Better Safe Than Sorry: CEO Regulatory Focus and Workplace Safety

Abstract

Research shows that CEOs who are sensitive to maximizing gains (promotion focus) engage in more socially oriented initiatives, while CEOs who are sensitive to avoiding losses or harm (prevention focus) attend more to shareholder concerns. Our point of departure, however, is that many social initiatives are of the “do no harm” type that involve efforts to avoid burdening stakeholders with social and economic costs. Integrating research on strategic leadership and regulatory focus, we develop a framework for understanding the relevance of CEO regulatory focus for workplace safety. We argue that firms with prevention-focused CEOs have fewer employee injuries than firms with promotion-focused CEOs as these latter CEOs impose aggressive workloads on employees. Drawing on regulatory fit theory, we further identify two contextual factors that attenuate or accentuate CEO motivation to pursue harm-reducing or growth-maximizing goals. Whereas analyst downgrades mitigate the influence of prevention focus by motivating CEOs to avoid missing their obligations to shareholders, environmental munificence strengthens the influence of promotion focus on injuries by motivating CEOs to take advantage of growth opportunities in the environment. Based on a sample of S&P 500 firms and injury data from the Occupational Safety and Health Administration (OSHA) from 2002 to 2011, we find support for our predictions. The results illustrate the unforeseen consequences of CEO regulatory focus on employee interests.