the dilemmas of their decision making must be very complex. Therefore, the ethics
program should look more into power and leadership (Terris 2005, 123). Indeed, we can argue that
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personal morality and integrity is insufficient and that involvement of the ethics office in
developing structures and procedures for this field is important. In addition, it is characteristic that
the focus on individual responsibility seems to imply a strange kind of “collective innocence”
(Terris 2005, 130). Even though it has a strong ethics program the corporation is all the time
involved in legal and ethical allegations and court cases where the corporation is charged with
millions of dollars in fines. This is not only a question of size of the organization, but it indicates
increased focus on the need for treatment of ethical issues at the collective and institutional level of
the firm.
Therefore, critical voices may say that the effort to achieve corporate citizenship illustrates
how ethics has become a bureaucratic instrument for forcing and disciplining the employees. “Open
communication” is whistle-blowing to one’s superior in order to ensure compliance with company
policy. Instead of being a program of visions of an ideal world this program is about how to govern
employees and ensure that management gets knowledge of irregularities in the organization. The
ethics program has become training in political correctness. There may be a conflict between
personal values of employees and requested work norms – or more profoundly, a tension between
values of the organization and the deeper values with regard to the conceptualization of more
fundamental issues of work and society in relation to corporate citizenship.
This is documented by the strong focus on conflict of interests, corruption and bribery or the
ethics of teamwork in the ethics program. Ethics and appeal to corporate citizenship are used as
kind of sophisticated military weapon to ensure that employees are not opportunistic and that they
are able to submit to the values and norms of the corporation. There is not much ethics in the
Annual report that first of all focuses on financial results (Lockheed Martin 2004). Employees are
suggested to follow a clear line of reasoning in accordance with company policy, but this
conception of ethics awareness might sometimes hide fundamental structural issues of ethics.
A further critical comment would be that training of employees is based on description of
ethical dilemmas of what they have to do. The employees are regarded as potential wrongdoers and
the program is designed to show them how to behave in a decent way with high integrity (Lockheed
Martin 2005a). By considering the employee highly responsible the corporation manages to move
the responsibility from the institutional level of the organization towards the individual level of
employee responsibility. To make employees responsible becomes a major instrument in creating
an ethical image and political legitimacy of the organization. What is important is to ensure that
employees are able to act with virtue in the work environment and give employees capacities to deal
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with ethical dilemmas in the work environment in a civilized way. Ethics and citizenship are used
as an instrument to give employees something like good scout virtues so that they can comply with
the rules of regulations of society as representatives from the corporation.
5. Conclusion: Politicization without good corporate citizenship?
What is the conclusion? The abovementioned criticisms seem to be very severe and they challenge
the idea of the possibility of good corporate citizenship. What we can learn from the analysis of
Lockheed Martin is that it seems sufficiently documented that the corporation searches to build a
political field of self-regulation where it assumes responsibility at a market that has political
dimensions that has social dimensions that go beyond pure economic interaction. However, we can
also learn that Lockheed Martin is very far from realizing ideal corporate citizenship. We can
observe awareness of ethics and responsibility in relation to overcoming the “Sins of the Tycoons”
and proposing ethical behavior of the defense industry. This is indeed a move towards corporate
citizenship which is a condition for the corporate citizenship. However, there is also an important
limitation to the approach to corporate citizenship of Lockheed Martin since the corporation has
done very little to address the issues of employee wellbeing, corporate social responsibility and the
legitimacy of its main product, namely weapons and missiles.
We can say that the corporation wants to create an image of being a good corporate
citizen in compliance with the virtues and values of society (see annual reports of Lookheed
Martin). Corporate citizenship is considered as a good ethics, but it is not considered as a
progressive work for changing society, for example with regard to defense policy issues and
political issues. The corporation does not directly confront issues about the legitimacy of defense
policy and the ethics of war even though this may be implicit in the ethical values of integrity,
responsibility, trust and honesty. There is a risk that Lockheed Martin may disregard fundamental
issues of the mission of the corporation in community. There is in the ethics programs no room for
the discussion of the dilemmas of defense business and therefore the corporation does not really
address issues of social responsibility and legitimacy of profits.
In this sense, the case of Lockheed Martin makes us aware of the ambiguity of
corporate ethics between increased responsibility and lack of responsibility (Frankel 2008), since
the ethical corporation is producing controversial products with high ethics and great responsibility.
Lockheed Martin is an ambiguous actor that has a very well developed ethics program, but produces
military technology and defense products, which by some members of the population may be
14
considered as ethically doubtful objects. Ethics is important in the business of this corporation
because it is a major government contractor. Ethics and values are as we have seen first of all
related to the vision of doing good business. As a government contractor on sensible issues of
security politics and defense policy Lockheed Martin is forced to have strict values and decent
behavior if the corporation shall not loose legitimacy credibility and trust among business partners
and in society at large. Therefore, the corporation is a good illustration of the politicization of the
firm even though it is very far from having implemented corporate citizenship on the levels of
treatment of employees, social responsibility and creation of a room for debate about the legitimacy
of its core products and services.
References:
Badaracco, Joseph F. Jr., & Ellsworth, Richard F. (1991): Leadership and the Quest for Integrity, Boston: Harvard
Business School Press.
Boyne, Walter J.: Beyond the Horizons: The Lockheed Story, New York: St. Martin’s Press, 1998.
