Electronic copy available at: http://ssrn.com/abstract=1652151Electronic copy available at: http://ssrn.com/abstract=1652151Electronic copy available at: http://ssrn.com/abstract=1652151

Dirk Ulrich Gilbert / Andreas Rasche

DISCOURSE ETHICS AND SOCIAL ACCOUNTABILITY –

THE ETHICS OF SA 8000 Professor Dr. Dirk Ulrich Gilbert Institute of Economics University of Erlangen-Nuremberg Kochstrasse 4 (17) 91054 Erlangen, Germany Phone: +49-9131 85-22093 Fax: +49-9131-85-22060 E-Mail: dirk.gilbert@phil.uni-erlangen.de Dipl.-Kfm. Andreas Rasche Department of Organization and Logistics Helmut Schmidt University, University of the Federal Armed Forces Holstenhofweg 85 22043 Hamburg, Germany Phone: + 49-40-6541 2973 Fax: + 49-40-6541-3767 E-Mail: arasche@hsu-hh.de

Dirk Ulrich Gilbert received his PhD in international management from Frankfurt University, Germany. He was an Assistant Professor of International Management at The University of New South Wales, Sydney, Australia (2004-2005) and currently is a Professor of Management at the University of Erlangen-Nuremberg in Germany. His research interests include international business strategy, strategic networks and international business ethics.

Andreas Rasche is currently working at the Chair for Business Administration at the Helmut Schmidt University, Hamburg, Germany and is finishing his PhD in strategic management at EUROPEAN BUSINESS SCHOOL, Germany where he is also teaching business ethics. His research interests include the institutionalization of ethics initiatives in multinational corporations, reflections about the theory of strategic management, as well as the relation between the sociology of practice to strategy and ethics.

Electronic copy available at: http://ssrn.com/abstract=1652151Electronic copy available at: http://ssrn.com/abstract=1652151Electronic copy available at: http://ssrn.com/abstract=1652151

1

DISCOURSE ETHICS AND SOCIAL ACCOUNTABILITY –

THE ETHICS OF SA 8000

Based on theoretical insights of discourse ethics as developed by Jürgen Habermas, we delineate

a proposal to further develop the institutionalization of social accounting in multinational

corporations (MNCs) by means of “Social Accountability 8000” (SA 8000). To reach this

research goal we proceed in four steps. First, we discuss the cornerstones of Habermas’s

discourse ethics and elucidate how and why this concept can provide a theoretical justification of

the moral point of view in MNCs. In a second step, the basic conception, main purpose, and

implementation procedure of SA 8000 are presented. In the third section, we critically examine

SA 8000 from a Habermasian perspective and discuss advantages and drawbacks of the

initiative. Fourth, to address these drawbacks, we introduce a “discourse-ethically” extended

version of SA 8000. We show that this approach is theoretically well-founded and able to

overcome some of the current deficits of the certification initiative. We demonstrate that the

extended version of SA 8000 can be successfully applied on a cross-cultural basis and that our

findings have significant implications for other international ethics initiatives.

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Social accounting went through a period of considerable discussion and practical

implementation in the 70s but fell off the public agenda in the 80s. It was not until the mid-1990s

that the field gained wider attention again (Gray, 2001; Gray, Owen & Adams, 1996; Lehman,

1999; Mathews, 1997; Ramanathan, 1976). A closer look at the recent literature shows that, since

the turn of the century, social accounting has become one major growth area within the field of

business ethics (Gray, 2002, 2001; O’Dwyer, 2001; Unerman & Bennett, 2004). Particularly in

the international context there has been a proliferation of different concepts providing

multinational corporations (MNCs) with ways to systematically evaluate their social and ethical

performance and to communicate relevant information to affected stakeholders (Donaldson,

2003; Göbbels & Jonker, 2003; Mathews, 1997; McIntosh, Thomas, Leipziger & Coleman, 2003;

Tulder & Kolk, 2001). Recently introduced social accountability standards offer ways to

implement business ethics to cope with the increasing demand for transparency and ethical

performance measurement (Kell & Levin, 2003). Well-known examples of such standards are the

Global Reporting Initiative (GRI), the Fair Labor Association (FLA), AccountAbility 1000

(AA 1000), and Social Accountability 8000 (SA 8000).

All of these social accountability standards have in common that they represent formal ethics

initiatives that aim at fostering ethical behavior by MNCs. Against the background of this special

issue of BEQ the question seems to be how ethical these initiatives are and whether they

represent genuine efforts to provide ethical guidance for MNCs. A closer look at the literature

reveals that only limited attention has been given to the ethical qualities and basic normative

assumptions of such initiatives (Göbbels & Jonker, 2003; Leipziger, 2001). In line with this,

Gray (2002, 2001) argues that the field of social accounting has yet to gain maturity and is still

under-theorized. From our perspective this criticism particularly applies to international social

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accountability standards because these tools face the problem of how to theoretically justify a

common moral basis to gain cross-cultural acceptance. To be coherent in the international

environment, it is of categorical importance to base initiatives like SA 8000, AA 1000 or the GRI

on validity claims that can provide a “moral point of view,” which stakeholders in different

countries, with diverse norms and values, can accept. Although international social accountability

standards are mostly based upon a broad normative ground (e.g. certain ILO principles), their

universal applicability is often criticized (Gilbert, Behnam & Rasche, 2003) and they are

considered as a means of imposing Western norms on developing countries. Notwithstanding

these problems, a critical discussion of problems for justifying social accountability standards has

not been part of the literature. In fact, a closer look reveals that in papers on social accounting,

researchers often inadequately discuss the ethical presuppositions on which theories and practices

of all kinds of economic accountability must rest (Schweiker, 1993; Shearer, 2002).

To discuss and overcome these problems, we propose to link critical theory (Adorno &

Horkheimer, 1997; Hoy & McCarthy, 1994; McCarthy, 1991; Parker, 2003; White, 1980) and in

particular discourse ethics, as developed by Jürgen Habermas (1990, 1996, 1999, 2003), with the

literature on social accounting. We consider discourse ethics and its adaptation to economic

theory (Schnebel, 2000; Ulrich, 1998; Ulrich, 1996) as an appropriate concept for providing a

framework to systematically assess international social accountability standards for three reasons:

First, Habermas’s concept is a formal ethical approach developed for pluralistic societies that can

no longer draw on a single moral authority and that differ on questions of value and the good life.

In this context, he introduces a theory that refers to communicative action and to the

presuppositions that speakers unavoidably make when they engage in argumentation to describe

how they can reach a shared understanding of the situation and resolve conflicts about norms and

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values. Most important for this paper is the fact that Habermas has sought to redeem the notion

of universally valid norms on the basis of a theory of discourse and language (Habermas, 1996,

1999). He precisely outlines the conditions of how to achieve rational consensus among human

beings. Second, Habermas attempts to bring moral philosophy into the realm of political and

social science. His approach seeks to develop a system of different forms of practical reason to

validate moral and ethical choices, particularly those of how society and its institutions should be

designed. By doing this, Habermas presents a theory that provides a framework of how to

critically examine social accountability standards and their ethical assumptions. Third, we

believe that Habermas’s discourse ethics is of enormous relevance to the construction and

legitimacy of a business ethics approach but so far has received only limited attention in the

English-speaking business ethics literature (Hendry, 1999; Lozano, 2001; Reed, 1999). Certainly,

a large number of publications related to different fields of business such as accounting (Chua &

Degeling, 1993; Laughlin, 1987; Power & Laughlin, 1996; Unerman & Bennett, 2004),

organization theory (Alvesson, 1991; Burrell, 1994; Froomkin, 2003), strategic management

(Levy, Alvesson & Willmott, 2003) or information technology (Cecez-Kecmanovic, Janson &

Brown, 2002; Cecez-Kecmanovic & Webb, 2000) deal with Habermas’s ideas, while the

business ethics literature is more or less unaffected.

