In our analysis of Cambodian apparel and footwear factories, we found that workers and capital benefit from participation in Better Factories Cambodia. That is, we did find a business case for social compliance. But we also found that factory managers do not believe that participation in Better Factories Cambodia made their factories more profitable. Our question is why not.
It is possible that manager perceptions are part of a risk calculation. The cost of social compliance is certain. The gain in productivity is ex ante uncertain.
It is also possible that factory managers are aware that labor’s cost share rises with social compliance. A rising unit labor cost associated with humane conditions of work implies an ambiguous effect on the return to capital.
However, there is evidence that managers who see workers in dehumanized terms are less likely to process a negative relationship between abuse and productivity.
Among the more famous experiments in social psychology is the Milgram (1963) electric shock experiment. The experiment explores the relationship between dehumanization and the willingness to inflict pain on another. Milgram was testing to see whether supervisors would follow instructions to administer an electric shock to a subordinate.
In a replication of the original Milgram experiment, Bandura et al. (1975) manipulated both the apparent effectiveness of an electric shock in eliciting desired behavior and the extent to which the subordinates were seen in dehumanized terms by the participant charged with administering the shock to them. Not surprisingly, experiment participants who saw their subordinates in dehumanized terms systematically administered more severe shocks than experiment participants who saw their subordinates in humanized or neutral terms.
These results are consistent with our own findings. Cambodian factories with managers who see their workers in dehumanized terms are less likely to be compliant at the next assessment conducted by Better Factories Cambodia.
The interesting evidence from the Bandura experiment for our question emerges when the experimenter manipulated the perceived effectiveness of the shock in eliciting the desired behavior from the subordinate and the extent to which the participant saw the subordinate in dehumanized terms. In the first experimental condition, the subordinates appeared to respond to the shock by improving their performance. (In reality, responses were preprogrammed and no one received a shock). However, in the second experimental condition, the subordinates appeared to make more mistakes after supposedly receiving the shock. That is, in the second experimental condition, the abusive treatment of a subordinate was not an effective human resource management strategy.
The question for our purposes is: Did the participant administering the shock in the second condition realize that abuse was an ineffective method of eliciting effort? The answer depended on whether the subordinate had been previously dehumanized in the mind of the participant. When the participant saw the subordinate in humanized terms, they correctly processed the negative relationship between abuse and effort. In contrast, when the participant saw the subordinate in dehumanized terms, they failed to draw the obvious lesson and even intensified the abuse.
Bandura, Albert, Bill Underwood, and Michael E. Fromson (1975), ‘Disinhibition of aggression through diffusion of responsibility and dehumanization of victims’, Journal of Research in Personality, 9, 253–69. https://doi.org/10.1016/0092-6566(75)90001-X
Milgram, Stanley (1963), ‘Behavioral study of obedience’, Journal of Abnormal and Social Psychology, 67, 371-8.