Professional Documents
Culture Documents
Paul Neiman
Received: 8 July 2011 / Accepted: 22 April 2012 / Published online: 5 May 2012 Springer Science+Business Media B.V.
2012
Abstract This article begins with a detailed analysis of how the choice situation of a social contract for
international business ethics can be constructed and justied. A choice situation is developed by
analyzing conceptions of the multinational rm and the domain of international business. The result is
a hypothetical negotiation between two ctional characters, J. Duncan Grey and Elizabeth Redd, who
respectively represent the interests of businesses and communities seeking to engage in international
trade. The negotiators agree on ethical principles governing wages, the environment, and compliance
social and cultural norms. These principles are then shown to rest in wide reective equilibrium with
considered moral judgments on international business ethics, which are drawn from international
agreements, such as the UN Declaration on Human Rights, and voluntary business initiatives, such as
the Global Sullivan Principles and the UN Global Compact.
Keywords Social contract . Contractarian . Business ethics . Wages . Environment . International .
Rawls . Global business
contract theory of a political philosopher to issues of business ethics. Palmer (2001), for example,
notes the parallels between Thomas Hobbess state of nature and concept of human nature, from
which Hobbes justies the powers of government, and multinational corporations in the global
marketplace, from which Palmer justies adherence to national laws and a commitment to sustain1
ability. Others (Bishop 2008; Hartman 1996) have attempted to apply Rawlss original position and
two principles of justice to organizations. Maffettone (2009) argues that Rawlss concepts of the basic
structure of society and basic institutions can be valid for international trade.
2
The second approach adapts the social contract methodology to the domain of business ethics.
Donaldson (1982, 1989), in both Corporations and Morality and The Ethics of International Business,
uses this approach by replacing the traditional state of nature with a state of individual production.
Rather than describing a contracting situation without government, Donaldson (1982, p. 44) describes
one in which people live without productive organizations. Sacconi (2006) develops a contracting
situation to provide justication for an extended model of corporate social responsibility. One of the
key features of this approach to social contracting, then, is the creation of a new contracting situation,
tailored to deal with a specic domain.
The third approach features actually existing social contracts, called extant, tacit, or micro-social
contracts,
1 For another social contract based on Hobbes s state of nature, see
2
Horvath (1995). For a detailed description of the traditional social contract methodology, see Conry
(1995) and Heugens et al. (2006). For a detailed description of Rawlss method of justifying and constructing his social
contract, see Daniels (1996).
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teleological than society, Rawlsian devices such
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that the
multinational rms.
Furthermore, the ability of states to control the
legal environmental regulating international
commerce has been
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negotiator, Redd had participated in many of
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will be checked against a different set of considered moral judgments. The restrictions on the
knowledge of the negotiators, along with the belief that they represent a sustainable business and
community, have been introduced to prevent Grey or Redd from exercising any coercive power in the
negotiation over ethical principles. In this sense, Grey and Redd are conceived of as equals in the
negotiations: They are equally skilled negotiators, and they have equal amounts of power. Phillips and
Margolis (1999) argue that equality in the choice situation may be appropriate for arriving at a just
basic structure of society, but it may not be appropriate for a just distribution within a business.
SCIBEs choice situation is conceived as a negotiation between business and the community, not just
9
the internal stakeholders of the business. The business and the community are considered equals
only in that each must consent, free from all coercion, to the ethical principles that govern their
relationship. As the logic of the negotiation demonstrates, the equality of power between Grey and
Redd does not necessitate an equal distribution of risks and benets of international trade.
According to the procedure described in Constructing and Justifying the Social Contract section,
the Grey Redd negotiation, as the choice situation for the social contract for international business
ethics, is justied if it incorporates the commonly shared presumptions and leads to agreement to
specic ethical principles that match or extend considered moral judgments in wide reective
equilibrium. Wide reective equilibrium requires that the principles derived from the choice situation
be consistent with considered moral judgments and background theories that support the commonly
shared presumptions on which the choice situation was constructed (Daniels 1996). The choice
situation was constructed from an understanding of the domain of international business and a
concept of the multinational rm as an economic and political agent. The unique nature of the
multinational rm, with a footprint and a voice in many communities, suggests that the rm and the
community be the represented in the choice situation. Rather than seeking to justify the conditions
under which individuals would accept the existence of multinational rms, as Donaldson (1989) and
Bishop (2008) do, SCIBE accepts the existence of multinational rms as fundamental to the domain of
international business, and seeks to determine what ethical principles such rms ought to follow.
