Business and Society Review 105:4 452–466

Contract Theory And Business

Ethics: A Review of
Ties That Bind
JOHN R. BOATRIGHT

T
o the familiar jibe that business ethics is an oxymoron
might be added another incongruous juxtaposition, that of
business ethics theory. The contradictory flavor of this
phrase is not due to a low estimate of the moral tone of business
but to skepticism about the practicality of ethical theory. How can
any theory of ethics that is rigorous enough to pass muster with
picky philosophers possibly give guidance to busy, hardheaded
business managers?
This challenge is faced squarely by Thomas Donaldson and
Thomas W. Dunfee in their book, Ties That Bind: A Social Contracts
Approach to Business Ethics.1 For moral philosophers, Donaldson
and Dunfee offer a grand theory, called Integrative Social Contracts
Theory, or ISCT for short, which follows in the contract tradition of
Hobbes, Locke, and, more recently, John Rawls. However, ISCT
does not consist solely of general, ideal principles that result from
most contract approaches, but includes specific agreements made
in actual communities. The concreteness of their theory enables the
two authors to provide managers with useful tools for ethical deci-
sion making in cases of conflicting standards.
Ties That Bind is an important contribution to both moral phi-
losophy and the field of management that amply illustrates how
ethical theory can yield practical business results. The theory is
also intended to guide business ethics research, and the authors
themselves apply ISCT to the problem of providing a normative

John R. Boatright is the Raymond C. Baumhart, S.J. Professor of Business Ethics at Loyola
University Chicago.

© 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.
JOHN R. BOATRIGHT 453

foundation for stakeholder theories of the corporation. Donaldson

and Dunfee may not succeed entirely in this ambitious effort, but
their book convincingly demonstrates that business ethics theory
need not be an oxymoron.

AN OUTLINE OF THE THEORY

Integrative Social Contracts Theory is constructed from three

major building blocks. At the highest level of abstraction are
hypernorms, which are fundamental ethical principles that are
universally recognized. Hypernorms are not like Rawls’s principles
of justice, which are derived from a hypothetical contract.2 Rather,
they are principles that make contracting possible and set limits on
possible contracts. Donaldson and Dunfee note the similarity
of hypernorms to the thin morality that Michael Walzer finds
expressed in different ways by people the world over.3 The princi-
ples of this thin morality are not “constructed” in Rawls’s sense by
finding the ground of all our common moral judgments.4 They are
discovered to exist, if indeed they exist at all, merely by looking for
congruence in the principles that are commonly recognized.
The second building block is a macrosocial contract. This hypo-
thetical construct is similar to Rawls’s choice in the original posi-
tion but with less stringent conditions on the contractors. The
macrosocial contract represents the agreements that would be
made by rational contractors who are aware of their limitations as
economic actors and want to provide a moral framework for produc-
tive economic activity. The macrosocial contract serves little pur-
pose in ISCT except to justify microsocial contracts, which
constitute the third building block. Within the limits imposed by
hypernorms, the members of each community are permitted by
the hypothetical macrosocial contract to form actual localized
microcontracts.
More precisely, Donaldson and Dunfee assume that in forming
the macrosocial contract, the contractors would allow a “moral
free space” within which it is morally permissible for communities
to create ethical norms for their own members. The main function
of the macrosocial contract in ISCT is to establish the justifying
conditions for the creation of the norms by means of microsocial
contracts. Chief among these conditions are the restrictions that
454 BUSINESS AND SOCIETY REVIEW