Starting from this, the objectives of this paper are threefold. First, we present an extended

description of discourse ethics to provide a clear picture of this normative theory. Second, we

provide insights into why discourse ethics can be successfully applied to business ethics, despite

Habermas’s own skepticism of such an endeavor. Third, based on the main lines of discourse

ethics, we illustrate theoretical deficits and resulting practical problems of international social

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accountability standards to be able to make suggestions both to further develop the concepts and

to contribute to the broader discussion on the “ethics of organizational ethics initiatives.”

In this article, we primarily focus on a critical evaluation of only one of the abovementioned

international social accountability standards, namely SA 8000, for three reasons. First, SA 8000

is the most important initiative in the corporate world when it comes to the institutionalization of

business ethics via accountability standards. SA 8000 is currently used by 710 production

facilities in 45 countries (SAI, 2005), whereas only 64 MNCs report in accordance with the GRI

and only 16 leading brand-name companies are participating in the FLA (as of June 2005).

AA 1000 does not present a list of MNCs using its model. Second, SA 8000 is particularly

representative of social accountability standards because it provides both an internationally

accepted verification system for ethical performance and a comprehensive framework to create

decent workplace conditions in MNCs (McIntosh et al., 2003; SAI, 2005). As we show in the

course of our analysis, insights gained from a critical examination of SA 8000 can easily be

applied to other social accountability initiatives. Third, notwithstanding its practical relevance,

SA 8000 is not yet sufficiently represented in the literature on social accounting and business

ethics (Göbbels & Jonker, 2003; Leipziger, 2001; McIntosh et al., 2003). By applying

Habermasian discourse ethics to SA 8000, we hope to make a contribution not only to the

discussion of social accounting but to the whole field of business ethics and to take up Gray’s

(2002: 703) call for more meta-theoretical investigations in this field.

To reach these research goals we proceed as follows. In the second section of the paper, we

discuss the cornerstones of Habermas’s discourse theory and elucidate how and why this concept

can provide a theoretical justification of the moral point of view in MNCs. We continue by

introducing the basic principles of discourse ethics that specify the route by which discursive

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agreements on different validity claims (e.g. effectiveness, goodness, and rightness) can be

reached. Based on these insights, different forms of practical reason (viz. pragmatic, ethical, and

moral) can be distinguished according to the type of validity claims to be redeemed. In the third

section, the basic conception, main purpose, and implementation procedure of SA 8000 are

presented. In the fourth section, we critically examine SA 8000 from a Habermasian perspective

and sketch out advantages and drawbacks of the initiative. Fifth, we introduce a “discourse-

ethically” extended version of the standard. We demonstrate that this approach is theoretically

well-founded and able to overcome some of the current deficits of SA 8000. We delineate that

the extended version of the standard can be applied on a cross-cultural basis and represents an

appropriate tool to institutionalize social accounting in MNCs. We close by outlining

implications of our findings for other international ethics initiatives and provide some clues for

further conceptual and empirical research.

HABERMASIAN DISCOURSE ETHICS

In the tradition of critical theory (Adorno & Horkheimer, 1997), Jürgen Habermas’s main

aim has been to construct a theory focusing on an analysis of advanced capitalist industrial

societies and of democracy and the rule of law in a critical social-evolutionary context

(Habermas, 1990, 1993, 1996, 2003). Over the last 20 years or so, Habermas has developed

discourse ethics, which represents the pivotal program of his comprehensive social theory and

tries to advance the goals of human emancipation, while maintaining an inclusive, universalist

moral framework. For Habermas, members of modern, pluralistic societies find themselves in a

dramatic situation of change, where the substantive background consensus on the underlying

moral norms and values has been shattered and where global and domestic conflicts need to be

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regulated. Discourse ethics proposes a morality of equal respect and solidaristic responsibility for

everybody by outlining a way to arrive at a universally accepted and acceptable moral and ethical

consensus through discourse (Habermas, 1990, 1996, 2003). The basic idea is that the universal

validity of a moral norm cannot be justified in the mind of an isolated individual reflecting on an

issue to be discussed but only in a process of argumentation between individuals. Every validity

claim to normative rightness depends upon a mutual understanding achieved by individuals in

argument (Habermas, 1998).

Normative validity cannot be understood as separate from the argumentative procedures used

in everyday practice, such as those used to resolve issues concerning the legitimacy of actions

and the validity of norms governing interactions. Discourse ethics states that the sources of moral

consensus are contained in the formal pragmatic preconditions of speech and language, the

communicative action, and are not drawn from particular religious convictions or the conception

of a “good life” internal to a particular group or culture (Finlayson, 2000; Habermas, 1996). To

understand what Habermas means by that, we first describe the notion of communicative action

and how it provides a basis for an approach to normative theory. Second, based on the

Habermasian concept of communicative action, we outline the principles of discourse ethics,

which offer procedures for validating moral choices in discourses. Finally, we introduce forms of

practical reason that play a significant role in Habermas’s recent publications. As the focus of our

paper is an analysis of social accountability initiatives and related discourses between MNCs and

their stakeholders, we only discuss those Habermasian concepts that are necessary to understand

and criticize these topics. We do not examine the economic and political institutions within

which discourses take place. It should be mentioned, though, that Habermas (1996, 1999, 2003)

recently places emphasis on political science and the theory of democracy.

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Communicative Action

With his concept of communicative action Habermas tries to explain human rationality as a

necessary outcome of the successful use of language. According to this, the potential for

rationality and mutual understanding is inherent in communication itself. As Habermas (1996: 4)

puts it: communicative rationality is “inscribed in the linguistic telos of mutual understanding

and forms an ensemble of conditions that both enable and limit. Whoever makes use of a natural

language in order to come to an understanding with an addressee about something in the world is

required to take a performative attitude and commit herself to certain presuppositions.” From this

it follows that interpersonal communication and mutual understanding are at the heart of

discourse ethics. Via communicative action individuals try to harmonize their action plans and

achieve consensus on normative validity claims in the life world (Lebenswelt). However,

individuals often do not turn to communicative action as a means of coordinating their actions

but to what Habermas (1990: 58) calls strategic action. According to this, an actor who acts

strategically primarily seeks to manipulate and influence the behavior of another by threatening

sanctions or by the prospect of gratification and does not rely on the power of communicative

understanding.

Although Habermas (1996, 1999) admits that most corporations’ actions are strategic in

nature and that in general firms simply follow price signals (and not mutual communication) to

coordinate their activities, his concept of discourse theory, from our perspective, can make a

significant contribution to the field of business ethics. In line with Sen (1993) and Ulrich (1998),

we believe that the normative preconditions for legitimate business activities in an economy

should be considered as predominant and not subordinate to economic interests. Likewise,

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modern concepts of business ethics are concerned with critically reflecting on the institutional

framework of the economy, which can be expected to generate results that are acceptable from

both an ecological and human point of view (Crane & Matten, 2004; Ulrich, 1998; Unerman &

Benett, 2004). Habermas himself, in his recent Studies in Political Theory (1999), points out that

we need a critical evaluation of general rules in existing market frameworks. By proposing the

concept of communicative action, he provides the appropriate means to analyze the normative

logic of market economies. Accordingly, the concept of communicative action should not be

considered as an endeavor to limit (strategic) business activities from an outside perspective but

as a process of critically reflecting on the normative preconditions of the legitimate value-

creation of firms from within the economic system. Hence, despite Habermas’s own skepticism

of the contribution of a business ethics (Habermas, 1991: 250–264), we see a chance for

discourse theory to inform this field of research successfully.

To understand how communicative action and mutual understanding are possible, Habermas

performs a pragmatic analysis of language and develops a theory of speech acts (Habermas,

1990). Speech acts constitute the basic unit of analysis and are of different types (e.g. constative,

regulative, expressive, etc.) to make different validity claims (e.g. claims to effectiveness,

goodness, rightness, etc.). According to Habermas (1999: 40), all individuals taking part in a

conversation and making different validity claims share certain inescapable presuppositions of

communication and argumentation in order for communication and argumentation to even begin.

Habermas (1990: 87) distinguishes between three levels of presuppositions of argumentation (see

Figure 1). These presuppositions ensure the equality of opportunity to offer speech acts and are

collectively termed as the discourse rules of the ideal speech situation (Habermas, 1996: 322).

