Center for Responsible Business

The results of five field and laboratory experiments reveal a ―time vs. money effect‖ whereby activating time (vs. money) leads to a favorable shift in product attitudes and decisions. Because time increases focus on product experience, activating time (vs. money) augments one‘s personal connection with the product, thereby boosting attitudes and decisions. However, because money increases focus on product possession, the reverse effect can occur in cases where merely owning the product reflects the self (i.e., for prestige possessions, or for highly materialistic consumers). The ―time vs. money effect‖ proves robust across implicit and explicit methods of construct activation. Implications for research on the psychology of time and money are discussed.

A model of corporate governance must explain (i) why governance matters; (ii) variation in governance across firms (i.e., be responsive to the Demsetz and Lehn, 1985, critique); and (iii) the positive correlations found empirically between quality of corporate governance and corporate performance. The model presented here satisfies these three criteria. Moreover, the model explains the correlation between firm size and executive compensation and why empirical estimates of managerial incentives seem too low, among other phenomena.

This paper is a survey of the literature on boards of directors, with an emphasis on research done subsequent to the Hermalin and Weisbach (2003) survey. The two questions most asked about boards are what determines their makeup and what determines their actions? These questions are fundamentally intertwined, which complicates the study of boards due to the joint endogeneity of makeup and actions. A focus of this survey is on how the literature, theoretical as well as empirically, deals—or on occasions fails to deal—with this complication. We suggest that many studies of boards can best be interpreted as joint statements about both the director-selection process and the effect of board composition on board actions and firm performance.

This research examines how a focus on time versus money can lead to two distinct mindsets that impact consumers’ willingness to donate to charitable causes. The results of three experiments, conducted both in the lab and in the field, reveal that asking individuals to think about “how much time they would like to donate” (versus “how much money they would like to donate”) to a charity increases the amount that they ultimately donate to the charity. Fueling this effect are differential mindsets activated by time versus money. Implications for the research on time, money and emotional well-being are discussed.

Experimental evidence and a host of recent theoretical ideas take aim at the common economic assumption that individuals are selfish. The arguments made suggest that intrinsic “social preferences” of one kind or another are at the heart of unselfish, pro-social behavior that is often observed. I suggest an alternative motive based on “shame” that is imposed by the extrinsic beliefs of others, which is distinct from the more common approaches to social preferences such as altruism, a taste for fairness, reciprocity, or self-identity perception. The motives from shame are consistent with observed behavior in previously studied experiments, but more importantly, they imply new testable predictions. A new set of experiments confirm both that shame is a motivator, and that trusting players are strategically rational in that they anticipate the power of shame. Some implications for policy and strategy are discussed. JEL classifications C72, C91, D82

Ratings of corporations’ environmental activities and capabilities influence billions of dollars of “socially responsible” investments as well as some consumers, activists, and potential employees. In one of the first studies to assess these ratings, we examine how well the most widely used ratings—those of Kinder, Lydenberg, Domini Research & Analytics (KLD)—provide transparency about past and likely future environmental performance. We find KLD “concern” ratings to be fairly good summaries of past environmental performance. In addition, firms with more KLD concerns have slightly, but statistically significantly, more pollution and regulatory compliance violations in later years. KLD environmental strengths, in contrast, do not accurately predict pollution levels or compliance violations. Moreover, we find evidence that KLD’s ratings are not optimally using publicly available data. We discuss the implications of our findings for advocates and opponents of corporate social responsibility as well as for studies that relate social responsibility ratings to financial performance.

Although there is $2 trillion in portfolios using socially responsible investing (SRI) criteria, it remains unclear how to measure “social responsibility.” We explore competing theoretical perspectives that explain the level of convergent and predictive validity across SRI ratings produced by competing social raters. While some prior literature predicts low convergent validity due to desire for differentiation, other work predicts high convergent validity driven by high true validity or by neo-institutionalist forces that reward imitation. We find that these ratings have low correlations and that firms with high and low social ratings are equally likely to be later embroiled in scandals.

This article reports results from a longitudinal field experiment examining the evolution of consumer-brand relationships. Development patterns differed, whereby relationships with sincere brands deepened over time in line with friendship templates, and relationships with exciting brands evinced a trajectory characteristic of short-lived flings. These patterns held only when the relationship proceededwithout a transgression. Relationships with sincere brands suffered in the wake of transgressions, whereas relationships with exciting brands surprisingly showed signs of reinvigoration after such transgressions. Inferences concerning the brand’s partner quality mediated the results. Findings suggest a dynamic construal of brand personality, greater attention to interrupt events, and consideration of the relationship contracts formed at the hands of different brands.

This paper presents the project finance controversy between Citigroup and the Rainforest Action Network (RAN) from a moral learning and innovation perspective. Using Kohlberg’s framework for moral development and learning it shows, that Citigroup improved its moral organizational cognition and implemented innovative processes and standards. This case demonstrates that public criticism can trigger social innovations.

In this research, we investigate the impact of significant life experiences on intertemporal decisions among young adults. A series of experiments focus specifically on the impact of experiencing the death of a close other by cancer. We show that such an experience, which bears information about time, is associated with making decisions that favor the long-term future over short-term interests (Studies 1 and 2). Underlying this effect appears to be increased salience and concreteness regarding one’s future life course, shifting focus away from the present toward the long run (Studies 3 and 4). Finally, we explore the shift caused by a cancer death of a public figure and examine its stability over time (Study 5). Implications for research on intertemporal decision making and the impact of life events on perceptions and preferences are discussed.