The Mechanism of board regulatory focus influencing corporate social responsibility: evidence from China

The study of corporate social responsibility (CSR) has attracted considerable attention from scholars and practitioners alike. While the influence of firm leadership on CSR success has been acknowledged, the specific ways in which psychological characteristics of leadership drive organizations to promote or hinder CSR, particularly at the board level and in relation to specific CSR strategies, remain unclear. To address these gaps, this thesis draws on regulatory focus theory and upper echelons theory to explore the antecedents of two CSR strategies from a social-psychological perspective, focusing on board leadership in an emerging market, with China as the research context. The thesis seeks to answer four research questions: (1) What are the major trends in the dynamic evolution of strategic leadership and CSR? (2) How does board regulatory focus influence the level of corporate philanthropy involvement? (3) How does board regulatory focus influence the level of corporate environmental practice involvement? (4) How does board regulatory focus impact firms’ choices between philanthropy and environmental practices as CSR strategies? 

To address the first research question, a bibliometric approach was employed to examine and visualize the evolution and major research trends in the strategic leadership-CSR domain (Chapter 2). Analyzing a sample of 1,432 peer-reviewed articles published between 1994 and 2020, the study identified three distinct stages of development: the initial stage (1991–2003), the rapid development stage (2004–2011), and the maturation stage (2012–present). These stages provided insights into research patterns over time and revealed an increase in the volume and breadth of strategic leadership-CSR research. Several relevant subdomains (or clusters) such as board characteristics, responsible leadership, emerging country context, and cross-sector social partnership were identified, inspiring further exploration of independent, dependent, and moderating variables in subsequent empirical studies. Consequently, the thesis investigated the antecedents of CSR from the perspective of board characteristics, taking into account the specific context of an emerging country (China), with cross-sector social partnerships considered as a clue for relevant situational moderators.

Building upon these findings, the subsequent research questions examined the relationship between board social psychological characteristics (board prevention focus vs. board promotion focus) and the involvement and choice of two typical CSR strategies: corporate philanthropy and environmental practices. By analyzing publicly disclosed CSR and financial data of Chinese A-share listed firms from 2007 to 2019, the results challenged previous studies that argued for an exactly opposite or symmetric impact of prevention focus and promotion focus. Instead, the study found that board prevention focus and board promotion focus may have consistent or distinctive influences on specific CSR strategies. This finding aligns with the notion that prevention focus and promotion focus are regulated by distinct and independent neurocognitive systems. 

The first empirical study (Chapter 4) employed a content analysis approach to assess the board of directors' reports and capture the boards' prevention focus and promotion focus. The investigation revealed an inverted U-shaped impact of board prevention focus on corporate philanthropic involvement. That is, a high level of board prevention focus initially stimulated more philanthropic involvement, but an excessive focus on prevention had the opposite effect. However, board promotion focus did not demonstrate a consistent impact on corporate philanthropic involvement. The lack of significance in the association between board promotion focus and corporate philanthropy indicated that boards with promotion focus had distinct goals and motivations for philanthropic involvement compared to boards with prevention focus. In terms of corporate environmental involvement (Chapter 5), both board prevention focus and promotion focus consistently strengthened firms' involvement in environmental practices, despite their different strategic orientation. Notably, boards with higher prevention focus had a stronger impact on environmental practices than boards with higher promotion focus. Regarding the choice between the two CSR strategies, both board prevention focus and board promotion focus favored environmental practices over philanthropic practices, with the impact of board promotion focus being more stable (Chapter 6). 

To further explore how to enhance the positive impact of board prevention and promotion focus on corporate involvement in philanthropy and environmental practices, the study incorporated regulatory fit and considered the perspective of cross-sector social partnerships. Three boundary conditions were investigated: interlocking directors, corporate environmental commitment, and the number of non-governmental organizations (NGOs) in the firm’s operating region. Interestingly, the results revealed that the existence of interlocking directors and the number of NGOs in a firm’s region consistently moderated the relationships across the three empirical studies. These factors enhanced the positive effect of board prevention focus on philanthropic involvement while diminishing its positive effect on environmental practice involvement. Additionally, they reduced the preference of both boards prevention and promotion focus for environmental practices when choosing between the two CSR strategies. However, corporate environmental commitment played a slightly different moderating role. It enhanced the positive impact of both board prevention and promotion focus on firms’ involvement in environmental practices, while decreasing the positive impact of board prevention focus on philanthropic involvement. Surprisingly, corporate environmental commitment does not affect the preference of board prevention and promotion focus for environmental practices. One possible theoretical explanation is that when boards decide between environmental and philanthropic practices, suggesting that boards may evaluate the nature and consequences of CSR strategies based on regulatory focus rather than solely considering commitments. 

In conclusion, this thesis contributes to strengthening the understanding of how board characteristics influence CSR strategies, particularly in an emerging market context such as China. By considering psychological factors and situational moderators, it sheds light on the complex interplay between board leadership, regulatory focus, and CSR practices. The findings have practical implications for organizations seeking to enhance their CSR initiatives and inform future research on strategic leadership and CSR in emerging markets.