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

Hijroh Rokhayati, Mahfud Sholihin, Supriyadi Supriyadi and Ertambang Nahartyo

Social Responsibility Journal, 2021, vol. 18, issue 5, 1004-1018

Abstract: Purpose - This paper aims to investigate the relationship between regulatory focus, performance measurement and corporate social responsibility (CSR) investment decisions. Design/methodology/approach - Using 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. Findings - The 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 implications - Companies 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/value - CSR 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.

Keywords: Performance measurement; Regulatory focus; CSR investment decision; Experimental method (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:srjpps:srj-04-2020-0138

DOI: 10.1108/SRJ-04-2020-0138

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