IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v11y2019i10p2939-d233728.html
   My bibliography  Save this article

The Role of Enterprise Risk Management in Sustainable Decision-Making: A Cross-Cultural Comparison

Author

Listed:
  • Xin Liu

    (School of Business, Pacific Lutheran University, Tacoma, WA 98447, USA)

Abstract

The goal of this paper is to examine how cultural differences moderate the effectiveness of an organization’s enterprise risk management (ERM) program in sustainable decision-making. Using an experimental design, this study found that Chinese participants, characterized by a stronger prevention focus, were more proactive in mitigating environmental, social and governance (ESG)-related risks under a loss-framed risk management philosophy, whereas American participants, characterized by a stronger promotion focus, were more proactive in mitigating ESG-related risks under a gain-framed risk management philosophy. This interactive effect of matching the risk management philosophy frame to the participants’ regulatory focus was mediated by their perceived processing fluency. The implications for the literature and practice are discussed.

Suggested Citation

  • Xin Liu, 2019. "The Role of Enterprise Risk Management in Sustainable Decision-Making: A Cross-Cultural Comparison," Sustainability, MDPI, vol. 11(10), pages 1-15, May.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:10:p:2939-:d:233728
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/11/10/2939/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/11/10/2939/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lee, Angela Y. & Aaker, Jennifer L. & Gardner, Wendi L., 2000. "The Pleasures and Pains of Distinct Self-Construals: The Role of Interdependence in Regulatory Focus," Research Papers 1577r, Stanford University, Graduate School of Business.
    2. Marika Arena & Michela Arnaboldi & Giovanni Azzone, 2011. "Is enterprise risk management real?," Journal of Risk Research, Taylor & Francis Journals, vol. 14(7), pages 779-797, August.
    3. Jesko Schulte & Sophie I. Hallstedt, 2018. "Company Risk Management in Light of the Sustainability Transition," Sustainability, MDPI, vol. 10(11), pages 1-25, November.
    4. David Weitzner & James Darroch, 2010. "The Limits of Strategic Rationality: Ethics, Enterprise Risk Management, and Governance," Journal of Business Ethics, Springer, vol. 92(3), pages 361-372, March.
    5. Higgins, E. Tory & Cornwell, James F.M., 2016. "Securing foundations and advancing frontiers: Prevention and promotion effects on judgment & decision making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 136(C), pages 56-67.
    6. Elaine Doyle & Jane Hughes & Keith Glaister, 2009. "Linking Ethics and Risk Management in Taxation: Evidence from an Exploratory Study in Ireland and the UK," Journal of Business Ethics, Springer, vol. 86(2), pages 177-198, May.
    7. Leen Paape & Roland F. Spekl�, 2012. "The Adoption and Design of Enterprise Risk Management Practices: An Empirical Study," European Accounting Review, Taylor & Francis Journals, vol. 21(3), pages 533-564, January.
    8. Beasley, Mark S. & Clune, Richard & Hermanson, Dana R., 2005. "Enterprise risk management: An empirical analysis of factors associated with the extent of implementation," Journal of Accounting and Public Policy, Elsevier, vol. 24(6), pages 521-531.
    9. Shimin Chen & Xu Ni & Jamie Y. Tong, 2016. "Gender Diversity in the Boardroom and Risk Management: A Case of R&D Investment," Journal of Business Ethics, Springer, vol. 136(3), pages 599-621, July.
    10. Aditya Jain & Stavroula Leka & Gerard Zwetsloot, 2011. "Corporate Social Responsibility and Psychosocial Risk Management in Europe," Journal of Business Ethics, Springer, vol. 101(4), pages 619-633, July.
    11. Arena, Marika & Arnaboldi, Michela & Azzone, Giovanni, 2010. "The organizational dynamics of Enterprise Risk Management," Accounting, Organizations and Society, Elsevier, vol. 35(7), pages 659-675, October.
    12. David Owen, 2005. "CSR after Enron: A Role for the academic accounting profession?," European Accounting Review, Taylor & Francis Journals, vol. 14(2), pages 395-404.
