Business ethics japan and the global economy

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BUSINESS ETHICS:
JAPAN AND THE GLOBAL ECONOMY

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Issues in Business Ethics
VOLUMES

Series Editors
Brian Harvey, University of Nottingham, UK.
Patricia Werhane, Loyola University of Virginia, US.A.

Editorial Board
Brenda Almond, University of Hull; Hull, u.K.
Antonio Argandona, lESE, Barcelona, Spain
William C. Frederick, University of Pittsburgh, US.A.
Georges Enderle, University of Notre Dame, U.S.A.
Norman E. Bowie, University of Minnesota, US.A.
Henk van Luijk, Nijenrode, Netherlands School of Business, Breukelen,
The Netherlands
Horst Steinmann, University of Erlangen-Nurnberg, Nurnberg, Germany

The titles published in this series are listed at the end of this volume.

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Business Ethics:
Japan and
the Global Economy
edited by

THOMAS W. DUNFEE
The Wharton School,
University of Pennsylvania

and
YUKIMASA NAGA Y ASU
Reitaku University,
Japan

SPRINGER-SCIENCE+BUSINESS MEDIA, B.V.

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Library of Congress Cataloging-in-Publication Data
BUSlness ethics
Japan and the global economy I edited by Thomas W.
Dunfee, Yukimasa Nagayasu.
p.
em. -- "In cooperation with the Institute of Moralogy, Kashiwa City,
Japan. "
ISBN 978-904814309-2
ISBN 978-94-015-8183-7 (eBook)
DOI 10.1007/978-94-015-8183-7

1. Business ethicS--Japan. 2. Business ethics.
I. Dunfee,
Thomas W. II. Nagayasu, Yukimasa, 1941III. Series.
HF53B7.B8724 1993
174' .4·0952--dc20
93-27884

ISBN 978-90-481-4309-2

Edited versions of papers given at two conferences in Japan, held in December, 1989
and September, 1991 hosted by the Japanese Institute of Moralogy with the
collaboration of Reitaku University, and with sponsorship and support from the
Ministry of Foreign Affairs and the Ministry of International Trade and Industry

Printed on acid-free paper

All Rights Reserved
© 1993 Springer Science+Business Media Dordrecht
Originally published by Kluwer Academic Publishers in 1993
Softcover reprint of the hardcover 1st edition 1993
No part of the material protected by this copyright notice may be reproduced or
utilized in any form or by any means, electronic or mechanical,
including photocopying, recording or by any information storage and
retrieval system, without written permission from the copyright owner.

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CONTENTS

List of Figures, Diagrams and Tables
Note on the Contributors
Acknowledgements

vii
viii
xi

PART I.

INTRODUCTION

Chapter 1

Global Business Ethics and
Japanese Economic Morality
An Introduction and Overview
(Thomas W. Dunfee, Yukimasa Nagayasu)

Chapter 2

Business Ethics: A Japanese View
(Iwao Taka)

PART II.

BUSINESS ETmCS IN A GLOBAL ECONOMY

Chapter 3

The Role of Ethics in International
Business (Thomas W. Dunfee)

63

Chapter 4

Globalization and Business Values in
the Asian-Pacific Region
(Yukimasa Nagayasu)

81

Chapter 5

International Business, A Universal
Morality and the Challenge of
Nationalism (Norman E. Bowie)

95

Chapter 6

The Language of International Corporate
Ethics (Thomas Donaldson)

115

Chapter 7

What is Business Ethics?
(Georges Enderle)

133

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3

23


PART III.

BUSINESS, ECONOMY AND ETmCS IN JAPAN

Chapter 8

A Japanese Perspective of the
Transformation of Modern Civilizations
(Haruo Naniwada)

153

Chapter 9

Business Ethics in the Global Age

(Ken'ichi Odawara)

173

Chapter 10

The Ideals of Moralogical Management
(Yukiyoshi Mochizuki)

189

Chapter 11

Business Ethics and Corporate Strategy
in Japan (Shunji Kobayashi)

209

PART IV.

mSTORICAL DEVELOPMENT OF MARKET
MORALITY IN JAPAN

Chapter 12

The Japanese Tradition of Economic Ethics
(Yukichi Shitahodo)

