Business and Society Review

105:4 436–443

Précis for:

Ties That Bind
THOMAS DONALDSON AND THOMAS W. DUNFEE

W

e wrote the book, Ties that Bind, out of our conviction that answering today’s questions requires a new approach to business ethics, an approach that exposes the implicit understandings or “contracts” that bind industries, companies, and economic systems into moral communities. It is in these economic communities, and in the often unspoken understandings that provide their ethical glue, that we believe many of the answers to business ethics quandaries lie. Further, we think that answering such questions requires the use of a yet deeper, and universal “contract” superseding even individual ones. The theory that combines both these deeper and thinner kinds of contracts we label “Integrative Social Contracts Theory,” or “ISCT” for short.
ISCT does not overturn popular wisdom. While it asserts that the social contracts that arise from specific cultural and geographic contexts have legitimacy, it acknowledges a limit to that legitimacy.
It recognizes the moral authority of key transcultural truths, for example, the idea that human beings everywhere are deserving of respect. The social contract approach we detail holds that any social contract terms existing outside these boundaries must be deemed illegitimate, no matter how completely subscribed to within a given economic community. In this sense, all particular or “micro” social contracts, whether they exist at the national, industry, or corporate level, must conform to a hypothetical “macro” social contract that lays down moral boundaries for any social contracting.
ISCT thus lies midway on the spectrum of moral belief separating

Thomas Donaldson is the Mark O. Winkelman Professor of Legal Studies and Director of the
Wharton Ethics Program at the Wharton School, University of Pennsylvania. Thomas W. Dunfee is the Joseph Kolodny Professor of Social Responsibility in Business and Vice Dean responsible for the Undergraduate Division of the Wharton School, University of Pennsylvania.
© 2000 Center for Business Ethics at Bentley College. Published by Blackwell Publishers,
350 Main Street, Malden, MA 02148, USA, and 108 Cowley Road, Oxford OX4 1JF, UK.

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relativism from absolutism. It allows substantial “moral free space” for nations and other economic communities to shape their distinctive concepts of economic fairness, but it draws the line at flagrant neglect of core human values.
Our approach takes “moral free space” seriously. It insists that morality can be “conditional” or “situational” at least in the sense that two conflicting conceptions of ethics can sometimes both be valid, and that community agreements about ethics often matter.
Two economic systems need not have precisely the same view about the ethics of insider trading. Their views about what is wrong with insider trading may differ, yet both may be legitimate. Nor does every corporation have to follow exactly the same conception of fairness as it designs flextime or seniority rules. It follows from our view that all economic actors must recognize the critical role of social contracts in the communities they impact. To fail to do so, as many companies have done in the past, is to display moral blindness.
In our view, as social contracts change, so too do the challenges for business. The ethical “game” of business today is played by different rules, and harbors different penalties and benefits, than it did decades ago. Broad shifts of moral consensus have occurred. In subtle, far reaching shifts, managers and members of the general public have gradually redefined their view of the underlying responsibilities of large corporations. Half a century ago, companies were basically expected to focus on producing goods and services at reasonable prices; today, corporations are held responsible for a variety of issues involving fairness and quality of life. In companies