For Habermas (1990: 202), these presuppositions are not mere social conventions or subject of a

10

free personal decision; they are inescapable in discourses intended to reach rationally motivated

moral consensus. Rational social agents who engage in discourses to validate contested norms

inescapably follow these presuppositions. To disclaim them while being in a discourse is similar

to denying that one is able to communicate in a discourse at all. All of these presuppositions are

at the center of Habermas’s concept of communicative action and set down the conditions of how

individuals can try to reach mutual understanding.

---------------------------------

Insert Figure 1 about here ---------------------------------

At this point, a particular advantage of Habermas’s concept becomes clear: By strictly

referring to the presuppositions of argumentation to justify his theory, he circumvents a formal

deduction of norms and finally gives up an “ultimate justification” without damage to his theory.

He rather describes practically existing possibilities and prerequisites to achieve argumentative

understanding among human beings (Habermas, 2001). Hence, discourse ethics does not attempt

to generate and justify moral principles with universal validity but provides only a process of

argumentation to test them (Phillips, 2003: 110). Based on these findings, we now introduce the

basic principles of discourse ethics and Habermas’s particular methodology for justifying moral

norms via discourses.

Basic Principles of Discourse Ethics

Habermas’s discourse ethics remains faithful to the Kantian position of establishing a

procedural principle that allows us to distinguish between norms of action which are morally

valid and possible and those that are impossible (Finke, 2000: 23). However, whereas Kantian

ethics links the process of justification to the individual conducting a universalizing test (Kant,

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1993, 2004) to see whether she or he wishes everyone else to act according to the same maxim,

in discourse ethics Habermas (1990: 196–198) moves Kant’s categorical imperative beyond its

“monological” reflection. The same criticism applies to Rawls’s (1971) “Theory of Justice,”

where the morality of an action is determined by individuals critically evaluating actions behind a

“veil of ignorance.” Habermas argues that individual reasoning and self-reflection are insufficient

to justify acceptable norms because different individuals might come to different conclusions

regarding the acceptability of particular norms. Achievement of general acceptance of any norm

can therefore only be obtained through a process of dialogical argumentation. Based on this

criticism, discourse ethics provides a “principle of universalization” (U), which has to be

considered as the fundamental guideline of moral reasoning.

(U) “A norm is valid when the foreseeable consequences and side-effects of its general

observance for the interests and value-orientations of each individual could be jointly

accepted by all concerned without coercion” (Habermas, 1999: 42).

The principle of universalization forms the cornerstone of Habermas’s theory of moral

validity. By introducing it he describes how normative claims can be justified in dialogues. As a

rule of reasoning (U) is implied by the presuppositions of argumentation because, for Habermas,

a prerequisite for reaching a consensus on generalizable maxims is that all participants in the

discourse must speak honestly and comprehensibly and refer to the rules of the ideal speech

situation (Habermas, 1990: 120–121). As a principle (U) states that the amenability to consensus

is both a necessary and sufficient condition of the validity of a moral norm.

The principle of universalization specifies the type of argumentation and hence the route by

which an agreement on conflicting normative claims can be reached and should not be confused

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with the “principle of discourse ethics” (D), which presupposes that norms exist that satisfy the

conditions specified by (U). This principle of discourse ethics states:

(D) “Only those norms can claim validity that could meet with the acceptance of all

concerned in practical discourse” (Habermas, 1999: 41).

A closer look at the principle of discourse ethics reveals that (D) makes reference to a

procedure of argumentation, namely the practical discourse and the discursive redemption of

normative validity claims. This is why discourse ethics can be characterized as a formal concept,

for it does not provide substantive guidelines of how to solve a conflict but only a procedure, the

practical discourse. A discourse has to be understood as a process that follows the guidelines of

the “ideal speech situation” to guarantee an open, unbiased, and truthful argumentation to ensure

that all participants in a discourse accept the force of the best argument (Habermas, 1996;

Unerman & Bennett, 2004). Assuming that a practical discourse has been sufficiently well

prosecuted, failure to reach a consensus on a conflicting norm indicates that this norm is not valid

(Finlayson, 2005). In other words, norms are not deduced from existing guidelines, but brought

into being by consensus in a practical discourse.

It is precisely this proceduralism that sets discourse ethics in opposition to the fundamental

assumptions of other approaches to business ethics, for instance Donaldson & Dunfees (1994,

1999) “Integrative Social Contracts Theory” or Browns (2005) approach to “Corporate

Integrity,” and makes us aware of the need to distinguish the procedure of discourse from the

substantive content of argumentation. Habermas (1990: 122) states: “Any content, no matter how

fundamental the action norms in question may be, must be made subject to real discourse.” As a

consequence for norms to gain acceptance, every person needs to question her/his own subjective

opinion and needs to freely consent to the discussed issues.

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A crucial point of Habermas’s theory is that he introduces not only one but two basic

principles to justify discourse ethics. This is surprising and Habermas (1999: 41–42) does not

provide a clear-cut answer to the question where the exact differences between these principles

are (Finlayson, 2005: 79). However, both principles (U) and (D) have slightly different meanings

and are essential to his theory. The principle of universalization (U) seems to be the stronger

principle as it represents the “moral principle” of discourse ethics (Habermas, 1990: 93). It acts

as a rule of argumentation enabling us to reach consensus on generalizable maxims and it

provides information about the prerequisites for the acceptance of consensus in discourses. More

precisely, (U) makes validity dependent on the acceptability of the “foreseeable consequences

and side effects” of an implementation of a norm; it states that a norm is valid if, and only if, it

“could be jointly accepted by all concerned without coercion” and therefore embodies a

universalizable interest. Whereas (U) claims to be the rational reconstruction of the impartial

moral point of view, which is at the heart of all moral theories, (D) expresses the fundamental

idea of Habermas’s moral theory which he develops by drawing on communication theory and

the notion of an ideal speech situation. Thus, (D) proposes that norms can be and must be

impartially justified in “practical discourses” and that those to be affected by a norm must be able

to participate in an argumentation concerning its validity (Habermas, 1996: 108). No thought

experiment whatsoever can and should replace a communicative exchange in practical discourse

regarding moral norms that may affect others. As a result, (D) imposes a very restrictive

condition on individuals trying to resolve conflicts in discourses. That is why the practical

achievement of Habermas’s theoretical concept might not be fully realizable in actual practical

dialogues regarding working conditions.

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Habermas recognizes that the consequences of (U) and (D) and the theoretical archetype of

the ideal speech situation are difficult to realize in practical discourses; we will deal with these

objections later. However, for him this does not in principle preclude the possibility that these

assumptions usefully can inform the conduct of dialogues. Drawing upon discourse ethics, both

principles (U) and (D) can be regarded as catalysts for a moral learning process in organizations,

which is guided by universal guidelines of communication extracted from the deep structures of

argumentation. It is for this reason that this part of Habermasian theory has recently attracted the

attention of scholars in the field of business ethics and organization studies (Levy et al., 2001;

Lozano, 2001; Rasche/Esser, in press; Unermann & Bennett, 2004).

Different Forms of Practical Reason

Based on his understanding of communicative action and the principles of discourse ethics

Habermas (1996: 109) distinguishes between various forms of practical reason and their

corresponding types of discourse. This is because not every question at issue asks for a

discussion of universal moral principles that need to be resolved in a discourse following the

rules of the ideal speech situation. Habermas (1990, 1992, 1996, 1999) distinguishes between

three distinct forms of practical reason, viz. pragmatic, ethical, and moral reasoning, according

to the validity claim to be redeemed.

Pragmatic reason. Pragmatic reasoning occurs in situations where an actor is seeking advice

to choose the means to a given end but does not critically evaluate the choice of these ends

(Habermas, 1996: 159). The issue being discussed is an empirical question of rational choice;

therefore, the validity claim is one of effectiveness (e.g., you ought to buy shares of different

companies to spread the risk of your investment). In the case of an argument about the right or

wrong of such a decision we engage in pragmatic discourses in which the goal is to rationally

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justify the choice of technique or strategy and to provide a recommendation concerning a reliable

program of action (Habermas, 1996: 159). Under such circumstances, the ought of the imperative

derived is directly linked to an individual’s own interest and to an application of decision rules

familiar to him or her (Reed, 1999: 459); therefore, the scope of the validity claim is non-

universal.