norms must be grounded in genuine consent and be consistent

with hypernorms.
At the heart of ISCT are the legitimate norms of microsocial con-
tracts. These are the moral guideposts that Donaldson and Dunfee
propose for practical business decision making. In general, the
norms of a community are discoverable by observing the attitudes
and behaviors of its members. A norm is “authentic” when observa-
tion of the people’s attitudes and behaviors shows the norms to be
accepted by a “substantial majority” of the community. Authentic
norms are not obligatory, however, unless they are also “legitimate,”
which is to say that they are consistent with hypernorms. Legitimate
norms thus have empirical and normative content. They must, in
fact, be accepted by a community in a microsocial contract, and they
must be formed within the moral free space provided by the
macrosocial contract and be consistent with hypernorms.
Legitimate norms are incomplete as guides to practical decision
making because of the possibility of multiple communities with
conflicting norms. Not only may the norms of any given community
be inconsistent, but decision makers may be members of different
communities with incompatible norms and may act in ways that
are contrary to the norms of other communities that are affected.
Donaldson and Dunfee meet this problem with priority rules for
choosing among competing legitimate norms. The justification of
these rules is left rather vague. On the one hand, the authors admit
that rational contractors could not reasonably anticipate all con-
flicts and devise priority rules for them. On the other, they justify
their proposed rules on the grounds of being “consistent with the
macrosocial contract.” Obviously, priority rules cannot be created
by microsocial contracts because they are needed to decide among
the norms created by such contracts. As a result, priority rules
have a shadowy existence somewhere between macrosocial and
microsocial contracts.

HYPERNORMS: CONSTRAINTS OR IDEALS?

In Ties That Bind, Integrative Social Contracts Theory is not pre-

sented as a complete ethical theory. In particular, Donaldson and
Dunfee deliberately decline to offer a justification for hypernorms.
This decision to remain “agnostic” about the ultimate ground for
JOHN R. BOATRIGHT 455

hypernoms frees the authors from a daunting task of justifying a

thin theory, which is of interest primarily to philosophers, and
allows them to focus on the content of the thick morality that is
more relevant to business managers. As a result, ISCT is, in the
authors’ view, “independent of the truth of any particular tradi-
tional ethical theory.”5
This agnostic approach assumes that the readers of Ties That
Bind will admit that hypernorms exist in some sense and that these
readers will largely agree on a list of hypernorms. Hypernorms may
be justified in different ways by traditional ethical theories, but the
particulars of any possible justification are irrelevant to the role of
hypernorms in ISCT. The situation might be compared to that a
mathematician who assumes an unproven but true theorem as part
of a proof. The proof yields a true conclusion, no matter how the
theorem itself is finally proven. Similarly, the acceptance of ISCT
requires only that we be able to discover hypernorms, without
regard for how they might be justified. This process of discovery can
be done empirically by finding patterns of congruence in the reli-
gious, cultural, and philosophical beliefs of people around the
world.
This method of proceeding might be workable in practice, but
not as a matter of theory. The nub of the problem is the extent to
which hypernorms entail specific obligations that must be recog-
nized in all communities. Hypernorms function in ISCT primarily as
constraints on the agreements that may be made in both the
macrosocial contract and individual microsocial contracts. The
suggestion is that anything that is not forbidden is permitted. As
a result, hypernorms appear to play little if any role in actually
creating microsocial contractual norms. However, many of the
hypernorms that Donaldson and Dunfee cite have substantial nor-
mative content that goes beyond mere constraints on contracting.
A respect for human dignity, for example, could be understood to
entail numerous obligations about the treatment of individuals.
More importantly, this hypernorm could also serve as an ideal by
which the norms of specific communities are judged. These norms
can be evaluated not merely to determine whether they are con-
sistent with hypernorms but to gauge the extent to which they
embody hypernorms. Put simply, hypernorms are not necessarily
“all or nothing” tests that microsocial contractual norms pass or
456 BUSINESS AND SOCIETY REVIEW

fail. They could also serve as general principles or ideals that we can
strive to achieve and that can be realized more or less completely.
Donaldson and Dunfee might well reply that hypernorms consti-
tute a minimal morality or a thin theory in Walzer’s sense, which
does constitute merely a constraint. If so, then they cannot be
agnostic about the justification of hypernorms, and ISCT is not
“independent of the truth of any particular traditional ethical the-
ory.” The reason for this is that we need some ethical theory in order
to know specifically what hypernorms entail. Depending on how
hypernorms are ultimately justified, they are merely minimal
contraints or more substantial ideals. The point is that we cannot
know which is the case without having some ethical theory that jus-
tifies hypernorms.
Hypernorms, unlike microsocial contractual norms, are not
wholly empirical; their existence does not depend merely on observ-
ing people’s attitudes and behaviors. Hypernorms must have some
justifying ground if they are to legitimize microsocial contractual
norms and make them obligatory. Consequently, Donaldson and
Dunfee must assume that hypernorms have some supporting ethi-
cal theory. About this they cannot be agnostic. The key point is
that different justifying theories profoundly affect the content of
hypernorms. Thus, their situation is not like that of a mathemati-
cian who uses an unproven but true theorem in a proof, because in
this case we need the proof of the theorem in order to know exactly
what it means.

