Confucian Principles of Governance: Paternalistic Order and Relational Obligations Without Legal Rules

Abstract

Tung Chung-Shu (179-104B.C.) synthesized the works of Confucius and Mencius to come up with a blueprint for the creation of civil society based on hierarchical order and moral cultivation, known as ‘San Gang Wu Chang’. ‘San Gang’ refers to the obligations attached to three key relationships in any given society, they are those between the king and his subjects; father and son; husband and wife. It is essentially social stratification with the focus on paternalism. ‘Wu Chang’ speaks of the five virtues: benevolence (Ren), righteousness (Yi), propriety (Li), wisdom (Zhi), and trust (Xin). These five moral benchmarks are the underpinnings of human intercourse and relational obligations. Therefore, the application of this Confucian order in the context of corporate governance suggests an emphasis on the establishment of paternalistic order and the fulfillment of one’s relational obligations towards others in the company, the goal is to create a harmonious environment.

Keywords: governance, paternalistic order, relational obligations, ethics, Confucius

JEL Classification: B31, H89, K29, M19, L29