Integrative Social Contracts Theory

Integrative Social Contracts Theory is a theory of business ethics originated by Thomas Donaldson and Thomas Dunfee, and is heavily influenced by the social contracts theories of political philosophers such as Thomas Locke and John Rawls. The goal of Integrative Social Contracts Theory is to provide a framework by which managerial and business decisions can be made with respect to their impact on relevant communities, ethical norms and possible universal moral standards.

Drawing on social contract theory, Integrative Social Contracts Theory posit that rational global contractors--businesses, individuals and other economic actors--enter into a hypothetical contract determining standards and norms. However, instead of politics and governance, this contract is concerned with normative rules influencing economic and business affairs. These norms must not conflict too much with divergent cultural or religious norms. While the hypothetical situation in this theory is that actors form this contract knowingly, in reality this process is more likely to come about implicitly, as with social contracts theory, where consent without coercion is the governing factor of whether or not a norm or value is constitutive.

This term is used to refer to universal moral principles that are the limits of acceptable action. Hypernorms are broad, foundational and encompass all actors everywhere, serving as an ultimate horizon determining what is and is not ethical for human beings and business entities. For an action to be ethical under social contracts theory it must align with such hypernorms.

Microsocial contracts are less pervasive and less encompassing agreements reached between agents within smaller business or economic communities--such as, but not limited to, individual industries--and exist as a substratum of contracts existing under the Macrosocial contract. They produce norms that are governed by a community’s generally accepted norms and values. For them to be considered legitimate by Integrative Social Contract Theory, they must not diverge from hypernorms determined in part by the Macrosocial contract.

Integrative Social Contracts Theory provides a loose method for making ethical decisions. First, you must identify all communities that will be impacted by the decision. Then, it is necessary to identify the norms by which those communities freely conform. Those norms must not conflict with larger moral standards which are taken as universally applicable to everyone, such as hypernorms. Finally, if conflicts remain, give priority to norms that are more pervasive, consistent and coherent within the framework of the macrosocial contract. This method would theoretically allow decision-makers to act in accordance with regard to an acceptable set of values, practices and norms.

Critiques of Integrative Social Contracts Theory oftentimes focus on the concept of hypernorms. It is arguable whether “universal” moral standards actually exist, how such standards are to be determined and whether they are variable over time and across cultures. Additionally, the methodology deployed by Integrative Social Contracts Theory would necessitate some kind of moral calculus, which some ethical theorists have rejected. Finally, some claim that a company or manager’s only commitment is to maximize profits for shareholders or to serving your own self-interest, and therefore any kind of business ethics that reaches beyond these minimal loyalties is obsolete.