The Internal Morality of Contracting: Advancing the Contractualist Endeavor in Business Ethics
Academy of Management Review, Vol. 31, No. 3, pp. 521-539, 2006
51 Pages Posted: 19 Mar 2008
Date Written: 2006
Integrative Social Contracts Theory (ISCT) is arguably the most promising theory of business ethics to date, but is often criticized for its inability to produce substantive, action guiding norms. The gist of the problem is that the contractualist argument central to this theory may justify many different sets of norms and principles - some of which may even be mutually incompatible - thereby leaving the substance of what it justifies undetermined. Rather than importing moral substance from outside the contractualist framework, or abandoning contractualist business ethics (CBE) altogether, we seek to advance CBE by exploring the internal morality of contracting. We demonstrate that substantive norms for guiding and constraining business conduct can be produced without relying on premises from outside the contractualist framework.
Keywords: contractualism, contractarianism, contracting, nexus, nexus of contracts, moral hazard, adverse selection, business ethics, morality, integrative social contracts theory, contractualist business ethics, fiduciary duties, theory of the firm, Hobbes, bounded rationality, normativity, opportunism
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