The Social Contract with Business

The Social Contract with Business is a business model that aims to build a healthy society through sustained profitability.
Thus, the Social Contract with Business provides for an answer to classic management questions, such as: What is a business for? Business as an organ of society? Why has business failed society? Business as a global change agent for the common good?
A family of social contracts
All social contracts aim for a society that is free, fair, just, safe, prosperous, healthy and sustainable.
The political social contract provides for the grounding of democracy as a form of government as proposed by John Locke in his famous Two Treatises of Government in 1690.

The sociologist’s social contract provides for equality, fraternity and brotherhood as proposed by Jean-Jacques Rousseau (1749-1778) in his treatise: The Social Contract.
The business ethicist’s social contract with business provides for an integrated social contracts theory as proposed by Thomas Donaldson and Thomas Dunfee (1999) in their treatise: Ties That Bind - a social contracts approach to business ethics.
The business leader’s social contract provides for a healthy society through profitability as proposed by Jopie Coetzee (2012) in his treatise: The Social Contract with Business - beyond the quest for global sustainability. was used as to find answers to the management questions above through the Socrates’ dialectic method, namely in this case: What kind of future does humanity want? What kind of society will be able to deliver and sustain such a kind of future? What kind of business is suitable for such a society? What kind of business leader is needed for such a business? What kind of education does such a business leader need?
The answers were drawn from business, societal and political leaders from the G3 countries and the BRICS countries. With business the broad definition is taken, namely all enterprises that are professionally managed in business, society and government.
Key characteristics
All the characteristics below arise from the treatise, The Social Contract with Business.
Deliverables
The collective answers to these Socratic questions are the deliverables of the social contract firm and have been termed ‘humanity’s global sustainability mandate to its leaders'.
This mandate serves as an end-purpose statement of any enterprise of any size in any sector of human endeavour, namely to deliver a world of inclusive globalisation (WOIG) where systemic poverty has been permanently removed and where humanity’s broad security is assured.
This requires:
* a society that finds its greatness in the courage of protecting both its humanity and its economy as a whole;
* world-class businesses, financially robust across economic cycles, with global stewardship as the dominant business logic;
* business leaders with the ability to envision a WOIG, and then to lead towards it in an entrepreneurial and path-breaking manner exerting leadership qualities anchored in wisdom, love, and courage; and
* an educational paradigm, termed conscientization that aims to develop an applied consciousness of one’s conscience as a competitive advantage.
Responsibilities
The purpose, nature and dynamics of business as an organ of society, crystallised into what have been termed the new ‘Social Contract with Business’ consisting of eight business leadership responsibilities directed:
* towards itself is to be an organ of society (such a virtuous responsibility can only be taken up if a firm reinvents itself to become a WOIG-kind of business);
* towards its direct stakeholders is to be sustainable (this responsibility is mainly achieved through compliance with socially and environmentally responsible indices and protocols, that is, to demonstrate compliance with external measures);
* towards the earth is its alignment with the earth’s finite nature (this responsibility is done by way of on-balance sheet activities);
* towards the global commons is to be a co-custodian thereof (this responsibility is done by way of off-balance sheet activities);
* towards society is to be a co-architect of a healthy society (this responsibility is done by way of financial and non-financial support to society to help itself);
* towards its own entrepreneurial space is to protect its own efficiency of doing business (this responsibility is aimed at supporting gatekeeper institutions upholding democratic rule and to mitigate or eliminate all threats from the external business environment);
* towards government is its alignment with government priorities (this responsibility aims to support government to deliver on its reasonable developmental objectives); and
* towards transnational crime is to eliminate its role and influence (this responsibility needs to be taken-up with the same zeal as business has taken up its social and environmental responsibilities).
Building blocks
Edith Penrose’s Theory of the Growth of the Firm became re-confirmed and re-contextualised for global business. The original four drivers of the sustainability of the firm became expanded to eight for the social contract firm, namely:
* Entrepreneurial versatility: Moving beyond management and technical competence to build a WOIG enterprise as an organ of a WOIG society;
* Trust-building ingenuity: Convincing a sceptical audience about the merits of the enterprise’s intent to turn around to a WOIG, and then to invest in it;
* Entrepreneurial ambition: Moving away from the comfort zone of destructive globalisation towards building a new WOIG-kind future;
* Entrepreneurial judgement: Having the ability to make holistic decisions through analysis and wisdom to advance the cause of good for all stakeholders;
* Entrepreneurial innovation: Having the ability to innovate in technologies, education, mindsets, and value-propositions necessary for a turn-around to a WOIG;
* Entrepreneurial implementation: Having the ability to master the art, science, and craft of implementation without compromising on quality, time, budget, and integrity;
* Intrapreneurial operations: Having the ability to exploit technologies and opportunities to optimise the firm’s assets towards delivering sustained prosperity to a WOIG society; and
* Entrepreneurial stewardship: Having the wisdom, love, and courage to exert path-breaking leadership to apply the Social Contract with Business as an intergenerational business case.
Language
The many variations of, and the embedded power of the words wisdom, love and courage have been introduced to discuss, plan and implement the social contract with business.
Educational paradigm
Conscientization aims at sculpting the social contract business leader to deliver a specific kind of future, that is, humanity’s global sustainability mandate.
The educational challenge is to develop an applied consciousness of conscience.
For this, two core competences are prerequisite to lead the turn-around to a WOIG, namely:
Cultivating a global mindset through
* mastering the context of history and the present, i.e. an economic history of the world, globalisation, global political economy and current global status;
* mastering consciousness of the world, i.e. universal ethics and values, sociology, ecology, culture and key global trends;
* mastering consciousness of the self, i.e. a moral judgement of self in the presence of the call for stewardship (metanoia); and
* mastering consciousness of the conscience, i.e. the ethos and intent of the Social Contract with Business as a means to deliver humanity’s global sustainability mandate.
The outcome should be an ability to exercise the vocabulary of wisdom, love and courage in leadership for a WOIG.
Mastering holistic decision-making through
* mastering critical reasoning through mathematics (numbers, analysis) and language (words, philosophy);
* mastering the tools of decision-making, such as creativity, systems thinking, understanding risk, uncertainty and opportunity, inter-generational business models, management decision making, business analysis, due diligence, complex business problem solving, research techniques; and
* mastering the tools of buy-in of decisions, such as communication, negotiation, influencing, crossing cultural and mindset divides, dealing with power, ambition and ego.
The outcome should be an ability to exercise entrepreneurial judgement.
These two core competences set the curriculum for other leadership-in-practice competences, such a crafting prosperity, implementing prosperity and managing prosperity. This comprises essentially the new Social Contract MBA (master of business administration) and the new Social Contract CA (chartered accountant).
A Critique of the Social Contract with Business
A dominant critique is that the social contract with business undermines the profit motive of the firm and capitalism. A critique amongst business ethical theorists is that social contract theory development is promising, but inadequate.
Future developments
To develop the responsibilities and obligations of society in its contract with business; to disseminate the Social Contract with Business to decision-makers; and, to add value to the ongoing development of social contract theory in business.

Main Menu

See Also

Main Menu