Overinvestment on Social Responsibility Programs: An Ethical Judgment of Managers

Abstract

This study analyzed managers’ ethical judgments against excessive investment in social care programs. The equity theory was used to develop the egocentric concept of selfmanagement, which predicted that individual managers with different compensation schemes and levels of long-term goals would make other ethical decisions in the corporate social care programs. The research had an experimental design, which found that managers underpay schemes that discourage pay schemes that do not provide managers with incentives to over-invest in social care programs; some consider that excessive spending in social activities is unethical. A compensation payment scheme encourages managers to overspend on social activities. Our study found that a manager with long-term goals perceives overspending as bad for the company or unethical. So, we concluded that economic incentives or compensation and an individual’s long-term goals impact ethical decisions. The results of our review highlighted the importance of designing appropriate payment schemes for managers because such schemes encourage investment decisions and managers’ ethical judgments. In addition, the results also identified the importance of considering individual factors, especially the long-term goal of managers.
 Keywords: Managers’ Ethical Judgments, Long-term Orientation, Overinvestment, Social Care Programs