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, Open Access Journal, 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. 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.
    3. 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.
    4. 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.
    5. 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, Open Access Journal, vol. 10(8), pages 1-17, August.
    6. Jennifer Adelstein & Stewart Clegg, 2016. "Code of Ethics: A Stratified Vehicle for Compliance," Journal of Business Ethics, Springer, vol. 138(1), pages 53-66, September.
    7. Jesko Schulte & Sophie I. Hallstedt, 2018. "Company Risk Management in Light of the Sustainability Transition," Sustainability, MDPI, Open Access Journal, vol. 10(11), pages 1-25, November.
    8. Frank Krysiak, 2009. "Risk Management as a Tool for Sustainability," Journal of Business Ethics, Springer, vol. 85(3), pages 483-492, April.
    9. 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.
    10. 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.
    11. 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.
    12. 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.
    13. 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.
    14. 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.
    15. 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.
    16. 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.
    17. 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, Oxford University Press, vol. 28(1), pages 33-49, June.
    18. 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.
    19. 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.
    20. 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, Open Access Journal, vol. 10(12), pages 1-20, December.
    21. 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.
    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, Open Access Journal, 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," Journal of Risk and Financial Management, MDPI, Open Access Journal, vol. 13(7), pages 1-18, July.
    3. Sorin Gabriel Anton & Anca Elena Afloarei Nucu, 2020. "Enterprise Risk Management: A Literature Review and Agenda for Future Research," Journal of Risk and Financial Management, MDPI, Open Access Journal, vol. 13(11), pages 1-22, November.

    More about this item

    Keywords

    culture; decision-making; enterprise risk management; sustainability;

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

    Statistics

    Access and download statistics

    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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (XML Conversion Team). General contact details of provider: https://www.mdpi.com/ .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.