Lockheed Martin's Ethics Transformation: Bribery to Integrity
This paper examines the ethical evolution of Lockheed Martin, from its widespread use of bribery and questionable sales strategies during the 1950s–1970s to its emergence as a model of corporate ethical conduct. The paper describes the unorthodox practices the company employed abroad, analyzes whether those practices were unethical given their ubiquity at the time, and explains why the Defense Industry Initiative of 1986 was pivotal to leveling the competitive playing field. It also explores how CEO Norman Augustine leveraged Scott Adams' "Dilbert" character through a mandatory board game called "The Ethics Challenge" to embed ethical values across the organization and rehabilitate Lockheed Martin's global reputation.
- Introduction: Overview of Lockheed Martin's history and paper scope
- Unorthodox Strategies in the Mid-20th Century: Bribery, middlemen, and overseas sales tactics
- If Everyone Plays by Shady Rules, Is It Still Unethical?: Ethical analysis of industry-wide corrupt practices
- The Defense Industry Initiative and Lockheed Martin's Ethics Program: How the 1986 DII reshaped corporate ethics standards
- Norman Augustine, Dilbert, and Turning the Corner on Ethics: Augustine's board game initiative and culture change
- Conclusion: Synthesis of Lockheed Martin's ethical transformation
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What makes this paper effective
- The paper uses a clear chronological structure that traces Lockheed Martin's ethical failures and eventual reforms in logical sequence, making the argument easy to follow.
- Direct quotations from Terris (2013) and Bonime-Blanc (2011) are integrated smoothly to support each claim with authoritative evidence rather than assertion alone.
- The paper engages a genuine ethical question — whether it is wrong to follow universally shady rules — and answers it with principled reasoning rather than simply condemning the company.
Key academic technique demonstrated
The paper demonstrates effective use of contextual ethical analysis: rather than judging mid-20th century practices solely by modern standards, the author first establishes the legal and cultural context of the era, then argues that universality of a practice does not confer ethical legitimacy. This nuanced approach strengthens the argument and reflects graduate-level critical thinking.
Structure breakdown
The paper opens with a framing introduction that previews all major sections. It then moves through four substantive sections — historical practices, the ethics-of-ubiquity question, the DII's structural importance, and Augustine's culture-change initiative — before closing with a tight conclusion that synthesizes the findings. Each section addresses a distinct sub-question, giving the paper a cohesive essay-style structure built on targeted source integration.
Introduction
"Do What's Right." — Lockheed Martin Corporate Values, 2022
Founded on August 16, 1912 by Glenn L. Martin (Our history, 2022), the entity that would become Lockheed Martin is currently a leading aerospace company headquartered in Bethesda, Maryland, which employs approximately 114,000 people at more than 370 facilities in the United States and around the world (About us, 2022). Although the company enjoys positive global brand recognition today, Lockheed Martin experienced significant fallout as a result of its sales strategies beginning in the 1950s that adversely affected its reputation.
The purpose of this paper is to describe some of the unorthodox strategies used by Lockheed Martin during the 1950s and 1960s and to analyze whether those strategies were ethical given their ubiquity at the time. In addition, the paper examines why the Defense Industry Initiative was important to the eventual success of Lockheed Martin's ethics program and discusses Norman Augustine's and Dilbert's contributions in helping the company turn the corner on ethics. A summary of key findings is presented in the conclusion.
Unorthodox Strategies in the Mid-20th Century
In reality, the strategies used by the company during the mid-20th century were only "unorthodox" by modern standards, because bribery was a ubiquitous and accepted part of doing business in many parts of the world at the time. Terris (2013) points out that not all of the business practices Lockheed Martin used for negotiations abroad were illegal under U.S. law, but even those practices — such as outright bribery — that were illegal elsewhere were widely regarded as just "the cost of doing business" in those regions. As Terris emphasizes, "In the 1950s and 1960s, bribery overseas was not even illegal under American law; corporations doing business in other countries were presumed to be subject to the laws (or lack of laws) in those places" (p. 56).
