John B. Dilworth's Commentary on "Conflicts within a Manufacturing Firm"
Is there in general anything ethically unfair about an
internal unit of a company receiving information from other
units of the same company, which information is not made
available to outsiders? Put in this general form, surely our
answer has to be no. A business, and particularly a private
business with no legal public disclosure requirements, is free
to organize itself internally and move information around in
any (legal) way it sees fit. Equally, it can relate externally
to people or other businesses in any legally sanctioned
Secrecy in business is valuable, in that it is a prime
factor in achieving a competitive edge in a company's dealings
with others, and hence in improving the overall competitive
health of an economy. But most kinds of 'external' secrecy
would be a severe handicap to companies if they had to be
practiced internally, and so would work against the interests
of a capitalist society. Thus any ethical theory which
generally supports capitalism is unlikely to defend internal
secrecy requirements, whether in the name of fairness or for
other reasons. If there were exceptions, they would have to be
individually argued for.
So in the present case, the burden of proof is on those who
would claim that there is something ethically unfair about an
internal unit receiving information (about competitive bids)
not available to outsiders.
Here's a more specific reason for thinking that internal
sharing of information is morally legitimate in the present
case. Suppose the situation were somewhat different at T&D
Manufacturing, as follows. T&D has been internally
producing the tools in question, with no outside help, but now
would like to check whether it would be cheaper to 'outsource'
the production, i.e., get external companies to produce the
tools. So they request competitive bids from outsiders. In this
case, the internal T&D tool and die department is central
to current production and centrally involved in the new
inquiries about relative costs for outsourcing, so it would be
ridiculous to suggest that they should not be fully informed
about the external bids received.
This example suggests that the initial case seemed unfair
because the internal department was not initially involved.
Thus it might have appeared to belong in a group with the
external companies which are also not directly involved in
business decisions of T&D. However, as the example shows,
the involvement or non-involvement of any internal unit can
easily be changed by circumstance or company policy. Since
these matters are so variable, they cannot justify
situation-independent judgements about the unfairness of the
relevant kind of information-sharing.
If we accept that ethics does not require internal business
secrecy, there might nevertheless be sound business reasons for
restricting internal information-sharing in some cases. For
example, it might be that as a matter of fact the most accurate
method of estimating actual costs of production involves
restriction of information about the costs of competitors. If
so, business self-interest rather than ethics would dictate a
'sealed bid' approach.
Another example is provided in the case itself. If outside
vendors are unhappy with a bidding situation in which an
internal unit has an advantage, and if this affects their
willingness to bid, then again prudent T&D officials might
consider internal restriction of information so as to keep
their suppliers happy. But here again it is the interests of
their own company, rather than ethics, which is at work in
Cite this page:
"John B. Dilworth's Commentary on "Conflicts within a Manufacturing Firm""
Online Ethics Center for Engineering
National Academy of Engineering
Accessed: Thursday, May 23, 2013