Integrative Social Contracts Theory

A hypothetical social contract takes into account ethical standards developed by groups through real social contact and based on their mutual interest in supportive or, at least, benign interaction.

In other words, managers both desire and expect that there be ethical rules to govern their marketplace transactions. They envision global humanity coming together to work out a rational arrangement for ethics in economic life. The rational humans at this global convention would recognise that moral rationality is bounded in the same way that economic rationality is bounded.

Thus, Donaldson and Dunfee, two chief advocates of the social contract theory approach, conclude that they would want business communities or groups to have moral free space.

People, including managers, would want to have moral free space because they want to keep their moral options open until they confront the full context and environment of a decision.

In theory, there may be norms that condone murder as a method of enforcing contracts or that endorse racial or sexual discrimination. As a consequence, it can be assumed that the vast majority of people would want to restrict the moral free space of communities by requiring that, before any community norms become ethically obligatory, they must be found to be compatible with hypernorms.

Hypernorms (the norms by which all other norms are to be judged) entail principles so fundamental to human existence that we would expect them to be reflected in a convergence of religious, philosophical and cultural beliefs.

A list of hypernorms would surely include thefollowing:

  • An obligation to respect the dignity of each human person
  • Core human rights, such as personal freedom, physical security and well-being, and the ownership of property
  • Equity, or the fair treatment of similarly situated persons
  • Avoiding unnecessary injury to others

The notion that “acceptable standards” of business or industry practice cannot violate hypernorms is one of the basic contributions of this approach.

Integrative social contracts theory has been applied to international bribery and corruption and according to Dunfee “establishes a means for displaying the ethical relevance of existing norms in industries, corporations and other economic communities, even as it limits the acceptable range of such norms. It . . . advocates much closer scrutiny of existing ethical beliefs and practices in institutions as dissimilar as the European Community, the Sony Corporation, the international rubber market and Muslim banks.”


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