Damle, C.S. (1989): “The Case Method of Instruction in Management Education. A Critical Review” in Hans E. Klein:
Case Method. Research and Application, Selected Papers of the Sixth International Conference on Case Method and
Case Method Application. Waltham: Bentley College.
Driscoll, Dawn-Marie and W. Michael Hoffman: Ethics Matter: How to Implement Values-Driven Management,
Waltham, Mass: Center for Business Ethics 2000.
Frankel, Christian (2008): ”Virksomheders politiske virksomhed: Anden ordens politik som udfordring og mulighed”,
Tidsskriftet Politik (dette nummer).
Gadamer, Hans Georg (1960): Wahrheit und Methode, Tübingen: J.B.C. Mohr (Paul Siebeck) (Dansk oversættelse Arne
Jørgensen: Sandhed og metode. Grundtræk af en filosofisk hermeneutik, Århus: Systime.
Jonsen, Albert R. & Stephen Toulmin (1989): The Abuse of Casuistry. A History of Moral Reasoning. Berkeley:
University of Califonia Press.
Lyttle, Jim: ”The effectiveness of humor in persuasion: The case of business ethics training”, Journal of General
Psychology, April 2001
Lockheed Martin: “Compliance and Education Training: Foreign Corrupt Practices Act (FCPA)”, revised 2000.
Lockheed Martin Corporation: Annual Report 2001. Lockheed Martin 2001.
Lockheed Martin Corporation: Annual Report 2004. Lockheed Martin 2004.
Lockheed Martin (2005a): Setting the Standard. Code of Ethics and Business Conduct. Updated January, Bethesda, MD
2005.
Lockheed Martin (2005b): “Corporate Value Statement”, Lockheed Martin 2005.
Lockheed Martin (2005c): Ethics and Business Conduct. How the Ethics Process Works at Lockheed Martin. Updated
2005
Lockheed Martin (2005d): The 2005 Ethics Effect. Leaders Guide. Lockheed Martin 2005.
Lockheed Martin (2005e): Ethics and Business Conduct. How the Ethics Process Works at Lockheed Martin. Updated
2005.
Megone, Chris & Simon J. Robinson (eds.) (2002): Case Histories in Business Ethics, London: Routledge.
Paine, Lynn Sharp (1994): “Managing for Organizational Integrity”, Harvard Business Review.
Paine, Lynn Sharp: “Martin Marietta: Managing Corporate Ethics”, case prepared by Lynn Sharp Paine with assistance
of Albert Choy and Michael Santoro, 1992 Harvard Business School Case 393-016. Reprinted in Cases in Leadership,
Ethics, and Organizational Integrity. A Strategic Perspective, Irwin, McGraw-Hill 1997.
Paine, Lynn Sharp: Value Shift, New York: McGraw-Hill, 2003.
Rendtorff, Jacob Dahl: “Corporate Social Responsibility, sustainability and stakeholder management” In Njavro, D., &
Krkac, K. (red.). Business Ethics and Corporate Social Responsibility. International Conference Papers. Jordanovac,
Zagreb, Croatia.: Zagreb School of Economics and Management 2006.
Rendtorff, Jacob Dahl: Virksomhedsetik. En grundbog i organization og ansvar, København: Samfundslitteratur, 2007.
Richman, Niel (1989): ”Hermeneutics and Case Study Research: What does German Philosophy have to do with
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Harvard Business School?” in Hans E. Klein: Case Method. Research and Application, Selected Papers of the Sixth
International Conference on Case Method and Case Method Application. Waltham: Bentley College.
Thompson, G.F.: ”Global Corporate Citizenship: What does it mean?”, Competition and Change, Vol 9., No 2. June
2005 131-152.
Terris, Daniel: Ethics at Work. Creating Virtue at an American Corporation, Brandeis University Press, University
Press of New England, Lebanon, US, 2005.
United States Federal Sentencing Commission: United States Federal Sentencing Guidelines, www.ussg.gov.
US Federal Sentencing Commission: “Corporate Crime in America: Strengthening the “Good Citizen Corporation”, A
National Symposium Sponsored by The U.S Sentencing Commission, Washington, September 8, 1995.
Velasquez, Manuel G. (2002): Business Ethics. Concept and Cases, fifth Edition, New Jersey: Prentice Hall.
(www.lockheedmartin.com). Last visited, 26 October 2008.
doc_209503282.pdf
In this paper, I want to present the problems of the political firm by investigating how a particular firm deals with the issue of being a good corporate citizen. I have selected the US Defense industry corporation Martin Marietta that more recently became Lockheed Martin.
1
The corporation as a good citizen:
A case study of Lockheed Martin
By Jacob Dahl Rendtorff, Roskilde University ([email protected])
1. Introduction: Politicization of the firm and corporate citizenship
What is corporate citizenship? There are many theoretical points of view, but few authors look at
the idea of the political firm in practice (Megone 2002). In this paper, I want to present the
problems of the political firm by investigating how a particular firm deals with the issue of being a
good corporate citizen. I have selected the US Defense industry corporation Martin Marietta that
more recently became Lockheed Martin. This firm is political in the sense that it has worked
deliberately on being a “good corporate citizen” (USSG, 1995 & 2005), which is the US notion for
corporate citizenship as a requirement of legitimacy of corporations of the government and the
general population. Accordingly, the topic of this article is to show some aspects of the problems
and dilemmas of corporate citizenship in practice by studying the activities of one particular
corporation in the US (Paine 1997). We can define corporate citizenship as “.. the process of
identifiying, analyzing, and responding to the company’s social political, and economic
responsibilities as defined through law and public policy, stakeholder expectations, and corporate
values and business strategy… [it] involves both actual results (what corporations do) and the
process through which they are achived (how they do it) (Tompson 2005).” With this definition we
may say that corporate citizenship expresses the attempt of a company to be socially responsible
and act ethically in relation to internal and external stakeholders in the corporation and in society.
