Stakeholder Theory Of Social Contract

distinguish the contracts that exist in the organisations and in sense that they are found in all religions, philosophical ethical theories, and in international treaties. If the society violates hyper norms then it is not legitimate norm. However, societal and organisational norms that meet Donaldson and Dunfee’s tests for authenticity are legitimate. To guide international companies as they do business in moral free space, Donaldson and Dunfee have a series of rules (1994) to settle conflicts among norms.
All social contract theories have in common the view that the foundations of business ethics lie either in hypothetical or actual contracts, or in some combination of both. (C. 5) Stakeholder Theory
The Rise of the Stakeholder Concept

This principle is drawn from the deontological ethical theory of Kant (1724-1804) based on the respect for persons principle that persons should be treated as ends and never only as means. This implies that the corporation must treat its stakeholders as rational beings with a right to purpose their own interests without undue interference.
Criticisms of Stakeholder Theory According to some, however, stakeholder theory ‘has been advanced and justified in the management literature on the basis of its descriptive accuracy, instrumental power and normative validity’ (Donaldson & Dunfee, 1995). Stakeholder theory has acquired opponents from various sides of the ideological divide, critiques from right and left, from friend to foe (Philips et al., 2003). Derived from classical Friedman principles, writers such as Sternberg (1997) have argued that the principles of stakeholder theory undermine the property rights of the owners of the company, comprise the mechanisms of the free market, destabilise the operations of government and changes the very nature of capitalism. These arguments have been well documented elsewhere (Philips et al., 2003). They have also been resoundingly refuted on a number of fronts (Freeman & Philips,

Trevino (1986) offered a general theoretical model, whereas Ferrell and Gresham (1985), Hunt and Vitell (1986), and Dubinsky and Loken (1989) offered models that focus on marketing ethics. Rest (1986) presented a theory of individual ethical decision-making that can easily be generalised to organisational settings. Among the empirical contributions to date are the works of Hegarty and Sims (1978, 1979), Fritzsche and Becker (1983), Frederick (1987), Laczniak and Inderrieden (1987), Fritzsche (1988), Dubinsky and Loken (1989), and Weber (1990). One reason for the relative paucity of theoretical and empirical work in ethics may be that few scholars are interested in both ethics and organisational behaviour and decision-making. The models that have emerged are the products of scholars in psychology or psychology-based disciplines, including organisational behaviour and marketing. In addition, organisational scholars may be reluctant to study