As anyone who has tried to lose weight knows, realistic goal-setting generally produces the best results. That’s partially because it appears people who set realistic goals actually work more efficiently, and exert more effort, to achieve those goals.

What’s far less understood by scientists, however, are the potentially harmful effects of goal-setting.

Newspapers relay daily accounts of goal-setting run amok in industries and businesses up and down both Wall Street and Main Street, yet there has been surprisingly little research on how the long-trumpeted practice of setting goals may have contributed to the current economic crisis, and unethical behavior in general.

“Goals are widely used and promoted as having really beneficial effects. And yet, the same motivation that can push people to exert more effort in a constructive way could also motivate people to be more likely to engage in unethical behaviors,” says Maurice Schweitzer, an associate professor of operations and information management at Penn’s Wharton School. His paper, titled “Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting,” appears in the February issue of the Academy of Management Perspectives.

“It turns out there’s no economic benefit to just having a goal—you just get a psychic benefit and that’s quite motivating in itself,” Schweitzer says. “But in many cases, goals have economic rewards that make them more salient or powerful.”

A prime example Schweitzer and his colleagues cite is the 2004 collapse of energy-trading titan Enron, where managers used financial incentives to motivate salesmen to meet specific revenue goals. The problem, Schweitzer says, is the actual trades were not profitable.

Other studies have shown that saddling employees with unrealistic goals can compel them to lie, cheat or steal. Such was the case, Schweitzer says, in the early 1990s when Sears imposed a sales quota on its auto repair staff. It prompted employees to overcharge for work and to complete unnecessary repairs on a companywide basis.

“People become significantly more likely to cheat with goals than without them,” he says.

Goal-setting is at the heart of the debate over the effectiveness of the controversial No Child Left Behind Act. Because underperforming schools receive less federal money than those with high math and reading test results, “predictably,” Schweitzer says, there have been examples of teachers and administrators manipulating scores.

Schweitzer concedes his research runs counter to a very large body of literature that extols the many benefits of goal-setting. Proponents of the practice have taken issue with his team’s use of anecdotal evidence like news accounts to support his conclusion that goal setting is widely over-prescribed.

In a rebuttal paper, Edwin A. Locke, from the University of Maryland, College Park, and Gary P. Latham, from the University of Toronto, write: “Goal setting is not going away. Organizations cannot thrive without being focused on their desired end results any more than an individual can thrive without goals to provide a sense of purpose.”

But Schweitzer contends the “mounting causal evidence” linking goal-setting and harmful behavior should be studied to help spotlight issues that merit caution and further investigation. “Even a few negative effects could be so large that they outweigh many positive effects,” he says.

The debate is likely to rage on in future papers, and the practice of setting goals no doubt will continue. For now, though, the lesson seems to be to put more thought into setting goals.

“They really do help to coordinate and motivate people. My idea would be to combine that with careful oversight, a strong organizational culture, and make sure the goals that you use are going to be constructive and not significantly harm the organization,” Schweitzer says.