CEO Regulatory Focus and Workplace Safety: Evidence from Plant-Level Analysis

Abstract

We integrate upper echelons theory with regulatory focus theory and expand the research to examine the relationship of chief executive officers’ (CEOs’) promotion and prevention focus and workplace injuries. We develop argument that the desire for advancement and growth associated with CEOs of a high promotion focus leads to more workplace injuries while a pursuit for stability and security associated with CEOs of a high prevention focus leads to fewer workplace injuries. Based on the regulatory fit framework, we further identify the a contingent framework that identifies CEO- (i.e., incentives of current and prospective wealth associated with stock options), firm- (i.e., performance aspiration), and external capital market-level (i.e., analysts downgrades) factors which provide the boundary conditions of the effects of CEO promotion and regulatory focus on workplace injuries. Based on a sample of S&P500 firms and their plant-level injury data during the period of 2005-2011, we find general support for these hypotheses. The results highlight the important role of CEO regulatory focus and illustrate its unforeseen consequences beyond firm strategies to affect other stakeholders’ interests (i.e., employees). We discuss our contribution to strategic leadership literature as well as stakeholder literature.