Log in

Advancing Integrative Social Contracts Theory: A Habermasian Perspective

  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract

We critically assess integrative social contracts theory (ISCT) and show that the concept particularly lacks of moral justification of substantive hypernorms. By drawing on Habermasian philosophy, in particular discourse ethics and its recent application in the theory of deliberative democracy, we further advance ISCT and show that social contracting in business ethics requires a well-justified procedural rather than a substantive focus for managing stakeholder relations. We also replace the monological concept of hypothetical thought experiments in ISCT by a concept of practical discourse to better govern business activities on the macro-level of organizational actors such as firms, governments, and NGOs.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or Ebook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price includes VAT (Germany)

Instant access to the full article PDF.

Similar content being viewed by others

References

  • Barry, B., & Stephens, C.U. (1998). Objections to an objectivist approach to integrity. Academy of Management Review, 23(1), 162–169. doi:10.2307/259105

    Article  Google Scholar 

  • Benhabib, S. 1990, ‹Afterward: Communicative ethics and contemporary controversies in practical philosophy’, in S. Benhabib and F. Dallmayr (eds.), The communicative ethics controversy (MIT Press, Cambridge/MA), pp. 330–369.

    Google Scholar 

  • Beschorner, T. (2006). Ethical theory and business practices: The case of discourse ethics. Journal of Business Ethics, 66(1), 127–139. doi:10.1007/s10551-006-9049-x

    Article  Google Scholar 

  • Bird, F·B. 1996, The muted conscience: Moral silence and the practice of ethics in business (Quorum Books, Westport/CT).

    Google Scholar 

  • Bird, F. B.: 2003, ‹The value-added approach to business ethics’, Zeitschrift für Wirtschafts- und Unternehmensethik, 4(2), 148–166.

    Google Scholar 

  • Boatright, J.R. (2000). ‹Contract theory and business ethics: A review of ‹Ties that bind’’. Business and Society Review, 105(4), 452–466. doi:10.1111/0045-3609.00094

    Article  Google Scholar 

  • Boatright, J.R. (2007). Is there an internal morality of contracting? Academy of Management Review, 32(1), 293-295.

    Google Scholar 

  • Bohman, J. 1996, Public deliberation: Pluralism, complexity, and democracy (MIT Press, Cambridge/MA).

    Google Scholar 

  • Bowie, N.E. 1999, Business ethics: A Kantian perspective (Blackwell Publishers, Hong Kong).

    Google Scholar 

  • Brockner, J. (2002). Making sense of procedural fairness: How high procedural fairness can reduce or heighten the influence of outcome favorability. Academy of Management Review, 27(1), 58–76. doi:10.2307/4134369

    Article  Google Scholar 

  • Brockner, J. (2006). ‹Why It’s so hard to be fair’. Harvard Business Review, 84(3), 122–129.

    Google Scholar 

  • Bucar, B., Glas, M., & Hisrich, R.D. (2003). Ethics and entrepreneurs: An international comparative study. Journal of Business Venturing, 18(2), 261–281. doi:10.1016/S0883-9026(01)00083-0

    Article  Google Scholar 

  • Buller, P·F., & McEvoy, G.M. (1999). Creating and sustaining ethical capability in the multi-national corporation. Journal of World Business, 34(4), 326–343. doi:10.1016/S1090-9516(99)00022-X

    Article  Google Scholar 

  • Calton, J.M. (2006). Social contracting in a pluralist process of moral sense making: A dialogic twist on the ISCT. Journal of Business Ethics, 68(3), 329–346. doi:10.1007/s10551-006-9017-5

    Article  Google Scholar 

  • Calton, J.M., & Payne, S. (2003). Co** with paradox. Business & Society, 42(1), 7–42. doi:10.1177/0007650302250505

    Article  Google Scholar 

  • Conger, S., & Loch, K.D. (2001). Invitation to a public debate on ethical computer use. The DATA BASE for Advances in Information Systems, 32(1), 58.

