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MarinaGrahovar
PhD‐student School of Business, Economics and Law, Gothenburg University
Phone: +46 31 786 14 46 e‐mail :[email protected]
TheRoleofCorporatesocialdisclosure
Trust,reputationorfashiontool?
Script20101028
Keywords: corporate social reporting and communication, trust creation, reputationmanagement,accountability.
Abstract
Motivation: Corporate social responsibility (CSR) disclosure can be used as a device by companies to communicate accountability, by showing their vision for the future and account for past performances. If companies are able to communicate their social and environmental work they can receive advantages attached to a good reputation and build a relationship, based on trust, with the society in which they operate. Therefore it is in the interest of this thesis to examine what role CSR disclosure have or does not have in companies’ communication to their stakeholders.
Previous research has stated that quality of CSR disclosure, as it tends to be unaudited, is a possible explanation to users’ lack of interest for it. This study sees companies “attitude” towards CSR disclosure and lack of knowledge as another possible area where companies can improve to enhance users interest in CSR disclosure.
Problem statement: Previous researchers have pointed out possible roles CSR disclosure could have, which would benefit both companies and users. For example the report could be a communication device with which companies show accountability and performance to build trust for their company and at the same time provide stakeholders with information these can use to improve their decision- making.
The problem with CSR disclosure role seems to be that companies either “misuse” it or does not embrace the possibility to account for their good work. Critics of the CSR disclosure mean that it is used by companies to manage their reputation, and that it is rather reputation management than accountability that drives companies to engage in CSR accounting. Others points the problem of CSR disclosure role to that companies instead of taking advantage of it do not embrace the possibility to account for their good work through CSR disclosure, that is companies engage more in environmental and societal issues than they disclose in their CSR reports.
Approach: The starting point for this study is that companies do not seem to embrace the possibility of using CSR disclosure as a communication tool in which they can show accountability and build trust, but instead use it as a marketing tool or just produce disclosure because it is in “fashion”.
This thesis examines the role of CSR reports and companies use of the report as a communication tool to respond to external pressure and build trust and/or manage reputation. To examine the role of CSR reports knowledge about how companies use CSR reports for reputation management and/or trust building is acquired through a literature review, covering a number of well established journals’ articles regarding corporate social reporting. The purpose of such literature review and the focus of this paper are to start building an instrument which can be used to analyze companies’ use of CSR reports in order to explore the role of CSR reports.
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1. Background–Aquestionaboutcompany’sroleinsociety
In the1960’s–1970’s itwasacknowledge that companies’ activitieshavean impacton
theirsurroundings,andassuchadiscussionaboutwhatresponsibilityacompanyshouldtake
for theiractionarose(Brownetal.2009).Thediscussionweredividedbetweentwo fieldson
onesideMiltonFriedmanandothersarguedthattheonlyresponsibilityacompanyshouldhave
was to be amarket playermaximizing shareholders profit. On the other side the discussants
arguedthatcompanies’responsibilityreachedbeyondtheirfinancialresponsibilities.
Scandals that occurred after the millennium such as Enron, WorldCom and Arthur
Andersen started a wave of mistrust against large companies driven by shareholder
maximization(Borglundetal.2009).FurtherthediscussionaboutCSRflourishedduetoreports
such as our common future orBrundtlandReport; where the relationship between economic
growthandenvironmentalissueswerediscussedandtheconceptsustainabledevelopmentwas
establish, Agenda 21; a sustainability program for sustainable development and Al Gore’s
documentary in2006“An inconvenient truth”discussingenvironmental issues.Externalactors
suchasgovernments,NGO:sandmediaengageinholdingcompaniesresponsiblefortheimpact
theiroperationhaveonsociety(PorterandKramer2007).CompaniessuchasNestlé,Shelland
Nike action were questioned by external actors and these companies had respond to the
externalpressurebyenhancingtheirresponsibilityengagementsinordertocontinueoperating
(Borglund et al. 2009). Media engage in reporting about what impact companies’ operations
haveontheirsurroundings,mostrecentlyBP:soilleakintheMexicangolfwereinthespotlight.
Investors’interestinCSRhasalsoincreasedandindexessuchasDowJonessustainabilityindex
and FTSE4Good have been established to give investors indication of which companies
operationsareethical.
Todaystakeholderstrustinacompany’soperationisconsideredtobeofimportancefor
companiesinorderforthemtocreatevalue(Borglundetal.2009).Thepurposeofthecurrent
paperistoexaminewhatroleCSRdisclosurehasordoesnothaveincompanies’communication
to respond to external pressure. KPMG’s international survey of corporate responsibility
reporting (2008) including approximately 2200 businesses in 22 countries showed that 80
percentofthesecompaniesincludedCSRintheirreporting.Thiswasanoticeableincreasefrom
thesurveyresultin2005when50percentofthecompaniesincludedCSRintheirreporting.(2008)
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The increaseof sustainability reportingmaybean indicationof that companies regards
CSRdisclosureaspartoftheirstrategytobuildvaluebycreatingtrustamongtheirstakeholder
groups.DeegmanandUnderman(2006:312)statesthat:(DeeganandUnderman2006)
“the broader objective driving any particular organization to
undertake CSR and sustainability report can range from ethically
motivateddesire to ensure that theorganizationbenefits,ordoes
notnegativeimpactupon,societyandnaturalenvironmentthrough
toaneconomicallyfocusedmotivetousesocialandenvironmental
reportingandCSRtoprotectorenhanceshareholdervalue.”
Previous studies have found that what motivates companies to engage in CSR
communicationisthattheyreceiveadvantagesandresourceswhichhelpthemcreatedvaluefor
the company. For exampleWaddock andGraves (1997) found a positive connection between
companies work with sustainability and their financial results. In their article they refer to
Moskowitz (1972), Freeman and Gilbert (1988) Hamel and Prahlad (1989) and Bartlett and
Ghoshal (1994) which found that enhance social responsibility could lead to competitive
advantageshavingapositive impactoncompanies’ financial results.Coomb’s (1995)research
showedthatcompaniescommunicatingthattheyaresociallyandenvironmentallyresponsible
areabletorecoverfasterfromcompanycrisissincecustomerstendtokeepcompanieswitha
goodCSRreputationlessliable. O’Dwyer’s(2002)studyshowedthattheprimemotivationfor
adoptingsustainabilityreportingwastoenhancecorporatelegitimacy.Hestatesthatcompanies
seemtoreactandrespondtoexternalpressureespeciallyifitthreatenedcorporatereputation
and/ortheabilitytooperateunhindered.(WaddockandGraves1997)(O'Dwyer2002)
