A preliminary exploration of the effects of rational factors and behavioral biases on the managerial choice to invest in corporate responsibility

We explore a possible decision-making process in which mixes of rational and non-rational factors affect the choice made by a firm's management to invest in corporate responsibility. We propose that the rational factors affecting the decision-makers' investment choice are: (a) moral choice; (b) risk management; (c) consequential changes that would be required in corporate structure or production processes; and (d) long-term versus short-term considerations. The non-rational behavioral biases that we suggest affecting the decision-makers' investment choice are: (a) attitude to risk, (b) status quo bias, (c) subjective discounting, and (d) myopic loss-aversion.