Social Irresponsibility in Management

stakeholders in making decisions. It shall not attempt to serve the common good or
society in general. (All of the current board members are well aware of this policy
statement.)

These instructions did not command the subject to follow the stakeholder role; they state that the
board advocated such a role. Beyond this the roles were identical to those described for the traditional
board. The other approach to the stakeholder role was to provide representation to the various interest
groups. No single group would dominate the board in this democratic version. The Chairman, the
President, and a stockholder representative were the same as described in the traditional board. In
addition, there was one representative each for employees, customers, suppliers, and the local
community. (These roles are presented in Appendix D.) Again, it may be seen that the roles allow
flexibility in decision making.

Table 2: Accounting Provided in Panalba Case. Estimated Losses

(in Millions of Dollars)^a

^a These estimates represent present value losses to each group affected by this decision. The losses to
customers represent deaths and illnesses caused by Panalba for which no compensation is received;
losses to employees represent lost wages and moving expenses beyond those covered by severance
pay and unemployment benefits.

The stakeholder role was reinforced by providing explicit measures on how each of the interest
groups would be affected (all information from Table 2). This is referred to as Asocial accounting.” It is
not a new concept, having been suggested at least as early as 1953 (e.g., see Bowen [8] ). Referring
again to the obedience studies, social accounting would be analogous to the feedback from victims; this
feedback led to substantial reductions in blind obedience [10, 42, 66]. One might also infer from Tilker
[66] that feedback is most effective when it is perceived as being legitimate to the person’s role; in his
experiment, the feedback had the greatest impact when the subject felt responsible for the safety of the
victim. The assumption used in the Panalba case was that social accounting will be most effective if the
subject perceives himself as being responsible to all interest groups.

Administration of the Experiment: The case was not introduced to the subjects as an experiment;
instead, it was used as a teaching vehicle. Furthermore, it was not introduced as a case on social
irresponsibility, but as a decision-making exercise in a crisis situation. In no instance was it implied that

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