The problem is what it means to be a good corporate citizen and have ethics programs and how this
is realized in the practical life of the corporation. The political firm is a corporation that wants to be
a good corporate citizen and a company that searches to have political, ethical and social legitimacy
in the political community (Driscoll & Hoffman 2000).
The theoretical framework for my study of Lockheed Martin as an example of a political
corporation that searches to appear as a good citizen corporation is - in addition to this theory about
business ethics and corporate citizenship - the theory of the political corporation as presented by
Christian Frankel (Frankel 2008). Frankel can help to situate our definition of corporate citizenship
within the framework of social theory. Frankel argues that emerging concepts like the corporate
2
social responsibility, values-driven management, business ethics and corporate citizenship indicate
new forms of political activity where corporations act in political fields of influences that constitute
a second order politics where firms define what is responsible influencing the first order politics of
legislation and party politics (Frankel 2008).
The political function of corporations in society represent a kind of governance where
corporations influence the conditions of making collectively binding decisions and in this way
companies constitute their own political domains (Frankel 2008). Their increasing responsibility
implies that companies are not only lobbyists but they make political decisions that shape political
decision-making process.
This implies that politics is not only about affecting legislation. It is about branding and it is
about how to make room for decisions and companies create room of domains for legitimate
political actions. In this sense companies are becoming more responsible but at the same time we
see a process of dissolution of responsibility (Frankel 2008). We can talk about the explosion of
responsibility. The new forms of responsibility imply that corporations are made political. They
assume responsibility not only in relation to themselves but in relation to society in general
From the point of view of institutional theory and economic sociology we can argue that
markets fundamentally are political (Frankel 2008). We can say that a corporation act at a political
market implying social and political relations between actors. In this sense the corporation
searching to be good corporate citizen acts in a political field where it relates to political processes
in society.
I have selected Lookheed Martin that is a fusion of the Lockheed Corporation and Martin
Marietta because it as a large corporation with 130.000 employees is one of the companies in the
United States that has been most efficient and influential in developing an ethics program as an
illustration of an effort to act as a good business organization (Boyne 1998). Moreover, Lookheed
Martin has really been a corporation that has been searching to propose itself as a major supporter
of the US society and as such a good corporate citizen. Another reason for the choice of this
corporation is that the air planes, missile and information technology producer as a major player in
the US defense industry since the 1980s has been very active in the establishment of codes of
conduct and compliance programs in order to overcome fraud and bad management.
With this activity Lockheed Martin is a corporation that goes beyond first order politics -
understood as traditional politics where representatively elected political bodies are setting the rules
for neutral and silently obedient economic actors – towards second order politics where the
3
corporation contributes actively towards formulating its own ethical and political field in society.
This is because this corporation does not only seek to obey legislation but makes its own value
strategies and develops ethics programs for corporate citizenship in order to be a good citizen
corporation. The distinction between compliance programs and ethics and values programs is very
important for understanding the increased political involvement of a corporation from passive
acceptance of legislation towards active engagement of good corporate citizenship. Compliance
approaches are about preventing and detecting and punishing violations of the while value and
ethics-based approach is about values and inner motivation to comply with laws and regulations. A
value-based approach seems to be more effective because it defines the shared values of the
corporation rather than external measures of rules. Values-driven management contributes to self-
governance and self-regulation of the corporation and this expresses the effort to acquire legitimacy
in society.
To move from compliance programs or legal programs to obey the law towards values-
driven management (proactive values for active political activities) as a new approach to
compliance illustrates how the corporation is acting within the domain of a field of second order
politics where it seeks to influence its environments by creating the brand value of being a good
citizen corporation. We can say that the effort to realize good corporate citizenship the corporation
makes a close link between ethics and compliance and this model of business ethics may indicate
the possibilities and limits of the political firm as based on business ethics issues. Moreover, it
illustrates the difficulties and necessities of ethics in large industries with products (defense industry
articles) that sometimes may be controversial from the political perspective.
In this sense, this paper aims at showing how the effort to become a good citizen corporation
illustrates how the corporation is politicized in modern complex society. However, I also want to
show ambiguities and paradoxes of the use of values-driven management and ethics programs as an
instrument of corporations to manifest themselves as political actors in society. In the end of the
article we will discuss the usefulness of ethics and values in order to promote good corporate
citizenship in the corporation.