    Google Scholar 

  • Conry, E.J. (1995). A critique of social contracts for business. Business Ethics Quarterly, 5(2), 187–212. doi:10.2307/3857353

    Article  Google Scholar 

  • Crane, A., & Matten, D.2007, Business ethics. A European perspective (2nd ed.) (Oxford University Press, Oxford).

    Google Scholar 

  • DeGeorge, R. 1993, Competing with integrity in international business (Oxford University Press, New York).

    Google Scholar 

  • Derrida, J. 1992, ‹Force of law: The “Mystical Foundation of Authority”‹, in D. Cornell, M. Rosenfeld, and D. G. Carlson (eds.), Deconstruction and the Possibility of Justice (Routledge, New York/London), pp. 3–67.

    Google Scholar 

  • Donaldson, T. (2003). ‹Editor’s comments: Taking ethics seriously – A mission now more possible’. Academy of Management Review, 28(3), 363–366.

    Google Scholar 

  • Donaldson, T., & Dunfee, T.W. (1994). Toward a unified conception of business ethics: Integrative social contracts theory. Academy of Management Review, 19(2), 252–284. doi:10.2307/258705

    Article  Google Scholar 

  • Donaldson, T., & Dunfee, T.W.1999, Ties that bind. A social contracts approach to business ethics (Harvard Business School Press, Boston).

    Google Scholar 

  • Donaldson, T., & Dunfee, T.W. (2000). Précis for: Ties that bind. Business and Society Review, 105(4), 436–443. doi:10.1111/0045-3609.00092

    Article  Google Scholar 

  • Donaldson, T., & Preston, L.E. (1995). The stakeholder theory of the corporation – Concepts, evidence, and implications. Academy of Management Review, 20(1), 65–91. doi:10.2307/258887

    Article  Google Scholar 

  • Douglas, M. (2000). Integrative social contracts theory: Hype Over hypernorms. Journal of Business Ethics, 26(2), 101–110. doi:10.1023/A:1006154819742

    Article  Google Scholar 

  • Dryzek, J.S. (2001). Legitimacy and economy in deliberative democracy. Political Theory, 29(5), 651–669. doi:10.1177/0090591701029005003

    Article  Google Scholar 

  • Dunfee, T.W. (2006). A critical perspective of integrative social contracts theory: Recurring criticisms and next generation research topics. Journal of Business Ethics, 68(3), 303–328. doi:10.1007/s10551-006-9016-6

    Article  Google Scholar 

  • Dunfee, T.W., Smith, N·C., & Ross, T.W. (1999). Social contracts and marketing ethics. Journal of Marketing, 63(3), 14–32. doi:10.2307/1251773

    Article  Google Scholar 

  • Enderle, G. (2000). Whose ethos for public goods in the global economy: An exploration in international business ethics. Business Ethics Quarterly, 10(1), 131–144. doi:10.2307/3857700

    Article  Google Scholar 

  • Finke, S.R.S. (2000). Habermas and Kant. Judgement and communicative experience. Philosophy and Social Criticism, 26(6), 21–45.

    Article  Google Scholar 

  • Finlayson, J.G. (2000). ‹Modernity and morality in Habermas’s discourse ethics’. Inquiry, 43(3), 319–340. doi:10.1080/002017400414881

    Article  Google Scholar 

  • Finlayson, J. 2005, Habermas: A very short introduction (Oxford University Press, Oxford).

    Google Scholar 

  • Fishkin, J. 1991, Democracy and deliberation: New directions for democratic reform (Yale University Press, New Haven/CT).

    Google Scholar 

  • Forest Stewardship Council (FSC).1996, FSC international standard. FSC principles and criteria for forest stewardship (FSC Printing Office, Bonn).