Because of the weakened role of government in the domain of international business, SCIBE selects
the community as the appropriate partner in these negotiations. Redd, as a direct representative of
the interests of the community, does not enter the choice situation to bargain over what legal or
political institutions
9
businesses. To Grey, the ethical principles are limitations on the protability of international trade.
This does not mean that Grey has an interest in acting immorallythis negotiation is to dene what
immoral and moral action meansbut, given Greys self-interest in prots, he will seek to minimize
the moral obligations of business. Now, Grey does not know how protable his company is, and so he
does not know at what point the moral restrictions on international trade will render it undesirable.
This is one of the intentional consequences of the choice situation. Suppose, for example, that Grey
represented a very protable business. He might
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Wages
The Environment
Redds
initial
bargaining
position
on
environmental obligations is derived from her
belief that the community is sustainable and
provides a decent standard of living. It is thus
reasonable for Redd to assume that the
community is exposed to an amount of
environmental risk and harm from domestic
businesses that is matched by the communitys
ability to manage it. Suppose, for example, that
Redds community is home to a company that
drills for oil. Beyond the economic benets this
company provides, the community must have
the means to prevent an oil spill from occurring,
and, if one does occur, to mitigate the resulting
damage. If an oil spill threatens the livelihoods of
members of the community, then the community
must have the means both to compensate the
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and
Wide
The
GreyRedd
negotiation
models
the
commonly shared presumptions it seems
reasonable and generally acceptable to impose
on negotiations for ethical principles for international business, and the two negotiators have
consented to several ethical principles. To
complete the justicatory process, these ethical
principles must rest in reective equilibrium with
considered moral judgments on international
business, and the background theories that
support the commonly shared presumptions.
These judgments can be drawn from existing
international agreements and initiatives. The
Universal Declaration on Human Rights, the
Global Sullivan Principles, the United Nations
Global Compact, and the International Labor
Organizations Declaration on Fundamental
Principles and Rights at Work are all appropriate
sources for considered moral judgments, in part
because they seem to be impartial judgments
not likely to be distorted by an excessive
attention to our own interests (Rawls 1999a, p.
18). The purpose of utilizing these international
agreements is not to provide justication for
them. Rather, these agreements simply serve as
a convenient list of considered convictions on
business ethics. If the principles agreed to by
Grey and Redd are justied, then they must
either rest in reective equilibrium with these
judgments or else provide compelling reasons to
revise them.
The rst principle, companies must pay more
than a living wage, is an extension of moral
judgments contained in the Universal Declaration
on Human Rights, the Global Sullivan Principles,
and other international agreements. Article 23,
paragraph 3 of the Universal Declaration on
Human Rights asserts that everyone has the
right to just and favourable remuneration
ensuring for himself and his family an existence
worthy of human dignity. The Global Sullivan
Principles requires voluntary signatories to
compensate our employees to enable them to
meet at least their basic needs and provide the
opportunity to improve their skill and capability
in order to raise their social and economic
opportunities. The requirement that companies
must pay more than a living wage extends these
convictions. The right to organize and bargain
collectively, an important way of improving
wages, is also recognized in these documents, as
well as in the International Labor Organizations
Declaration on Fundamental Principles and
Rights at Work.
The
second
principle,
dealing
with
environmental obligations, asserts that foreign
businesses are obligated to operate according to
the highest industry standards and that foreign
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Redd negotiation accurately models restrictions
Conclusions
SCIBE addresses three important ethical issues in
international business: wages, environmental
responsibility, and respect for social and cultural
norms. One area not specically discussed is the
relationship between multinational rms and
national governments. It is important to note
that Redd represents the interests of a
community,
not
a
government.
In
the
negotiations, Redd is unwilling to accept Greys
proposal to match ethical rules with legal rules,
largely because the domain of international
business is characterized by the imbalance of
power
between
multinational
rms
and
governments. There is no need for Redd to cede
control of the negotiations to actual governments
who may be unwilling or unable to serve the
interests of the community.
Social contract theory, especially when it
utilizes a hypothetical contracting situation, is
bound to be met with some skepticism. Dworkin
(1973),
for
example,
questions
how
a
hypothetical agreement between individuals who
do not exist can generate real obligations. This
criticism is as old as social contract theory itself.
Hobbess state of nature or Rawlss original
position need not actually exist to provide
justication for the agreements reached in them.
What is important for SCIBE is that the Grey
Similarly, the
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