2. StartbuildingamodeltoexplorepossiblerolesforCSRdisclosure.
Thispapersuggeststhatcorporateresponsibilityreportingispartofcompanies’strategy
tocreatevaluebybuildingtrustormanagingtheirreputationamongtheirstakeholders.Itisin
theinterestofthestudytoexaminewhatroleCSRdisclosurehasordoesnothaveincompanies’
communicationtorespondtoexternalpressure.Inordertoachievethepurposeofthispaper;to
startbuildingamodelthatcanbeusedinordertodeterminetheroleofCSRcommunication,the
study’s starts from Carroll’s pyramid model from 1979 which divides the responsibility that
companies’stakeholderwantsthemtotakeinapyramid‐figure(Figure1)offeringaframework
“throughwhichacorporation’sstrategicresponsestoasocialissuecanbeidentifiedandassessed”
(Lee2008:60).(Lee2008)
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The bottom and the largest part of the pyramid consist of company’s responsibility to
Economicmaximize the firm’svalue, thenextpieceof thepyramidconsistofcompaniesLegal
responsibility to comply with rules and regulations. At the next level companies’ Ethical
responsibilitytoactinawaythatsocietybelievedtobe“goodbehavior”isfoundandatthetop
ofthepyramidtheDiscretionaryorPhilanthropicresponsibilitytobeagoodcorporatecitizenis
found(SchwartzandCarroll2003,Carroll1979).
Figure 1 Carroll’s pyramid of CSR Source: Schwartz and Carroll 2003
Carroll’s pyramid is complemented with Elkington’s (1997) “Triple bottom line” that
suggestedthatsustainabilityaccountingshouldincludeinformationaboutcompanies’economic,
social and environmental impacts. The triple bottom line is often found in companies
sustainabilityreporting.(Elkington1997)
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Inthetablebelowpresentsthecontentfromasmallsampleofcompanies’responsibility
reports and how such information can be sorted under the categorization of Carroll and
Elkington.
Table 1 Carroll and Elkington's categorization
That is companies account for required responsibilities; that is what their economic
responsibilitiesareandwhattheeconomicimpact is.Furthermore,thismeansthatcompanies
accountforimpacttheireconomic,environmentalandsocialactionshavethatthelawrequires
them to account for. They also account for expected responsibilities; that is they account for
whatethicalresponsibilitytheytake,inthispaperthatmeansthattheyaccountfortheirsocial
andenvironmental impacts.Moreover, companiesdisclose informationaboutwhat theydo to
satisfyexternalsdesireforthemtotakeaphilanthropicresponsibility.(Elkington1997)
AquestionGray,OwenandAdams(1996)mightbeabletoansweriswhydocompanies
havetoaccountforthedifferentresponsibilitiesdiscussedabove?Theiranswerwouldprobably
be that in the struggle for sustainability the sustainability report could provide users with
information, which they could base their decision on. In their book Accounting and
Accountability they refer to Gray et al (1987:ix as cited in Gray et al 1996:3) defintion of
corporatesocialreportingas:(Grayetal.1996)
“ …the process of communicating the social and environmental
effects of organizations’ economic actions to particular interst
groupswithin society and to society at large. As such, it involves
extending the accountability of organizations (particularly
companies), beyond the traditional role of providing a financial
accounttotheownersofcapital,inparticular,shareholder.Suchan
extensionispredicatedupontheassumptionthatcompanieshaveto
Pages Carroll’sresponsibilitypyramid Philanthropic Ethical Legal Economical OtherTriplebottomline
Social Environmental Economic
AllianceOil
1 1 5 ‐ ‐
SCA 2 9 13 3 8 38SKF 5 4 7 1 4 5Husqvarna ‐1 2 6 ‐1 2 1HakonInvest
‐ ‐1 ‐1 ‐1 ‐1
SEB 4 8 4 5 27Ericsson 9 6 8 1 19
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wider responsiblites than simply make money for their
shareholders”
In this paper the citation above is interpreted as that the purpose of responsibility
reportingistoprovidestakeholderswithinformationthatgoesbeyondstatinghowcompanies
managetheirfinancialobligations.AssuchCSRreportinginvolves“…extendstheaccountabilityof
organizations…”.Thewordaccountabilityincorporateaquestionregardingwhoshouldanswer
towho,forwhatandunderwhatrules(LernerandTetlock1999).Questionsuchaswhoshould
answertowhohas,asstatedinthebeginning,beendiscussedinthefieldofCSR,thatisshould
companiesonlyanswertoshareholdersoralsotostakeholders.Forwhathasalsobeenbrought
up,asstatedbefore,iswhatcompany’sextendedaccountabilityincorporate,andCarroll’shave
developed amodel todivide the responsibility of companies.Responsibility reporting ismost
oftenvoluntarybutasCarroll’sshowsexternalactorscanrequire,expectsordesirecompanies
toaccountfordifferentresponsibilities.Inordertogetahardergripaboutwhataccountability
meansintheCSRfiledsomepreviousresearchersfromtheCSRfielddefinitionofaccountability
willbepresented:
Gray et al. (1996:38) defined accountability as “The duty to provide an account (by no
means necessarilly a finacial account) or reckoning of those actions for which one is held
responsible”. ThiscitationlikeLearnerandTetlock(1999)statesthatsomeoneshouldoreven
mustprovideanaccountfortheirresponsiblities.
Adams (2004:732) demonstrate accountability as “corporate acceptance of its ethical,
socialandenvironmentalresponsiblity.Assuchthe”account”givenshouldreflectcorporateethical,
socialandenvironmentalperformance”.AdamscitationgivesanindicationofthatifCSRreports
is not only show performance (a bottom line result), but also stated what responsibility the
companyhasacceptedtotakeandworkwith.
Lozano (2004:102‐ 103)writes in the book edited by Brenkert (2004) that accountability
“definesthekindofcompanyonewantstobuildandthecontributiononewantsittomake…Inthis
respect,accountabilityinvolvesmuchmorethansimplyprovidinginformation;itinvolvesbuilding
acorporatelicensetooperatethroughinteractionwithothersocialactors…..Accountabilityisnot
aquestionofmetricsbutofvision.Thisvisionconcernshowacompanyseesitselfanditsroleinthe
world.”(Brenkert2004)
StealingthewordsofLozano(2004)accountability involvesbuildingacorporate license
to operation and one tool that is avaialble for companies to show their accountability are
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corporate responsibility reports (Adams 2004). In order to show accountability and build a
licencetooperatethroughsuchreportspreviousresearchersstatedthatcompaniesshoulduse
ittodemonstratewhattheyaregoingtodosociallyandenvironmentally(vision&acceptanceof
responsiblity)andasloaccount forwhat theyhavedonesociallyandenvironmentally (record
actions). To sum up this means that the corporate responsibility report could be used by
companiestoshowaccountabilityandperformanceinordertobuilduptrustwhichhelpthem
togetaliciencetooperate.
