The Social

Contract:
Moral Obligation or
Regulation

Social Contract Theory

Thomas
Hobbes

John Locke

Jean-Jacques
Rousseau

Social Contract Theory

Milton
Friedman

Changing Business Climate: 21st

Century

Approaches of CSR
Instrumental
Approach

Social Contract
Approach

Social Contract Theories in

Business
An ancient philosophical idea that states that an
individuals ethical and political obligations
relate to an agreement he has with every other
individual within a society
The agreement can be written or tacit agreement
This involves Corporate Philanthropy, Corporate
Social Responsibility and Corporate Governance

Social Contract Approach to

Business
Refers to the strategy a company chooses when
it accepts informal expectations from the
public and makes social and environmental
responsibility important to business operations
Is the perspective that a corporation has an
obligation to society over and above the
expectations of its shareholders

Definitions of Social Contract

An implicit agreement among the members of a society to
cooperate for social benefits, for example by sacrificing some
individual freedom for state protection
Is an unofficial agreement shared by everyone in a society in
which they give up some freedom for security
The voluntary agreement among individuals by which,
according to any of various theories, as of Hobbes, Locke, or
Rousseau, organized society is brought into being and invested
with the right to secure mutual protection and welfare or to
regulate the relations among its members.
An agreement for mutual benefit between an individual or
group and the government or community as a whole.

The Social Contract

5. We believe that the interests of our company and

our customers
are best served through a sustainable practice of
capitalism economically, morally, ethically,
environmentally, and socially.

Example of a Social Contract

Social Contract Between [Brand X] and Its
Customers
We recognize that we live in a new world, where
reckless profit and self-interest hurt our business,
our own lives and those of people we care about, as
well as millions of human beings around the world.
We believe that a better future depends on an
integration of profit and purpose within the private
sector. To that end, our company and our customers
must become partners in social change to build a
better world. We agree that the following principles
will guide our own behavior and in the relationship
between us:
1. We believe our company has a right to
innovation,
entrepreneurship, and profit-making while our
consumers have a right to a healthy society and
planet for living.
2. We recognize an interdependent, global
community requires an
expanded definition of self-interest that
acknowledges the needs of all inhabitants of the
planet.
3. We define success through prosperity, which
means the well-

6. We believe that our company and our customers

owe each
other an equal duty of transparent, authentic, and
accountable communication.
7. We believe that social technology, business, and
shopping
have the potential to change our world through new
modes of engagement, collaboration, and
contribution.
8. We believe in these values to guide our daily
practice
of capitalism: sustainability, fairness of rewards,
fiscal responsibility, accountability, purposefulness,
engagement, and global citizenship.
9. We believe that our company and our consumers
are dutybound to serve as custodians of global well-being for
this and all future generations.
10. We believe that the entire private sector must
cooperate, collaborate, and coordinate with
governments and NGOs to create a unified force for
social good. To this end, we will undertake
partnership and collaborations as possible to work
with other companies in bringing out
meaningfulsocial change.

Pros & Cons of the Social Contract to

Business
Damage Protection

Pros & Cons of the Social Contract to

Business
Long-term Profitability

Pros & Cons of the Social Contract to

Business
Cost

Pros & Cons of the Social Contract to

Business
Focus

References
http://www.thecro.com/topics/business-ethics/the-corporate

-social-contract/
http://smallbusiness.chron.com/social-contract-theories-b
usiness-59955.html
http://smallbusiness.chron.com/pros-cons-social-contract
-approach-business-20993.html
http://
study.com/academy/lesson/social-contract-theory-definitio
n-examples.html
http://yourbusiness.azcentral.com/social-contract-theorie
s-business-17357.html