Some of the other strategies the company used abroad to gain favor with powerful decision-makers seemed drawn from a spy novel, involving nefarious actors, prominent politicians, and even members of royal families — such as German-born Dutch Prince Bernhardt of Lippe-Biesterfeld. For this purpose, the company enlisted influential middlemen with intimate knowledge of local governments and good relationships with the powerbrokers needed to sell more Starfighter aircraft. Terris reports that "in countries around the world, they found willing partners, middlemen with access to the highest reaches of government, who were able to sway decisions for a price, and with access to a pool of funds that would not be tracked too closely" (pp. 55–56). The company also invested in multiple charitable initiatives in several nations, though it is reasonable to infer that these investments were directly linked to Lockheed Martin's overarching objective of increasing Starfighter sales abroad.
If Everyone Plays by Shady Rules, Is It Still Unethical?
Private sector companies' top leadership teams are responsible for serving as good stewards of their organizations. Generating sufficient revenue to remain in business and provide a reasonable return on stakeholders' investments is among the most important of these responsibilities. This means that top leaders are routinely faced with ethical dilemmas about how to proceed in any given environment, including those involving "shady rules." If rules are recognized as shady, their ethicality is obviously in question. Therefore, even when all competitors are following the same questionable practices, doing so remains unethical — however understandable it may be in context.
This reality places smaller enterprises at a competitive disadvantage, since they are less able to absorb the losses that result from refusing to engage in unethical business practices. Yet the historical record confirms that even the largest companies eventually face consequences once their unethical conduct is revealed. Lockheed Martin's outright bribery of Japanese aerospace companies in the early 1970s is a prime example. As Terris notes, "Lockheed was not the only player in the aeronautics industry to engage in these activities, nor was it the only one to receive government scrutiny. But the sheer size of the company, the scope of its international activities, and the harsh spotlight of the [Senate] subcommittee combined to make Lockheed a watchword for global bribery" (p. 58).
Because virtually all of Lockheed Martin's competitors were engaged in similar practices to varying degrees, the company's leadership insisted it was being scapegoated for the entire industry. Moreover, Terris notes that although the company lacked an internal ethics program throughout the 1960s and 1970s, its shady overseas practices were unlikely to have been addressed even if one had existed. It was only after a major shakeup of the company's top leadership and the implementation of the Defense Industry Initiative in 1986 that fundamental changes to ethical conduct were instituted.
Conclusion
The research was consistent in showing that Lockheed Martin engaged in many of the same unethical business practices that were characteristic of the global aerospace industry during the 1960s and 1970s, as well as other "shady" practices that, while not outright illegal, were questionable by modern standards. Not surprisingly, the company suffered financially and reputationally when these practices were discovered — an outcome that forced Lockheed Martin to take careful stock of what was needed to transform itself into a competitive yet ethical enterprise.
The research also showed that the Defense Industry Initiative of 1986 was critical in creating the structural conditions that made ethical competition possible across the industry. Furthermore, Norman Augustine's inspired use of "Dilbert" in The Ethics Challenge board game proved highly effective as part of the company's larger ethics program. Lockheed Martin ultimately emerged from its scandal-ridden past to become a global leader in the aerospace industry — one whose stated corporate values now include, simply, "Do What's Right."
References
About us. (2022). Lockheed Martin. Retrieved from https://www.lockheedmartin.com/en-us/who-we-are.html
Bonime-Blanc, A. (2011). The Defense Industry Initiative: From business conduct program innovator to industry standard? In S. P. Sethi (Ed.), Globalization and self-regulation. Palgrave Macmillan.
Meisler, A. (2004). Doing right and doing well. Workforce Management, 83(3), 50–51.
Our history. (2022). Lockheed Martin. Retrieved from https://www.lockheedmartin.com/en-us/news/features/history.html
Terris, D. (2013). Ethics at work: Creating virtue at an American corporation. Brandeis University Press.
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