Althoughcorporateresponsibilityreportinghavebeencriticizedforbeingusedasatoolto
managerepuation insteadof a tool to showaccountability.Previousresearchershavepointed
out that corporate social reports are used in order to manage repuation: As the corporate
responsibility report is a social construction (Morgan 1988, Hines 1988) established on
voluntary basis there is a risk that only certain aspects of the organizations operation is
visualized in thereports (Grayetal.1996).Assuchthecorporateresponsibilityreportinghas
been criticized for beingused as a reputationmanagement tool. For instance Schilizzi (2002)
criticizecorporatesocialreportsstatingthatitisonlyawayfororganizationstoenhancetheir
reputation.Adams (2004) complained that the reports lack completeness. She stated that the
reportswas not transparent enough, not covering positive aswell as negative aspects of the
company’s operation or showing the company’s acceptance of its responsibility by clearly
statingvaluesandcorresponding targets andexpectedachivementdates.Owen (2005) stated
thatitseemedtobeissuesofreputationandriskmanagementandcompetitiveadvantagesthat
drovecompaniestoengageincorporatesocialaccountingratherthanaccountability.Inastudy
made by Bebbington et al (2007) a connection between corporate social reporting and
reputationmanagementwas found.Bothexplicit and implicit evidence for reputationmanage
where found in theCSR reports examined. In some reports organization explicitly stated that
theysoughttogaingoodreputation.Inotherreportsexamplesofstrategiccommunicationwere
found. Furthermore, O’Dwyer (2002) found internal evidence for that companies use CSR
reports tomanage reputation.Managers interviewed in his study stated that corporate social
reports were used as symbolic tool rather than reflecting actual responsibility or activities
undertaken. Laufer (2002) referred to previous researchers to state that companies mislead
theirstakeholdersfromissuesthatmightconcernthemaboutthecompanyinordertomanage
their reputations, using communication practices misleading users’ perception about its
operations,suchasgreen‐washing,conductedbyQuirolaandSchlup(2001)andVogel(1989).
That is inorder tomanage their reputationcompaniesmayengage in complex strategies that
shiftattention fromthe firmandmisleadstakeholdersabout theirobjectivesorcommitments
(Laufer2003).(Bebbingtonetal.2007)(Owen2005)(Schilizzi2002,Adams2004,Morgan1988,Hines1988)
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So far twodifferentpictureof theroleofCSRreportshavebeen introduced.On theone
handthereportsareusedbycompaniesinordertoaccountfortheirresponsibilityandassuch
buildtrustamongtheirstakeholders.Theotheroptioncompanieshaveistousethereportsto
manage reputation and in such tries tomislead their stakeholder about how theyworkwith
sustainabilityintheiroperations.Thispapersuggestathirdoption,thatisthatsomecompanies
useCSRreportingbecauseothersuccessfulcompaniesdoso.
Asanattempttounderstandwhyandhowcompaniesusetheirsustainabilityreportsthis
paper wants to continuing building on Carroll’s pyramid model by conducting a literature
reviewexaminingwhatpreviousresearchershavefoundaboutaboutwhyandhowcompanies
useCSRdisclosure,inorderbuildamodelthatcanbeusefordeterminingtheroleofcorporate
responsibilityreportinghaveincompaniesstrategiccommunicationtowardstheirstakholders.
3. Method
Thecurrentpaperis focusingonhowandwhycompaniescommunicateandaccount fortheir
responsibility through corporate responsibility reporting. The purpose is to contribute to the
CSR literaturebystarting tobuildamodel thatcanbeused forstudying theroleofcorporate
responsibility reports; that is how and why companies use these to respond to external
pressure.
Thequestionthispaperstartstoansweriswhy(whatcommunicationstrategyliesbehind
companiesuse)andhow(whattechniquesdoescompaniesusetoachievetheircommunication
strategy) companies use responsibility disclosure. This paper divides the role of corporate
responsibilitydisclosureintothreedifferentcategories;(1)trustbuildingdevise(2)reputation
managementtool(3)fashion‐followingdocument.Inthefirsttwocategoriesitisassumedthat
companiesembracethepossibilitytousethecorporateresponsibilitydisclosurestrategicallyto
receiveresources,althoughhowtheirattitudetowardshowtoreceiveresourcesdiffers.Inthe
thirdcategorycompaniesusethedisclosurebutdonotfullyembracetheirpossibilitytoaccount
fortheirgoodworkinordertocapturestakeholders’interestandtrustintheircompany.
The challenging part of this study lies indefining the three categories. Although in this
paperthefocuswilllieonstudyingwhatpreviousstudieshavefoundregardingcompaniesuse
of the sustainability reporting. A literature review focusing on examining what previous
researchstatesabouthowandwhycompanieschoosetocommunicatetheirCSRresponsibilities
andactivitiestostakeholderswillbeconducted.TheaimistoextendCarroll’smodelinorderto
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applyitforanalyzingcompanies’useofcorporatesocialdisclosureasstrategiccommunication
to theirstakeholders.For the future theaim is touse thismodel toanalyzecompanies’useof
CSRreportsempirically.
Firstsampleselection
Thesampleoftheliteraturereviewwaschosenbysearchingforthekeywords:corporatesocial
reporting+reputation,corporatesocialdisclosure+reputation,corporatesocialreporting+trust,
corporatesocialdisclosure+trust.Whentherewerelessthan20articlesintotalforthe
keywordscorporatesocialreportingorcorporatesocialdisclosureallarticlesinsuchjournal
willbereviewed.
HighlyrankedaccountingjournalsbyBallas&Theoharakis(2003)withdifferentfocuses(i.e.
moretheoretical,empirical,researchbased)wereselectedforthereview:(BallasandTheoharakis2003)
Keywords:Journals:
Reporting+reputation
Reporting+trust
Disclosure+reputation
Disclosure+trust
Accounting,organizations&society(AOS)
110 156 86 138
Accounting,auditingandAccountability(AAA)
110 156 77 99
ABACUS
135 204 37 60
JournalofAccountingandeconomics(JAE)
88 0 92 0
JournalofAccounting&publicpolicy(JAP)
42 41 37 13
TOTAL 443 516 292 297Accounting&Businessresearch(ABR)
16 7
EuropeanAccountingreview(EAR)
17 9
Table2FirstSelectionofarticlesbasedonkeywords(sortedafterhowmanyhitswherefoundineachjournal)
Thekeywordswerefirstselectedwiththehopetousearticlestobeabletodividebetweentrust
andreputationandassuchdistinguishthetwoconcepts,althoughsomearticlesarefoundboth
undertrustandreputationandthereforeeacharticlewillbeanalyzedandvaluedseparately.
