WHEN A FIRM is undertaking a corporate social responsibility
initiative, does it matter whether it donates cans of food or the
money to buy those cans? Apparently, yes, according to four
researchers: Bryan Church of the Georgia Institute of Technology
in Atlanta, who died in 2017; Wei Jiang of Jinan University
in Guangzhou, China; Jason Kuang of Georgia Tech; and Adam
Vitalis of the University of Waterloo in Ontario, Canada.
They found that managers will invest more when CSR initiatives
are framed in a nonfinancial way, such as planting trees or
donating food, than if those initiatives are framed as a financial
investment, such as donating specific dollar amounts to a
cause. However, this only holds true when managers’ personal
beliefs support the social norm underlying the CSR initiative.
In a lab experiment, researchers asked participants to act as
corporate division managers whose companies were initiating
tree-planting projects. Participants individually decided on the
amount of resources to invest, which translated into real money
paid to plant trees. What participants did not invest, they kept.
When managers consider CSR as a nonfinancial investment—for instance, deciding how many trees to plant—those
who support CSR will promote the initiative. But when managers
use more traditional financial measurements, such as deciding
how much money to invest in tree-planting, they’re more likely to
focus on economic costs. In this case, their personal CSR beliefs
are not activated and they do not invest more in the initiative.
If companies expect managers to invest in CSR initiatives, say
the researchers, they must understand that how they present
those measures will affect managers’ decisions. Managers must
both believe in the initiative and understand its social benefits.
“A Dollar for a Tree or a Tree for a Dollar? The Behavioral
Effects of Measurement Basis on Managers’ CSR Investment
Decision” appeared in the September 2019 issue of
The Accounting Review.