Hubris behind corporate unethical behaviour

New research from The Australian National University (ANU) has found overconfidence driven by outstanding performance is the decisive factor when companies behave badly. When high-performing companies and individuals behave unethically it is because past successes make them arrogant or cut corners to maintain strong performance. The research also found that under-performing companies tended to engage in unethical behaviour, but were motivated by desperation to improve their performance. The study, the first of its kind to examine how financial performance affected corporate social responsibility (CSR), explored the motivation behind corporate risk taking leading to breaches in regulation. Lead researcher, Dr Di Fan, said very human emotions were behind the causes of breaches in corporate social responsibility, with companies motivated by a sense of overconfidence or a desire to avoid losses and continue strong financial performance. "While you might expect poor performers to take more risks in order to reach their targets, what surprised us most was finding that both poor and very good performing companies tended to engage in risky behaviour," Dr Fan said. "Outstanding performance can lead to an arrogance or overconfidence.