Ethical reason. The goal of an ethical discourse is to critically evaluate the ends discussed in

a pragmatic discourse. This form of practical reasoning involves important value decisions by

assessing what is “good for me” or “good for us” (Habermas, 1996: 161). Thus, the validity

claim being raised in an ethical discourse is that of goodness. It is important to note that for

Habermas the answer to the question of what is “good” or “bad” is always defined in terms of the

specific identity and particular life history of the person or the group and hence cannot claim to

be universal (Habermas, 1999). Accordingly, advice issued by an ethical discourse has only

relative validity and is only binding upon an individual or the members of the relevant group

(Finlayson, 2005: 95).

Moral reason. Although the notion of ethical discourse plays an increasingly important role

in Habermas’s thought, discourse ethics primarily aims at explaining which role morality plays

and how moral reasoning can set limits to ethics (Habermas, 1996, 2001, 2003). Actually, it is a

defining characteristic and a particular strength of discourse ethics to draw a clear distinction

between ethical and moral reasoning (Habermas, 1996). Whereas the former investigates

questions of the good life, the latter looks at generalizable norms and the procedures necessary

for regulating conflicts between members from competing cultural traditions. According to this,

ethical reasoning is a source of justification that always has to operate within the boundaries of

moral justification and results of moral reasoning always have a certain priority over results of

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ethical discourses (Habermas, 2003). The default concept for conflict resolution is the moral

discourse which refers to (U) as the principle of morality in order to find agreement concerning

the just resolution of an issue in the realm of norm-regulated action (Habermas, 1999: 42; Reed,

1999: 461–462). A moral discourse leads to norms for a specific situation, which are an

expression of a rational consensus of all concerned parties that had to comply with the criteria of

the ideal speech situation such as impartiality, non-coercion, non-persuasiveness, and acceptance

of the better argument (Habermas, 1993: 54–60). Thus, the validity claim that is raised in a moral

discourse is that of rightness and its scope is universal in nature (Habermas, 1998).

---------------------------------

Insert Table 1 about here ---------------------------------

All three forms of practical reason are somehow distinct but represent complementary

components of Habermas’s theory and ask for a certain type of discourse (see Table 1). This

means that there is also a sense in which the three forms of practical reason overlap and that the

same issue may be treated either as a pragmatic, an ethical or a moral question (Reed, 1999: 463).

It is precisely this concept of three normative realms that most scholars see as a major strength of

discourse ethics (Finlayson, 2005; Reed, 1999). As we shall see in the course of our analysis, this

distinction provides some clues for a critical evaluation of the normative assumptions of

SA 8000.

SOCIAL ACCOUNTABILITY 8000

Originally, the “Council on Economic Priorities Accreditation Agency” (CEPAA) established

the idea of SA 8000. Today, the New York-based NGO “Social Accountability International”

17

(SAI), which emerged out of CEPAA, is the responsible body for the standard (Leipziger, 2001:

12). In 1996, SAI finally convened an international multi-stakeholder Advisory Board to develop

and introduce SA 8000 as a global certification standard obligating companies to accept social

responsibility in certain areas and to prove compliance by allowing for independent audits.

Basic Idea of SA 8000

SA 8000 is the first social accountability standard for retailers, brand companies, suppliers,

and other organizations to maintain decent working conditions throughout the supply chain on a

global basis. The standard defines minimum requirements for workplace conditions that need to

be met by corporations and their suppliers and is applicable to a wide range of industry sectors

and to any size of organization (Göbbels & Jonker, 2003: 56). Using the procedures of the

quality management standard ISO 9000 and the environmental management standard ISO 14000

as a reference (Jiang & Bansal, 2003), there are two options for corporations to implement

SA 8000 (SAI, 2005): certification in compliance with SA 8000 and participation in the

Corporate Involvement Program:

Certification in compliance with SA 8000: corporations operating their own production

facilities can aim to have individual facilities certified in compliance with SA 8000 through

audits conducted by SAI accredited certification bodies.

Corporate Involvement Program (CIP): The CIP helps companies, particularly retailers,

brand companies, wholesalers, and sourcing agents, to assure that goods are made under

decent working conditions by seeking SA 8000 certification of their suppliers. The CIP is a

two-level approach that assists corporations in implementing the standard and to report on

implementation progress. CIP Level One is called “SA 8000 Explorer” and is designed for

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companies trying to evaluate SA 8000 as an ethical sourcing tool via pilot audits. CIP Level

Two is entitled “SA 8000 Signatory” and helps companies to implement SA 8000 over time

along their supply chain by demanding certification and communicating implementation

progress to stakeholders (e.g. Levi Strauss and Body Shop).

The decisive difference with regard to common ethics programs (like codes of conduct) is

that successful implementation of SA 8000 is monitored by external auditors (certification

bodies). It should be mentioned that third-party monitoring of standards is still very rare. In an

empirical study, Tulder and Kolk (2001) discovered that third-party monitoring was included in

only three of 138 companies. Nevertheless, there is a significant increase in the number of

companies starting to verify their sustainability reports on an independent basis (KPMG, 2002;

Mamic, 2005).

Figure 2 depicts the overall framework of SA 8000 and reflects the two-tiered character of

the initiative by distinguishing between a macro and a micro-level. On the macro-level one can

find the catalogue of consensus-based standards comprising three elements that shall be specified

below. The macro-level restricts actions on the micro-level where the certification process and

audit are carried out in cooperation with affected stakeholders. A mutual consideration of both

levels establishes an open dialogue around the initiative and thus drives the continuous

improvement process.

--------------------------------- Insert Figure 2 about here

---------------------------------

19

Macro-Level: Catalogue of Consensus-Based Standards

On the macro-level one can find the specific contents of the standard consisting of (1)

purpose and scope of the standard, (2) normative basis of the standard and definitions, and (3)

specific guidelines for corporate action (SAI, 2005):

1. Purpose and scope of the standard. Following SA 8000, corporations are under obligation to

actively handle all areas of social accountability that can be controlled and influenced. The

“controllable” area also includes suppliers. Certification is awarded only for a specific local

production facility but not for the entire value chain of a company at a time. The guidelines

have to be applied in consideration of the respective geographical, societal, political, and

economic situation of the corporation.

2. Normative basis of the standard and definitions. The normative basis emerges out of the

claim that corporations have to meet all nationally and internationally valid laws. In addition,

companies need to act in accordance with the United Nations Universal Declaration of

Human Rights, the United Nations Convention on the Right of the Child, and a number of

ILO-conventions (see SAI, 2005). SA 8000 does also provide a definition of certain terms

(e.g. supplier, stakeholder, children, and child labor) that play a significant role in the scope

of certification.

3. Specific guidelines for corporate action. These guidelines are derived from the normative

basis of the standard. To be certified successfully, a production facility must meet the

measurable, verifiable standards in the following areas (see Table 2).

--------------------------------- Insert Table 2 about here

---------------------------------

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Micro-Level: Implementation of the Standard

Operative implementation on the micro-level takes place at local production facilities. A

“guidance document” issued by SAI provides instructions concerning the local adaptation and

basic compliance rules of SA 8000. To foster implementation, SAI suggests dividing the process

into four phases following Deming’s (2000) Plan-Do-Check-Act model (Leipziger, 2001: 60–63).

In the first phase (plan), the corporation chooses a certification company (auditor) that is

accredited by SAI and conducts a first self-assessment. During the second phase (do), necessary

modifications of production processes and management systems are accomplished. The auditor

analyzes the production processes and informs the company about deviations from SA 8000.

Within the third phase (check), the actual audit takes place once a production facility meets all

demanded requirements. Auditor, production facility, and affected stakeholders (e.g. unions)

work together while the audit is conducted. In case of a successful certification, the production

facility is awarded the SA 8000 seal for three years. The last phase (act) is supposed to guarantee

constant compliance with SA 8000; auditors are allowed to make follow-up visits and are

permitted to withdraw certification. To ensure dialogue, corporations are asked to set up a system

by which employees can report their complaints in an anonymous way. Independent stakeholders

(e.g. NGOs) act as monitoring institutions by reporting violations to the auditor or to SAI.

