Multifunctional Tetralemma. Framework for the Strategic Management of Moral Trade-offs

Abstract The issue of moral trade-offs is widely discussed in the literatures on sustainable development and stakeholder theory. Sustainability efforts often require corporate managers to balance economic, social, and environmental concerns, which frequently translate into trade-offs between legitimate stakeholder interests. We investigate how the nature of these trade-offs is illuminated by Luhmannian systems theory, particularly its vision of the polycontextural nature of the functionally differentiated society. We argue that managerial perceptions of trade-offs frequently arise from difficulties in fully grasping this polycontexturality. By applying the traditional Indian concept of tetralemma, we offer a framework that assists managers in navigating these trade-offs by emphasising the various observational perspectives associated with different function systems. Our analysis reveals that the traditional three-pillar model of sustainability is a reductionist framework that does not adequately address the incommensurability of function systems, thereby perpetuating the very issues it seeks to resolve. The adoption of the tetralemmatisation strategy we promote in this paper encourages the development of alternative corporate performance metrics that recognise the complexity of functional differentiation in evaluating corporate contributions to society.