MULTI-LAYERED INTEGRATIVE SOCIAL CONTRACTS THEORY (MISCT): A CONTRACTUALIST FRAMEWORK FOR BUSINESS ETHICS

Abstract

This essay introduces a contractualist framework that incorporates leading theories of business ethics into the grand narrative of Multi-layered Integrative Social Contracts Theory (MISCT). Viewing business through the lens of MISCT offers both descriptive and prescriptive benefits to managers desiring to act ethically in business. Historical questions of corporate purpose are given new answers within the pluralistic MISCT construct by the detailed identification of the role of communities in the evolution of ethics. An underpinning theme of MISCT is the development of banded, closely knit communities that adhere to shared values which enhance the ties that bind.

Chapter I merges law, economics, psychology, and ethics by creating an allegory of stockholder syndrome. It utilizes the normative stockholder theories of authors such as Milton Friedman and F. A. Hayek to create an allegory of stockholder syndrome - portraying shareholder wealth maximization that is not restricted by legal and ethical restraints as a form of psychosis paralleling notions of traumatic bonding in psychological literature. The structure of the firm is analyzed, and suggestions made to modify the firm from both internal and external vantages.

Chapter II tests the six principles of stakeholder capitalism by use of the criteria of ideal and nonideal theory. It utilizes the criteria of ideal and nonideal theory as described by John Rawls and Allen Buchanan to critique the six principles of stakeholder capitalism described by Edward Freeman and his colleagues. This chapter merges theory with empirical data to analyze the feasibility and practicability of the principles of stakeholder capitalism. Suggestions are made to improve the six principles so that they will fully satisfy the criteria and thus prove both feasible and practicable in contemporary society.

Chapter III traces the development of social contracts theory over time, and into its application in business contexts. It describes in detail the foremost contractarian rendition of social contracts in business ethics: Integrative Social Contracts Theory (ISCT). This chapter analyzes Thomas Dunfee and Thomas Donaldson's ISCT, provides a detailed explication of its evolution, and examines many of the leading critiques of ISCT. It then applies ISCT to two business cases and draws conclusions as to how ISCT applies to questions of child labor and outsourcing.

Chapter IV introduces a contractualist approach to social contracts in business ethics: Multi-Layered Integrative Social Contracts Theory (MISCT). This chapter defines the nuances of the theory including how its polycentric and contractualist components provide a useful lens for the analysis of moral issues in business. This chapter goes on to explain how the leading normative theories of business ethics may be understood in terms of MISCT. It then explains how MISCT may be utilized to address traumatic bonding, ideal and nonideal theory, and stakeholder prioritization. MISCT, a new approach to business ethics, does offer a useful lens by which to view ethics in business.