My methodology and framework for this analysis of corporate citizenship is a case-study
approach based on the Harvard case-method that can conceived as a hermeneutical reading
(Gadamer 1960; Jonsen 1989) and reconstruction of the context of a specific corporation (Richman
1989; Damle 1989; Megone 2002, 2). The empirical basis for this reading is the text about their
ethics programs produced by Lookheed Martin and other written material of the corporation, in
4
particular annual reports. In addition to this I have used secondary sources of literature about
business ethics. What is at issue in the perspective is the identification of particular political ethical
problems and issues of corporate practice and the organizational and institutional response to these
problems. So the analysis is based on hermeneutical understanding and reconstruction of the way a
corporation faces ethical and political dilemmas and problems (Damle 1989; Richman 1989;
Megone 2002).
2. Martin Marietta: Corporate citizenship as good business ethics
Martin Marietta was in the 1980s an important contractor to the US government and in this sense
had a close relation with the state and the need to appear as an attractive business partner for the
state may be one of the reason for the focus on corporate citizenship (Boyne 1998; Badaracoo et al.
1991). With these initiatives to develop a written code of ethics and conduct and install a set of
measures to ensure implementation of ethics programs in different organizations systems of ethics
offices Martin Marietta was very important for the US Defense Industry Initiative on Business
Ethics and Conduct from 1986. This initiative was an effort to make the defense industry
corporations appear as good corporate citizens and in this sense the corporations was given a space
for self-regulation and development of their own ethical policies. The Reagan administration had
been critical to the defense industry in the 1980s while this administration wanted to use money on
defense. In order to ensure better products the administration asked the defense industry
corporations to set up ethics codes for the entire industry. This led to an agreement where 18 and
shortly after 32 and in 1990 55 defense industry contractors gathered together in order to formulate
a code of conduct for the defense industry (Defense Industry Initiative) (Paine 1997, 194). In this
context Martin Marietta also took initiative to coordinated audit planning and a contractor risk
assessment guide in order to be more collaborative with regard to worries of government auditors.
Martin Marietta shows itself as a leading company in trying to make the industry have stronger and
better compliance programs.
In the Defense Industry Initiative the corporations agreed to possess a written code of
conduct, train their employees in the codes requirements, encourage employees to report violations
of the code without fear of retribution, monitor compliance with the federal procurement laws and
adopt procedures for voluntary disclosure of violations to the appropriate authorities, participate
annually in an industry wide Best Practices Forum in which ideas were freely exchanged, provide
for public accountability by outside review of company programs (Paine 1997). This code of
5
conduct is a very good illustration of a second order politics where corporations are becoming self-
regulating with regard to the norms and practices for their industry.
In this sense the ethics programs initiatives of the defense industry corporation may be seen
as a reaction to potential government action. Due to certain scandals and in order to avoid
government involvement in company affairs the corporations took initiatives for corporate
citizenship with self-regulation through compliance programs (Boyne 1998). These programs can
be considered as effort of the corporations to show themselves as good corporate citizens and
honest businesses in order to avoid scandals and prevent illegal behavior. This approach is oriented
towards values-driven management as going beyond compliance as a necessary action to stay in
business rather than a strong desire to be prudent and virtuous. Accordingly, in compliance outside
pressure is stronger than inner motivation.
The implantation process of the ethics and values-driven management in order to go beyond
compliance programs in Martin Marietta and other defense industry corporations in order to make
them good corporate citizens soon faced important problems. The one was the effectiveness of
employee reporting of violations and wrongdoings. How could the corporation avoid that
employees would fear retaliation and retribution if they reported other employee’s wrongdoing to
management? How could ethics officers and their offices help to facilitate this process? Another
problem was how to measure the effectiveness of the program with regard to the prevention of
wrongdoing.
The ethics program was evaluated in an annual report and a hotline to the ethics office was
established so that employees could have easy contact with ethics officers. The corporation
emphasized that every request for the ethics office should be taken seriously (Terris 2005, 107). All
high level managers should be informed about the ethics programs and the ethical policies of the
organization. Also the firm established a voluntary program where employees could disclosure
freely eventual misconduct. The ethics program of Martin Marietta is an example of the use of US
compliance programs for large industries in order to promote corporate citizenship. In the years
following the ethics program Martin Marietta experienced an increase in economic growth. Martin
Marietta was ranked among the best of government contractor companies in 1990 and it was
considered as one of the most profitable companies in the industry (Paine 1997; Boyer 1998).
If we apply the concept of the politicization of the corporation (Frankel 2008) to the US
Defense Industry Ethics Initiative we can argue that it represents an external and internal effort to
make defense industry corporations appear as good corporate citizens. With the ethics programs we
6
see an effort to make second order politics of self-regulation by endorsing employees to follow
values that are promoted by the corporation. The corporation seeks not only to improve internal
values but externally it seeks to appear with a societal brand of being a politically responsible
corporation taking seriously its role as a good citizen. We can argue that this represents an
extension of the sphere of legitimate responsibility where the firm takes responsibility in relation to
society. Moreover, it represents an effort to build a brand of the corporation as an actor that is
institutionally legitimate in US society.
However, critical voices say that these efforts do not really lead to good corporate
citizenship but made the organization turn into a bureaucratically controlled surveillance firm where
employees became more cautious rather than a firm with a free spirit of collaboration and
entrepreneurial spirit (Paine 1997, 169; Boyne 1998). Other critics argue that the efforts to do self-
regulation of citizenship are not efficient because they are too close to traditional compliance
programs rather than being genuinely based on ethics and values (Driscoll & Hoffman 2000).
