Corporate Social Reporting (CSR) in Emerging Economies: A Review and Future Direction

Transcription

1 Corporate Social Reporting (CSR) in Emerging Economies: A Review and Future Direction ATAUR RAHMAN BELAL ASTON BUSINESS SCHOOL, ASTON UNIVERSITY, UK AND MAHMOOD MOMIN AUCKLAND UNIVERSITY OF TECHNOLOGY, NEWZEALAND Contact author and particulars Dr. Ataur Rahman Belal Finance, Accounting & Law Group Aston Business School Aston University Birmingham B4 7 ET, UK a.r.belal@aston.ac.uk Telephone: Fax: /03/ :29

2 1 Corporate Social Reporting (CSR) in Emerging Economies: A Review and Future Direction Abstract Purpose Previous reviews of CSR literature have tended to focus on developed economies. The aim of this study is to extend the reviews of CSR literature to the emerging economies. Design/methodology/approach a desk based research method, using a classification framework of three categories, has been applied in this study. Findings Most of the CSR studies in emerging economies have concentrated on the Asia-Pacific and African regions. Most of these studies are descriptive in nature, used content analysis method and measured the extent and volume of disclosures contained within the annual reports. Moreover, most of these studies provide indirect explanation of the reasons behind CSR. Of late, a handful of studies have started to probe managerial motivations behind CSR directly via in depth interviews and have found that CSR agenda in emerging economies is largely driven by external forces, viz. pressures from parent companies, international market and international agencies. Originality/value This is the first review of CSR studies from the emerging economy perspective. On the basis of this analysis the present authors have suggested some important future research questions. Keyword(s): Corporate Social Reporting (CSR); social accounting standards/codes; emerging economies; Paper Type: Literature review

3 2 Introduction Corporate Social Reporting (CSR 1 ) literature has grown in size over the last 30 years or so (Gray, 2001). It is neither desirable nor possible to review all of them in one paper. There are at least five review papers which collated previous CSR literatures, explored historical development of CSR and raised interesting questions (See Deegan & Soltys, 2007; Gray, 2002; Mathews, 1997; Owen, 2008; Parker, 2005). These reviews, although provide useful explanations of CSR practice, offer insights mainly from the perspective of developed economies. 2 The aim of this study is to extend the reviews of CSR literature to the emerging economies 3. A review of CSR studies within the emerging economy context is currently absent. This is the first review of CSR studies purely from the emerging economy perspective. On the basis of this analysis the present authors have suggested some important future research questions. In addition, it provides a one stop service to the existing and future researchers undertaking CSR research from the emerging economy perspective without re-inventing the wheels. There is a lack of understanding in the CSR literature regarding CSR research within emerging economies (Kisenyi & Gray, 1998). This paper stems from such concerns. CSR is believed to have the potential of promoting equality, social justice, transparency and accountability by holding business organisations to account (Belal, 2008, p.7). