Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/287481 
Year of Publication: 
2021
Citation: 
[Journal:] Journal of Business Economics [ISSN:] 1861-8928 [Volume:] 92 [Issue:] 3 [Publisher:] Springer [Place:] Berlin, Heidelberg [Year:] 2021 [Pages:] 355-396
Publisher: 
Springer, Berlin, Heidelberg
Abstract: 
Corporations have recently started incorporating employees' prosocial preferences into their incentive schemes, including charitable donations (corporate giving). These donations are mainly discussed in conjunction with the external effects of a firm's CSR strategy. However, this experiment examines the effect of donations on internal firm operations. Specifically, we investigate whether the presence and structure of corporate giving influences employees' excessive risk-taking. Such prosocial activities may remediate misaligned incentives often cited as drivers for employees to take excessive risks. Contrary to widespread practice, our experimental evidence suggests that firms could constrain employees' excessive risk-taking by linking existing contributions to project rather than corporate performance, thus providing boundaries around an employee's involvement in CSR initiatives. We identify project-level giving as an unexplored CSR benefit and infer that personal responsibility effectively changes an employee's incentive package. Our findings suggest an inverted U-shape curve of effectiveness.
Subjects: 
Incentive contract
Excessive risk-taking
Corporate social responsibility
Corporate giving
Prosocial incentives
Experimental economics
JEL: 
C91
J30
M14
M41
M52
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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