219

Chapter 13

The Japanese View of Business and Work
(Han-Yu Chang)

231

Chapter 14

Economic De,velopment and Ethics in Japan
- A Historical Perspective
(Tsunehiko Yui)

255

vi

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LIST OF FIGURES, DIAGRAMS AND TABLES

Figure 4-1

Various Kinds of Reciprocity
(Yukimasa Nagayasu)

87

Diagram 7-1

Matrix of Value-Guided Human
Acting (Georges Enderle)

139

Diagram 7-2

Problem and Action Oriented
Approach (Georges Enderle)

146

Diagram 7-3

Different Conceptions of the
Good and the Idea of an
Overlapping Consensus
(Georges Enderle)

148

Table 9-1

A Comparison of Japanese and
Western Companies and Labor
Unions (Ken'ichi Odawara)

185

vii

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NOTE ON THE CONTRIBUTORS
Nonnan W. Bowie is the Elmer L. Andersen Chair in Corporate

Responsibility at the University of Minnesota. He is the
author, co-author, editor or co-editor of twelve books and
numerous articles in business ethics and political philosophy.
He is currently chair of the Department of Strategic
Management and Organization and is past Executive
Secretary of the American Philosophical Association. He is
past president of the Society for Business Ethics and the
Society for Value Inquiry.
Han-Yu Chang is Professor Emeritus of Taiwan University. His
publications include A Study of British Mercantilism: 16201720 (1954), Economic Development and Income Distribution
in Taiwan (1983), and A Study of Japanese Corporate
Management (1989).

Thomas Donaldson is the John F. Connelly Professor of Business
Ethics in the School of Business, Georgetown University. At
Georgetown University he also holds the positions of Adjunct
Professor, Department of Philosophy, and Senior Research
Fellow, Kennedy Institute of Ethics. Books that he has
authored or edited include: Ethics in International Business
(Oxford University Press, 1989); Ethical Issues in Business, 4th
Edition (Prentice-Hall Inc., 1979-92), co-edited with Patricia
Werhane; Issues in Moral Philosophy (McGraw-Hill, Inc.,

1986); Case Studies in Business Ethics, 3rd Edition (PrenticeHall Inc., 1984-92); and Corporations and Morality (PrenticeHall Inc., 1982).
Thomas W. Dunfee is the Kolodny Professor of Social Responsibility
at The Wharton School of the University of Pennsylvania. At
the Wharton School, he was Chair of the Legal Studies
Department from 1979-85 and 1987-91. He was President of

viii

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the American Business Law Association 1989-90, served as
Editor-in-Chief of the American Business Law Journal 1975-77
and received the Distinguished Senior Faculty Award for
Excellence from the ABLA in 1991. He currently is a
member of the executive committees of the Society for
Business Ethics and the Society for the Advancement of
Socio-Economics. His research interests focus on the
application of social contract theory to business ethics,
corporate attorney whistle-blowing, and on developing ethical
standards for global business transactions. He has written or
edited over ten books and has published articles in a wide
variety of journals in the fields of law, business and applied
ethics.
Georges Enderle is the Arthur and Mary O'Neil Professor of
International Business Ethics at the University of Notre
Dame, Indiana. He is author of several books including
Handlungs orientierte Wirtschaftsethik, Grundlagen und
Anwendungen (Action-oriented Business Ethics. Foundation
and Applications: 1993) and contributing co-editor of Lexikon

der Wirtschaftsethik (Encyclopedia of Business Ethics: 1993).
He has written numerous articles on business ethics and is
presently working on a research project on "International
Business Ethics".
Shunji Kobayashi is Professor at the School of commerce, Waseda
University. His publications include Study of Managerial
Environment (1990), and "Political Strategy of Corporations"
(1992).
Yukiyoshi Mochizuki is Director of Research Department, the
Institute of Moralogy and Professor in the Faculty of Foreign
Languages, Reitaku University. His publications include:
Human Rights and Moralogy (1986), Beautiful Heart and
Wonderful Life (1988), and Pleasure of Moral Practice (1990).
Yukimasa Nagayasu is Professor at the International School of
Economics and Business Administration, Reitaku University.
He is also chief of the Economics Division of the Research
Department, the Institute of Moralogy. His books include
Ecology of Economic Civilization (1979), Principles of National
Economy (1978), Principles of Political Economy (1981), and
Cosmology of Economics (1991).
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Haruo Naniwada (1906-1991) was Honorary President of Kanto
Gakuen University. His publications include Study of
Economic Sociology (1971), Philosophy of Crisis (1974), Theory
of Community (1982), and Morality and Economy (1983).
Ken'ichi Odawara is Professor in the Faculty of Economics, Jochi