    13. Muddassar Sarfraz & Wang Qun & Li Hui & Muhammad Ibrahim Abdullah, 2018. "Environmental Risk Management Strategies and the Moderating Role of Corporate Social Responsibility in Project Financing Decisions," Sustainability, MDPI, vol. 10(8), pages 1-17, August.
    14. Frank Krysiak, 2009. "Risk Management as a Tool for Sustainability," Journal of Business Ethics, Springer, vol. 85(3), pages 483-492, April.
    15. Katrina Graham & Jonathan Ziegert & Johnna Capitano, 2015. "The Effect of Leadership Style, Framing, and Promotion Regulatory Focus on Unethical Pro-Organizational Behavior," Journal of Business Ethics, Springer, vol. 126(3), pages 423-436, February.
    16. Chenhall, Robert H., 2003. "Management control systems design within its organizational context: findings from contingency-based research and directions for the future," Accounting, Organizations and Society, Elsevier, vol. 28(2-3), pages 127-168.
    17. Angela Y. Lee & Punam Anand Keller & Brian Sternthal, 2010. "Value from Regulatory Construal Fit: The Persuasive Impact of Fit between Consumer Goals and Message Concreteness," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 36(5), pages 735-747, February.
    18. Gordon, Lawrence A. & Loeb, Martin P. & Tseng, Chih-Yang, 2009. "Enterprise risk management and firm performance: A contingency perspective," Journal of Accounting and Public Policy, Elsevier, vol. 28(4), pages 301-327, July.
    19. Aaker, Jennifer L & Lee, Angela Y, 2001. ""I" Seek Pleasures and "We" Avoid Pains: The Role of Self-Regulatory Goals in Information Processing and Persuasion," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 28(1), pages 33-49, June.
    20. Karen Benson & Marion Hutchinson & Ashwin Sriram, 2011. "Governance in the Australian Superannuation Industry," Journal of Business Ethics, Springer, vol. 99(2), pages 183-200, March.
    21. Damjan Maletič & Matjaž Maletič & Basim Al-Najjar & Boštjan Gomišček, 2018. "Development of a Model Linking Physical Asset Management to Sustainability Performance: An Empirical Research," Sustainability, MDPI, vol. 10(12), pages 1-20, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rocío Rodríguez-Rivero & Isabel Ortiz-Marcos & Luis Ballesteros-Sánchez & Xabier Martínez-Beneitez, 2020. "Identifying Risks for Better Project Management between Two Different Cultures: The Chinese and the Spanish," Sustainability, MDPI, vol. 12(18), pages 1-14, September.
    2. Tyrone T. Lin & Hui-Tzu Yen, 2020. "The Criteria of Optimal Training Cost Allocation for Sustainable Value in Aesthetic Medicine Industry," JRFM, MDPI, vol. 13(7), pages 1-18, July.
    3. repec:thr:techub:10023:y:2021:i:1:p:401-414 is not listed on IDEAS
    4. Sorin Gabriel Anton & Anca Elena Afloarei Nucu, 2020. "Enterprise Risk Management: A Literature Review and Agenda for Future Research," JRFM, MDPI, vol. 13(11), pages 1-22, November.
    5. Hengbin Yin & Muhammad Mohsin & Luyao Zhang & Chong Qian & Yan Cai, 2022. "Accessing the Impact of FDI Goals on Risk Management Strategy and Management Performance in the Digital Era: A Case Study of SMEs in China," Sustainability, MDPI, vol. 14(22), pages 1-20, November.
    6. Hesty Erviani Zulaecha & Yuswar Z. Basri & Yvonne Augustine & Susi Dwi Mulyani, 2021. "The effect of sustainability management practice, enterprise risk management, and business strategies on integrated sustainability performance with intellectual capital as a moderating variable," Technium Social Sciences Journal, Technium Science, vol. 23(1), pages 401-414, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yongrok Choi & Xiaoxia Ye & Lu Zhao & Amanda Luo, 2016. "Optimizing enterprise risk management: a literature review and critical analysis of the work of Wu and Olson," Annals of Operations Research, Springer, vol. 237(1), pages 281-300, February.
    2. Yongrok Choi & Xiaoxia Ye & Lu Zhao & Amanda C. Luo, 2016. "Optimizing enterprise risk management: a literature review and critical analysis of the work of Wu and Olson," Annals of Operations Research, Springer, vol. 237(1), pages 281-300, February.
    3. Therese R. Viscelli & Mark S. Beasley & Dana R. Hermanson, 2016. "Research Insights About Risk Governance," SAGE Open, , vol. 6(4), pages 21582440166, November.
