A regulatory fit explanation of financial and environmental performance

Practitioners and scholars are increasingly concerned with environmental sustainability while remaining attentive to economic efficiency. Addressing these dual priorities, this research adopts a regulatory fit perspective to examine how alignment between regulatory focus and external environments predicts financially and environmentally relevant outcomes at both the employee and firm levels. Drawing on data from two multi-wave survey studies, we find that employees’ (CEOs’) promotion focus is positively associated with performance goal commitment, which in turn enhances task performance (firm performance) under conditions of high perceived industry competition. Conversely, employees’ (CEOs’) prevention focus is positively related to environmental goal commitment, which, in turn, promotes green performance (green human resource management) when perceived government environmental pressure is strong. Theoretically, this research contributes to the motivational micro-foundations of financial and environmental performance and extends regulatory focus theory by revealing its multifaceted performance implications across organizational levels. Practical implications are also discussed.