According to this criticism the Defense Industry Ethics Initiative was not radical enough because it
stayed within the framework of traditional compliance programs. In order to contribute to corporate
citizenship ethics programs should create motivation and personal engagement than mere
compliance with legal regulations (Paine 1994; Paine 2003). According to this criticism an ethics
program should be more than compliance, monitoring and supervision, but include experience and
training in ethical judgment so that employees are capable of making the right decisions in difficult
situations.
3. Lockheed Martin: improvement of the ethics program
The company is to day known as Lockheed Martin Corporation and was formed in 1995 when two
of the world’s premier technology companies Lockheed Corporation and Martin Marietta merged
(Lockheed Martin 2001). In contrast to Martin Marietta it is not conceived only as a defense
industry corporation, but also as a corporation developing many products for civil purposes. For
many years the corporation had a turnover of more than 25 Billon US dollars and in 2007 the
turnover was 41 Billion US Dollars. Due to the changed security situation in the world the
company’s sale have increased rapidly after September 11. As a leader in the defense industry the
corporation produces weapons and materials for the armed forces (Lookheed Martin 2005). In 2001
the corporation expresses its willingness to be a good corporate citizen and fight and help “serving
those who fight for freedom” (Lockheed Martin 2001, 11). Lockheed Martin Corporation developed
7
and refined the model of ethics and corporate citizenship that was proposed by Martin Marietta. The
idea is that ethics is straight-forward thing about helping people to “do the right thing” (Terris
2005a, 2). This approach that should be the basis for the good citizen corporation can be
characterized as a values-driven approach with a strong focus on corporate ethics. We can
document this by a short description of the dimensions of the ethics program at Lockheed Martin.
Elements of the ethics program at Lockheed Martin:
What are the elements of the ethics program at Lockheed Martin? This is indicated by the values that we find in the
value declarations, ethics programs and annual reports of the corporation: “Ethics, Excellence, “Can-Do”, Integrity,
People, Teamwork” (Lockheed Martin 2005b). Lockheed Martin defines the value of ethics as very important for its
concept of corporate citizenship. Ethics is integrated in the values of the corporation in the following statements that
illustrate the effort of the corporation to be a responsible economic and political actor in society: “We will be well-
informed in the regulations, rules and compliance issues that apply to our businesses around the world. We will apply
this knowledge to our conduct as responsible employees of Lockheed Martin, and will adhere to the highest standards of
ethical conduct in all that we do” In this sense, ethics is closely to follow the law and comply with the standards of the
state. Excellence is considered as a value of high business performance: “The pursuit of superior performance infuses
every Lockheed Martin activity. We excel at meeting challenging commitments even as we achieve total customer
satisfaction…” (Lockheed Martin 2005b).
In this context the value of Can-do is about individual leadership and the commitment of employees to the
opportunities and challenges of the organization. Integrity as a basic value is related to commitment, respect for dignity,
truthfulness and trust (Lockheed Martin 2005b). The value of people indicates that the corporation regards employees as
very important and that the corporation works for life-long personal and professional development. Finally, the value of
teamwork relates to the collective accountability and team spirit of the organization, which however should not oppress
individual talent and creativity (Lockheed Martin 2005b). These values are defined as fundamental to all kinds of
policies and strategies of the firm. They are considered to define the accountability of the employees and of the
organization as a whole.
The ethical principles that we find in the value statements are regarded as central to the vision of corporate
citizenship in the ethics programs of the organization are: “Honesty (to be truthful in all our endeavors; to be honest and
forthright with one another and with our customers, communities, suppliers, and shareholders), Integrity (To say what
we mean, to deliver what we promise, to fulfill our commitments, and to stand for what is right), Respect (To treat one
another with dignity and fairness, appreciating the diversity of our workforce and the uniqueness of each employee),
Trust (To build confidence through teamwork and open, candid communication), Responsibility (to take responsibility
for our actions, and to speak up – without fear of retribution – and report concerns in the workplace, including
violations of the laws, regulations and company policies, and seek clarification and guidance whenever there is doubt),
Citizenship (To obey all the laws of the countries in which we do business, and to do our part to make the communities
in which we live and work better” (Lockheed Martin 2005b).
In addition to these values and ethical principles the corporation proposes a decision-making model in its
material for ethics education with the following components: “1. evaluate information 2. Consider how your decision
might affect all involved 3. Consider what company values and ethics principles are relevant 4. Determine the best
course of action” (Lockheed Martin 2005b). This code of ethics and conduct is said to apply to all employees,
managers, executive officers and corporate board members of the corporation.
The code of ethics and business conduct that should express the intention of the corporation to be a good
corporate citizen was adopted by the board of directors as universal principles to guide the actions of the enterprise
everywhere in the world. The corporation emphasizes personal integrity as ethical commitment as an important part of
its way to do business and here can see that the corporation develops what Lynn Sharp-Paine call an “integrity strategy
for corporate citizenship” (Paine 1994). The code of ethics seems to apply to external corporate actions but indeed
mostly also to internal actions of employees. The code is formulated as an instrument to ensure sound individual ethical
judgment and common sense of employees and their capacity to confront ethical dilemmas in their professional
activities (Lockheed Martin 2005b). It is characteristic that citizenship and the concept of the good citizen corporation
are considered as an important ethical principle of the corporation and that the technology and defense system producer
wants to ensure its commitment to serve the political community. Employees, customers, community, shareholders,
8
suppliers and partners are mentioned as fundamental stakeholders that determine the commitments of the enterprise
(Lockheed Martin 2005b, 8).
