The effect of regulatory focus and performance measurement on corporate social responsibility investment decisions

Abstract

PurposeThis paper aims to investigate the relationship between regulatory focus, performance measurement and corporate social responsibility (CSR) investment decisions.Design/methodology/approachUsing an experimental method with a 2 × 2 between-subjects factorial design involving 144 participants, the data were analyzed using t-test and contrast test. In the experiment, the authors assigned participants into prevention focus or promotion focus group and complementary performance measurement or substitute performance measurement condition.FindingsThe results show that CSR investment is more preferable for managers in prevention focus instead of those in promotion focus group. Additionally, CSR investment is more preferable for managers in complementary performance measurement condition compared to those in substitute performance measurement condition. This study also provides evidence that the greatest CSR investment is reached when managers are in both prevention focus group and complementary performance measurement conditions.Practical implicationsCompanies need to activate the prevention focus for managers to motivate CSR investment. Additionally, companies need to use complementary performance measurements, which consist of CSR measurement and financial measurements.Originality/valueCSR research is dominated by theories explaining the external models which trigger companies to perform CSR. Existing research related to the internal models is limited to psychological aspects that are not directly related to company performance. This study investigates the motivational attributes that have a direct and strong influence on managers behavior. This research shows that regulatory focus is better at predicting CSR investment and is more motivational for individuals to perform well at work.