Active First Movers vs. Late Free-Riders? An Empirical Analysis of UN PRI Signatories' Commitment

Publikation: Beiträge in ZeitschriftenZeitschriftenaufsätzeForschungbegutachtet


Joining voluntary thematic initiatives can be a means for firms to legitimate their business activities. However, a lack of review mechanisms could create incentives for free-riding. This might lead to a lower commitment to the initiative’s principles, and endanger its credibility and its members’ legitimacy benefits. Whether members of voluntary initiatives take advantage of the opportunity to free-ride has not been analyzed empirically so far. To fill this research gap, we investigate from an institutional theory perspective the actual implementation behavior of publicly listed signatories of the United Nations Principles for Responsible Investment (UN PRI) in a difference-in-differences and an event study setting. Our empirical results show that, after signing, UN PRI signatories integrate environmental, social, and governance (ESG) criteria in their business activities significantly more than matched non-signatories from the financial sector, indicating the commitment of the signatories to the UN PRI in general. However, while the initial members show a high commitment to the initiative’s principles by increasing their ESG integration performance substantially, new members signing at a later stage of the initiative perform considerably less, and thus undermine the UN PRI’s credibility. We derive implications for voluntary thematic initiatives to avoid such a development.
ZeitschriftJournal of Business Ethics
Seiten (von - bis)747-781
Anzahl der Seiten35
PublikationsstatusErschienen - 01.2023

Bibliographische Notiz

Funding Information:
We thank Kai Hockerts (the editor) and three anonymous reviewers for their comments that helped us improve the article. We are grateful to the participants of the IWÖ sustainability winter seminar brownbag series, University of St.Gallen, the Workshop on Empirical Sustainable Finance 2020 at University of Kassel, and the Online Seminar Series of the Alliance for Research on Corporate Sustainability (ARCS) for helpful comments and discussions. We thank Vigeo Eiris for providing their ESG ratings.

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© 2021, The Author(s).