An important part of citizenship proposed in ethics statements and declarations is to comply with law and
regulations, but this is only considered as a minimum to a much more uncompromising ethical responsibility (Lockheed
Martin 2005c). Among others the corporation emphasizes its willingness to obey anti-trust laws and respect the rules of
fair competition at free markets. The corporation regards it important to comply with the US International Traffic in
Arms Regulation (ITAR) and the US Foreign Corrupt Practices Act (FCPA), which prohibits any kind of bribery
(Lockheed Martin 2005a). We can also mention the US Federal Sentencing Guidelines for Organizations (1991) where
government emphasizes the need for corporate self-regulation with ethics programs and the Sarbanes-Oxley regulation
that puts emphasis on the need for increased control with corporate accounting. This effort to follow the law implies
careful relations with foreign officials and representatives from corporations. It also emphasizes its obligation to follow
national laws of the countries in which it operates (Lockheed Martin 2000). All employees are encouraged to involve in
civic affairs in their free time even to the corporation does not give any money to political parties and organizations.
The ethical principles fundamental to citizenship are regarded as essential to create a workplace that respect
and honor diversity and cultural difference and exclude harassments or discrimination of any kind. The code of ethics
promotes the principles of honesty, integrity, respect, trust and responsibility as integrated part of daily activities of the
corporation (Lockheed Martin 2005a). The virtues of a health and drug free work environment with safety are also
promoted. Any kind of misrepresentation or falsification of data or lying to stealing or doing theft is sharply condemned
by the code of conduct. Employees and supervisors are responsible for keeping honest and true records of their
activities (Lockheed Martin 2005a, 16). The ethical principles are used as instruments to ensure a better and more
conscious performance at work. It is considered important that employees run, negotiate and perform contracts very
carefully (Lockheed Martin 2005a, 22).
Bribery and gifts are stressed as very controversial and employees should not accept improper gifts of a very
high value, because these gifts may be used as pressure or instruments of corruption. Lockheed Martin goes far as to say
that employees are not required to give gifts to government business connections for more than 20 dollars (reflection of
government ethics regulations). The same is the case of restaurants meals and refreshments (Lockheed Martin 2005a,
24). In case of doubt or exceptions to this rule employees are encouraged to consult laws and regulations and to contact
superior managers and the ethics office of the corporation. Indeed, employees of Lockheed Martin are not allowed to
receive gift by other persons or companies for more than 100 dollars. In some cases of doubt they would have to ask
ethics officers if it may be appropriate to accept the suggested gifts
Another important issue that plays a large role in the code of ethics of Lockheed Martin is the question of
conflict of interests (Lockheed Martin, 2005a, 34). Individuals should work to avoid that they are placed in situations
where they are in conflicts of interests and they should make fair decisions with regard to the people involved. This
implies when family relations, ownership relations or personal interests are involved in the situation. In particular,
employees should be aware of the problems of conflicts of interests when they work with government officials or
former government officials, due to the position of the company as a major government contractor.
The folder with the code of conduct of Lockheed Martin contains an indication of “warning flags” and a
“quick quiz” based on the ethical principles to tell people whether an action is ethical. The warning flags indicated are
““Well, may be just this once”, “No one will ever know”, “It doesn’t matter how it gets done as long as it gets done”,
“Everyone does it”, “Shred that document”, “We can hide it”, “No one will get hurt”, “What’ in it for me?”, “This will
destroy the competition”, “We didn’t have that conversation”, “This is a ‘non meeting’”” (Lockheed Martin 2005a, 45).
The quick quiz “When in doubt ask yourself” contains the following questions: “1. Are my actions legal? 2. Am I fair
and Honest? 3. Will my action stand the test of time? 4. How will I feel about myself afterwards? 5. How will it look in
the newspaper? 6. Will I sleep soundly to night? 7. “What would I tell my child to do? 8. How would I feel if my
family, friends, and neighbors knew what I was doing?” (Lockheed Martin 2005a, 46). The warning flags and the quick
quiz show how Lockheed Martin is trying to base its ethics program on personal responsibility and integrity of the
employees. Their conscience and ability to make sound ethical judgment is the central aim of the ethics program.
Indeed, the code of ethics and conduct emphasize that people making a request to the ethics office will be
treated with dignity and respect and their communications with be kept confidential and that people can be anonymous
when they talk with the ethics office. Employees are encouraged to talk with the ethics office when they meet issues and
problems of ethical character in their daily activities of the organization. With this focus on the behavior of the
employees the corporation seeks to ensure that all sectors of the organization are contributing to the establishment of
good corporate citizenship.
With these elements of corporate values and ethics at Lockheed Martin we see how proactive self-
regulation of behavior is going far beyond a neutral compliance with regulation. Through corporate
9
policies, training programs of employees with concrete tests and focus on values and ethics in
concrete work situations Lockheed Martin has continued the efforts of Martin Marietta to appear as
a good corporate citizen (Lockheed Martin 2005e). We can say that the code of values and the
ethics program opens for a broader field of ethical and political responsibilities of the corporation
that it was traditionally presupposed in the economic concept of the market where economic action
was totally separated from politics and ethics. With its ethics program Lockheed Martin commits to
broader social responsibilities to a variety of stakeholders including customers, employees,
suppliers and local and international community. We may say that the corporation wants to achieve
legitimacy in society as being “more than just a defense corporation” (www.lockheedmartin.com).
