The Pressure to Comply: An Experimental Study of CSRD and Innovation-Oriented Decision-Making

Abstract

The Corporate Sustainability Reporting Directive (CSRD) represents a major expansion of mandatory sustainability reporting within the European Union, increasing requirements for transparency, accountability, and sustainability-related disclosure. While previous research has primarily examined the effects of sustainability reporting regulation on disclosure practices and reporting quality, less attention has been given to how such regulation may influence internal organisational decision-making. This thesis examines how CSRD-related regulatory pressure influences innovation-oriented decision-making in terms of risk tolerance, investment willingness, and innovation direction. Drawing on institutional theory, the behavioural theory of the firm, and the attention-based view, a quantitative vignette-based experiment was conducted through an online survey involving 210 respondents. Participants were randomly assigned to either a treatment condition containing CSRD-related reporting pressure or a control condition without such pressure. Additional subgroup analyses were conducted to examine whether the effects differed among business professionals. The findings indicate that CSRD-related regulatory pressure influences innovation-oriented decision-making, although the effects vary across dimensions. The strongest effects were observed for innovation direction, where respondents exposed to CSRD-related pressure were more likely to prioritise compliance-oriented innovation alternatives. More moderate effects were identified for risk tolerance, while evidence regarding investment willingness was comparatively limited. The effects were generally stronger among business professionals than among students. The thesis contributes to research on sustainability reporting and innovation management by demonstrating that mandatory sustainability reporting may influence not only external disclosure practices but also the internal evaluation and prioritisation of innovation opportunities. Overall, the findings suggest that CSRD-related regulatory pressure primarily redirects innovation-oriented decision-making rather than restricting innovation activity, encouraging decision-makers to favour innovation initiatives that align with sustainability objectives, reporting requirements, and stakeholder expectations.