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Selectingarticles
Inordertoselectarticlesallabstractsfromthejournalsselectedwerereview.Atthisstage
some paper were excluded, that was paper focusing on auditing, performancemeasures (the
connectionbetweencorporatesocialreportingandcorporatefinancialperformance),webandon‐
line related questions, different sorts of accounting such as city accounting or compensation
accounting, pension incentive system, feminist theory, changed practice of financial institutions.
Insteadarticleswithabstractsindicatingthatthearticlefocusonhowandwhycompaniesuse
responsibilityreportswereselected.Afterthislimitation123articlesremained.
In the final stage of selecting articles the whole article is read and evaluated. If it is
believed that the article can contribute to the understanding of how andwhy companies use
corporatesocialdisclosure it isusedforbuilding themodel.Thethirdselectionprocess isnot
completedatthisstage;theliteraturereviewatthisstageisstillaworkinprogress.
Selectionofarticles Nr.ofarticlessecondselection
Nr.ofarticlesthirdselection
Accounting,organizations&society 36 21Accounting,auditingandAccountability 56 ?ABACUS 4 ?JournalofAccountingandeconomics 2 0JournalofAccounting&publicpolicy 9 ?Accounting&businessresearch 8 ?EuropeanAccountingreview 8 ?TOTAL 123 ?Table3Secondandthirdselectionofarticles
4. Literaturereview‐Companies’useofcorporateresponsibilitydisclosureasastrategiccommunicationtool
4.1Responsetoexternalpressure
Differenttheoreticalperspectiveshavebeenusedinordertoexplainthevoluntarydisclosure
practicethatexistsinsustainabilitydisclosure.Inseveralstudiesmorethanonetheoryhasbeen
usedas theories tend tooverlapandbe connected toeachother (Deegan2006). For instance
Greyetal. (1995)regards legitimacyandstakeholdertheoryastwosetofassumptionswithin
thepoliticaleconomictheory.Deegan(2006)alsostatesthatlegitimacytheoryarrivesfromthe
economic political theory but adds that legitimacy theory overlaps the institutional and
stakeholdertheory.AertsandCormier(2009)statesthatthelegitimacytheoryhasitsrootsin
both institutional theory and socio‐ political research. Furthermore, some assumptions in
impressionmanagement theory can be drawn back to the stakeholder theory and legitimacy
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theory.Forinstanceimpressionmanagementliteraturestatesthatannualreportsnarrativesare
directedtowardsrelevantpublicincontrasttoothertextualdiscoursesthatmaybedirectedto
the general public (Neu et al. 1998). As such the power of a stakeholder affectswhat issue a
companychoosestodiscloseandthestrategychosenbyacompanytosendtherightmessageto
the relevant public (Neu et al. 1998). Furthermore, it is assumed in legitimacy theory that
managershavethepossibilitytocontrolinformationoutputinordertocreatecorrespondence
between social values and organizations activities. Impression management rest on the
assumption that managers will take this opportunity to provide a self‐ serving picture
(Hooghiemstra2000).(Grayetal.1995)
Different theories used in the CSR research have been influenced by each other and as
such come to share some convergent assumptions. A convergent assumption between some
theoriesisthatorganizations’existenceisaffectedbytheirexternalsurrounding’sperceptionof
them.Asexternalactorspossessresourcesfirm’saredependentofexternalactorsandassuch
needtorespondtoexternalexpectations(Molletal.2006).Onewayforcompaniestorespond
andaffectpublicopinionaboutthemistoengageinsocialdisclosure(Hooghiemstra2000).
Inaccordancetothetheoreticalassumptionsexpressedabovethisstudyisbasedonthe
assumption that companies use corporate responsibility disclosure in order to respond to
externalpressure.Assuchthefirstsectionofthisliteraturereviewwillexaminewhatprevious
researchershavefoundinregardstohowexternalexpectationsaffectaccountingpractice.
TherelationshipbetweenexternalpressureandsocialresponsiblereportingExternalpressuredependson:
Firmscharacteristicssuchas:Size,age,industry,ownership,profitabilityandcapitalintensityetc
AOS: Trotman&Bradley(1981);Roberts(1992);Aerts(1994)(2005);Cho,Roberts&Patten(2009);Aerts&Cormier(2009).AAAJ:O’Dwyer(2002);Laine(2010).
Thereisacorrelationbetweenfirms’characteristics andvisibilityandbetweenvisibilityandsocialresponsibledisclosure. Table 4: References to external pressures relationship with corporate social responsibility reporting
Ithasbeenrecognizedthatfirms’characteristicshaveanimpactonwhatexternalpressure
firmshavetodealwith,asfirmscharacteristicshaveanimpactonhowvisibleafirmis.O’Dwyer
(2002) found that companies in sensitive industries togetherwith size had an effect on how
visible a companywas in society. Aerts & Cormier (2009) tested and found support for that
companiesoperatinginenvironmentalsensitiveindustriesaremorevisible(inmedia)andthat
thesecompaniesdisclosemorecorporatesocialinformation.Trotman&Bradley(1981)showed
that companies providing social responsible information on average are larger in size, have
highersystematicriskandplacestrongeremphasisonlongtermthancompaniesnotdisclosing
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such information. Aerts (2005) showed that ownership can affect accounting practice as he
foundthatBelgian listedcompaniesusedattributionexplanations, that iswhencompanies for
examplelettinggoodperformancebeassociatedwithinternalfactorswhilebadperformanceis
associatedwithexternalfactors.(O'Donovan2002,TrotmanandBradley1981,Aerts2005,AertsandCormier2009)
As firm’s characteristics seem to have an impact on external pressure that in its turn
seems to have an impact on disclosure practice several studies use firms’ characteristics as a
variableintheirresearch.ForexampleRoberts(1992)weretestingUllman’sstakeholdermodel
or Cho, Roberts and Patten (2009) testing the bias language and verbal tone in corporate
responsibilityreportingusedfirmscharacteristicsasacontrolvariableintheirstatisticmodel.
