Abstract
Contract-based approaches have been a focus of attention in business ethics. As one of the grand traditions in political philosophy, contractarianism is founded on the notion that we will never resolve deep moral disagreement. Classical philosophers like Hobbes and Locke, or recent ones like Rawls and Gaus, seek to solve ethical conflicts on the level of social rules and procedures. Recent authors in business ethics have sought to utilize contract-based approaches for their field and to apply it to concrete business dilemmas. However, the application of contractarianism to management contexts can cause difficulties. Our article discusses this conceptual problem of contractarian business ethics and presents the idea of order ethics as an alternative. Order ethics, as we argue, can make a difference by conceptually bridging the gap between contractarianism and business ethics.
Notes
This is, for instance, the case if consumers reward a company for conforming to the consumers’ ethical standards.
Interestingly, Buchanan already applied simple capital and investment theory to morals (Buchanan 2000: 159).
References
Andreoni, J. (1988). Why free ride? Strategies and learning in public goods experiments. Journal of Public Economics, 37, 291–304.
Binmore, K. (1994). Game theory and the social contract, Vol. 1: Playing fair. Cambridge, London: MIT Press.
Binmore, K. (1998). Game theory and the social contract, Vol. 2: Just playing. Cambridge, London: MIT Press.
Boatright, J. R. (2000). Contract theory and business ethics: A review of ties that bind. Business and Society Review 105, 4, 452–466.
Brennan, G., & Buchanan, J. M. (1980). The power to tax: Analytical foundations of a fiscal constitution. Cambridge: Cambridge University Press.
Brennan, G., & Buchanan, J. M. (1985). The reason of rules: Constitutional political economy. Cambridge: Cambridge University Press.
Buchanan, J. M. (1990). The domain of constitutional economics. Constitutional Political Economy, 1, 1–18.
Buchanan, J. M. (2000). The limits of liberty: Between anarchy and Leviathan. Indianapolis: Liberty Press.
Buchanan, J. M. (2009). Economists have no clothes. In M. Baurmann & B. Lahno (Eds.), Rationality, Markets, and Morals. Perspectives in Moral Science (Vol. 0, pp. 151–156).
Buchanan, J. M. (2010). Chicago school thinking: Old and new, unpublished paper. Center for Study of Public Choice, George Mason University: Fairfax, Virginia.
Buchanan, J. M. (2011). The limits of market efficiency. Rationality, Markets, and Morals, 2, 1–7.
Buchanan, J. M., & Tullock, G. (1962). The calculus of consent. Logical foundations of constitutional democracy. Ann Arbor: University of Michigan Press.
Byrne, E. F. (2002). Business ethics: A helpful hybrid in search of integrity. Journal of Business Ethics, 37(2), 121–134.
Donaldson, T. D., & Dunfee, T. W. (1995). Integrative social contract theory: A communitarian conception of economics ethics. Economics and Philosophy, 11(1), 85–112.
Donaldson, T. D., & Dunfee, T. W. (1999). Ties that bind: A social contracts approach to business ethics. Boston, MA: Harvard Business School Press.
Donaldson, T. D., & Dunfee, T. W. (2000). Book review dialogue: Tightening the ties that bind-defending a contractarian approach to business ethics. American Business Law Journal, 37, 579–585.
Donaldson, T. D., & Dunfee, T. W. (2002). Ties that bind in business ethics: Social contracts and why they matter. Journal of Banking & Finance, 26, 1853–1865.
Francé-Gómez, P. (2003). Some Difficulties in Sacconi’s View about Corporate Ethics. Journal of Business Ethics, 42(2), 165–180.
Gaus, G. (2011). The order of public reason: A theory of freedom and morality in a diverse and bounded world. Cambride: Cambridge University Press.
Gauthier, F. (1986). Morals by agreement. Oxford: Clarendon Press.
Gürerk, Ö., et al. (2006). The competitive advantage of sanctioning institutions. Science, 312, 108.
Hart, O. D. (1987). Incomplete contracts. In J. Eatwell, et al. (Eds.), The new Palgrave: A dictionary of economics (Vol. 2, pp. 752–759). London, Basingstoke: Macmillan.