(Sophia) University and lecturer of International Relations at
the University of Tokyo. His edited books include
International Political and Economic Theories (1988), and The
World Economy (1982). His publications include American
Disease (1980), "The Competition Principles in Japanese
Companies and Labor Unions" (1988), and "What Lessons
Have Japan and the U.S. Learned from Previous Bilateral
Effort on Energy and Environment?" (1992).
Yukichi Shitahodo is Professor Emeritus of Kyoto University and
Advisor of the Institute of Moralogy. His books are
Independent Education in Japan (1952), Education of Social
Intelligence (1957), Anthropological Study of Sontoku Ninomiya
(1965), Family Education and social Morality (1968), Spiritual
Awakening and Human Development (1970), Drei Prinzipien
der anthropologischen Padagogik (1971), and Anthropological
Study of Shoin Yoshida (1988).
Iwao Taka is Assistant Professor at the International School of
Economics and Business Administration, Reitaku University,
and Visiting Research Fellow at The Wharton School, the
University . of Pennsylvania. His publications include
"J apanese History and Thought -- Based on a Philosophy of
Sontoku Ninomiya --" (1990), "From Economics to Cognitive
Science" (1989), "Intuitive Decision-Making and Creative
Destruction" (1987), "Japanese Entrepreneurship After World
War II" (1986), and An Introduction to New Principles of
Management (with others) (1985).
Tsunehiko Yui is Professor at Department of Business
Administration, Meiji University. His publications include
The Development of Japanese Business: 1600-1980 (1983),
Japanese Management in Historical Perspective (1989), and

History of Yasuda Financial Combines (1987).

x


ACKNOWLEDGEMENTS
We express our deep appreciation to Lauretta Tomasco who
coordinated the entire project. Her radiant cheerfulness and
unwavering competency saw us through many difficult times. Stefan
Whitwell worked long hours on editing many of the chapters and we
benefited from his linguistic talents. John Musero deftly edited and
drafted abstracts for several chapters. Martin Rowley helped
immensely with the bibliographies. Nick Harris carefully proofed the
manuscript and applied his sleuthing skills in a search for hard to
find citations. Jennifer and John Dunfee devoted some of their
precious summer time to provide some valuable insights for the
project, particularly the first chapter.

xi


PART I

INTRODUCTION


Chapter 1

GLOBAL BUSINESS ETIllCS AND JAPANESE ECONOMIC
MORALITY

AN INTRODUCTION AND OVERVIEW
Thomas W. Dunfee
Yukimasa Nagayasu

INTRODUCTION: THE TWO CONFERENCES ON GLOBAL
BUSINESS ETIllCS
Japan is an important player in global markets, yet in many
ways, it remains an enigma to non-Japanese. Those who deal with
Japanese firms and markets need to understand its hidden economic
culture, work ethic, and common sense views of business thinking.
Japanese culture is the result of an integration of historical factors,
including Shintoism, Buddhism, Confucianism and modern Western
science and technology. This book goes beyond stereotypical
approaches in applying a philosophical analysis to the Japanese
economic mind. It also uses the methodologies of social contract and
traditional applied business ethics as a theoretical framework for
discussing cross-cultural issues in global economic transactions. A new
Japanese approach of moral science, called "Moralogy", is explained.
Practical proposals, such as how to internationalize the Keiretsu system,
are also advanced.
Almost all books of contemporary business ethics are written
primarily from the viewpoint of Western culture and economy. In
contrast, this book presents a multi-cultural perspective of global
business ethics. Particular emphasis is given to Japanese viewpoints. A
3

T.W. Dunfee and Y. Nagayasu (eds.), Business Ethics: Japan and the Global Ecorwmy, 3-22.
© 1993 Kluwer Academic Publishers.

