THE IMPORTANCE OF VALUE DIVERSITY IN CORPORATE LIFE Wayne Eastman and Michael Santoro Abstract: Donaldson and Dunfee (1999) suggest in a brief discussion that a manager may in some cases rely on his or her own values in making organizational decisions. Our paper examines the role of di- versity in values in an organizational context. Our central contention is that value diversity among managers, employees, and other stake- holders on dimensions such as prudence-boldness, clarity-flexibility, and rigor-mercy is highly useful for an organization. We introduce non- technical models of individual and board decision-making in which value diversity cuts across group interests that would otherwise con- trol the decision. In these models, decision-makers who are influenced by values such as prudence or boldness as well as by their group interests are more likely to avoid suboptimal decisions, because their weaker but not their more intense group interests are likely to be overridden by their cross-cutting value inclinations. Introduction I n "Ties that Bind," Donaldson and Dunfee contend that under some circum- stances an organization's values, and even a manager's own values, may le- gitimately be part of his or her decision process.' Our paper is a reflection upon that comment and the tricky issue it raises as to the appropriate role of personal values in decision-making on matters such as discipline, layoffs, leave policy, and investment in risky projects.^ Our view is that when firms have to resolve competing claims by stakeholders in moral free space, where an action is not mandated by either an overarching hypernorm or a local authentic norm, value diversity by decision-makers on dimensions such as courage-prudence and rigor- mercy is highly desirable.^ For example, we believe that a corporation is better off if it has some manag- ers with a character tilt toward courageous decisions and other managers with a character tilt toward prudent decisions."* Although the greatest benefit for a corpo- ration from such value diversity comes in the context of group decision-making, as with a corporate board, we will also contend that in situations involving an individual manager there is value from an organization's perspective in having © 2003. Business Ethics Quarterly, Volume 13, Issue 4. ISSN 1052-150X. pp. 433-452