    Google Scholar 

  • Fort, T.L. (2000). ‹A review of Donaldson and Dunfee’s “Ties that bind: A social contracts approach to business ethics”‹. Journal of Business Ethics, 28(4), 383–387. doi:10.1023/A:1006297614984

    Article  Google Scholar 

  • Frederick, W·C. (2000). Pragmatism, nature and norms. Business and Society Review, 105(4), 467–479. doi:10.1111/0045-3609.00095

    Article  Google Scholar 

  • Froomkin, A.M. (2003). Habermas@discourse.net: Towards a critical theory of cyberspace. Harvard Law Review, 116(3), 751–873. doi:10.2307/1342583

    Article  Google Scholar 

  • Fung, A. (2003). ‹Deliberative democracy and international labor standards’, Governance: An International Journal of Policy. Administration and Institutions, 16(1), 51–71.

    Google Scholar 

  • Fung, A. (2005). Deliberation before the revolution. Political Theory, 33(2), 397–419. doi:10.1177/0090591704271990

    Article  Google Scholar 

  • Gauthier, D. 1986, Morals by agreement (Oxford University Press, Oxford).

    Google Scholar 

  • Gilbert, D.U., & Behnam, M.2006, ‹Putting discourse ethics into practice: The case of multinational corporations’, in T. Beschorner and M. Schmidt (eds.), Unternehmerische Veranwortung in Zeiten des Wandels (Rainer Hampp, Munich), pp 41–69.

    Google Scholar 

  • Gilbert, D.U., & Rasche, A. (2007). Discourse ethics and social accountability – the ethics of SA 8000. Business Ethics Quarterly, 17(2), 187–216.

    Google Scholar 

  • Habermas, J. 1990, Moral consciousness and communicative action (MIT Press, Cambridge/MA).

    Google Scholar 

  • Habermas, J. 1992, Postmetaphysical thinking: Philosophical essays (MIT Press, Cambridge/MA).

    Google Scholar 

  • Habermas, J. 1993, Justification and application. Remarks on discourse ethics (MIT Press, Cambridge/MA).

    Google Scholar 

  • Habermas, J. 1996, Between Facts and Norms (Polity Press, Cambridge/UK).

    Google Scholar 

  • Habermas, J. 1998, On the pragmatics of communication (MIT Press, Cambridge/MA).

    Google Scholar 

  • Habermas, J. 1999, The inclusion of the other. Studies in political theory (MIT Press, Cambridge/MA).

    Google Scholar 

  • Habermas, J. 2001, ‹From Kant’s ‹ideas’ of pure reason to the ‹idealizing’ presuppositions of communicative action: Reflections on the detranscendentalized ‹use of reason’’, in W. Regh and J. Bohman (eds.), Pluralism and the pragmatic turn (MIT Press, Cambridge/MA), pp. 11–39.

    Google Scholar 

  • Habermas, J. 2003, Truth and justification (Polity Press, Cambridge/UK).

    Google Scholar 

  • Habermas, J. 2006, The divided west (Polity Press, Cambridge/UK).

    Google Scholar 

  • Hartmann, E.M. 1996, Organizational ethics and the good life (Oxford University Press, New York).

    Google Scholar 

  • Hartman, L.P., Shaw, B., & Stevenson, R. (2003). Exploring the ethics and economics of global labor standards: A challenge to integrative social contract theory. Business Ethics Quarterly, 13(2), 193–220.

    Google Scholar 

  • Hendry, J. (1999). Universalizability and reciprocity in international business ethics. Business Ethics Quarterly, 9(3), 405–420. doi:10.2307/3857509

    Article  Google Scholar 

  • Heugens, P·P.M.A.R., Kaptein, M., & van Oosterhout, J.H. (2004). Ties that grind? Corroborating a typology of social contracting problems. Journal of Business Ethics, 49(3), 235–252. doi:10.1023/B:BUSI.0000017960.17747.56

    Article  Google Scholar 

  • Heugens, P·P.M.A.R., van Oosterhout, J.H., & Kaptein, M. (2006). Foundations and applications for contractualist business ethics. Journal of Business Ethics, 68(3), 211–228. doi:10.1007/s10551-006-9011-y

    Article  Google Scholar 

  • Husted, B. (1999). A critique of the empirical methods of integrative social contracts theory. Journal of Business Ethics, 20(3), 227–235. doi:10.1023/A:1005843230170

    Article  Google Scholar 

  • Jones, T.M., Felps, W., & Bigley, G.A. (2007). Ethical theory and stakeholder-related decisions: The role of stakeholder culture. Academy of Management Review, 32(1), 137–155.