Lockheed Martin is forming its brand by giving it political and ideological significance as important
for the common good of society.
4. Search for Legitimacy through good corporate citizenship
This presentation of the cases of Martin Marietta and Lockheed Martin as well as the US Defense
Industry Initiative illustrates the move to integrity and value-based ethics programs in the vision of
the good corporate citizen, which has been so evident in US developments of business ethics
(Driscoll & Hoffman 2000; Paine 2003). We can see the emergence of the concept of “the good
citizen corporation” as an attempt to give the corporation responsibilities and duties as a fellow
citizen in society (Rendtorff 2006; Rendtorff 2007). The metaphor of corporate citizenship is used
as an indication of the effort of the corporation to act with responsibilities in society that go beyond
the pure economic responsibility to increase profit maximization. With its emphasis of ethics at all
internal and external levels of the organization Lockheed Martin constructs its brand identity as a
good corporate citizen that recognizes and takes seriously it’s social and political responsibility.
How should we characterize this definition of the political corporation? Daniel Terris
contributes with a very important analysis of business ethics at Lockheed Martin in his book Ethics
at Work. Creating Virtue at an American Corporation (2005) (Terris 2005). On the basis of his
work we can make a distinction between five possible approaches to the concept of business ethics
and corporate citizenship used by US corporations that can be applied to Lockheed Martin. These
approaches are:
1. The sins of the Tycoon. This approach is mainly a critical approach that indicates that
modern corporations has so much power and responsibility, but do not take their social
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and political responsibility seriously. On this basis this approach argues that what is
needed is that top management in large corporations become aware of their ethics and
responsibility in order to make the corporation a good corporate citizen. We can
evidently see an element of this approach in the policy of Lockheed Martin. Business
ethics and values are used in order to get social legitimacy as a good citizen corporation.
2. Business conduct in the industry market. This approach focuses on the need for political
self-regulation of corporations on their economic market. In fact with the US Defense
Industry Ethics Initiative we can argue that this approach also play an important role in
the efforts of Lockheed Martin to appear as a good corporate citizen. By making a
general ethics initiative for the industry it is proposed that the industry should establish
certain general ethical rules that may be accepted by society so that industry acquire
goodwill and legitimacy in society through its establishment of goodwill in particular
political fields of action.
3. Putting workers first. This is an approach that focuses not only on the virtues of the
employees and their ability to behave decently but also consider their social wellbeing
and good working conditions as important for business ethics. This approach is less
present in the ethics program of Lockheed Martin. Employee ethics is first and foremost
an instrument to ensure good behavior of the corporation and not so much a tool to give
the employees better working conditions. We can observe that Lockheed Martin only is
interested in employee virtue as long as it ensures good ethical behavior in society.
4. Corporate social responsibility. This element of corporate citizenship emphasizes the
need to be responsible towards society and assume responsibility for the community
where the corporation acts. We can see that Lockheed Martin with its brand for corporate
citizenship is eager to assume this task. However, this is still a lot to do of the corporation
to really be socially responsible. Moreover, we can observe that Lockheed Martin needs
to develop concrete CSR tasks in order to live up to the requirements of CSR. Presently,
CSR is presented as being present in the activity of defense industry corporations as
Indicated by their contribution to the defense of the country.
5. Perils of profits. This dimension of corporate citizenship relates to the legitimacy of the
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way the corporation gets its profits and earns money. In the case of Lockheed Martin we
should not forget core earnings come from selling weapons to the state. Some people
might express skepticism to this way of earning money as being unethical (Lockheed
Martin 2005d, 21-22). It is indeed a problem that this skepticism is not present in the way
that Lockheed Martin presents its ethics program. The organization has done very little to
take up the debate of the legitimacy of war and arms sales in society.
With these different approaches we can argue that the ethics program of Lockheed Martin has
mainly been focused on avoiding the sins of the Tycoons and ensure good business conduct in the
industry market. Good treatment of workers, corporate social responsibility and extensive
discussion of the legitimacy of arms production has not played any significant role in the
construction of corporate citizenship of Lockheed Martin. In this context it is characteristic that
education of employees has been considered a key component of creating good business conduct in
the industry without putting focus on better employee treatment. We can say that corporate
citizenship has been conceived with efforts to build employee virtue so that the corporation was
represented by good, honest employees with high integrity.
The system of ethics training represented by the ethical training of employees seems to be
characterized as an effective and easy going, humoristic way to minimize misconduct among
employees (Lyttle 2001). What have been important for Lockheed Martin have been the virtues of
individual employees in order to ensure the morality of the corporation. When we look at the ethics
program in practice we can see that it can handle individual “ethical lapses” among employees, but
it is less apt to tackle issues of collective decision making and problems of corporate policies at
higher levels. Moreover, the ethics program is very silent about the complexity decisions of high
level managers and of the policy of the corporation with regard to the ethical issues of war and
defense policy (Terris 2005, 17).
