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The Separation Thesis Weighs Heavily on Integrative Social Contracts Theory: A Comprehensive Critique

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Abstract

For more than three decades, Integrative Social Contracts Theory (ISCT) has been lauded as a business ethics theory particularly well suited to the international arena, especially because of its alleged ability to reconcile respect for cultural idiosyncrasies and normative teeth. However, this theory has also faced various objections, many of which its authors have responded to with varying degrees of satisfaction. As a contribution to this debate, this article provides a unifying rationale for many of those objections by exploring their rooting in the Separation thesis. It submits that this fact negatively impacts the theory with three major challenges, namely: significant limitations to correctly frame moral issues and situations; poor identification of hypernorms; and insufficient theoretical grounding of hypernorms. This critique highlights the need for the entanglement of the normative and the empirical in business ethics theorizing.

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Data Availability Statement

Data sharing not applicable – no new data generated, or the article describes entirely theoretical research.

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Notes

  1. These issues include LGBTQ rights, gun control and contraception (Baird and Mayer 2021); gender discrimination (Mayer and Cava 1995); differences in moral reasoning and ethical standards across cultures (Bucar et al. 2003; Fritzsche et al. 1995; Hisrich et al. 2003; Markova 2015; McCarthy and Puffer 2008; Spicer et al. 2004; Tan and Ko 2014); safety and health in sweatshops (Auchter 2014; Auchter and Dziewa 2013; Hartman et al. 2003); distribution of life-saving pharmaceuticals in developing countries (Danis and Sepinwall 2002, p. 6; Reisel and Sama 2003; Sama and Reisel 2005); disability policies (Ståhl et al. 2014); financial misconduct (Vasudev 2015); marketing practices, such as the ethics of marketing to college students (Lucas 2001), the ethicality of targeting in social marketing (Newton et al. 2013), or the cultural challenges of international marketing practices (Javalgi and La Toya 2018); consumer privacy issues (Culnan 1995; Higgs-Kleyn et al. 2000), including online privacy (Martin 2016; Wang and Wu 2014); a moral framework for resolving the tension between CO2 emissions and poverty reduction goals (Collins and Zheng 2015); corporate drug testing (Strong and Ringer 2000); downsizing (Van Buren and Harry 2000); morally questionable trading at the expense of atomistic investors (Evans et al. 2017); deviant behavior in organizations (Warren 2003) and reconciliation of conflicting ethical tones in organizations (Warren et al. 2015); managing the gap between managers’ personal values and those of the company (LoMonaco-Benzing and Ha-Brookshire 2016); etc. Some of these studies turn to ISCT as a background framework for the issue under discussion (Bucar et al. 2003; Culnan 1995; Evans et al. 2017; Higgs-Kleyn et al. 2000; Hisrich et al. 2003; Madsen 2003; Sila 2018; Wang and Wu 2014; Warren 2003), although sometimes just superficially (Castro-Martinez and Jackson 2015; Collins and Zheng 2015; Chen and Wang 2017; Doh et al. 2016; Javalgi and La Toya 2018; Ståhl et al. 2014; Vasudev 2015; Wilburn and Wilburn 2014). The remainder of these works attempt to systematically apply the analytical steps that the authors recommend (Donaldson and Dunfee 1999).

  2. Ast (2019), Diener (2014), Scholz et al. (2019), Hsieh (2015), Scherer (2015), Vitell and Hunt (2015), Warren et al. (2015), Windsor (2015), Martin (2016), Frynas and Stephens (2015), Russell et al. (2016), Wilburn and Wilburn (2014), Jahn and Brühl (2018), Doh et al. (2016), Auchter and Dziewa (2013), LoMonaco-Benzing and Ha-Brookshire(2016), Zwanka (2018), Sila (2018), Curtis et al. (2017), Luetge et al. (2016), Wang and Wu (2014), Ståhl et al. (2014), Collins and Zheng (2015), Tan and Ko (2014), Francés-Gómez (2018, 2019), Javalgi and La Toya (2018), Dahan et al. (2015), Evans et al. (2017) and Vasudev (2015).

  3. Among these, Sánchez (1999) and Salbu (2000), who highlight the benefits of a procedural approach to business ethics rather than a substantive one. Reisel and Sama (2003) also consider ISCT a useful tool for analyzing the ethicality of life-saving pharmaceuticals distribution, and Baird and Mayer (2021) stress the usefulness of priority rules in helping decide corporate stance in front of controversial issues, such as gun control, contraception and LGBTQ rights. Gosling and Huang (2009) illuminate the notion of integrity through ISCT, whilst Jahn and Brühl (2018) employ ISCT as a term of comparison to highlight the normative richness of Friedman’s understanding of corporate responsibility. Other authors celebrate the relevance that ISCT gives to the moral free space towards a pluralistic theory of business ethics (Dempsey 2011; Rowan 2001; Tsui and Windsor 2001). Other scholars just discuss ISCT within the broader framework of contractarian theories of ethics (Huang and Hung 2013; Russell et al. 2016; Vitell and Hunt 2015) or make use of some of its notions (Hsieh 2015; Windsor 2015).