    Google Scholar 

  • Kant, I. 1788, Critique of practical reason (Cambridge University Press, Cambridge, UK).

    Google Scholar 

  • Keeley, M. 1988, A social contract theory of organizations (University of Notre Dame Press, Notre Dame/IN).

    Google Scholar 

  • Keeley, M. (1995). Continuing the social contract tradition. Business Ethics Quarterly, 5(2), 241–256. doi:10.2307/3857355

    Article  Google Scholar 

  • Locke, J. 1690, The second treatise of civil government and a letter concerning toleration (Basil Blackwell, Oxford).

    Google Scholar 

  • Logsdon, J.M., & Wood, D.J. (2002). Business citizenship: From domestic to global level of analysis. Business Ethics Quarterly, 12(2), 155–187. doi:10.2307/3857809

    Article  Google Scholar 

  • Lozano, J.F. (2001). ‹Proposal for a model for the elaboration of ethical codes based on discourse ethics’, Business Ethics. European Review (Chichester, England), 10(2), 157–162.

    Article  Google Scholar 

  • Lucas, L.: 2004, ‹Business Ethics and the Adaptive Problem: ISCT’s Efficiency Hypernorm’, Paper Presented at the Conference: Contractarian Approaches to Business Ethics: Evolution of Integrative Social Contract Theory, Philadelphia

  • Macneil, I.R. (1978). Contracts: Adjustments of long-term economic relations under classical, neoclassical and relational contract law. Northwestern University Law Review, 72(6), 854–905.

    Google Scholar 

  • Matten, D., & Crane, A. (2005). Corporate citizenship: Towards an extended theoretical conceptualization. Academy of Management Review, 30(1), 166–179.

    Article  Google Scholar 

  • Mayer, D., & Cava, A. (1995). Social contract theory and gender discrimination. Business Ethics Quarterly, 5(2), 257–270. doi:10.2307/3857356

    Article  Google Scholar 

  • McCarthy, D.J., & Puffer, S.M. (2008). Interpreting the ethicality of corporate governance decisions in Russia: Utilizing integrative social contracts theory to evaluate the relevance of agency theory norms. Academy of Management Review, 33(1), 11–31.

    Google Scholar 

  • Mitchell, R.K., Agle, B.R., & Wood, D.J. (1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review, 22(4), 853–886. doi:10.2307/259247

    Article  Google Scholar 

  • Moore, G. E. 1903, Principia ethica (Cambridge University Press, Cambridge, UK).

    Google Scholar 

  • Morsing, M., & Schultz, M. (2006). ‹Corporate social responsibility communication: Stakeholder information, response and involvement strategies’, Business Ethics. European Review (Chichester, England), 14(4), 323–338.

    Article  Google Scholar 

  • Nielsen, R.P. (2000). Do internal due process systems permit adequate political and moral space for ethics voice, praxis, and community? Journal of Business Ethics, 24(1), 1–27. doi:10.1023/A:1005968228336

    Article  Google Scholar 

  • Palazzo, G., & Scherer, A.G. (2006). Corporate legitimacy as deliberation: A communicative framework. Journal of Business Ethics, 66(1), 71–88. doi:10.1007/s10551-006-9044-2

    Article  Google Scholar 

  • Parkinson, J. 2006, Deliberating in the real world. Problems of legitimacy in deliberative democracy (Oxford University Press, Oxford/UK).

    Google Scholar 

  • Phillips, R. 2003, Stakeholder Theory and Organizational Ethics (Berret-Koehler Publishers, San Francisco).