4

primary purpose of this volume is to encourage a multi-dimensional
dialogue concerning global business ethics.
This book is based on a selection of the papers given at two
conferences focused on ethics and the global economy hosted in Japan
by the Japanese Institute of Moralogy with the collaboration of Reitaku
University, and with sponsorship and support by the Ministry of
Foreign Affairs and the Ministry of International Trade and Industry.
An International Conference on Asian Economy and Culture on the
theme "Globalization and Ethics of Economy" was held December 1-3,
1989 and featured presentations from Asian scholars. The attendance
for this conference was 211,33 academics and the rest businesspeople.
In September, 1991 a second conference, featuring academics from the
United States, Europe and Japan, was held on the theme "Business
Ethics in a Global Economy." The 1991 conference drew 136 people,
with 52 coming from academia.
1989 Conference on Globalization and Ethics of Economy
This conference aimed at comparing cultural and religious
diversities in economic values, with a goal of finding some common
aspects among them. This conference confirmed that, in spite of
existing gaps, there are some fundamental common principles among
the various Asian countries allowing diverse populations to
communicate and conduct business. The sessions and presenters at the
conference were as follows:
Session 1: Encounter of Civilization and Creation of New Values
Thomas W. Dunfee (The University of Pennsylvania)
"The Role of Ethics in International Business"
Haruo Naniwada (Kanto Gakuen University)
"Destination of the Modem Civilization: Encounter,

Struggle and Transformation of Civilizations"
Session 2: Modem Economic Civilization and Ethics of Economy
San-Guine You (Myong Ji University)
"The Spirit of the Times and Historical Evidence"
Iwan Jaya Azis (The University of Indonesia)
"The Choice of Policies and Strategies That Can Be Evaluated From


5

the Moral Aspects of Development:

The Case of Indonesia"

Takashi Kobayashi (Tokyo International University)
"The Present Time in World History and East Asian Cultural Zone"
Yukimasa Nagayasu (Waseda University)
"World Systems, Globalization, and Economic Values"
Session 3: The Internationalization of Business Enterprises and
Principles of Business Behavior
Prasert Chittiwatanapong (Thammasat University)
"Japan's Foreign Relations: Some Ethical Problems"
Takeo Tsuchiya (Reitaku University)
"Social Responsibility of Business Corporations
in the Age of Global Economy"
Ah-Keng Kau (The National University of Singapore)
"Corporate Behavior in an Internationalized
Business Environment: Issues and Problems"
Han-Yu Chang (Tamkang University)
"Business Ethos and Management Culture: A Comparative

Historical Sketch for Modernization of the Asian Economy"
Session 4: Asian Thought: Tradition and Innovation
Il-Gon Kim (Pusan National University)
"Application of Confucian Ethics to Modern Economy:
A Way to Give Life to the Culture of Family Collectivism"
Lae Dilokvidyarat (Chulalongkorn University)
"The 'Community Culture' School of Thought in Thailand"
Yukiyoshi Mochizuki (The Institute of Moralogy)
"Ideals of Moralogical Management"
Mohd Nazari Ismail (The University of Malaya)
"Islamic Perspectives towards Economic Development and Business"
Asmad Muflih Saefuddin (Ibn Khaldun Islamic University)
"Islamic Economic Ethics"


6

Session 5: The Globalization and Ethics of Economy
Jin Du (Liaoning University)
"Globalization and Economic Reform in Socialism:
The Case of the Chinese Economy"
Poh Ping Lee (The University of Malaya)
"The Globalization of the Asian-Pacific Area:
The View of a Southeast Asian Political Scientist"
Kiyoshi Takase (Takasaki City College of Economics)
"Modern World and Globalization:
The World in the Period of Structural Change"
Masataka Kosaka (Kyoto University)
"Globalization in the Perspective of State, Nation and Culture"
1991 Conference on The Ethics of Business in a Global Economy:

Rethinking Corporate Morals
This conference focused upon the narrow but highly
professional field of business ethics. This conference had three aims:
1) To find universal norms applicable and helpful in resolving business
conflicts in the conduct of global business; 2) To find creative ways
through which corporations can become more innovative and stronger,
in order to increase their longevity; and 3) To prepare for creating an
Asian-Japan Business Ethics Network. From this conference some
tasks were made clear: how to develop ethical hypernorms at a crosscultural level, and how to think about the dual approaches; the positive
and optimum versus the negative and minimum. This conference also
had five sessions:
Session 1: What is Business Ethics?
Georges Enderle (The University of St. Gallen)
"What is Business Ethics?"
Tadao Miyakawa (Hitotsubashi University)
"Social Responsibility of Business and Business Ethics"
Kei Takeuchi (The University of Tokyo)
"Business Ethics in Research and Development"


7

Session 2: Economic Systems and Business Ethics
Thomas W. Dunfee (The University of Pennsylvania)
"Establishing Normative Ethical Standards
for Global Business Transactions"
Norman E. Bowie (The University of Minnesota)
"International Business, a Universal Morality
and the Challenge of Nationalism"
Tsunehiko Yui (Meiji University)

"Value System, Ethics and Economic Development in Japan:
in Historical Perspective"
Yukichi Shitahodo (Kyoto University and the Institute of Moralogy)
"The Japanese Tradition of Economic Ethics"
Session 3: Business Ethics and Corporate Behavior
Brian Harvey (European Business Ethics Network)
"Business Ethics and Corporate Behavior in the United Kingdom"
Takatsugu Nato (Tokyo International University)
"On the Measurement and Comparisons of
Social Contribution Degree by Enterprise"
Moriaki Tsuchiya (The University of Tokyo)
"Business Ethics of the Global Company"
Shunji Kobayashi (Waseda University)
"Business Ethics and Corporate Strategy in Japan"
Session 4: Corporate Culture and Human Development in Business
Nasaru Yoshimori (International University of Japan)
"American Entrepreneurship Decline: A Perspective of BusinessGovernment Relationships" Nobuhisa Obu (Wako University)
"A View on the Evaluation and Ethics of Enterprise Behavior:
A Step Toward the Establishment of Behavior Standards"
Patrick Mac1agan (The University of Hull)
"Some Thoughts on Individuals' Moral Development
in Business Organizations"


8
Session 5: Business Ethics in a Global Economy
Henri-Claude de Bettignies (INSEAD)
"Ethics in International Business: A European Approach"
Thomas Donaldson (Georgetown University)
"The Language of International Corporate Ethics"

Ken'ichi Odawara (Jochi University)
"Economic Ethics and the Globalization of World Economy"
Norihiko Suzuki (International Christian University)
"Multinational Business Ethics: An Analytical View"
OVERVIEW OF THE BOOK

This book is divided into four parts. Part I contains just two
chapters: this one which introduces the basic themes and outlines the
coverage of the book, and Chapter 2 which provides a framework of
Japanese thinking about normative issues. In this chapter, recurrent
topics are noted and their treatment in various chapters is contrasted.
Common viewpoints are emphasized; significant divergences
commented upon. One main purpose is to provide a brief overview of
each of the chapters so that the reader may selectively choose what to
read.
The linchpin of the book is chapter 21 written by Iwao Taka
(Visiting Scholar, The Wharton School, University of Pennsylvania;
Assistant Professor, Reitaku University), which introduces the religious
and social normative environment of Japanese business. Taka describes
the influence of Confucianism, Buddhism and traditional Japanese
religions in leading to the modern Japanese view that every individual
has a soul or spirit (numen) connected to the ultimate reality. A
principle of equality derives from this -- every person is equal in the
sense of having an equal numen. The concept of an individual numen
extends to the phenomena of work and group activity. Work
constitutes a means by which individuals connect to the ultimate reality

1This paper was written subsequent to the two conferences. It is
included because it provides an excellent framework for
understanding Japanese business morality and complements the

approaches taken in this' book.