We can therefore argue that the focus on the individual worker in the ethics program leaves
many important questions untouched and this is the basis for the potential vulnerabilities of the
ethics program that are related to the different conceptions of business ethics in the US that are left
untouched by Lockheed Martin. We can mention that there is little focus on corporate governance
and the power, privileges and responsibilities of corporate leaders. In particular, in the defense
industry, the dilemmas of their decision making must be very complex. Therefore, the ethics
program should look more into power and leadership (Terris 2005, 123). Indeed, we can argue that
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personal morality and integrity is insufficient and that involvement of the ethics office in
developing structures and procedures for this field is important. In addition, it is characteristic that
the focus on individual responsibility seems to imply a strange kind of “collective innocence”
(Terris 2005, 130). Even though it has a strong ethics program the corporation is all the time
involved in legal and ethical allegations and court cases where the corporation is charged with
millions of dollars in fines. This is not only a question of size of the organization, but it indicates
increased focus on the need for treatment of ethical issues at the collective and institutional level of
the firm.
Therefore, critical voices may say that the effort to achieve corporate citizenship illustrates
how ethics has become a bureaucratic instrument for forcing and disciplining the employees. “Open
communication” is whistle-blowing to one’s superior in order to ensure compliance with company
policy. Instead of being a program of visions of an ideal world this program is about how to govern
employees and ensure that management gets knowledge of irregularities in the organization. The
ethics program has become training in political correctness. There may be a conflict between
personal values of employees and requested work norms – or more profoundly, a tension between
values of the organization and the deeper values with regard to the conceptualization of more
fundamental issues of work and society in relation to corporate citizenship.
This is documented by the strong focus on conflict of interests, corruption and bribery or the
ethics of teamwork in the ethics program. Ethics and appeal to corporate citizenship are used as
kind of sophisticated military weapon to ensure that employees are not opportunistic and that they
are able to submit to the values and norms of the corporation. There is not much ethics in the
Annual report that first of all focuses on financial results (Lockheed Martin 2004). Employees are
suggested to follow a clear line of reasoning in accordance with company policy, but this
conception of ethics awareness might sometimes hide fundamental structural issues of ethics.
A further critical comment would be that training of employees is based on description of
ethical dilemmas of what they have to do. The employees are regarded as potential wrongdoers and
the program is designed to show them how to behave in a decent way with high integrity (Lockheed
Martin 2005a). By considering the employee highly responsible the corporation manages to move
the responsibility from the institutional level of the organization towards the individual level of
employee responsibility. To make employees responsible becomes a major instrument in creating
an ethical image and political legitimacy of the organization. What is important is to ensure that
employees are able to act with virtue in the work environment and give employees capacities to deal
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with ethical dilemmas in the work environment in a civilized way. Ethics and citizenship are used
as an instrument to give employees something like good scout virtues so that they can comply with
the rules of regulations of society as representatives from the corporation.
5. Conclusion: Politicization without good corporate citizenship?
What is the conclusion? The abovementioned criticisms seem to be very severe and they challenge
the idea of the possibility of good corporate citizenship. What we can learn from the analysis of
Lockheed Martin is that it seems sufficiently documented that the corporation searches to build a
political field of self-regulation where it assumes responsibility at a market that has political
dimensions that has social dimensions that go beyond pure economic interaction. However, we can
also learn that Lockheed Martin is very far from realizing ideal corporate citizenship. We can
observe awareness of ethics and responsibility in relation to overcoming the “Sins of the Tycoons”
and proposing ethical behavior of the defense industry. This is indeed a move towards corporate
citizenship which is a condition for the corporate citizenship. However, there is also an important
limitation to the approach to corporate citizenship of Lockheed Martin since the corporation has
done very little to address the issues of employee wellbeing, corporate social responsibility and the
legitimacy of its main product, namely weapons and missiles.
We can say that the corporation wants to create an image of being a good corporate
citizen in compliance with the virtues and values of society (see annual reports of Lookheed
Martin). Corporate citizenship is considered as a good ethics, but it is not considered as a
progressive work for changing society, for example with regard to defense policy issues and
political issues. The corporation does not directly confront issues about the legitimacy of defense
policy and the ethics of war even though this may be implicit in the ethical values of integrity,
responsibility, trust and honesty. There is a risk that Lockheed Martin may disregard fundamental
issues of the mission of the corporation in community. There is in the ethics programs no room for
the discussion of the dilemmas of defense business and therefore the corporation does not really
address issues of social responsibility and legitimacy of profits.
In this sense, the case of Lockheed Martin makes us aware of the ambiguity of
corporate ethics between increased responsibility and lack of responsibility (Frankel 2008), since
the ethical corporation is producing controversial products with high ethics and great responsibility.
Lockheed Martin is an ambiguous actor that has a very well developed ethics program, but produces
military technology and defense products, which by some members of the population may be
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considered as ethically doubtful objects. Ethics is important in the business of this corporation
because it is a major government contractor. Ethics and values are as we have seen first of all
related to the vision of doing good business. As a government contractor on sensible issues of
security politics and defense policy Lockheed Martin is forced to have strict values and decent
behavior if the corporation shall not loose legitimacy credibility and trust among business partners
and in society at large. Therefore, the corporation is a good illustration of the politicization of the
firm even though it is very far from having implemented corporate citizenship on the levels of
treatment of employees, social responsibility and creation of a room for debate about the legitimacy
of its core products and services.
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