Serving differently: CEO regulatory focus and firm stakeholder strategy Journal Articles uri icon

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abstract

  • AbstractResearch summaryA fundamental question in stakeholder strategy research is why firms adopt certain strategies or approaches to engage with key stakeholders. Recent research suggests that CEOs' characteristics can influence their general decisions to engage with stakeholders, however, this work has yet to consider why CEOs might utilize specific stakeholder strategies. In this article, we demonstrate how CEO regulatory focus influences the nature of a firm's stakeholder strategy. Specifically, we argue that CEO prevention focus is positively associated with engagement in governance‐oriented initiatives and receptivity to governance‐oriented stakeholder activism, while CEO promotion focus is positively associated with engagement in socially‐oriented initiatives and receptivity to socially‐oriented stakeholder activism. We find strong support for our hypotheses in a sample of 374 publicly‐traded firms.Managerial summaryThe strategies a firm uses to engage with stakeholders can influence its performance, yet little is known about what makes firms focus on certain stakeholders over others. To better understand this, we examined CEO regulatory focus in a sample of large public companies. Our findings reveal that the way CEOs view decisions—either based on a sense of duty, obligations, and responsibility or as a means to achieve high ideals—influences their tendency to prioritize shareholder concerns or the concerns of a broader array of stakeholders. This suggests that executives should be aware of their own natural tendencies to inject their motivations into their firm's stakeholder strategy and consider avenues to balance their perspectives for the sake of the firm.

publication date

  • July 2020