9

and therefore has value in and of itself. Groups have their own numen,
seen as superior to that of individual members. Obligations to comply
with group norms are emphasized through statements of tatemae or
formal rule. When members resist tatemae they do so through
assertions and gestures called honne or real motives.
In the social dimension, Taka notes that the normative
environment may be envisioned as a set of four concentric circles
representing (1) family, (2) fellows or close associates, (3) the nation of
Japan and (4) the world. Different ethical rules govern in the four
circles as follows: (1) filial piety, (2) long-term give-and-take relations,
(3) a combination of open competition and long-term-give-and-take and
(4) open competition. Corporations fit into the same framework with
vertical keirets'; being representative of the family circle and
horizontal keiretsu operating within the fellows circle. The question of
access to keiretsu arrangements is a controversial issue in Japanese
global trade. Taka emphasizes that understanding and adopting the
ethical rules of long-term give-and-take is critical for acceptance into
the fellows circles of Japanese corporations. Managers tend to view
the inner circles as operation bases supported by cooperative behavior
while the outer bases are seen as battlegrounds of intense competition.
Taka suggests that the logic of the religious normative
environment causes Japanese managers to be critical of the strict
division of labor that occurs in some U.S. firms, and of the attitudes of
some managers that certain jobs (e.g. housekeeping, assembly line
work) are inferior or, at the least, beneath them as individuals.

Similarly, the logic of the social dimension is the basis for the recent
criticism by Japanese of U.S. executive compensation policies, hostile
takeovers and the use of mass layoffs as a corporate strategy.
Japanese firms also have shortcomings under Japanese
normative standards. The discriminatory restrictions faced by female
workers in Japan violates the principle that everyone has an equal
numen. Further, the emphasis on work results in heavy pressures to
put in long hours and to comply with social conventions. Those who do
not go along face the possibility of severe criticism. In extreme cases,
this may lead to karoshi (death by work). Further, individual

Keiretsu are closely connected firms that work cooperatively
toward common goals. Vertical Keiretsu are combinations of
suppliers (including service firms such as banks and insurance
companies), manufacturers and distributors; whereas, firms
associated in an horizontal keiretsu operate at the same level of the
marketing structure.
2

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10
employees are unlikely to question whether the decisions of the group
are ethical.

Part II: Business Ethics in a Global Economy
Part II focuses on general issues of morality in a global
economy and seeks criteria for making normative judgments about
controversial practices in international trade. A central, recurring

question is how business practices are to be judged when they directly
implicate two or more societies with contrasting ideas about what
constitutes proper business behavior? Underlying the arguments
presented in this part is the ultimate issue of whether there is a
discoverable, universal morality relevant to global business transactions.
In chapter 3, Thomas Dunfee (Kolodny Professor of Social
Responsibility at The Wharton School, University of Pennsylvania)
applies a contractarian analysis arguing that there is an unwritten,
malleable social contract existing at the level of international trade
which provides a central core of moral practices for international trade.
He then extends the argument to identify a set of rule of thumb
principles which provide substance to the social contract for practicing
global managers.
In chapter 4, Yukimasa Nagayasu (formerly Professor, The
School of Social Science, Waseda University; Chief, Economics
Division, Research Department, The Institute of Moralogy; Professor,
Reitaku University) identifies key trends in the global political economy
which have significance for business ethics at the international level.
Economic forces appear to be coming to dominate over politics; yet, at
the same time there is increasing recognition of interdependence and
the need for reciprocity in trade relations. This, in turn, is changing the
way in which business ethics is viewed, with increasing rejection of
more narrow, short-term profit-making viewpoints. Nagayasu
emphasizes benevolence as an important factor for relating to this
emerging environment.
In chapter 5, Norman Bowie (Elmer L. Anderson Chairholder
in Corporate Responsibility, The University of Minnesota, a leading
figure in business ethics in the United States) picks up on a major
theme of the conferences and develops a rousing defense of a universal
morality working from a Kantian perspective. Bowie argues that so

long as there is free and open competition at the global level, rational
managers will be constrained to act honestly, eschew bribery and
become trustworthy. In addition, these forces will ultimately cause a
decrease in discrimination based on taste and/or misinformation.


