Groupthink and the Law

Abstract

The chapter takes up the challenge raised by the emerging Law & Management school. Using empirical-observatory methods, this school explores the behavior of economic actors, with a special interest in how these use legal tools. It then proceeds to develop recommendations, within the broader context of value creation by firms in particular. It takes group think as an illustration of potentially harmful behavior by corporate actors. The German Wirecard scandal provides empirical insight, drawing on investigative hearings conducted at the German Bundestag. Groupthink theory offers a conceptual framework to understand why this behavior happens, and to explore counterstrategies. Using this framework, the chapter presents three types of legal tools for corporate actors to profit from: shaping, nudging, and enabling law. Some rules shape a legal actor such as a board or a committee, other legal rules nudge corporate actors toward optimal decision-making, and yet others enable additional strategies to enhance decision-making.