I just left a job that afflicts Stockholm Syndrome on employees. Thankfully as a systems programmer in a research firm, I avoided the worst of it, but most people weren't so lucky. Here are some management behaviors that were effective:
Never thank people for finishing something on time, on budget, and to the project specifications. Instead, heap attention on those who finish in an all-nighter that ends in the final demo. Heroic measures are sometimes necessary and deserve reward, but being part of the process is a big red flag.
Never set expectations or milestones, just expect the project to be finished on the due date. This had an interesting effect on the work pace. Due to Parkinson's Law, individual workers finish days before the deadline, but that's not enough time to test integration. Major problems are discovered late, and everyone works ridiculous hours to fix it. Thank everyone for making it work at the last minute, rinse and repeat!
Tell employees to work weekends and nights for projects that could be unnecessary. Make these individual efforts to maximize the time one person wastes. When burning the candle on both ends, it's satisfying when you're done and the work was needed. After all, you took on the impossible, and here it is! But when days or weeks of your life are thrown away with a laugh, you would find another job if you actually had the time.
The Perceived Threats were the Bad Things that would happen if our demos failed. Funding lines would dry up, the company would be in trouble, etc. So everyone pitched together to keep the system going. Everyone became so focused that they stopped realizing that it could be done another way.