Hart, O. D., & Holmström, B. R. (1987). The theory of contracts. In T. F. Bewley (Ed.), Advances in economic theory, Chapter 3. Cambridge: Cambridge University Press.
Hausman, D. M., & McPherson, M. S. (2006). Economic analysis, moral philosophy, and public policy (2nd ed.). Cambridge: Cambridge University Press.
Heath, J., Moriarty, J., & Norman, W. (2010). Business ethics and (or as) political philosophy. Business Ethics Quarterly, 20(3), 427–452.
Herzog, L. (2013). The modern social contract tradition. In C. Luetge (Ed.), Handbook of the philosophical foundations of business ethics (pp. 631–645). Dordrecht: Springer.
Heugens, P., Kaptein, M., & van Oosterhout, H. (2004). Ties that grind? Corroborating a typology of social contracting problems. Journal of Business Ethics 49, 3, 235–252.
Heugens, P., van Oosterhout, H., & Kaptein, M. (2006). Foundations and applications for contractualist business ethics. Journal of Business Ethics 68, 3, 211–228.
Hobbes, T. (1651/1991). Leviathan, ed. R. Tuck, Cambridge: Cambridge University Press.
Hodgson, B. J. (2000). Economics as a moral science. Berlin: Springer.
Hodgson, B. J. (2001). Can the beast be tamed? Reflections on John McMurty’s unequal freedoms: The global market as an ethical system. Journal of Business Ethics, 33(1), 72–80.
Holmes, S., & Sunstein, C. R. (2000). The cost of rights: Why liberty depends on taxes. New York: Norton.
Homann, K. (2007). Globalisation from a business ethics point of view. In K. Homann, P. Koslowski, & C. Luetge (Eds.), Globalisation and business ethics (pp. 3–11). Aldershot/London: Ashgate.
Homann, K., & Blome-Drees, F. (1992). Wirtschafts-und Unternehmensethik. Göttingen: Vandenhoeck und Ruprecht.
Homann, K., & Kirchner, C. (1995). Ordnungsethik. Jahrbuch für Neue Politische Ökonomie, 14, 189–211.
Keeley, M. (1988). A social contract theory of organizations. Notre-Dame, IN: University of Notre-Dame.
Kreps, D. M. (1990). Corporate culture and economic theory. In J. E. Alt & K. A. Shepsle (Eds.), Perspectives on positive political economy (pp. 90–143). Cambridge: Cambridge University Press.
Luetge, C. (2005). Economic ethics, business ethics and the idea of mutual advantages. Business Ethics: A European Review, 14(2), 108–118.
Luetge, C. (2008). Public reason and order ethics: A critical assessment. In Adela Cortina, et al. (Eds.), Public reason and applied ethics: The ways of practical reason in a pluralist society (pp. 177–188). Aldershot, London: Ashgate.
Luetge, C. (2012a). Economic Ethics, In: R. Chadwick (Ed.), Encyclopedia of Applied Ethics (Vol. 2, 2nd Ed., pp. 13–19). Oxford: Elsevier.
Luetge, C. (2012b). Fundamentals of order ethics: Law, business ethics and the financial crisis. Archiv für Rechts-und Sozialphilosophie Beihefte, 130, 11–21.
Luetge, C. (2013). The idea of a contractarian business ethics. In C. Luetge (Ed.), Handbook of the philosophical foundations of business ethics (pp. 647–658). Dordrecht: Springer.
Luetge, C. (2015). Order ethics or moral surplus: What holds a society together?. Lanham, MD: Lexington.
Luetge, C. (2016). Order ethics and the problem of social glue. University of St. Thomas Law Journal, forthcoming.
Luetge, C., & Mukerji, N. (Eds.) (2016). Order ethics: An ethical framework for the social market economy. Heidelberg, New York: Springer, forthcoming.
Moriarty, J. (2005). On the relevance of political philosophy to business ethics. Business Ethics Quarterly, 15(3), 455–473.
Norman, W. (2011). Business ethics as self-regulation: Why principles that ground regulations should be used to ground beyond-compliance norms as well. Journal of Business Ethics, 102(S1), 43–57.
