Published date: May 26 2023

Journal Title: KnE Social Sciences

Issue title: International Conference on Advance & Scientific Innovation (ICASI)

Pages: 1025–1037

DOI: 10.18502/kss.v8i9.13416

Victor Pattiasinavictorpattiasina@ppsuniyap.ac.idFaculty of Economics and Business, University Yapis Papua, Indonesia

Muhammad IkbalFaculty of Economics and Business, University Yapis Papua, Indonesia

Muhammad Yamin NochFaculty of Economics and Business, University Yapis Papua, Indonesia

Muhammad Ridwan RumasukunFaculty of Economics and Business, University Yapis Papua, Indonesia

Lailatul HijrahFaculty of Economics and Business, University Yapis Papua, Indonesia

This study analyzed managers’ ethical judgments against excessive investment in social care programs. The equity theory was used to develop the egocentric concept of selfmanagement, which predicted that individual managers with different compensation schemes and levels of long-term goals would make other ethical decisions in the corporate social care programs. The research had an experimental design, which found that managers underpay schemes that discourage pay schemes that do not provide managers with incentives to over-invest in social care programs; some consider that excessive spending in social activities is unethical. A compensation payment scheme encourages managers to overspend on social activities. Our study found that a manager with long-term goals perceives overspending as bad for the company or unethical. So, we concluded that economic incentives or compensation and an individual’s long-term goals impact ethical decisions. The results of our review highlighted the importance of designing appropriate payment schemes for managers because such schemes encourage investment decisions and managers’ ethical judgments. In addition, the results also identified the importance of considering individual factors, especially the long-term goal of managers.

Keywords: Managers’ Ethical Judgments, Long-term Orientation, Overinvestment, Social Care Programs

[1] Ismail FO, Tejumaiye JA. “Sociology of tribalism for inclusive corporate social responsibility communication in Nigeria,” Corp. Commun. Corp Commun. 2021;27(3):470– 793.

[2] Bianchi E, Bruno JM, Sarabia-Sanchez FJ. The impact of perceived CSR on corporate reputation and purchase intention. Eur. J. Manag. Bus. Econ. 2019;28(3):206–21.

[3] Kim Y, Ferguson MA. “Are high-fit CSR programs always better? The effects of corporate reputation and CSR fit on stakeholder responses,” Corp. Commun. Corp Commun. 2019;24(3):471–98.

[4] Radomir L, Moisescu OI. Discriminant validity of the customer-based corporate reputation scale: some causes for concern [doi: Journal of Product & Brand Management.]. J Prod Brand Manage. 2019;29(4):457–69.

[5] Jeffrey S, Rosenberg S, McCabe B. Corporate social responsibility behaviors and corporate reputation. Soc Responsib J. 2019;15(3):395–408.

[6] Utz S. Over-investment or risk mitigation? Corporate social responsibility in Asia-Pacific, Europe, Japan, and the United States. Rev Financ Econ. 2017;: https://doi.org/10.1016/j.rfe.2017.10.001.

[7] Sheikh S; ShahbazSheikh. Is corporate social responsibility a value-increasing investment? Evidence from antitakeover provisions. Glob Finance J. 2018;38:1–12.

[8] Benlemlih M. Corporate social responsibility and firm financing decisions: A literature review. J Multinat Financ Manag. 2017;42:1–10.

[9] Oh WY, Chang YK, Jung R. Board characteristics and corporate social responsibility: does family involvement in management matter? J Bus Res. 2019;103:23–33.

[10] Gras-Gil E, Manzano M, Fernández JH. Investigating the relationship between corporate social responsibility and earnings management: evidence from Spain. Bus Res Q. 2016;19(4):289–99.

[11] Karim K, Lee E, Suh S. Corporate social responsibility and CEO compensation structure. Adv Account. 2018;40:27–41.

[12] Hobson JL, Mellon MJ, Stevens DE. Determinants of moral judgments regarding budgetary slack: an experimental examination of pay scheme and personal values. Behav Res Account. 2011;23(1):87–107.

[13] Ryan JC. Old knowledge for new impacts: equity theory and workforce nationalization. J Bus Res. 2016;69(5):1587–92.

[14] Miller BK, Gallagher DG. Examining trait entitlement using the self-other knowledge asymmetry model. Pers Individ Dif. 2016;92:113–7.

[15] Yean TF, Yusof AA. Organizational justice: A conceptual discussion. Procedia-Social and Behavioral. Procedia Soc Behav Sci. 2016;219:798–803.

[16] Wang L, Zhao JZ, Zhou KZ. How do incentives motivate absorptive capacity development? The mediating role of employee learning and relational contingencies. J Bus Res. 2018;85:226–37.

[17] Kienzler M. Value-based pricing and cognitive biases: an overview for business markets. Ind Mark Manage. 2018;68:86–94.

[18] Anderson R, Thier M, Pitts C. Interpersonal and intrapersonal skill assessment alternatives: Self-reports, situational-judgment tests, and discrete-choice experiments. Learn Individ Differ. 2017;53:47–60.

[19] Bridges E. Executive ethical decisions initiating organizational culture and values. J Serv Theory Pract. 2018;28(5):576–608.

[20] Valentine SR, Hollingworth D, Schultz P. Data-based ethical decision making, lateral relations, and organizational commitment: building positive workplace connections through ethical operations [doi: Employee Relations.]. Employee Relat. 2018;40(6):946–63.

[21] Dunn P, Sainty B. Professionalism in accounting: a five-factor model of ethical decision-making. Soc Responsib J. 2019;16(2):255–69.

[22] Noronha C, Guan J, Fan J. “Firm value and social contribution with the interaction of corporate governance: social contribution value per share,” Sustain. Accounting. Manag. Policy J. 2018;9(2):165–200.

[23] Aboud A, Diab A. The impact of social, environmental and corporate governance disclosures on firm value: evidence from Egypt. J. Account. Emerg. Econ. 2018;8(4):442–58.

[24] Moardi M, Salehi M, Poursasan S, Molavi H. Relationship between earnings management, CEO compensation, and stock return on Tehran Stock Exchange. Int J Organ Theory Behav. 2020;23(1):1–22.

[25] Park S, Song S, Lee S. The influence of CEOs’ equity-based compensation on restaurant firms’ CSR initiatives: the moderating role of institutional ownership [ Journal of Contemporary Hospitality Management.]. Int J Contemp Hosp Manag. 2019;31(9):3664–82.

[26] Bearden WO, Money RB, Nevins JL. A measure of long-term orientation: development and validation. J Acad Mark Sci. 2006;34(3):256–467.

[27] Hofstede G. Culture’s consequences. Beverly Hills; 1980.

[28] Nunnally, “Psychometric Methods, New York: McGraw-Hill. O’Fallon, M., dan K. Butterfield. 2005. A review of the empirical ethical decision-making literature: 1996- 2003,”. J Bus Ethics. 1967;59:375–413.

[29] 29. Oumlil AB, Balloun JL. Cultural variations and ethical business decision making: a study of individualistic and collective cultures. J. Bus. Ind. Mark. 2017;32(7):889–900. https://doi.org/10.1108/JBIM-08-2016-0194.

[30] Le TD, Kieu TA. Ethically minded consumer behaviour in Vietnam: an analysis of cultural values, personal values, attitudinal factors and demographics. Asia Pac J Mark Log. 2019;31(3):609–26.

[31] Gao Y, He W. Corporate social responsibility and employee organizational citizenship behavior: the pivotal roles of ethical leadership and organizational justice. Manage Decis. 2017;55(2):294–309.