The description of the different phases demonstrates that corporations need to understand the

reorganization of their production processes as an ongoing task and challenge—a challenge that

is not completed once the certificate is awarded. Certification is not supposed to provide a

snapshot at a single point in time but rewards sustainable efforts to improve working conditions.

21

SA 8000 tries to guarantee that standards are still met after the external auditor has left to ensure

a continuous improvement of workplace conditions (Leipziger, 2001: 59).

CRITICAL EVALUATION OF SA 8000 FROM A HABERMASIAN VIEW

Having presented both an overview of discourse ethics and an account of SA 8000, we are

now in a position to provide a critical evaluation of this standard from a Habermasian

perspective. To be coherent with our previous findings, the critical discussion draws heavily

upon the insights gained from the concept of communicative action, the basic principles of

discourse ethics, as well as the distinction between the three different forms of practical reason.

Advantages of SA 8000

Our investigation revealed that SA 8000 is currently one of the most developed and widely

used social accounting standards for MNCs. The opportunity to gain even wider acceptance

seems to be substantial, at least at first glance, because SA 8000 not only provides proper

guidelines to improve working conditions but also is auditable (Leipziger, 2001; McIntosh et al.,

2003). In fact, SA 8000 is the first auditable standard on workers’ rights. Corporations receive a

quasi-objective confirmation for socially responsible production and represent themselves as

“good corporate citizens” on an international level. McIntosh et al. (2003: 117–120) consider

auditability to be the major advantage and most important distinguishing feature of the standard.

Regular audits help companies to ensure that they are respecting workers’ rights and enable them

to take responsibility for the consequences of their economic activities.

22

In accordance with (U), the “foreseeable consequences and side-effects” of business

operations come to the fore and, due to independent auditing processes, working conditions

become highly transparent. SA 8000 does not only ask for pragmatic discourses to enhance the

effectiveness of production by improving workplace conditions, introducing better management

systems, lowering the risk of liabilities, and increasing product quality (Gilbert, 2003; McIntosh

et al., 2003) but also fosters authentic ethical reflection on the ends of business practices. From a

Habermasian perspective, the auditing process can be considered as an ethical discourse where

the question of the goodness of production is critically discussed in collaboration with affected

stakeholders on the local level. As stated by the principle of discourse ethics (D), in such a

process of ethical reasoning all stakeholders affected by SA 8000 are basically entitled to express

their opinion in order to foster a reformulation of the proposed guidelines and to criticize the

auditing process. Because of this, SA 8000 should not be considered as just another fashion or

trend in management (Abrahamson, 1996), implemented solely to protect a firm’s reputation, but

as a real effort to foster stakeholder dialogues and to draw the attention of MNCs to the

consequences of their international business operations. If we deem firms to be responsible for

the consequences and side effects of their actions, business ethics needs to develop and advance

concepts like SA 8000 to support executives in exploiting the potential syntheses between

morality and (market) success (Ulrich, 1998).

Drawbacks of SA 8000

Despite the advantages of SA 8000, a closer assessment of the initiative, from a Habermasian

perspective, reveals three problems: First, the norms contained in SA 8000 are based on an

insufficient justification; second, the standard does not provide any idea of how to design

23

dialogues with affected stakeholders; and third, commitment to the standard often seems to be a

result of coercion (and thus of strategic action) and does not reflect voluntary participation.

Insufficient justification of norms. The macro-level norms, contained in the “catalogue of

consensus-based standards,” claim to be moral maxims for corporate behavior which make the

scope of these validity claims universal in nature. Following the principle of universalization (U),

norms can only be sufficiently justified to claim universal validity when all stakeholders affected

by a norm jointly and freely accept the consequences and side effects of its general observance

(Habermas, 1999: 42). Taking a closer look at how SA 8000’s norms were developed, one needs

to doubt that all affected stakeholders, not even all key stakeholders, were involved in the

process of justifying the proposed principles. SAI (2005) states that the standard was developed

by an international multi-stakeholder “Advisory Board” and that the representatives included in

this body compiled guidelines that were supposed to be applicable on a worldwide basis

(Leipziger, 2001; McIntosh et al., 2003). A closer look at the composition of the Advisory Board

shows that the development process was dominated by particular groups, namely experts from

trade unions, businesses, and NGOs (Leipziger, 2001; SAI, 2005). Representatives of other key

stakeholder groups, particularly suppliers, employees of production facilities, and consumers

were not invited to take part in this working group, although they are heavily affected by

SA 8000. The Advisory Board also seems to be dominated by representatives from a small

number of developed (Western) countries resulting in an imbalance between stakeholders from

industrialized and less-developed nations. That is why the standard is often considered to be just

another initiative trying to impose Western standards on people from other cultural backgrounds

(Gilbert, 2003).

24

Consequently, the maxims included in SA 8000, which claim to be moral norms with

universal validity, can only be considered as ethical norms with relative validity, reflecting the

intentions and cultural backgrounds of the members of the Advisory Board. A more profound

justification of SA 8000 and a consensus on a catalogue of moral maxims on the macro-level

would not only be an interesting academic endeavor but also a starting point to distinguish this

initiative from other social accounting standards. It would boost the acceptance of SA 8000

mainly by reducing the likelihood of conflicts among stakeholders on the micro-level. Under

conditions of scarce resources, firms must choose which initiatives they want to adopt; a solid

normative-grounding provides a central criterion to make a decision in favor of SA 8000.

How to organize stakeholder dialogues? The problem of an insufficient justification is

closely related to a second major weakness of SA 8000, the question of how to organize

stakeholder dialogues. In discourse ethics, normative validity cannot be understood as separate

from the argumentative procedures used to resolve issues concerning the legitimacy of ethical

and moral norms (Habermas, 1996). Every validity claim to normative rightness depends upon a

mutual understanding achieved by individuals in discourse. Although the current version of

SA 8000 asks for stakeholder discourses to further develop the consensus-based norms on the

macro-level and to locally apply the guidelines on the micro-level, no clues are given how these

dialogical processes are supposed to be organized. The only advice provided is that “[…] the

company shall establish and maintain procedures to communicate regularly to all interested

parties” (Leipziger, 2001: 121). We argue that the absence of a structured idea about how to

organize stakeholder dialogues presents a fundamental shortcoming of the current version of

SA 8000. Many companies lack experience in designing stakeholder engagement processes

(Belal, 2002). Others have such processes in place but put an exclusive focus on key stakeholders

25

like employees, customers, and shareholders while neglecting the legitimate interests of other

parties (KPMG, 2002: 24–25). To be able to arrive at universally accepted maxims (macro-level)

and to locally adapt these maxims (micro-level), a more developed concept of communication is

needed.

Coercion as a driver to implement SA 8000. The principle of universalization (U) requires

achieving agreements on conflicting norms in practical discourses under the condition of the

ideal speech situation and it states that a consensus should be the result of an agreement reached

without coercion (Habermas, 1996: 42). When looking at the practice of MNCs, firms often

place an obligation on their suppliers to comply with SA 8000. Then, the acceptance of the

standard is not based on the integrity of the supplier but represents a response to external

pressure and fear of sanctions in case of non-compliance. This results in an odd situation:

suppliers try to formally comply with the standard, but do not alter their internal decision

processes (Treviño, Weaver, Gibson & Toffler, 1999: 135). From a discourse ethics perspective

such an enforced certification can be termed as strategic action and therefore barely ensures

legitimate actions. Of course, it is comprehensible that MNCs are trying to place special

emphasis on strategic motives to increase economic performance. Nevertheless, the application

of the whole initiative should not be limited to such an understanding, at least from the viewpoint

of discourse ethics. Sustainable ethical reflection does not consider the implementation of

SA 8000 as a mere result of strategic calculation. MNCs need to understand that externally

imposed standards do not automatically enhance the willingness of companies to accept ethical

responsibility. On the contrary, there is increased risk that corporations will attempt to get around

imposed rules or even try to get rid of them.

