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Diverging Paths: CEO Regulatory Focus, Corporate Social Responsibility, and the Enigma of Firm Performance

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  • Tianmin Cheng

    (School of Economics, Southwest University of Political Science & Law, Chongqing 401120, China)

  • Wen Hua Sharpe

    (School of Business and Creative Industries, University of the Sunshine Coast, Sippy Downs, QLD 4556, Australia)

  • Abdel K. Halabi

    (Federation Business School, Federation University, Mount Helen, VIC 3350, Australia)

Abstract

Regulatory focus theory theorizes that there are two distinct dispositional foci of self-regulation (promotion focus and prevention focus) that impact individuals’ motivational tendencies to achieve their decision-making processes. This study integrates regulatory focus theory with upper echelons theory to investigate how CEO regulatory focus (i.e., higher degrees of promotion focus relative to prevention focus) influences corporate strategic outcomes, particularly regarding the pursuit of corporate social responsibility (CSR) performance and firm performance. This study uses data collected from the annual reports of S&P 1500 firms in the US from 2000 to 2018. Results show a negative association between CEOs who are predominantly promotion-focused and CSR performance. This negative association is diminished in firms with better corporate governance (i.e., higher CEO equity compensation and greater institutional ownership). The results also show that CSR plays a mediating role in the relationship between CEO regulatory focus and firm performance. These findings not only contribute to the existing literature by highlighting the role of CEO regulatory focus in shaping CSR initiatives but also shed light on its implications for firm performance.

Suggested Citation

  • Tianmin Cheng & Wen Hua Sharpe & Abdel K. Halabi, 2024. "Diverging Paths: CEO Regulatory Focus, Corporate Social Responsibility, and the Enigma of Firm Performance," JRFM, MDPI, vol. 17(7), pages 1-20, June.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:7:p:258-:d:1420261
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    References listed on IDEAS

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