METHOD IN ETHICS: RAWLS VS. WALZER

The social contracts approach of Ties That Bind draws on two

threads in contemporary ethical theory. The hypothetical macro-
social contract owes much to Rawls’s A Theory of Justice, whereas
actual microsocial contracts resemble the thick moralities that
Michael Walzer describes in Spheres of Justice. Unfortunately, the
methods of these two distinguished theorists are incompatible, with
the result that Donaldson and Dunfee are left in an untenable no
man’s land between them. One virtue of ISCT, in the authors’ view,
is that it avoids the view from nowhere, which, in the case of Rawls,
produces abstract universal principles with uncertain practical
applications. Walzer’s theory, on the other hand, is a radical view
JOHN R. BOATRIGHT 457

from somewhere, in which there are only concrete, particular

moralities of specific communities. ISCT is a view from nowhere and
somewhere at the same time, which is a difficult trick to pull off.
The distinction between the views from nowhere and somewhere
is expressed by Walzer as follows:
One way to begin the philosophical enterprise—perhaps the
original way—is to walk out of the cave, leave the city, climb the
mountain, fashion for oneself . . . an objective universal stand-
point. Then one describes the terrain of everyday life from far
away, so that it loses its particular contours and takes on a
general shape. But I mean to stand in the cave, in the city, on
the ground. Another way of doing philosophy is to interpret to
one’s fellow citizens the world of meanings that we share.6
If one takes the former course, that is the view from nowhere, and
seeks objective universal principles, it is still possible to make spe-
cific judgments, albeit with some uncertainty. The standard model
of applied ethics holds that general principles, such as those
expressed by utilitarianism or Kantianism or Rawls’s theory of jus-
tice, can be combined with appropriate empirical premises to yield
supported conclusions about concrete situations.7 This method
allows for the possibility that particular communities might develop
different norms, which are still justified by the same universal,
objective principles.
Donaldson and Dunfee reject this method and opt for something
like Walzer’s second approach. They propose to leave the mountain
top and go down to the city, in which the members of specific com-
munities use their moral free space to develop norms through
microsocial contracts. It is these microsocial contractual norms or
thick moralities that ISCT would have us apply to particular cases
rather than the general principles of a thin theory. In Walzer’s the-
ory, the proper method of ethics is the interpretation of the “shared
meanings” in a community. These two methods have much in com-
mon, but they differ in this important respect: For Walzer, there is
no general framework of principles, such as hypernorms, to provide
a critical standpoint. This lack of independent ground for apprais-
ing community standards has led Walzer’s critics to charge him
with relativism.8 If the norms of a community sanction slavery, for
example, then there is nothing beyond these norms, in Walzer’s
theory, to serve as a basis for criticism.
458 BUSINESS AND SOCIETY REVIEW

ISCT avoids the charge of relativism by introducing hypernorms.