26

A “DISCOURSE-ETHICALLY” EXTENDED VERSION OF SA 8000

Based on our critical evaluation of the current model of the initiative we are now able to

introduce a “discourse-ethically” extended version of SA 8000 which provides both reasonable

answers to the criticism outlined above and a more developed system to justify and implement

international labor standards to improve working conditions. The extended version draws on the

basic conception of SA 8000 as introduced in section three. However, to address the problems

outlined above, we suggest including a number of Habermas’s ideas on the macro as well as on

the micro-level of the standard (see Figure 3).1

---------------------------------

Insert Figure 3 about here ---------------------------------

Macro-Level: Moral Discourses and a Catalogue of Discursively Legitimized Standards

As a response to the insufficient justification of norms and due to the fact that SA 8000 does

not address the question of how to set up stakeholder dialogues, we propose to integrate the basic

principles of discourse ethics (U) and (D) as well as the discourse rules (ideal speech situation)

into the macro-level. SAI would have to supplement the current version of the standard with a

preamble comprising (U) and (D) and the discourse rules of the ideal speech situation. This has

three particular advantages: First, the principle of universalization (U) provides an impartial

moral point of view for SA 8000 to capture the practice of moral argument, particularly the

process of universalization which is of utmost importance for a social accounting standard trying

to assure humane workplaces across cultures and their respective norms and values. By drawing

upon (U), SAI can refer to a process of argumentation to justify the standard and is able to test

whether a norm achieves the status of an intersubjectively held moral principle.

27

Second, the principle of discourse ethics (D) provides SA 8000 with a stronger stakeholder

focus because it expresses the strict obligation that norms can and must be impartially justified in

practical discourses where affected members of society have the opportunity to raise their voice.

Third, an integration of the procedural principles of the ideal speech situation offers SAI and its

stakeholders a more precise idea of how to design and maintain stakeholder dialogues between

people from different cultural backgrounds to ensure that norms can claim normative validity.

Although the archetype of the ideal speech situation is not fully realizable in practical

communication, the discourse rules have a counterfactual potential to facilitate a greater degree

of equity among stakeholders and to move away from a one-sided prioritization of economically

powerful stakeholders (Unermann & Bennett, 2004).

In more practical terms, this means that the SAI Advisory Board has to initiate a practical

discourse to critically evaluate the current normative basis of the standard and the specific

guidelines for corporate action. As the present version of SA 8000 can only be referred to as a

catalogue of ethical values with relative validity, SAI needs to initiate a moral discourse at the

macro-level to be able to derive a catalogue of moral maxims with universal validity. This moral

discourse aims at balancing the interests of all, or at least the most concerned stakeholders, by

achieving a mutual agreement on the guidelines included in SA 8000. SAI has to ensure that not

only members of the Advisory Board have a voice in advancing the standard but also fringe

stakeholders like suppliers, workers, and customers. As an outcome of such a debate norms that

are not accepted in an unconstrained way have to be reformulated or eliminated from the

standard whereas missing norms need to be included. We propose to label the result of this moral

discourse a catalogue of discursively legitimized standards, representing the macro-level of

SA 8000 and providing a point of reference for auditing procedures at the micro-level.

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Micro-Level: Dealing with Cultural Diversity through Local Discourses

Contrary to the macro-level, where SAI needs to foster moral discourses to provide a solid

justification of the normative basis of SA 8000, a discursive extension of the micro-level needs to

deal with cultural diversity and the local adaptation of the macro-level norms. According to

Habermas’s concept of different forms of practical reason, local discourses can be characterized

as ethical discourses because they involve decisions on what is good for a specific group,

community, or culture. As ethical norms always have to operate within the limits of moral

justification, the macro-level restricts the activities of affected stakeholders at the micro-level. In

practice, this means that the norm-catalogue proposed at the macro-level needs to be

operationalized via ethical discourses on the micro-level since every norm (and every law as

well) shows room for interpretation and needs to be applied to a context (Derrida, 1992). Because

local production conditions differ widely, affected stakeholders cannot simply reproduce the

standard at the micro-level but rather need to “fill the pre-given rules” with a contextualized

interpretation. Within ethical discourses they need to develop a mutual understanding of how

they interpret terms like “discrimination,” “child labor,” and “secure working conditions” in their

specific local context. The dialogical justification and interpretation of norms on the micro-level

and not just their plain reproduction become central to the concept to provide affected

stakeholders with concrete guidance regarding specific actions. Hence, ethical discourses that

occur on the micro-level can eventually lead to a revision of norms and standards on the macro-

level. A continuous assessment and improvement of the normative contract proposed on the

macro-level should take place to further develop the standard.

29

A discursively extended certification process offers yet another advantage: once affected

stakeholders have agreed on certain moral standards on the macro-level and their local

specification on the micro-level, they are freed from a permanent ethical reflection on their

operative business practices under discursive conditions. As long as the issue being discussed on

the micro-level does not evoke an ethical conflict and therefore is only a question of rational

choice, pragmatic discourses are the appropriate means to justify actions and compliance

regulations. Pragmatic discourses are not supposed to refer to the assumptions of the ideal speech

situation and thus allow for quick and efficient decision-making. Hence, the discursive approach

to SA 8000 would ensure economic efficiency in management and production processes because

ethical discourses at the micro-level only take place when certain normative issues call for further

regulation (e.g., “How do we define child labor in a local context?”) and/or when (compliance)

norms for certain issues do not exist at all (e.g., “Is there an ethical responsibility for suppliers

who are not able to pay for certification?”).

Inevitably, this raises the question of how micro-level discourses should operate when the

macro-level rules are not yet determined? In a world of radically different cultures and values the

development of moral norms may take some time, whereas local production facilities have to

preserve their capacity to (re)act. In this case, micro-level discourses can be considered as

“trading zones” created by stakeholders. According to Galison (1997, 1999), trading zones are ad

hoc spaces that coordinate locally where broader meanings clash. Such zones are based upon

interlanguages that are generated by stakeholders. Interlanguages contain terms specific to the

context at hand (e.g., “child labor”) that are redefined by stakeholders according to the social

systems they are scrutinizing and the feelings and passions they share. An interlanguage occurs

where people lacking a common speech and cobble together a temporary set of terms, not to

30

homogenize various groups, but to translate back and forth in a local context. According to

Galison (1997: 49), there are three aspects of interlanguages: (a) they set broader meanings aside

to serve a local communicative function, (b) they are time-variant, coming into being and fading

out fairly quickly, and (c) they are historically contingent. Therefore, an interlanguage connects

stakeholder groups by providing a common, yet locally conditioned, set of terms. Like pragmatic

discourses, trading zones do not operate with regard to particular rules but are ad hoc cultural

spaces that are dependent on the local context for both their character and their duration.

Although we cannot outline the idea of trading zones in detail, we believe that it provides an

appropriate supplement to Habermasian ideas to factor in the limits of macro-level consensus

building in a postmodern world. Against this background, trading zones provide temporary

solutions as long as macro-level norms are missing and, recently, scholars have found empirical

evidence for their existence (Fuller, 2005).

Limitations of the “Discourse-Ethically” Extended Version of SA 8000

As already indicated, the implementation of Habermasian ideas to advance SA 8000 is

somewhat problematic. The conditions of real-world communication, affected by unequal power

distribution between SAI, MNCs, suppliers, and other stakeholders, weaken the applicability of

the principles of discourse ethics. In addition, the ideal speech situation proposed by Habermas

works with rather idealized assumptions. Critics argue that a discourse is never free from

constraints and they do not believe that the “unforced force of the better argument” will

rationally motivate stakeholders to recognize the validity of a normative claim (Spaemann, 2000;

Alvesson & Willmott, 2003).

