Social Irresponsibility in Management



To avoid problems arising from the above definitions, extreme cases of irresponsibility are examined
in this article. It focuses upon cases where great harm is caused to the system, and where almost all
unbiased observers are in agreement that an irresponsible act has occurred.

The current system is examined in the first section. What is the role of management and how is it
perceived by managers? This provides clues as to whether socially irresponsible decisions might be
expected under the current system. Evidence is drawn from previously published studies.

An alternative view of the role of management is described in the second section. This “stakeholder
role” is designed to reduce the likelihood of irresponsible acts.

The third section describes a role-playing experiment, which was used to study three questions:

1. Will management act in an irresponsible manner under the current system?

2. Are there individual differences that may help to identify people who are less likely to
commit irresponsible acts?

3. What changes in the system might reduce the level of irresponsibility?

Results are then provided from almost 2,000 subjects from 10 countries.

Social Irresponsibility Under the Current System

Many managers act in their own selfish interests. This often leads to irresponsible behavior. This
investigation, however, studies whether managers may commit irresponsible acts when they behave
according to the expectations of their role.
Do they do harm when they try to do good? A review of
the empirical evidence, in particular the work of Milgram [42], suggests that they do. The evidence is
consistent with Reich’s [56] viewpoint that “Evil now comes about not necessarily when people violate
what they understand to be their duty, but more and more often, when they are conscientiously doing
what is expected of them.”

The Role of the Manager. The U.S. legal system advocates a “stockholder role” for managers. This
role, summarized by Berle in the Dodd-Berle exchange of the 1930s [3, 4] states that the manager is
directly accountable
only to the stockholder. This was stated in an emphatic way by Rostow [59]:

The law books have always said that the board of directors owes a single-
minded duty of unswerving loyalty to the stockholders, and only to the
stockholders.



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