Social Performance Incentives in Mission-Driven Firms

Sun-Moon Jung () and Jae Yong Shin ()
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Sun-Moon Jung: Department of Accounting, Dongguk Business School, Dongguk University, Seoul 04620, Korea
Jae Yong Shin: College of Business Administration, Seoul National University, Seoul 151-916, Korea

Management Science, 2022, vol. 68, issue 10, 7631-7657

Abstract: We examine the effect of introducing an incentive plan based on social performance in a sample of 186 social mission–oriented firms in Korea. We find that the social performance of social enterprises (SEs) significantly improves over time after adoption of an incentive plan based on social performance, and that the incentive effect increases with managers’ perceived measurability of social performance. Moreover, we document that social bonuses do not harm SEs’ financial performance and that they have a positive spillover effect on financial performance in SEs that have a higher level of task complementarity between social and financial goals. Our results also show that when the main beneficiary of social bonuses is expected to be a firm’s employees, the incentive effect of social bonuses decreases (increases) with a firm’s focus on social controls (formal controls). In contrast, when the main beneficiary is expected to be a firm’s social mission, the incentive effect increases with a firm’s reliance on social controls.

Keywords: social enterprises; social performance; bonus incentives; task complementarity; perceived measurability; social controls; formal controls (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:10:p:7631-7657

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