31

Nevertheless, in line with other scholars (Froomkin, 2003; Power & Laughlin, 1996;

Schnebel, 2000; Unerman & Bennett, 2004), we believe in the potential of discourse ethics to be

achieved, at least partially, in the social accounting practice of MNCs. It does not make sense to

conduct a debate based on the simple dichotomy between fully implementing the theoretical ideal

of discourse ethics and implementing no elements of the concept. In line with this, Unerman and

Bennett (2004: 688, 692) conclude that “[…] there is a continuum of possible positions between

these two extremes, with the counterfactual potential of the ideal speech situation […] to

introduce a greater degree of equity into the determination of corporate responsibilities, and the

morality of corporate behaviour, than would be the case in the absence of debate informed by

these procedures.” A partial fulfillment of the theoretical ideas of the ideal speech situation need

not be seen as a failure of Habermas’s program but as a constant reminder of how much further

the implementation of discursive ideas has to progress (Power & Laughlin, 1996). In accordance

with Habermas (1996, 1998), we interpret discourse ethics as a regulative idea that does not call

for compliance with all demanded aspects at every point in time. Rather, we propose that SAI

and other key stakeholders should try to take institutional precautions in order to neutralize the

restrictions practical discourses are faced with. Under empirical conditions, the best we can hope

for is to achieve provisionally legitimate rules at the macro and micro-levels of SA 8000 through

a process of collaboration in which affected stakeholders attempt to meet the conditions proposed

in the principles of discourse ethics.

We argue that discourse ethics is one of the most developed concepts available to cope with

different normative claims on an international level as well as to handle conflicts among

stakeholders. Habermas’s approach to moral theory captures a formal and universal procedure to

which there seems to be no viable alternative (Finlayson, 2005: 103). In addition, Habermas does

32

not propose that different stakeholders can resolve all problems simply by sitting together and

talking about them. He recognizes that, in real conflicts, discourses must take place under all

sorts of constraints and much of this interaction is actually “strategic,” which means that

stakeholders seek to exercise their power and try to influence others to achieve what they

consider to be an advantageous result (Froomkin, 2003; Habermas, 1996). However, the

significance of Habermas’s approach in relation to these objections is that it provides a way for

deciding which forms of power and which validity claims are legitimate and which are not.

Keeping this in mind, discourse ethics can make at least two contributions to the discussion of

what is commonly referred to as “stakeholder theory” (Freeman, 1984; Harrison & Freeman,

1999; Mitchell, Agle & Wood, 1997; Phillips, 2003).

First, from a Habermasian perspective, stakes based upon morality (macro-level) always take

precedence over those based upon ethics (micro-level). This does not mean that questions of

ethics are in some sense less important, but unlike morality, ethics does not provide generalizable

norms for resolving conflicts (Reed, 1999). Some local stakeholders, for instance, may have

strong ethical beliefs that conflict with moral norms proposed by SA 8000 at the macro-level. In

such a case, the relative ethical considerations, however important they might be, would be

overridden by moral norms with universal validity.

Second, with the principle of universalization (U) Habermas provides a guideline for

critically evaluating the legitimacy of stakeholders’ claims via discourse. We would like to point

out that this implies neither that all stakeholders should be treated equally nor that they would

have an equality of voice and share of outputs (Phillips, 2003: 162; Phillips, Freeman & Wicks,

2003: 488–490). As the power to influence a firm and the urgency of stakeholders’ claims vary

across both time and issue (Mitchell et al., 1997: 854), stakeholders continuously need to search

33

for a discourse-based consensus in regard to their different claims, or at least explain to the

public how a prioritization of claims has been achieved. More powerful stakeholders are not per

se a threat to the ideas of discourse ethics, as long as they are willing and able to convince

affected parties via discourse of the legitimacy of their claims. Consequently, the task for SAI

would be to guard the implementation of SA 8000 against pure strategic communication of more

powerful stakeholders and to support particularly those groups who are poor, remote, and weak

but nevertheless matter (e.g., child workers). In such a case, following Habermas (1990), it

would be appropriate at least to name advocates for those stakeholders who cannot raise their

voice in order to include their legitimate claims in practical discourses. In the long run, however,

the aim of every discourse should be to reduce the gap between the idealistic situation of full

participation of all affected stakeholders and the shortcomings of real argumentation processes.

IMPLICATIONS FOR OTHER INTERNATIONAL ETHICS INITIATIVES

SA 8000 is not the only means to institutionalize ethical reflection in MNCs and to cope with

the increasing demand for transparency. Among the myriad of so called “international corporate

citizenship initiatives” (for an overview see Goodell, 1999; McIntosh et al., 2003; Zadek, Pruzan

& Evans, 1997), particularly the Global Reporting Initiative, AccountAbility 1000, the OECD

Guidelines for Multinational Enterprises, and the UN Global Compact have attained a high

degree of recognition and a significant following (Göbbels & Jonker, 2003; McIntosh et al.,

2003). Although we cannot describe these initiatives in detail, we would like to highlight a few

implications of our findings for the discussion on these concepts.

Despite their differences, all of these initiatives have a few commonalities. First, they draw

on conventions of the ILO and/or the UN Declaration on the Rights of the Child and/or the

34

Universal Declaration of Human Rights. Second, based on these principles, the initiatives intend

to promote corporate responsibility to ensure that MNCs are respecting the environment and/or

workers’ rights. Third, all initiatives refer to the importance of communication with stakeholders

and the power of dialogue as a means to solve conflicts on an international level. Fourth, and

most important for this paper, despite a common focus on stakeholder relations, in none of these

initiatives can one find an elaborated concept of how to actually perform such stakeholder

dialogues and how to justify their normative basis. Although the UN Global Compact explicitly

fosters stakeholder collaboration and AA 1000 operates under the leading principle of

“stakeholder inclusivity” (Göbbels & Jonker, 2003: 57; ISEA, 1999), neither concept provides

sufficient justification and assistance in establishing a well-organized stakeholder engagement

process.

Having said this, the implications of our findings for these initiatives become clear. As

stakeholder engagement is at the core of every concept based on discourse ethics, we propose to

integrate Habermasian ideas not only into SA 8000 but also into the Global Reporting Initiative,

AccountAbility 1000, the OECD Guidelines for Multinational Enterprises, and the UN Global

Compact. We believe that the initiatives can benefit from Habermas’s findings because he

provides a sound justification for his concept of communicative action and the procedural

discourse rules, both of which can be applied in the context of other standards. Although, the

practical achievement of Habermas’s ideas is often deemed to be problematic, the framework

provides a clear-cut guideline of how to design stakeholder dialogues to promote open and

unbiased discourses. Moreover, the option of distinguishing between different forms of practical

reason (viz., pragmatic, ethical, and moral discourses) offers the chance to really bring the

national voice of stakeholders into the global debate about universal norms and values and to test

35

both validity claims that are normative in nature (viz., goodness and rightness) and more

pragmatic claims of effectiveness.

Although other ethical theories may also be appropriate to inform the current discussion on

international ethics initiatives, we wish to start a critical discourse on the application of

Habermas’s ideas in the field of international business ethics. Business ethics scholars, in their

role as stakeholders, then need to initiate dialogues with representatives of international ethics

initiatives to further develop these standards.

CONCLUSIONS

In this paper, we first aimed to introduce SA 8000 as a means of social accounting in MNCs and,

second, to test whether discourse ethics can successfully inform this concept to better answer the

needs of SAI and its international stakeholders. Above all, we consider the practical quality of a

“discourse-ethically” extended version of SA 8000 as a major strength. When meaningfully

based on discourse ethics, SA 8000 supports SAI, MNCs, suppliers and other stakeholders to

effectively communicate about conflicting issues in order to finally “live” social responsibility in

their organizations. The principles of discourse ethics and the discourse rules can be applied at

the macro-level of SA 8000 (moral discourses to develop a legitimized norm-catalogue) and the

micro-level (ethical discourses to resolve local conflicts).

Furthermore (and maybe most important for a concept trying to offer guidance in the field of

international business ethics), based on the assumption of unavoidable presuppositions of

argumentation, Habermas presents a general theory of justification with formal and processual

characteristics that (a) allows for a sharp differentiation between ethical and moral validity and

36

(b) can be found in and applied to all cultures. Whoever enters into a discussion with the serious

intention of becoming convinced of something via dialogue with other stakeholders has to accept

that “[…] true propositions are resistant to spatially, socially, and temporally unconstrained

attempts to refute them. What we hold to be true has to be defendable on the basis of good

reasons not merely in a different context but in all possible contexts, that is, at any time and

against anybody” (Habermas, 1998: 367). By drawing on discourse ethics, stakeholders are

provided with a normative point of reference to handle certification processes and to further

develop SA 8000 on a truly international level. Nevertheless, the conditions of real-world

communication, for instance affected by unequal power distribution between MNCs and fringe

stakeholders, weaken the applicability of the basic principles of discourse ethics. Under empirical

conditions, the goal of discursively oriented communication must be to realize these principles as

far as possible.

