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Business, communities, and the social contract
 What is the role of corporations in our society beyond making money and
maximizing profits for their shareholders? Oakland University Professor of
Management Don Mayer and co-author Anita Cava of the University of Miami School
of Business take on a small slice of that big pie in Integrative Social
Contracts Theory and Urban Prosperity Initiatives, a paper accepted for
publication in the Journal of Business Ethics.
Ethicists from Aristotle to Immanuel Kant have theorized about the role of
business in society. Social contract theory as applied to business came into
play in the 1990s. Postulated by two researchers at the University of
Pennsylvania’s Wharton School, “integrative social contracts theory” raises an
age-old question in an era of corporate globalization. What do we, as a society,
have a right to expect businesses to do?
“The theory, which most folks just call ISCT, turns out to be fairly useful,”
Mayer says. “The more I look at it the more sensible it seems. We are trying to
apply it to urban prosperity initiatives, and specifically to what my co-author
finds happening in Miami.”
Mayer says that successful urban prosperity initiatives require businesses to
become engaged in the effort. Consequently, corporations are forced to ask, ”Do
we have a commitment to local communities and if so what is that?”
As an example, Mayer says that a corporation can inform its employees of
federal programs such as the earned income tax credit or food stamps, which
benefit low-wage workers with little or no cost to the corporation. More
controversial is the idea that the company might actually commit resources to
training, education, safety, or public infrastructure. Yet doing so fits well
within the recommendations of ISCT.
And doing good can be good for the bottom line.
“You would be surprised how many corporations have come to realize the market
benefit of thinking outside the standard box of profit maximization short-term,”
Mayer says. “Reputational effects are increasingly important.”
That concept translates to the classroom, Mayer says. “Do we want our
students to leave Oakland University without showing them that corporations
should be mindful of what they owe their communities? I should hope not.”
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