11

Supplementing his argument with support from Adam Smith, Bowie
optimistically sees free and open global competition as a force for
world peace, causing war to become in Kant's terms, too destructive,
expensive and economically irrational. Bowie ultimately tempers his
optimism, however, by worrying that nationalistic influences on
economic competition may be destructive, using examples from the
trade war between the United States and Japan and the changing
reactions of United States citizens toward Japanese investment in the
United States.
Thomas Donaldson (John Connelly Professor of Business
Ethics, Georgetown University and the leading proponent of a
contractarian approach to business ethics) focuses in chapter 6 on a
different dimension of the universalism/relativism debate: the
implications of the great diversity of moral claims and language across
cultures. Donaldson identifies six different languages of ethics: (1)
virtue and vice, (2) self perfection through self-control, (3)
maximization of human welfare, (4) avoidance of human harm, (5)
rights/duties and (6) social contract. Languages which identify
perfectionistic as opposed to minimalistic standards present great
difficulty when attempts are made to relate them to the decisions of
global business firms. Similarly, those whose focus is psycho-centered
are awkward to apply to corporations which have, at most, a decidedly

non-human psychology. Donaldson concludes that languages based on
rights/duties, avoidance of harm and social contracts are more suited to
understanding international corporate ethics than ones based in virtue,
self control and maximization of human happiness.
Chapter 7, written by Georges Enderle (Arthur and Mary
O'Neil Professor of International Business Ethics at the University of
Notre Dame, Indiana) closes Part II. Enderle comments on the
emerging academic field of applied business ethics. He discusses the
relationship between ethics and economics and notes that the new field
must focus on the process of integrating ethics into business decisionmaking. Enderle advocates a "New Practice" in which there is
recognition of the true overlapping nature of economics and ethics, and
also of pluralism. Enderle suggests that solutions to the difficult
problems of business ethics can be found in the domain of overlapping
consensus.

Part III: Business, Economy and Ethics in Japan
Part III involves a more specific focus on economics and ethics
in Japan. The four chapters of Part III provide background and


12
examples for the analysis developed by Taka in chapter 2.
The difficulties with using certain moral languages as noted by
Donaldson are dramatized in chapter 8 by the late Haruo Naniwada
(Honorary President, Kanto Gakuen University). Naniwada argues that
viable economic systems must emphasize both freedom and justice, and
therefore that the logic of the "real economy" is based on a trilogy of
liberty, social equality and true community. In reaching this conclusion,
Naniwada rejects rationalism as a speculative logic whose major
shortcoming is that it arrogantly assumes that the world exists as its

theory predicts. But in offering a solution to this problem, Naniwada
encounters a problem of language. No existing concepts or terminology
adequately capture the point he wishes to make. His solution is to coin
his own term "allelonomy". Allelonomy describes a principle of mutual
dependence, identifying that the very existence of one thing is
dependent upon the existence of another.
Ken'ichi Odawara (Professor, Faculty of Economics, Sophia
University, Lecturer of International Relations, University of Tokyo)
focuses on differing perspectives concerning labor and human resource
management that exist in Japan and the West. In chapter 9,Odawara
contrasts the approaches taken by U.S. and Japanese firms in dealing
with periods of losses or reduced profitability. These differing
approaches are seen as influencing the basic nature of labor relations in
the two countries. Odawara concludes that the Japanese system is
ethically superior in this dimension.
The work of Chikuro Hiroike, founder of the Institutes of
Moralogy and author of A Treatise on Moral Science published in four
volumes in 1928, is discussed in chapter 10 by Yukiyoshi Mochizuki
(Director, Research Department, The Institute of Moralogy; Professor
of Foreign Languages, Reitaku University). As a means of bridging
East and West and enhancing the chances of world peace, Chikuro
Hiroike sought a Supreme Morality through study of the great sages,
including Buddha, Christ, Confucius, Socrates and works of Japanese
mythology. Mochizuki describes Hiroike's creation of moralogy, a
scientific study of morals based upon realizing the happiness of
individuals and the cultivation of human character. Stress is placed
upon the unification of morality and economy, so that moralogical
management emphasizes character capital, the recognition and
observance of duty. "Character comes first, not money" is a key theme
for companies managed in a manner compatible with moralogy. An

important obligation is the development of the character of employees,
a mission seen as more important than short-term profitability. Each
employee should unify knowledge and virtue and constantly seek to
advance their knowledge and ability. These ideals are then extended