It is important to note that an implementation of a “discourse-ethically” extended version of

SA 8000 does not only depend on endeavors encouraged by SAI, MNCs, and other business-

related stakeholders. From a Habermasian perspective, the successful promotion of moral

behavior of firms heavily depends on an integrative approach to democracy comprising different

levels of social systems (Habermas, 1996). To prevent free riding from taking place, political

institutions and the civil society need to establish frameworks of laws and international law-

related codes (e.g., ILO principles) within which economic pressures are domesticated and moral

behavior of firms (e.g., the implementation of SA 8000) cannot be easily exploited by free-riding

competitors. It was not our focus and we do not have the space to outline the consequences of

such a program in this paper, thus we can only refer the reader to Habermas’s recent work, where

37

he provides an extensive framework of how to justify a theory of law and how to design

(international) democratic institutions based on discourse ethics (Habermas, 1996, 1999).

Starting from this, some implications for future research can be identified. First, the relation

between international social accountability standards like SA 8000 or the Global Reporting

Initiative and other spheres of democratic societies needs to be investigated in more detail. This

research would address the question of how such voluntary initiatives can be successfully linked

to each other and to existing political institutions. Second, our Habermasian approach to advance

SA 8000 is a purely normative theory and would benefit from empirical findings on the

practicality of the concept. Empirical insights are especially required to learn more about

applying the discourse guidelines to local contexts and integrating fringe stakeholders into

practical discourses. Unerman & Bennett (2004) provide initial empirical evidence and show that

the regulative idea of an ideal discourse in a specific local context can be at least partially

achieved. To extend this line of inquiry, we suggest designing a qualitative empirical study to

investigate to what degree SAI’s norm-development process (macro-level) and local stakeholder

dialogues (micro-level) meet the proposed discursive framework. The results together with the

presented conceptual arguments can affect the future co-operation of SAI, auditing bodies,

corporations, and other stakeholders. Third, more research is necessary to address the cultural

differences with regard to the implementation of SA 8000 and other international ethics

initiatives. Approaches to handle normative issues in business vary greatly across cultures

(Watson & Weaver, 2003: 77) and have an impact on the implementation of international social

accounting standards. In the light of these findings, a broad research agenda for the field of

international business ethics is opening up and we suggest considering Habermasian discourse

ethics as a promising candidate to tackle these problems.

38

Endnotes

We gratefully acknowledge the detailed comments of BEQ editor Gary Weaver as well as two anonymous

reviewers. Michael Darroch provided much appreciated editorial advice.

1 Analogous to Donaldson and Dunfee’s (1994, 1999) “Integrated Social Contracts Theory” (ISCT), as the

prevailing concept to address business ethics in an international context, we propose to design the process for the

justification and implementation of norms and values in a two-stage manner, comprising a macro and a micro-level.

In their approach Donaldson and Dunfee emphasize the importance of several universal hypernorms (e.g., human

rights, respect for human dignity and good citizenship) that are ethical principles fundamental to human existence.

As such, these hypernorms constitute the basis of macro contracts and act as overarching principles to limit the

design and interpretation of micro-contracts within specific local communities (e.g., local codes of conduct of the

subsidiaries of MNCs). Relevant to this article is the fact that Donaldson and Dunfee (1999: 52) deliberately decline

to provide any justification for the hypernorms in ISCT. They admit that hypernorms may be justified in different

ways, but the particulars of those justifications are not relevant to ISCT. As a consequence Donaldson and Dunfee

(1999: 23) consider ISCT as “[…] independent from the truth of any particularly traditional ethical theory.” We

consider this lack of moral justification as a major deficit of ISCT. From our perspective it does play a significant

role how hypernorms are ultimately justified. To develop an international business ethics framework we need

particular ethical theories—like discourse ethics—in order to provide such justifications. The point is that we cannot

make ethical judgments about the right or wrong of norms and values without having some ground on which to

legitimize them. The Habermasian approach can make a significant contribution to further develop the field of

international business ethics. Concepts, like Donaldson and Dunfee’s ISCT, could benefit from an application of the

principles (U) and (D) as well as the discourse rules of the ideal speech situation to improve existing processes of

argumentation and to better justify hypernorms.

39

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49

FIGURE 1

Habermas’s Rules for an Ideal Speech Situation (Source: Habermas, 1990: 87–89)

50

TABLE 1

Different Forms of Practical Reason (Source: Reed, 1999)

Form of Practical Reason

Type of Validity Claim

Scope of the Validity Claim

Type of Discourse Goal of Discourse

pragmatic reason effectiveness non-universal pragmatic discourse a recommendation concerning suitable technologies or a realizable program of action

ethical reason goodness relative ethical discourse value-oriented assessment of ends to provide both advice concerning the correct conduct of life and a clarification of a collective identity

moral reason rightness universal moral discourse agreement on generalizable interests and proper procedures for a just resolution of interpersonal conflicts

51

FIGURE 2

Basic Conception of SA 8000

Information

(e.g., alteration of the

normative basis)

Open Dialogue to

Develop

the Standard

Macro-Level

Micro-Level

Continuous Monitoring

of Production Processes

Certification Process

and Audit

Cooperation with

Affected Stakeholders

Limitation

of the

Micro-Level

Purpose and Scope of

the Standard

Normative Basis of the

Standard and Definitions

Specific Guidelines

for Corporate Action

Catalogue of Consensus-Based Standards

Implementation of the Standard

52

TABLE 2

Specific Guidelines for Corporate Behavior (Source: SAI, 2005)

Specific Guidelines Provided by SA 8000 1. Child Labor: No workers under the age of 15; minimum lowered to 14 for countries operating

under the ILO Convention 138 developing-country exception; remediation of any child found to be working

2. Forced Labor: No forced labor, including prison or debt bondage labor; no lodging of deposits or identity papers by employers or outside recruiters

3. Health and Safety: Provide a safe and healthy work environment; take steps to prevent injuries; regular health and safety worker training; system to detect threats to health and safety; access to bathrooms and potable water

4. Freedom of Association and Right to Collective Bargaining: Respect the right to form and join trade unions and bargain collectively; where law prohibits these freedoms, facilitate parallel means of association and bargaining

5. Discrimination: No discrimination based on race, caste, origin, religion, disability, gender, sexual orientation, union or political affiliation, or age; no sexual harassment

6. Discipline: No corporal punishment, mental or physical coercion or verbal abuse

7. Working Hours: Comply with the applicable law but, in any event, no more than 48 hours per week with at least one day off for every seven day period; voluntary overtime paid at a premium rate and not to exceed 12 hours per week on a regular basis; overtime may be mandatory if part of a collective bargaining agreement

8. Compensation: Wages paid for a standard work week must meet the legal and industry standards and be sufficient to meet the basic need of workers and their families; no disciplinary deductions

9. Management Systems: Facilities seeking to gain and maintain certification must go beyond simple compliance to integrate the standard into their management systems and practices.

53

FIGURE 3

”Discourse Ethically” Extended Version of SA 8000

Limitation

of the

Micro-Level

Preamble:

Principle of Universalization (U), Principle of Discourse Ethics (D),

Discourse Rules (Ideal Speech Situation)

Micro-Level

SA 8000 Standards

Local Discourses(local justification and application of the

SA 8000 standards in cooperation withall affected stakeholder)

Discursive Implementation of the Standard within the Certification Process and Audit

Macro-Level

Purpose and Scope

of the Standard

Normative Basis of the

Standard and Definitions

Specific Guidelines

for Corporate Action

Catalogue of Discursively Legitimized Standards

LocallySpecified Standards

Information

(e.g., alteration of the

normative basis)

Open Dialogue to

Develop

the Standard