    4. Mojca Marc & Marika Arena & Darja Peljhan, 2023. "The role of interactive style of use in improving risk management effectiveness," Risk Management, Palgrave Macmillan, vol. 25(2), pages 1-21, June.
    5. Florio, Cristina & Leoni, Giulia, 2017. "Enterprise risk management and firm performance: The Italian case," The British Accounting Review, Elsevier, vol. 49(1), pages 56-74.
    6. Elisabetta Mafrolla & Felice Matozza, 2014. "Risk management and firm size: a survey of Italian private companies," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2014(3), pages 87-108.
    7. Rita Lamboglia & Francesco Paolone & Daniela Mancini, 2019. "Determinants of the implementation of environmental risk indicators: Empirical evidence from the Italian manufacturing context," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(2), pages 307-316, March.
    8. Adam, Mukhtar & Soliman, Alaa. M. & Mahtab, Nehal, 2023. "Measuring enterprise risk management implementation: A multifaceted approach for the banking sector," The Quarterly Review of Economics and Finance, Elsevier, vol. 87(C), pages 244-256.
    9. Braumann, Evelyn C. & Grabner, Isabella & Posch, Arthur, 2020. "Tone from the top in risk management: A complementarity perspective on how control systems influence risk awareness," Accounting, Organizations and Society, Elsevier, vol. 84(C).
    10. Sorin Gabriel Anton & Anca Elena Afloarei Nucu, 2020. "Enterprise Risk Management: A Literature Review and Agenda for Future Research," JRFM, MDPI, vol. 13(11), pages 1-22, November.
    11. Mónica Hernández-Madrigal & Cristina Aibar-Guzmán & Beatriz Aibar-Guzmán & Élfego Ramírez-Flores, 2020. "Are external pressures always behind ERM implementation? Evidence from Spanish listed firms," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 17(2), pages 86-100, September.
    12. Kingsley Alawattegama, 2017. "The Impact of Enterprise Risk Management on Firm Performance: Evidence from Sri Lankan Banking and Finance Industry," International Journal of Business and Management, Canadian Center of Science and Education, vol. 13(1), pages 225-225, December.
    13. José Ruiz-Canela López, 2021. "How Can Enterprise Risk Management Help in Evaluating the Operational Risks for a Telecommunications Company?," JRFM, MDPI, vol. 14(3), pages 1-26, March.
    14. Ivana Dvorski Lacković & Nataša Kurnoga & Danijela Miloš Sprčić, 2022. "Three-factor model of Enterprise Risk Management implementation: exploratory study of non-financial companies," Risk Management, Palgrave Macmillan, vol. 24(2), pages 101-122, June.
    15. Haipeng (Allan) Chen & Woojin Choi & Yan (Lucy) Liu & Haoying Sun & Fu Liu, 2021. "More or Less? Consumer Goal Orientation and Product Choice," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 8(1), pages 16-26, June.
    16. Manuela Gomez‐Valencia & Maria Alejandra Gonzalez‐Perez & Ana Maria Gomez‐Trujillo, 2021. "The “Six Ws” of sustainable development risks," Business Strategy and the Environment, Wiley Blackwell, vol. 30(7), pages 3131-3144, November.
    17. Posch, Arthur, 2020. "Integrating risk into control system design: The complementarity between risk-focused results controls and risk-focused information sharing," Accounting, Organizations and Society, Elsevier, vol. 86(C).
    18. Sun, Jin & Keh, Hean Tat & Lee, Angela Y., 2019. "Shaping consumer preference using alignable attributes: The roles of regulatory orientation and construal level," International Journal of Research in Marketing, Elsevier, vol. 36(1), pages 151-168.
    19. Alessandra Allini & Raffaela Casciello & Marco Maffei & Martina Prisco, 2022. "The national culture as a determinant of ERM quality: Empirical evidence in the European banking context," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2022(1), pages 79-102.
    20. Gavin Cassar & Joseph Gerakos, 2017. "Do risk management practices work? Evidence from hedge funds," Review of Accounting Studies, Springer, vol. 22(3), pages 1084-1121, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:11:y:2019:i:10:p:2939-:d:233728. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.