Slavery is not justified in any community because it violates a
hypernorm, with the result that the norms of a slave community do
not have legitimacy. Hypernorms thus provide the critical stand-
point that Walzer’s theory appears to lack. However, this response
solves one problem only by creating another. By invoking hyper-
norms, Donaldson and Dunfee leave the city and start climbing the
mountain. Once embarked on this journey, they face the question
of whether hypernorms have been correctly identified and their
implications have been correctly assessed.9
Expressed differently, the problem is how we can determine
whether the norms of a community are legitimate. This is not a sim-
ple matter of checking them against a list of hypernorms to get a
“yes or no” answer. At a minimum, we need to draw out as fully as
possible the implications of hypernorms for the conduct of any
given community. Only after doing this can we know the bound-
aries of the moral free space in which the members of the com-
unity are justified in creating microsocial contractual norms.
However, this task is the same as applying ethical theory in the
standard model, which takes the view from nowhere. That is, deter-
mining the legitimacy of community norms necessarily involves
applying universal, objective principles, in the form of hypernorms,
to specific situations.
Donaldson and Dunfee introduce microsocial contractual norms
in an attempt to avoid the absolutism of the view from nowhere.
However, fearing the relativism of an extreme particularism, which
affects Walzer’s theory, they retreat back to the safety of universal
hypernorms. Although hypernorms bear some similarity to Wal-
zer’s thin morality, the universally accepted beliefs in Walzer’s thin
morality do not impose constraints on the thick morality of individ-
ual communities. Indeed, the content of a thin morality plays no
formal role in Walzer’s theory. However, in order for hypernorms to
play their assigned role in ISCT, they must have some ground, and
until we know what that ground is, we cannot know whether
Donaldson and Dunfee have successfully negotiated between the
absolutism of Rawls and a Walzerian relativism.10
JOHN R. BOATRIGHT 459

ISCT AND MORAL REASONING

ISCT offers a practical method to guide business managers through

the maze of conflicting community norms. Indeed, a proverbial visi-
tor from outer space, who is able to observe people’s attitudes and
behaviors and apply a few simple priority rules, could make ethical
decisions according to this theory. This ease of application is both a
strength and a weakness of ISCT. It is a strength because business
managers now have a tool for making quick, reliable decisions. The
weakness is that the method is at best a surrogate for ethical deci-
sion making. Applying ISCT might yield correct decisions, but it
neither provides nor requires an understanding of the reasons for
this correctness. It gives us no insight in moral reasoning.
The practical method in ISCT is most useful in situations where
the norms of different communities give definite but conflicting
results. However, some of the most difficult moral questions arise
when the norms of one’s own communities are not sufficiently devel-
oped to provide adequate guidance. The problem is compounded
when a decision affects two or more communities, each of which
lacks well-developed norms. In such situations, we may need to
engage in moral reasoning in order to create new norms or to modify
and expand old ones. ISCT enables a decision maker to choose a
course of action that reflects existing norms, but it provides few
resources for participating in the process of norm development.
Donaldson and Dunfee could modify ISCT so as to provide an
account of moral reasoning. Moral reasoning, on their view, cannot
be a matter of applying general ethical principles, such as hyper-
norms, to specific situations. However, many theorists reject this
model of applied ethics. In Walzer’s theory, moral reasoning is
a matter of interpreting the “shared meanings” of a community.
Albert Jonsen and Stephen Toulmin describe moral reasoning as a
process of “triangulating” between similar cases.11 One can imagine
a picture of moral reasoning in ISCT in which members of a
community negotiate their microsocial contracts by appealing to
existing norms and building them into a coherent whole, much in
the way that Ronald Dworkin describes judicial reasoning.12 The
details are unimportant here. The critical point is that a fully ade-
quate account of moral reasoning in ISCT would be different from
the procedure described in Ties That Bind and would be far more
460 BUSINESS AND SOCIETY REVIEW

complex and difficult. Certainly, it could not be performed by the

proverbial visitor from outer space.

THE BINDING FORCE OF COMMUNITY NORMS

Perhaps the most puzzling feature of ISCT, as it is presented in Ties

That Bind, is the obligation of community members to follow
microsocial contractual norms. Donaldson and Dunfee state
unequivocally:
So long as one is a member of a community, one has an ethical
obligation to abide by the extant authentic norms that are rec-
ognized as proper in the attitudes and behaviors of a clear
majority of the membership.13