    Google Scholar 

  • Phillips, R.A., & Johnson-Cramer, M.E. (2006). Ties that unwind: Dynamism in integrative social contracts theory. Journal of Business Ethics, 68(3), 283–302. doi:10.1007/s10551-006-9015-7

    Article  Google Scholar 

  • Rasche, A., & Esser, D.E. (2006). From stakeholder management to stakeholder accountability. Journal of Business Ethics, 65(3), 251–267. doi:10.1007/s10551-005-5355-y

    Article  Google Scholar 

  • Rawls, J. 1971, A theory of justice (Harvard University Press, Cambridge/MA).

    Google Scholar 

  • Reed, D. (1999). Stakeholder management theory: A critical theory perspective. Business Ethics Quarterly, 9(3), 453-483. doi:10.2307/3857512

    Article  Google Scholar 

  • Reisel, W.D., & Sama, L.M. (2003). The distribution of live-saving pharmaceuticals: Viewing the conflict between social efficiency and economic efficiency through a social contract lens. Business and Society Review, 108(3), 365–387. doi:10.1111/1467-8594.00169

    Article  Google Scholar 

  • Reisel, W. D. and L. M. Sama: 2004, ‹Applying ISCT When Norms are Incompatible: The Case of Access to Live-Saving Medicines in South Africa’, Paper Presented at the Conference: Contractarian Approaches to Business Ethics: Evolution of Integrative Social Contract Theory, Philadelphia

  • Rorty, R. 1991, ‹The priority of democracy to philosophy’, in R. Rorty (ed.), Objectivity, relativism, and truth: Philosophical papers, vol. I (Cambridge University Press, Cambridge/UK), pp.175–196.

    Google Scholar 

  • Rowan, J.R. (2001). How binding are the ties? Business ethics as integrative social contracts. Business Ethics Quarterly, 11(2), 379–390. doi:10.2307/3857756

    Article  Google Scholar 

  • Ryfe, D.M. (2005). Does deliberative democracy work? Annual Review of Political Science, 8(1), 49–71. doi:10.1146/annurev.polisci.8.032904.154633

    Article  Google Scholar 

  • Salbu, S.R. (2000). ‹Ties that bind: ISCT as a procedural approach to business ethics’’. Business and Society Review, 105(4), 444–451. doi:10.1111/0045-3609.00093

    Article  Google Scholar 

  • Sama, L.M., & Shoaf, V. (2005). Reconciling rules and principles: An ethics-based approach to corporate governance. Journal of Business Ethics, 58(1–3), 177–185. doi:10.1007/s10551-005-1402-y

    Article  Google Scholar 

  • Scherer, A.G., & Palazzo, G. (2007). Toward a political conception of corporate responsibility – Business and society seen from a Habermasian perspective. Academy of Management Review, 32(4), 1096–1120.

    Google Scholar 

  • Schnebel, E. (2000). Values in decision-making processes. Systematic structures of J. Habermas and N. Luhmann for the appreciation of responsibility in leadership. Journal of Business Ethics, 27(1/2), 79–89. doi:10.1023/A:1006465030955

    Article  Google Scholar 

  • Schnebel, E., & Bienert, M.A. (2004). Implementing ethics in business organizations. Journal of Business Ethics, 53(1/2), 203–211. doi:10.1023/B:BUSI.0000039409.58757.a8

    Article  Google Scholar 

  • Schulz-Hardt, S., Brodbeck, F·C., Mojzisch, A., Kerschreiter, R., & Frey, D. (2006). Group decision making in hidden profile situations: Dissent as a facilitator for decision quality. Journal of Personality and Social Psychology, 91(6), 1080–1093. doi:10.1037/0022-3514.91.6.1080

    Article  Google Scholar 

  • Shaw, B. (2000). Book review dialogue: Ties that bind. American Business Law Journal, 37(3), 563–578.

