Integrative Social Contract Theory (ISCT)

The term integrative social contract theory (ISCT) was coined by Tom Donaldson and Tom Dunfee, two business ethicists at the Wharton School of the University of Pennsylvania who, as a philosopher and a legal scholar, respectively, elaborated a methodology for developing norms for corporate morality on the basis of a social contract model. As in the work of classical contract theorists such as Hobbes and Locke, who used the contract model to specify the principles for the legitimate exercise of power by the state, ISCT seeks to specify the principles for socially responsible corporate conduct on the basis of a social contract model especially adapted for this purpose.

An explicit goal of the ISCT project was to improve on the practical guidance of general ethical theories such as utilitarianism, Kantianism, virtue ethics, or the stakeholder model. By their very nature, these general ethical theories will always remain insufficiently specific to provide concrete practical guidance. The general thrust of the ISCT project can be seen from the examples with which the project was introduced, Royal/Dutch Shell's dispute with the Ogoni, an indigenous people living in the Niger Delta, and the bad publicity over the Brent Spar affair. The idea here is that in any practice of foreign direct investment there may well arise conflicts between (usually stricter) moral norms in the home country of the firm and the (generally more lenient) standards practiced in the host country. ISCT then presents itself as an instrument preeminently suited to resolving these kinds of conflicts.

At the core of all contractarian approaches is the idea that all parties involved in the social contract (“the contractors”) voluntarily consent to whatever the terms of the contract are. Any social contract theory must therefore give some characterization of the parties to the contract and their motivation to come to agreement. ISCT describes the contractors as motivated by a mix of preferences, in which some are greed driven, some altruistic, but in which most are simply somewhere in between and do not know to which economic community they will belong or their [Page 1141]personal wealth. But they have settled understandings of deep moral values, which are used as ingredients for the moral norms the contract will sanction.

Having thus characterized the choice situation, ISCT argues that contractors will agree on a procedural model of four steps that will help specify some universal principles, called hypernorms, which may be presumed to be valid in all places and circumstances. The core idea of the ISCT model is that any conflicts among local norms can be reconciled by these universal principles. And as more empirical evidence is gathered, these presumed hypernorms acquire a stronger status (and supposedly more moral authority).