The table below is a summary showing the extensive use of firm characteristics as a variable
when it comes to research in corporate responsibility disclosure. The table shows that the
characterofthefirmisusedinstudiesusingdifferentmethods,differentgeographicalsetting1,if
ithasbeenalongitudinalstudy(LT).(Roberts1992,Choetal.2009)
Industry:Method:
Differentindustries Miningindustry Tobaccoindustry
Energy
Contentanalysis
Patten(1991)DeeganandRankin(1996)(AUS,LT*)WilmshurstandFrost(2000)(AUS)Laine(2009)(FIN)
Guthrieand Parker(1989)(LT*)(AUS)Deegan,RankinandTobin(2002)(LT*)(AUS);
Interview O’Dwyer(2005)
Interview/Survey
O’Dwyer(2001,2002)(UK)
Content +interview/survey
DeeganandGordon(1996)”(AUS,LT*)WaldenandSchwartz(1997)(LT*)
DeeganandBlomquist(2006)
Cho(2009)(FRA)
Content +Statistics
CormierandGordon’s(2001)(LT*)(CAN)Patten(2005)(LT*)AertsandCormier(2009);Cho,RobertsandPatten(2009)(US)
TillingandTilt(2009)(UK)
Patten(1992)(US)CormierandGordon(2000)(CAN;LT*)
Statistics Roberts(1992):Aerts(1994)(BE)(2005)(BE)
Table 5 Previous research using firm characteristic
Carroll’smodeldoesnotincorporatefirm’scharacteristicsasavariable;thereforethefirst
variable added to themodelwill be firm characteristics. In appendix 1 (a) a test on 7 listed
1 AUS=Australia,BE=Belgium,CAN=Canada;FIN=Finland;UK=theUK;US=theUSA
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companies on the Stockholm Stock Exchange (large cap) is conducted in order to test the
differentvariablesincludedintheextendedmodel.Whatwasinterestinginthisrespectwasthat
Allianceoilwhichcouldbeconsideredasacompanyoperatinginasensitivebusinessonlyused
7pages toreport theirsustainabilitywhileSEBwhichoperate in thebanksector(notbeinga
sensitivebusiness)used48pages.Evenif it is interestingthisdifferencemaybeassociatedto
other firms’ characteristics that could have a greater impact on a firm’s visibility, more firm
specificcharactershavetobeconnectedtothetwocompanies.
4.2Whyandhowdocompaniesrespondtoexternalpressure
This sectionwill look at why andwho companies responds to external pressure. Aerts
(1994), which does not refer to environmental reporting specifically, states that narrative
accountingdisclosure,suchasresponsibilityreporting, isatoolcompaniescanuseinorderto
legitimacycompany’sactivitiesandoutcomes,asaccountinglanguagecanbeusedtoinfluence
thinking and behavior. Carruthers (1995) points out that new institutionalism regards
accounting practice as a tool companies can use to receive legitimacy by constructing an
appearanceofrationalityandefficiency.Hoopwood(2009:437)alsostatedthatcompaniesmay
be interested in engaging in environmental reporting in order to increase their legitimacy or
facilitate anewanddifferent imageof the company.As such the report “servesasacorporate
veil,simultaneouslyprovidinganewfacttotheoutsideworldwhileprotectingtheinnerworkings
oftheorganizationfromexternalview”.(Aerts1994,Carruthers1995)(Hopwood2009)
In the next sections knowledge about why and how companies use responsibility
reportingwillbecollectedfrompreviousresearch.
1. Respondtoexternalpressure–disclosureusedtocloselegitimacygap.
Accordingtothelegitimacytheoryacompany’sexistenceisdependentonifthesocietyinwhich
itoperaterecognizethatit’sactivitiesareinaccordancetothissociety’svaluesystem(Grayetal
1996).Dowling&Pfeffer(1975:122)statedthatorganizations:
“seek toestablishcongruencebetween thesocialvaluesassociatedwith or implied by their activities and the norms of acceptablebehaviorinthelargersocialsystemofwhichtheyarepart”.
If there is no correspondence between social values and organization’s activities, a
legitimacy gap may occur. The legitimacy gap may arise due to different reasons: company
changewhilesocietalexpectationremain thesame;societalexpectationschangebutcompany
performance remains the same; both organization and societal expectations change but in
13
opposite directions To reduce the legitimacy gap companiesmay adopt tactics and discloser
approaches(O'Donovan2002).Neu(1991)howexplorestheroleoftrustandstatesthattrust
depends on to expectations; on the onehand it depends on socialexpectation that is practice
takenforgrantedandacceptedasthecorrectwayofacting,tostoponcecareataredlightand
constructive expectation that is appropriate behavior for specific situation, this is learnt with
experienceandinteractions.Neu(1991)alsoexplainsthattrustisafundamentalingredientthat
isneededinorderforanexchangetooccur.(Neu, Neu 1991)
The next sectionwill explorewhat communication techniques previous research states
thatcompaniesinresponsibilityreportingtoreceivelegitimacyandtrust.Asmightbeexpected
previous researchhave looked at the rhetoric and categorization in companies’ responsibility
reportingtounderstandhowtheseareusedtobycompaniestobeperceivedaslegitimate.
Dowling & Pfeffer’s paper from 1975 provides a conceptual framework for analyzing
organizational legitimacy and process of legitimating. Dowling and Pfeffer (1975: 126‐127)
foundthatorganizationscaneitheradaptitsoutput,goalsandmethodsofoperationtowhatis
currentlyseenaslegitimate,throughcommunicationbecomeidentifiedwithsymbols,valuesor
institution that are associatedwith strong legitimacy or try tochange the definition of social
legitimacyinsuchawaythatitsuitspresentpracticeoftheorganization.
Some researchers have found that depending onwhat stakeholders’ present perception
are of a company, the company may choose different communication strategies in order to
acquire legitimacy. As such several previous researchers have looked at how companies use
rhetorictogain,thatistoestablishaperceptionofbeingalegitimatecompany,maintain,thatis
toholdontothecurrentperceptionofbeingalegitimatecompany,regain,thatisgetbackthe
perception of being legitimate for instance after a “scandal” has occurred or loss, that is to
reducetheperceptionofbeingalegitimacycompanyforinstancebecauseitrequirestoomuch
resourcestomaintaincurrentperceptionofthecompany.
Severalarticleshavealsolookedathowcompaniesuserhetorictogain,maintain,regain
or loss legitimacy. Ashford and Gibbs (1990) start the 1990’swith an article about symbolic
legitimacy. In theirarticle theauthorsexplainhowthe fieldexistsofdifferentactors trying to
maintain,extendanddefendlegitimacy.Thepurposeoftheirarticleistoexplainthedynamicsof
legitimacy. In Suchman’s article from 1995 he explains what strategies managers choose to
managetheirreputation,dependuponifacompanywantstogain,maintainorrepairlegitimacy.
FromtheideasofDowling&Pfeffer(1975)thatcompaniesadoptorchangeperceptionof
what accepted as legitimate; Ashford & Gibbs (1990) and Suchman (1995) ideas about the
14
dynamicofcompanieslegitimacycreation,strategiclegitimacytheoryresearcherscontinuedto
examinehowcorporatesocialdisclosureisusedtocloselegitimacygaps.
