Double Bottom Line: The Use of Performance Incentives in Mission-Driven Firms

63 Pages Posted: 12 Dec 2019

See all articles by Sun-Moon Jung

Sun-Moon Jung

Seoul National University

Jae Yong Shin

Seoul National University - College of Business Administration

Date Written: December 9, 2019

Abstract

In this paper, we examine the effect of introducing an incentive plan based on social performance in a sample of 188 social mission–oriented firms in Korea. We find that social performance of social enterprises (SEs) significantly improves over time after the introduction of an incentive plan based on social performance. Moreover, we document that social bonuses do not harm SEs’ financial performance, and that they have a positive spill-over effect on financial performance in SEs that have a higher level of task complementarity between social and financial goals. Finally, our results show that the positive association between social bonuses and social performance is less (more) pronounced in SEs whose managers have higher levels of prosocial motivation (perceived measurability of social performance).

Keywords: social enterprises, social performance, bonus incentives, task complementarity, perceived measurability, prosocial motivation

JEL Classification: M41, M52, J33

Suggested Citation

Jung, Sun-Moon and Shin, Jae Yong, Double Bottom Line: The Use of Performance Incentives in Mission-Driven Firms (December 9, 2019). Available at SSRN: https://ssrn.com/abstract=3500315 or http://dx.doi.org/10.2139/ssrn.3500315

Sun-Moon Jung

Seoul National University ( email )

Seoul, 151-742
Korea, Republic of (South Korea)

Jae Yong Shin (Contact Author)

Seoul National University - College of Business Administration ( email )

Seoul, 151-742
Korea, Republic of (South Korea)

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