First, they surely mean “legitimate norms” and not merely “authen-
tic norms.” Otherwise the norms of a slaveholding community
would be morally binding on all its members.14 That aside, the bind-
ing force of community norms is merely assumed in the book; one
looks in vain for any discernible argument. Perhaps the authors
think the point too obvious to need support, but some justification
is surely in order.
For starters, people are members of many different communities,
each with its own norms, and so one could have conflicting ethical
obligations. Consider, for example, the situation of a Catholic who
works with Planned Parenthood. Would she be obligated to both
oppose and support a right to abortion? Could she be so obligated?
More to the point, is it necessary for a Catholic to acknowledge the
morally binding force of the church’s prohibition of abortion, along
with all other teachings, as long as one is a member of that commu-
nity?15 The stipulation in ISCT that authentic norms need only the
approval of a “clear” or “substantial” majority ensures that some
community members do not agree with any given norm. Why is any-
one obligated to observe norms of which they disapprove?
Donaldson and Dunfee appear to locate the source of obligation
in the hypothetical macrosocial contract rather than in actual
microsocial contracts. The latter could not provide a basis for the
binding force of its own norms for the simple reason that not every-
one consents to the terms of each microsocial contract. An argu-
ment is suggested in the authors’ discussion of moral free space,
where they again assert an obligation to obey community norms.
JOHN R. BOATRIGHT 461

They continue: “There cannot be a requirement that each person

must consent to a legitimate norm in order for it to constitute an
obligation. Such a requirement would invite ethical anarchy.”16
Roughly, then, the argument seems to be that hypothetical
macrosocial contractors would recognize not only the need to allow
moral free space for communities to develop their own norms but
also the necessity for these norms to be morally binding on all mem-
bers. That is, an obligation to observe the norms of one’s commu-
nity is a necessary condition for the existence of moral free space.
The logic is simple: If rational contractors would consent to A, and B
is a necessary condition for A, then they would also consent to B.
Impeccable logic is of little value, however, if one or both of the pre-
mises is false, which is the case with this argument.
In essence, Donaldson and Dunfee are proposing a doctrine of
majoritarianism in ethics that is similar to its use in political the-
ory. In Locke’s version, individuals in the state of nature would find
it mutually advantageous to agree to be bound by the will of the
majority within the limits imposed by natural rights. Hypernorms
function like Lockean rights by providing protection against a
tyrannical or morally corrupt majority. There are several points of
difference, however, between the argument for majoritarianism in
political theory and the argument in ISCT.
First, the need for morally binding rules in a state is not shared
by all communities. That is, anarchy would result if the rules of a
state were not morally binding on all members, but the case is less
compelling for more informal communities. Second, the political
argument for majoritarianism requires more procedural safeguards
that Donaldson and Dunfee provide in Ties That Bind. The authors
stipulate the rights of exit and voice, but majoritarianism in politi-
cal theory is also buttressed by extensive conditions for parti-
cipation in decision making and by structural safeguards for
minorities.
The most important point of difference is that in a democracy, the
only rules that are binding on citizens are those that are promul-
gated in an authoritative manner. It is not the will of the majority
that is obligatory but that will expressed in law. The problem with
ISCT is that the norms of a community are any and all standards
that are reflected in the attitudes and behaviors of a majority of
members. In a corporation with a dress code, for example, certain
dress is obligatory; but in the absence of a code, the attitudes and
462 BUSINESS AND SOCIETY REVIEW

behaviors of a majority of employees may indicate a norm. Is that

norm binding, then, on all employees, as though there were a writ-
ten code?
The problem can be expressed differently by arguing that the
parties to the macrosocial contract might agree to the morally
binding force of all norms that are necessary for the existence of
a community, which is to say to prevent anarchy. However, it is
implausible to hold that the same contractors would agree to be
bound by just any norms that were held by a majority of community
members.
This problem could me handled in several ways, none of them
very satisfactory. For example, ISCT could be amended so that legit-
imate norms are those promulgated in an authoritative manner.
However, this condition would limit the definition of a community,
since many groups lack a procedure for establishing norms.
In addition, it would conflict with the identification of norms by
observing people’s attitudes and behaviors, which may be in con-
flict with official norms.17 At bottom, the problem is the lack of a dis-
tinction between ethical norms and mere custom or mores. The
unanswered question is whether Donaldson and Dunfee can make
such a distinction in a way that is compatible with the empirical
character of microsocial contractual norms.