Nozick, R. (1974). Anarchy, state, and utopia. New York: Basic Books.
Ostrom, E. (2005). Understanding institutional diversity. Princeton: Princeton University Press.
Ostrom, E., Gardner, R., & Walker, J. M. (1994). Rules, games, and common-pool resources. Ann Arbor, MI: University of Michigan Press.
Phillips, R. A., & Margolis, J. D. (1999). Towards an ethics of organizations. Business Ethics Quarterly, 9(4), 619–638.
Pies, I., Hielscher, S., & Beckmann, M. (2009). Moral commitment and the societal role of business: An ordonomic approach to corporate citizenship. Business Ethics Quarterly, 19(3), 375–401.
Pies, I., Winning, A. V., Sardison, M., & Girlich, K. (2010). Sustainability in the petroleum industry. Theory and practice of voluntary self-commitments. Halle, Saale: The Chair of Business Ethics at Martin-Luther-University Halle-Wittenberg.
Rawls, J. (1971). A theory of justice. Oxford: Oxford University Press. (Revised edition, 1999).
Rawls, J. (2001). Justice as fairness. A restatement. Cambridge, MA: Belknap Press of Harvard University Press.
Regan, M. C, Jr. (1998). Corporate speech and civic virtue. In A. L. Allen & M. C. Regan Jr (Eds.), Debating democracy’s discontent: Essays on American politics, law, and public philosophy (pp. 289–306). Oxford: Oxford University Press.
Rowan, J. R. (1997). Grounding hypernorms: Towards a contractarian theory of business ethics. Economics and Philosophy, 13, 107–112.
Rowan, J. R. (2001). How binding the ties? Business ethics as integrative social contracts. Business Ethics Quarterly, 11, 379–390.
Sacconi, L. (2000). The social contract of the firm: Economics, ethics and organisation. Heidelberg: Springer.
Sacconi, L. (2006). A social contract account for CSR as an extended model of corporate governance (I): Rational bargaining and justification. Journal of Business Ethics 68, 3, 259–281.
Sacconi, L. (2007). A social contract account for CSR as an extended model of corporate governance (II): Compliance, reputation and reciprocity. Journal of Business Ethics, 75(1), 77–96.
van Oosterhout, H., Wempe, B., & van Willigenburg, T., (2004). Contractualism and the project for an integrative organizational ethics. In S. Welcomer (Ed.), IABS proceedings the fifteenth annual conference. Jackson Hole, Wyoming.
Vanberg, V. (2007). Corporate social responsibility and the ‘game of catallaxy’: The perspective of constitutional economics. Constitutional Political Economy, 18(3), 199–222.
Wagner-Tsukamoto, S. (2005). an economic approach to business ethics: Moral agency of the firm and the enabling and constraining effects of economic institutions and interactions in a market economy. Journal of Business Ethics, 60, 75–89.
Wagner-Tsukamoto, S. (2008). Contrasting the behavioural business ethics approach and the institutional economic approach to business ethics: Insights from the study of Quaker employers. Journal of Business Ethics, 82(4), 835–850.
Wempe, B. (2004). On the use of the social contract model in business ethics. Business Ethics: A European Review, 13, 332–341.
Wempe, B. (2008a). Contractarian business ethics: Credentials and design criteria. Organization Studies, 29, 1337.
Wempe, B. (2008b). Four design criteria for any future contractarian theory of business ethics. Journal of Business Ethics 81, 3, 697–714.
Wempe, B. (2009). Extant social contracts and the question of business ethics. Journal of Business Ethics 88, 4, 741–750.
Werhane, P. (1985). Persons, rights and corporations. Englewood Cliffs, NJ: Prentice Hall.
Acknowledgments
The authors would like to thank the anonymous reviewers for their comments.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Luetge, C., Armbrüster, T. & Müller, J. Order Ethics: Bridging the Gap Between Contractarianism and Business Ethics. J Bus Ethics 136, 687–697 (2016). https://doi.org/10.1007/s10551-015-2977-6
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10551-015-2977-6