ForinstanceLindblom(1994)(La‐cinthetablebelow)discusseshowcorporationsseek
toacquirelegitimacyandwhatdisclosurestrategiesanorganizationcantaketocloselegitimacy
gaps;(a)adjustorganizationoutputtoexternalpressureandcommunicatechangesinorderto
educateandinformtherelevantpublicsaboutthechangedperformance;(b)notadjustoutcome
to external pressure but inform and educate the public about the appropriateness of the
outcome; (c) not change outcome but be associated with symbols associated with high
legitimacystatus.(DowlingandPfeffer1975,AshforthandGibbs1990,TillingandTilt2009,Suchman1995,Lindblom1994)
O’Donovan(2002)(Oa‐dinthetablebelow)discussedwhatcommunicationstrategiesa
company could use to regain legitimacy; (a) avoid addressing the issue, (b) attempt to alter
social values, (c) attempt to shape perceptions of the organization, (d) conform to conferring
public’svalues.(O'Donovan2002)
Cho (2009) (C a‐c in the table below) took the ideas from Dowling & Pfeffer (1975),
Lindblom(1993)andO’Donovan(2002andcombined them into threenewclassifications: (a)
Image enhancement;where company link itself to positive values, (b) Avoidance/ deflection;
company redirect of deflect attention from social or environmental issue and (c)Disclaimer;
companyattempttolooklegitimatebydenyingitsresponsibilityinnegativeorharmfulactivity.
(Deegan2002,Cho2009)
BasedonCho’s(2009a)statementthatthereisaneedtobetterunderstandwhycompanies
engage in corporate social reporting and the rhetoric’s used in such, Laine (2009) started to
explorethelanguageusedbythreeFinishcompaniesintheirCSRreportsmoreindept.
Strategictacticsummary
Adapttosocialvalues(Dowling&Pfeffer,1975)
Changesocialvalues(Dowling&Pfeffer,1975)
Otheroptions
Gain(Suchman,1995)
L(a)Adaptand L(b) change L(c)Manipulateperceptions
15
(Tilling&Tilt,2009) communicate perceptionofoutcomebyeducation.
Maintain(Ashford&Gibbs,1990)(Suchman,1995)(Tilling&Tillt,2009)
L(a)Adaptandcommunicate
L(b) changeperceptionofoutcomebyeducation.
L(c)Manipulateperceptions
Regain(Ashford&Gibbs,1990)(Suchman,1995)(Tilling&Tilt,2009)
L(a)Adaptandcommunicate O(d)Conform
L(b) changeperceptionofoutcomebyeducation.O(b,c)changeperceptions
L(c)ManipulateperceptionsO(a)AvoidC(a)ImageenhancementC(b)Avoid/DeflectionC(c)Disclaimer
Loss(Tilling&Tilt,2009)
Table6Summarstrategictactics
L(a‐d)=Lindblom’s(1994)fourdifferentlegitimacystrategies. O(a‐d)=O’Donovan(2002)observationofmanagingreputationafteradisaster) C(a‐c)=Cho’s(2009)summaryofDowling&Pfeffer,LindblomandO’Donovan’sobservations.
O’Donovan(2002)alsousesOliver(1991)research,lookingatthephenomenaofcorporate
social disclosure (CSD) from an institutional and resource based theory, stating that effort
necessary tomaintain legitimacydependsonwhat legitimacy thecompanyhad tobeginwith.
BasedonthisO’Donovanstatesthatitisharderforacompanythatpromotesitselfasextremely
sociallyandenvironmentallyresponsible tomaintain legitimacy,as italwaysneed toperceive
publicexpectations.Although,maintaininglegitimacyiseasierthangainingorrepairingit,asthe
two latter activities requires proactive actions by the company (O'Donovan 2002). (O'Donovan 2002)(Oliver1991)
Tilling and Tilt (2009) study of Rothmans, an Australian tobacco company, result in an
expansionofAshford&Gibbs(1990)andSuchman(1995)modelofestablish,maintain,regain
withloss.Theynamedandexplainthedifferentphrasesoflegitimacy;establishingincludesearly
stageof firm’sdevelopmentwhere it ensures it canmeet itsobligations;maintaining includes
preserving itsroleandbecomeattachedtosymbolsaswellashandlingotherchallengesto its
legitimacy;extendingwherecompanyrealizeitsneedtochangeinaccordancetocircumstances;
defendingwherecompanyprovideresponsetoachallengedlegitimacyloss;insteadofdefending
itslegitimacyacompanymaychoosetolosssomeofitslegitimacyasitiseasiertomaintainless
legitimacy. At some point the company has to stop losing legitimacy and from that point the
company can either endup atdisestablishmentor start overwith establishment to gainmore
legitimacyagain.IntheirempiricalstudytheyfoundthatprevailingstrategyusedbyRothmans
to handle the smoking and health issue threat against its legitimacy, where to engage in
communityservicesandcharity.(DowlingandPfeffer1975,AshforthandGibbs1990,TillingandTilt2009,Suchman1995,Lindblom1994)
16
PreviousresearcherstoCho(2009)andTilling&Tilt(2009)havealsoempiricallytestedif
corporate social disclosure is used as strategic devise by legitimacy seeking companies. For
example after Exxon Valdes oil Spill in 1989 Patten (1992) and Walden & Schwartz (1997)
examine such crisis affected the disclosure among oil companies and companies in other
branches. Patten (2005) found that companiesmislead their social disclosure, includingmore
positive thannegative information in their corporate responsibility reports.Deegan&Gordon
(1996) and Deegan & Rankin (1996) also found that companies focus on disclosing positive
information.(Patten1992,WaldenandSchwartz1997,DeeganandGordon1996,DeeganandRankin1996,Patten2005)
Neu(1991)alsolookedathowcompaniescancreateandmaintaintrust.Trustisbasedon
commonexpectations,which in their turn impliesnormsof fairnessof certainbehaviour, and
sanctionsagainstsuchbehaviourthatisconsideredtobeunfair.Thereisarelationshipbetween
trustandcontracting,forexamplewhennotrustexistnocontractswillbesignedandwhenhigh
levelsof trustexistcontractsarenotneeded.BasedonZucker’s(1986)categorizationof trust
creatingmechanisms(a)process‐based(trusttiedtopastandfutureexchanges)(b)character
based (trust isascribedcharacteristics suchasethnicity,genderandage)and (c) institutional
basedNeushowedthathowcompaniesmayusesuchtrustmechanismintheircommunication.
For instance Neu noted that the in his sample of 230 companies listed on the Toronto Stock
Exchange,someusedtheprocess‐basedtrustmechanismbyincludingmanagementbiographies
withinprospectusdocument.