ISCT AND STAKEHOLDER THEORY

In the concluding chapter of Ties That Bind, Donaldson and Dunfee

boldly declare that ISCT provides a normative foundation for stake-
holder theories of the corporation. This claim should raise hope
among stakeholder advocates and provoke fear in those who ques-
tion the whole movement. Their discussion, however, is unlikely to
satisfy or dissuade either camp.
The idea that corporations have obligations to stakeholders,
such as employees, customers, suppliers, and communities, is
uncontroversial until one specifies those obligations and clarifies
the manager’s role. Donaldson and Dunfee note that there are
many expressions of this view; hence the stress on stakeholder the-
ories in the plural. In particular, stakeholder management can be
justified as an effective means for achieving other ends, such
as shareholder wealth, or as an end in itself. It is this latter
JOHN R. BOATRIGHT 463

approach—which the authors describe as “normative” rather

than “instrumental”—that stands most in need of a normative
foundation.
In the business ethics literature, normative stakeholder theory
has been presented as an alternative to a stockholder-centered con-
ception of the corporation. On this view, managers have an obliga-
tion to serve the interests of all those who have a “stake” in the
corporation and not the interests of shareholders alone. ISCT pro-
vides many resources for resolving some problems in formulating
both instrumental and normative stakeholder theory, such as iden-
tifying stakeholders and assessing their claims. However, on the
critical question, “Should a corporation be run in the interests of
stockholders or all stakeholders?” ISCT does not provide a definitive
resolution.
The approach of ISCT to this debate is to hold that within the lim-
its imposed by hypernorms, communities have moral free space
within which to create economic organizations that are consistent
with legitimate community norms. These norms will almost cer-
tainly specify numerous obligations to all corporate constituencies,
including fair treatment of employees, customers, suppliers, and
other stakeholder groups. However, countries with different cul-
tural, social, political, legal, and historical traditions will evolve dif-
ferent forms of economic organizations. Moreover, a single country,
such as the United States, provides for a wide variety of forms of
economic organization, including sole proprietorships, limited part-
nerships, nonprofit corporations, and for-profit corporations that
are owned by employees, customers, and other groups. All forms of
economic organization would be justified in ISCT unless they vio-
late some hypernorm or conflict with the microsocial contractual
norms of the relevant community.
The dominant form of economic organization in the United States
is the investor-owned corporation in which managers have a fidu-
ciary duty to maximize shareholder wealth. Insofar as ISCT serves
as a normative foundation for a stakeholder-centered conception of
the corporation, then the theory must provide some critique of the
rival stockholder view. However, Donaldson and Dunfee concede
that some countries might evolve norms that support a form of eco-
nomic organization that serves shareholder interests alone.18 Their
only criticism is the observation that the legitimate norms of the
United States recognize certain obligations to stakeholders.19 The
464 BUSINESS AND SOCIETY REVIEW

suggestion is that only stakeholder theory is consistent with Ameri-

can microsocial contractual norms.
This is a difficult claim to evaluate. On the one hand, the idea
that managers have a right, indeed an obligation, to pursue share-
holder wealth by dismissing employees or endangering consumers
or polluting the environment is unacceptable. Some corporate
behavior clearly violates legitimate norms, as well as, on occasion,
hypernorms. On the other hand, the conception of the corporation
as a nexus of contracts among its various constituencies—which
underlies the argument for stockholder rights—would seem to be a
form of microsocial contracting that fits right in with ISCT. On the
nexus-of-contracts view, the obligations of managers consist in
fulfilling the terms of all the contracts that they form. According
to this argument, shareholders contract for exclusive control of the
corporation and a claim on profits, while all other constituencies
contract for a different set of rights and benefits that better serve
their interests.
A nexus-of-contracts stockholder view can be reconciled with
ISCT by making a simple distinction. Stakeholder theorists, includ-
ing Donaldson and Dunfee, might be understood as making an
inference from the premise that corporations ought to serve the
interests of all stakeholders to the conclusion that managers ought
to run a corporation in the interests of all stakeholders. The prem-
ise is a statement of the ends to be served that reflects the norms of
society. The conclusion, however, is a choice of the means to
achieve this end. The underlying assumption is that the end of serv-
ing all stakeholders is best achieved by placing responsibility on
corporate managers.
The alternative is to design a system of corporate governance in
which, if each party fulfills its contractual role, the interests of all
stakeholders are served. On this approach, the responsibility for
ensuring that corporations achieve the agreed-upon end is placed
not upon the managers of corporations but on the whole of society
in the design of its economic institutions. Both means are equally
compatible with the norms of the United States at the present time,
and, as Ian Maitland has argued,20 the choice between them is pri-
marily an empirical matter of determining which is more effective.
The arguments for both the stockholder and stakeholder theories
depend, then, on further empirical premises.
JOHN R. BOATRIGHT 465

Thus, Donaldson and Dunfee have provided helpful resources for

developing a stakeholder theory of the corporation, but they do not
provide a normative foundation that demonstrates its superiority
over the rival stockholder theory—unless more argument is
forthcoming.