  4. While enumerating the merits of ISCT in providing concrete ways for resolving ethical conflicts, Conry (1995) also stresses that ISCT requires careful research regarding some specific features, including those related to bounded moral rationality and determinacy. Calton and Lad (1995) claim that ISCT could increase its functionality if it were perceived of and used as a network governance process. Douglas (2000) doubts the very role that hypernorms play in the ISCT scheme and proposes to substitute them with a well-conceived set of priority rules. Brenkert (2009) makes the opposite point, arguing that a contextualist view is to be preferred to a principlist one, but that is still not solid enough to defend human rights. Nielsen (2000) thinks that more work needs to be done in order to enhance companies’ internal due process systems, necessary for preserving employees’ voices. Phillips and Johnson-Cramer (2006) specifically analyze the notion of consent to extend ISCT by considering the circumstances under which the terms of and parties to social contracts change. Diener (2014) thinks ISCT can be completed by adding a “multi-layered” element. Jeurissen and Nijhof (2013) suggest expanding its social contractual dimension by emphasizing egalitarianism, adding an institutional aspect, and clarifying who the contractors are. Ast (2019) enhances the process of identifying hypernorms by designing a process, the Deliberative Test, to ensure that hypernorms with higher cross-cultural validity come out on top in cases of conflict. Scherer (2015) pinpoints that the justification of hypernorms can free itself from argumentative deadlock by grounding it in the normative tradition of discursivity, whilst Scholz et al. (2019) take seriously this criticism and seek to clarify the processual conditions of valid hypernorms.

  5. Kultgen (1986) questioned whether the effort represents a “minor heuristic exercise” based on the fact that it does not allow for status as a real agreement or a set of actual contracts. Levitt (1986) urged Donaldson to personally commit to the existence of a real social contract. Other scholars, such as Hodapp (1990) or Francés-Gómez (2018), even deny that ISCT belongs to the tradition of social contract theory. Husted (1999) affirms that empirical identification of communities, authentic norms, and hypernorms in ISCT is seriously impeded by differences in terms of orientation to moral contexts, moral reasoning, and institutional and structural conditions. Velasquez (2000) considers that a theory like ISCT, which incorporates both absolutist and relativist elements, inherits the deficiencies of both kinds of theories. Luetge et al. (2016) deem social contractualism a hopelessly inadequate means of addressing issues of management due to the abstract nature of its conceptual devices, which is the root of various shortcomings.

  6. Priority rules are: Priority Rule One: Transactions solely within a single community, which should not have significant adverse effects on other humans or communities, should be governed by the host community’s norms.

    Priority Rule Two: Existing community norms indicating a preference for resolving conflicts of norms should be utilized, so long as they do not have significant adverse effects on other individuals or communities.

    Priority Rule Three: The more extensive or more global community that is the source of the norm, the greater the priority that should be given to the norm.

    Priority Rule Four: Norms essential to the maintenance of the economic environment in which the transaction occurs should have priority over norms potentially damaging to that environment.

    Priority Rule Five: Where multiple conflicting norms are involved, patterns of consistency among alternative norms provide a basis for prioritization.

    Priority Rule Six: Well-defined norms should ordinarily have priority over general, less precise ones.

  7. Special attention is paid here to “substantive” hypernorms because “procedural” and “structural” hypernorms (Dunfee 2000, p. 498), although important on their own, play a subsidiary role in light of the former.

  8. This tension at the core of ISCT’s project can also be felt in another, usually overlooked but problematic element of ISCT: that most (if not all) hypernorms ‘start’ as authentic norms. For instance, the Universal Declaration of Human Rights (UN, 1948) is, to a great extent, a collection of local norms from different communities all over the world, including Islam, the Judeo-Christian tradition, or Confucianism (Glendon, 1998). This means that a local norm is often microcommunity- and macrocommunity-relative at the same time, and that it is its being normatively valuable what may prompt its transition from the micro up to the macro level. This is problematic for ISCT because it allows normativity seep into the moral free space and blur their carefully crafted difference between authentic norms and hypernorms. The authors have tried to obscure this tension (see also Brenkert, 2009) and cement the gap by using such terminology as 'lower level moral norms' vs. 'principles fundamental to human existence' and limiting the examples of authentic norms to those that lack proper ethical content. Cases in point are the above discussed example of condolence giving, “time sensitivity” (to characterize differences in punctuality between Swiss and South American people), or “group orientation” (between Japanese and US Americans) (Dunfee & Donaldson, 2002). This seems meant to keep artificially clean the divide between the empirical and the normative.

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This work was supported by the Spanish Ministerio de Ciencia y Tecnología (DGICYT) and FEDER Fund, through the research Project BENEB3 (FFI2017-87953-R).

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    César González-Cantón

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González-Cantón, C. The Separation Thesis Weighs Heavily on Integrative Social Contracts Theory: A Comprehensive Critique. Philosophy of Management 21, 391–411 (2022). https://doi.org/10.1007/s40926-021-00192-y

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