13

into a stakeholder concept of a duty to operate firms in a manner
consistent with a principle of triadic justice and equality. In conducting
business, the businessperson should always seek to insure that benefits
are appropriately spread among self, the other party to the transaction
and third parties. Diversity is to be tolerated, allowing for
co-prosperity. Ultimately, the prosperity of a corporation depends
upon the morality of its managers. Thus, the universal ideals are
reduced to the everyday actions of business managers and firms.
Part III closes with Chapter 11, written by Shunji Kobayashi
(Professor, School of Commerce, Waseda University). Kobayashi takes
a practical, modern approach in emphasizing that business firms must
take care to operate within the range of social acceptance. He sees the
Japanese social consciousness as based upon the community and the
relationships among individuals. Kobayashi discusses the current efforts
toward developing a system of corporate philanthropy in Japan as
actions consistent with these themes.
Part IV: Historical Development of Market Morality in Japan
Part IV combines three chapters which together survey the
historical development of market morality in Japan. The work and
conclusions of Chikuro Hiroike are further described in chapter 12, by
Yukichi Shitahodo (Professor Emeritus, Kyoto University; Advisor to
the Institute of Moralogy), who places the writings into their historical

context. Shitahodo discusses the economic ethics of Sontoku Ninomiya
which stressed the merger of self-interest and of community
responsibility. Subsequently, Eiichi Shibusawa, influenced by the
Analects of Confucius, derived an approach to economic ethics based
upon a parallel concept of justice and profit.
In chapter 13, Han-Yu Chang (Professor of Business
Administration, Tamkang University; Professor Emeritus, Taiwan
University) takes a historical approach to the ideal of occupation or
work. He traces attitudes toward work in both medieval Europe and in
Japan. In both societies, attitudes evolved toward a more positive view
of work as a calling and as activity essential to social order. Chang
traces changes in viewpoints in Japan through the writings of Seisan
Suzuki, Baigan Ishida and Eiichi Shibusawa. The influences of Buddhist
practice, Confucian concepts and the samurai spirit produced an
orientation toward work which recognized the unity of morality and
economy ,a sense of social responsibility and an emphasis on the
importance of education and learning. Out of these perspectives
emerged the view of a company as a life community.


14
Tsunehiko Yui (Professor, Department of Business
Administration, Meiji University) is the author of chapter 14. Yui
identifies and contrasts the values and ethics of merchants and business
leaders in three major periods of Japanese development: the feudal
Tokugawa period (1750-1867), the Meiji Restoration (1868-1912), and
the post World War II period (1945-1980). Yui concludes that through
all of three periods dedication to duty, group cohesion and harmony
remained central, even as Japan evolved in response to changing times
and circumstances. Even today, as concern about individual rights and

stakeholder interests increases, group solidarity remains paramount in
Japan.
THE ROLE OF ETHICS IN A RAPIDLY CHANGING GLOBAL
ECONOMY

A dominant theme of this book is that powerful forces are at
work bringing about significant changes in the ways in which global
corporations, nation states and regional trading blocs inter- relate.
Pundits and prognosticators notwithstanding, the overall trend of these
changes remains ambiguous in important respects. Clashing political
forces pull toward fragmentation in Eastern Europe and the former
Soviet Union; while the need for economic coordination brings other
nations and groups closer together in ever more administratively
powerful regional trading blocs. Increasing economic interdependence is
accompanied by increasing calls for political autonomy and
independence. The world environment is stressed by the competing
forces of integration and fragmentation.
What are the moral implications of global economic
interdependence? In a world in which the performance of the Japanese
stock market and the decisions of the German government concerning
interest rates may have as great an impact on the United States as its
own domestic economic policies, in which decisions about plant safety
or environmental protection may literally affect millions around the
globe; it is vital that business leaders and managers think seriously
about the moral implications of global business activities. Decisions
made by business firms can have impacts far beyond national
boundaries. Corruption, environmental degradation and product and
workplace hazards can all be added to the list of exportable goods and
services in international trade. Private firms have the capacity to sell
high technology or weapons to unstable despots and thereby have the

power to influence dramatically prospects for world peace.