Which act could be considered an acceptance of the social contract?
A. Paying the electric bill in exchange for using electricity
B. Viewing commercials in exchange for
C. Watching network news broadcasts
D. Observing traffic laws in exchange for driving on the highway
E. Paying the water bill in exchange for taking a shower
Answer: D. Observing traffic laws in exchange for driving on the highway
Understanding Social Contract Theory
Social contract theory enforces the order you and I enjoy in our daily activities. The same case applies in a business environment. Many conflicts are, by default, avoided due to business people’s acceptance of social contract theory.
Social contract theory postulates the need for an individual to surrender some of their freedom and live by the agreed-upon rule of law for the safety of all in society. It was a theory postulated by Rousseau.
The social contract ensures mutual respect of people’s rights and freedom. In an environment where people mutually respect each other, there is minimal possibility of disorder and chaos.
Social Contract Theory in Business
To run any business ethically, some dependence on the rule of law must exist. The dependence on the rule of law is what makes businesses independent. In this case, the independence of a business is to do as it wishes within the provision of the law.
Conducting business as a provision of the law comes from acceptance. Business people and other individuals in society must accept being confined within the boundaries of the law. If they are operating beyond the rule of law, then they reject to forego some of their freedom for the order of all.
When people accept to forego some of their freedom, there is a return they should expect. For example:
1. Paying taxes in exchange for infrastructure:
The state government requires businesses to pay different taxes. These taxes are revenue that a business must sacrifice to support the state. In return, the state constructs infrastructure like roads. This infrastructure helps businesses operate more smoothly because of logistics improvement.
2. Extending after-sales services to build customer loyalty:
Businesses and companies understand the significance of returning customers. Loyal customers are returning customers who will likely refer their friends and family members. For a customer to become loyal, their expectations must have been surpassed hence their delighted level of satisfaction.
A business that offers after-sales services tries to surpass customers’ expectations. For instance, a car dealer offering to deliver a car to your residence for free is an example of after-sales services. A business spends its money on after-sales services, and in return, it builds brand loyalty.