The second variable added to Carroll’s model is communication strategies which here is
presentedaswaystocloselegitimacy/trustgapsthatbyadoptingtochangesandinformabout
them or by changing social expectation though communication or by avoiding to address the
issueormisleadordrawattentionfromtheissue.Althoughatthisstagethesampledrawnfrom
theStockholmstockexchange responsibility reportshavenotbeenanalyzedby their rhetoric
usedinsuch,itisinterestingtonotethat3ofthe7companiesincludedaCEOmessageintheir
reports. From the 7 companies presented in appendix 1, three companies integrated their
responsibility reporting in their annual report. 3 of 4 with separate responsibility reports
included a CEO message. SKF also included collective information and picture over SKF
management,SCAalsopresenttheirmanagementbutseparatelyattachedtothedifferentareas
ofresponsibility,whichcouldbeanalyzedinconnectiontoNeu(1991)discussionabouttrustis
ascribedtocharacteristics.Furthermore,SEBgiveanhistoricalglanceoverhowtheirworkwith
responsibilityhasprogressedoveryears.Furthermore,SEBletsoneofitsmanagersKlasEklund,
known fromwriting text books used by universitieswrite an article about the importance of
17
sustainablework.Thisissomethingthatcouldbeconnectedtothesocalledprocess‐basedtrust
mechanism.
2. Respondtoexternalpressure–disclosureusedtopresentaself‐servingpicture.
AccordingtoHooghiemstra(2000)impressionmanagementstudieslookathowindividuals
representthemselvestocontroltheimpressionofothers.Neuetal.(1998)statesthatthetheory
rest on the assumption that the managers will provide a self‐ serving view of a company’s
performance.Cho,RobertsandPatten(2009)basedtheirresearchonMerkl‐Davies&Brennan
(2007) framework for analyzing corporate impressionmanagement strategies, assuming that
managerialself‐servingmotive“drivesbiasnarrativedisclosure”.Therearedifferentimpression
managementtechniquesavailable formanagerstoenhancegoodnewsanddiminishbadnews
(Hooghiemstra2000).(Neuetal.1998)
Previous researchers have tested companies’ use of communication techniques
companies’useforimpressionmanagementstrategieswhendisclosingcorporateresponsibility
information.Cho,RobertsandPatten(2009)lookedattherelationshipbetweendisclosureand
environmentalperformanceandmeasuredif“optimism”indisclosurewhererelatednegatively
tofirmsenvironmentalperformancewhile“certainty”indisclosurewhererelatedpositivelyto
firms performance. They found support for that companies rated as poorer environmental
performance by KLD (an independent rating firm) use impression management techniques.
Techniquesusedbymanagerswaseitherconceal information, that isemphasizinggoodnews
andcoverbadnews,orprovideinfluencingattributions,thatisattributingpositiveoutcometo
internalfactorsandnegativeoutcometoexternalfactors.IntheirstudyChoetal.(2009)looked
attherelationship.
Choetal.(2009)referstoAerts(1994)studywhichisabouthowcompaniesexplaintheir
performance in annual narrative reports. Aerts’ research is based on Schlenker (1980) and
Leary&Kowalski(1990)researchstatingthatthemoreacompany’srecentperformancediffers
fromwhat isdesired, themore likely it is thatmanagersbecomesconcernedwithwhat image
companiesactiongives thecompany.Accountingbias inAerts research is followingSchlenker
(1980), in the social psychology field, definition stating that an event can be interpreted
differently and as such an error may occur in the “objectivity” of the interpretation. Aerts’
(1994)researchalsoacknowledgesLeary&Kowalski (1990)statement that thevisibilityof a
companymayhaveanimpactoncompaniesawarenessofpublicopinionandassuch“encourage
verbalimpressionmanagementbehavior”(p.341).
18
Aerts (1994) found that companiesmostlyattributedpositiveeffects to internal factors;
theyfoundthat79%ofthepositiveperformancewasattributedtointernaleffect.Although,the
attributionofnegativeperformancewasnot inmajorityattributed toexternal factors, instead
Aerts research showed a more balanced picture with a small tendency to attribute negative
performancetoexternalfactorswereshown(53%ofthenegativeperformancewereattributed
toexternalfactors).Theresultsshowedthatnarrativeaccountinginformationtendstobebias,
although surprisingly the need to use accounting language to defend managers from
responsibility showed a lower result. Another interesting result Aerts (1994) found was in
opposition of the assumption that companieswith stable performancemight have less use of
defensive accounting narratives unstable firms might use such techniques more in order to
rationalize past experience and restore confidence in management capability. Aerts (1994)
resultshowedtheopposite:defensiveaccountinglanguagewasfoundonlyinstablecompanies
narratives.Hebelievesthatthiscouldbeanindicationofthatforstablecompaniesaccounting
explanations are used as “strategy for accountability predicaments”. In 2005 Aerts examines
accountingexplanationpractices’connectiontocontextualandmotivatinginfluences.Assuchhe
compared listed versus unlisted companies’ use of the attribution technique (that is how
performance is ascribed internal or external factors). They expected to find that listed
companies weremotivated to disclosemore accounting attributions and explanations due to
their public nature, incorporated with more pressure to show accountability. Examining the
explanatorybehaviorbetweenlistedandunlistedcompaniesfoundthat listedcompaniesused
more attribution statements than unlisted companies. Even so Aerts (2005) presented some
unexpectedresultssuchasthatunlisted,inoppositetotheexpectedlistedcompanies,disclosed
moreexplanationsperexplainedeffectthanlistedcompanies.
19
5. Concludingremarks
Inallregretsthisliteraturestudydoesnotprovidethereaderanyclearanswersastowhat
rolecompanies’responsibilityreportinghaveincompaniesstrategiccommunicationtorespond
toexternalpressure.Onereasonfornotbeingabletoprovidesuchanswerisbecauseithasbeen
hard to separate what is trust building and what is reputation management in the articles
reviewedsofar.Thismightbeexplainedbycompaniesownuseoftheconcepts,therearecases
werebothreputationandtrustisusedinthesamesentence.Forinstancethefollowingsentence
wasfoundonAstraZeneca’shomepage(accessed31ofOctober2010)“Ourreputationisbuilton
thetrustandconfidenceofallourstakeholdersandisoneofAstraZeneca'smostvaluableassets.”
WhatthispaperprovidesissomesuggestionsforvariablesthatcanbeattachedtoCarroll’s
and Elkington’s existing models which could help to understand the role of responsibility
reportingcouldhaveforcompanies’strategiccommunication.
First, it is suggested that what role the reporting get might depend on the firms’
characteristics.Asbeenstatedabovetheassumptionusedinmanytheoriesusedtodescribeand
understand corporate responsibility reporting, reports are provided to respond to external
pressure.Thecharacterofthefirmcanhaveanimpactoncompanies’“visible”forexamplesome
companies operation have a risk of causing high damage to their surroundings such as oil
companies.Therefore,stakeholdermayputmorepressureonandholdcompaniesaccountable
fortheiroperationspressuringthemtonotonlytaketheirfinancialresponsibilitybutalsotake
theirsocialandenvironmentalresponsibility.Aninterestingfindingwhencomparingthesmall
sampleof7companiesfromdifferentindustriescollectedonStockholmStockExchange(large
cap)wasthatAllianceoilwhichisoperatinginasensitiveindustryprovideslessinformationin
their sustainability report (7pages)while SEBoperating in thebank sectorprovides amore
extensive report (48 pages). Although the only character compared in my sample is their
industrybelongingandassuchotherfactorssuchasshareprice,ownershipstructureorother
characteristicscouldexplainthisfinding.