    Article  Google Scholar 

  • Sollars, G.G. (2002). The corporation as actual agreement. Business Ethics Quarterly, 12(3), 351–369. doi:10.2307/3858021

    Article  Google Scholar 

  • Soule, E. (2002). Managerial moral strategies – In search of a few good principles. Academy of Management Review, 27(1), 114–124. doi:10.2307/4134372

    Article  Google Scholar 

  • Spicer, A., Dunfee, W., & Bailey, W.J. (2004). Does national context matter in ethical decision making? An empirical test of integrative social contracts theory. Academy of Management Journal, 47(4), 610–620.

    Google Scholar 

  • Stasser, G. (1988). Computer simulation as a research tool: the DISCUSS model of group decision making. Journal of Experimental Social Psychology, 24, 393–422. doi:10.1016/0022-1031(88)90028-5

    Article  Google Scholar 

  • Ulrich, P. 1996, ‹Towards an ethically-based conception of socio-economic rationality: From the social contract theory to discourse ethics as the normative foundation of political economy’, in W. W. Gasparski and L. V. Ryan (eds.), Human action in business: Praxiological and ethical dimensions (Transaction Publishers, New Brunswick), pp. 21–99.

    Google Scholar 

  • Unerman, J., & Bennett, M. (2004). Increased stakeholder dialogue and the internet: Towards greater corporate accountability or reinforcing capitalist hegemony? Accounting, Organizations and Society, 29(7), 685–707. doi:10.1016/j.aos.2003.10.009

    Article  Google Scholar 

  • Van Buren, H.J., III. (2001). If fairness is the problem, is consent the solution? Integrating ISCT and stakeholder theory. Business Ethics Quarterly, 11(3), 481–499. doi:10.2307/3857850

    Article  Google Scholar 

  • Van Oosterhout, J.H., Heugens, P·P.M.A.R., & Kaptein, M. (2006). The internal morality of contracting: Advancing the contractualist endeavor in business ethics. Academy of Management Review, 31(3), 521–539.

    Google Scholar 

  • Van Oosterhout, J.H., Heugens, P·P.M.A.R., & Kaptein, M. (2007). Contractualism vindicated: A response to Boatright. Academy of Management Review, 32(1), 295–297.

    Google Scholar 

  • Waddock, S. (2008). Building a new institutional infrastructure for corporate responsibility. Academy of Management Perspectives, 22(3), 87–108.

    Google Scholar 

  • Watson, S., & Weaver, G. (2003). How internationalization affects corporate ethics: Formal structures and informal management behavior. Journal of International Management, 9(1), 75–93. doi:10.1016/S1075-4253(03)00004-8

    Article  Google Scholar 

  • Wempe, B. (2005). In defense of a self-disciplined, domain-specific social contract theory of business ethics. Business Ethics Quarterly, 15(1), 113–135.

    Google Scholar 

  • Wempe, B. (2008a). Contractarian business ethics: Credentials and design criteria. Organization Studies, 29(10), 1337–1355. doi:10.1177/0170840608093546

    Article  Google Scholar 

  • Wempe, B. (2008b). ‹Four design criteria for any future contractarian theory of business ethics. Journal of Business Ethics, 81(3), 697–714. doi:10.1007/s10551-007-9542-x

    Article  Google Scholar 

  • Wiesenfeld, B.M., Jr. Swann, W·B., Brockner, J., & Bartel, C.A. (2007). Is more fairness always preferred? Self-esteem moderates reactions to procedural justice. Academy of Management Journal, 50(5), 1235–1253.

    Google Scholar 

  • Williamson, O.E. (1991). Comparative economic organization: The analysis of discrete structural alternatives. Administrative Science Quarterly, 36(2), 269–296. doi:10.2307/2393356

    Article  Google Scholar 

  • Young, I.M. (2003). From guilt to solidarity. Sweatshops and political responsibility. Dissent, 50(1), 39–44.

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Dirk Ulrich Gilbert.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Gilbert, D.U., Behnam, M. Advancing Integrative Social Contracts Theory: A Habermasian Perspective. J Bus Ethics 89, 215–234 (2009). https://doi.org/10.1007/s10551-008-9995-6

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-008-9995-6

Key words

Navigation