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

See all articles by J. (Hans) van Oosterhout

J. (Hans) van Oosterhout

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Pursey P.M.A.R. Heugens

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Muel Kaptein

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Date Written: 2006

Abstract

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

Suggested Citation

(Hans) van Oosterhout, J. and Heugens, Pursey P.M.A.R. and Kaptein, Muel, The Internal Morality of Contracting: Advancing the Contractualist Endeavor in Business Ethics (2006). Academy of Management Review, Vol. 31, No. 3, pp. 521-539, 2006. Available at SSRN: https://ssrn.com/abstract=1107763

J. (Hans) van Oosterhout (Contact Author)

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Rotterdam
Netherlands

Pursey P.M.A.R. Heugens

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands
0031 10 408 2365 (Phone)
0031 10 408 9012 (Fax)

Muel Kaptein

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands
+31 10 408 1923 (Phone)

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