20
Secondly,theliteraturereviewstartstogivesomestructureastohowandwhycompanies
areusingCSRreportsforacertainpurpose.
Techniquesusedcorporateresponsibilityreportingfoundbypreviousresearchers1. Respondtoexternalpressure– disclosureusedtocloselegitimacygap
ObtainMaintainRegainLoss
Adopt changes and inform about the adoption, change perceptions by educating (presenting facts), Avoid addressing the issue, draw attention from the issue, misleading.
AAAJ: Tilt and Tilling (2009);O’Donnovan(2002)ABR:Deegan&Gordon(1996)AOS:Patten(1992)EAR:Cho(2009a);Laine(2010).JAP:Walden&Schwarts(1997)
Focus on positiveinformation
AAAJ: Deegan&Rankin(1996)ABR:Deegan&Gordon(1996)JAP:Patten(2005)
Createtrust Process‐ Based; Character‐ based or institutional based
AOS: Neu(1991)
2. Respondtoexternalpressure–disclosureusedtopresentaself‐servingpicture.
BiaslanguageorvocaltoneinAccountingexplanationsused
Impressionmanagement:concealmentandattribution.
AOS: Cho,Roberts&Pattern(2009)2
Accountingattributionandperformanceexplanations.
AOS:Aerts(1994)3AOS:Aerts(2005)
Astherhetoricusedinthesamplewasnotanalyzedindepthandastheircurrentneedto
obtain,maintainorregainlegitimacyhasnotbeenconsidernoobservationcanbedrawnabout
theuseoftheirrhetoricdevice.
ThefashionfollowingsideofCSRreportshavenotbeendiscussedasmuchaswantedin
thispaperalthoughitisintheinterestofthisresearchtostudymoreresearchsuchastheone
conducted by Walden & Schwartz (1997) that examined how disclosure is affected among
companies after a crisis such Exxon Valdes oil Spill in 1989, that is does it lead to more
environmentaldisclosureinthecompany,inthecompany’sindustryorinallindustries.
TheresearchfromNeu(1991)abouttrustmechanismthatusedbycompaniesisbelieved
tobeofinterestandcontributiontoourmodel.Lookingatthesampletheinformationprovided 2 In order to measure ”optimism” and “certainty” in their samples environmental disclosure included in 10‐ K reports Cho et al. (2009) used a text analysis program developed by Hart, R.P. called DICTION; which is used for “lexical analysis through the analysis of five master variables: “certainty”, “optimism”, “activity”, “realism” and “commonality.”(p.6). In order to determine environmental performance an independent rating firm, KLD, results were used. 3 Attributions were coded according to an attribution‐ manual including the following dimensions 1) locus of causality (internal or external) 2)valence of the effect (positive or negative effect) 3) nature of explanation (based on technical‐ accounting terminology and logical or not)4) Expression of cause and effect (is it expressed in accounting terms or not) .
21
bythecompaniesthatliesoutsideCarroll’sandElkington’scategorizationsseemstobeableto
contributetotheunderstandingoftheroleofCSRreports.Forfutureresearchitisattemptedto
study if and how the information that falls outside can be connected to companies’ strategic
communicationstrategiesandtechniquestocreatetrustorbuildupareputation.
The table below shows examples of information that is considered to be outside the
categorizationofCarrollandElkington,anditissuchinformationthatwouldbeinterestingfor
thisstudytocontinueworkingtoanalyzeandconnecttocompanyuseandtheroleoftheCSR
report.
Information Trustbuilding
Reputationmanagement
Controlandassurance X Codeofconduct/principles/policy/Ourrole ? ?CEOMassage X Awardandrecognition Managementinformation/messages Memberships Audit Indexesbelonging
Asthisstudyhaveonlystartedtoreviewliteratureandorganizeinthefieldofcompanies’
useofsustainabilityreportingandhowandwhycompaniesusetorespondtoexternalpressure
thisprocesswillcontinueinordertobuildontoCarroll’sresponsibilitymodel.
22
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APPENDIX1Testonasmallsample
(a) Carroll’sandElkington’smodel
InordertotestsomeexterminatorsfromtheresearchasimpleselectionwereconductedfromStockholmstockExchange,wherethethirdcompanyfromthebottomofthelistofsevendifferentindustrybelongingwerechosentostateanempiricalexample.
Exampleofinformationthatendedupunderthedifferentcategorizations
Philanthropy Ethics Legal
Communitycare/socialcommitment/involvement/investment
Social
Governance
Productregulation/productsafety
Environmentallegalandregulatorycompliance
Socialpolicy
Sustainabilitygovernance/businessethics
SportHumanresources Economic
HelpingpeopleHealthandsafety Economicresponsibility
Sponsorship/charity/InvestmentWorkforceprotection Businesscare
NaturalcrisisNon‐ Discrimination
EducationandvocationaltrainingBalancedwork‐ load
EnergyhelpEnvironment
Informationandengagingpeopleinenvironmentalissues
Climate&energy
Lowcarboneconomy
(b) Area1:Firmcharacteristics
Pages Carroll’sresponsibilitypyramid Philanthropic Ethical Legal Economical OtherTriplebottomline
Social Environmental Economic
AllianceOil
1 1 5 ‐ ‐
SCA 2 9 13 3 8 38SKF 5 4 7 1 4 5Husqvarna ‐1 2 6 ‐1 2 1HakonInvest
‐ ‐1 ‐1 ‐1 ‐1
SEB 4 8 4 5 27Ericsson 9 6 8 1 19
26
Company Industry CSRreport Separatereport(S)Integratedreport(I)
AllianceOil Energy 7pages SSCA Material 73pages SSKF Industry 26pages IHusqvarna Consumer
Discretionary12pages I
HakonInvest ConsumerStaples 3pages ISEB Finance 48pages SEricsson IT 43pages S
Separatereport,meansthatthecompanyhasanownreportfordisclosingCSRactivities.IntegratedreportmeansthatthecompanyhasincludedCSRactivitydisclosureinitsannualreport.
(c) Area2:Why–strategiccommunication&How–communicationtechniques
FirmcharacteristicsFirmsneedtoobtain,maintainorregainlegitimacy Trust Reputation FashionWhy
How How How
Closelegitimacygap Adapttoexpectationandinformaboutthechange Changeperceptionbyeducation Drawattentionfrom
issue
Avoidtoaddressanissue
Process‐basedmechanism Character‐ based“ Institutional‐ based“ Self‐servingimage Attribution Concealment Explanations