CONCLUSION

Although business ethics theory is not necessarily an oxymoron, the

task is not easy. Any ethical theory must be developed in great
detail in order to withstand critical scrutiny. Most of the difficulties
with ISCT, as it is presented in Ties That Bind, are “sins of omission”
that call for clarification and elaboration. Donaldson and Dunfee
have produced an impressive work of theory, as well as a useful
management guide, but much remains to be done. In the mean-
time, we can be thankful for their contribution to the business eth-
ics literature.

NOTES

1. Thomas Donaldson and Thomas W. Dunfee, Ties That Bind: A Social

Contracts Approach to Business Ethics (Boston: Harvard Business School
Press, 1999).
2. John Rawls, A Theory of Justice (Cambridge: Harvard University
Press, 1971).
3. Michael Walzer, Spheres of Justice (New York: Basic Books, 1983).
See also, Michael Walzer, Thick and Thin: Moral Argument at Home and
Abroad (Notre Dame: University of Notre Dame Press, 1994).
4. John Rawls, “Kantian Constructivism in Moral Theory,” Journal of
Philosophy 77 (1980), 515–572.
5. Ties That Bind, 23.
6. Spheres of Justice, xiv.
7. See, for example, Tom L. Beauchamp and James F. Childress, Princi-
ples of Biomedical Ethics, 4th ed. (New York: Oxford University Press, 1994).
8. Joshua Cohen, “Review of Spheres of Justice,” Journal of Philosophy
83 (1986), 457–468; Ronald Dworkin, A Matter of Principle (Cambridge: Har-
vard University Press, 1985).
466 BUSINESS AND SOCIETY REVIEW

9. This dilemma of choosing between relativism and uncertainty is

similar to a criticism, called the “communitarian dilemma,” that Cohen
makes against Walzer. See Cohen, “Review of Spheres of Justice,” 463–464.
10. Supporters of Walzer have suggested ways in which he could avoid
relativism by developing a critical standpoint from within the thick morality
of a community. See, for example, Georgia Warnke, “Social Interpretation
and Political Theory: Walzer and His Critics,” The Philosophical Forum 21
(1989–90), 204–226. Donaldson and Dunfee could do the same by showing
how hypernorms could be grounded within the norms of microsocial
contracts.
11. Albert S. Jonsen and Stephen Toulmin, The Abuse of Casuistry
(Berkeley and Los Angeles: University of California Press, 1988), 35. See
also Stephen Toulmin, “The Tyranny of Principles,” Hastings Center Report
11, (1981), 31–39.
12. Ronald Dworkin, Law’s Empire (Cambridge: Harvard University
Press, 1986).
13. Ties That Bind, 39.
14. Donaldson and Dunfee later acknowledge that norms must also be
legitimate to create obligations. Ties That Bind, 163.
15. Donaldson and Dunfee consider this possibility when they argue
that a dissenting member may still recognize an obligation to follow norms
because they have been generated in an authoritative manner. Ties That
Bind, 39. However, a dissenting member may also refuse to recognize the
norm, despite the origin.
16. Ties That Bind, 163.
17. For example, surveys reveal that American Catholics generally
practice and approve of birth control despite Church teachings to the con-
trary. Similarly, the official “don’t ask, don’t tell” policy of the U.S. armed
forces seems to be contradicted by the attitudes and behaviors of service
members.
18. Ties That Bind, 245–246.
19. Ties that Bind, 246.
20. Ian Maitland, “The Morality of the Corporation: An Empirical or
Normative Disagreement?” Business Ethics Quarterly 4 (1994), 445–458.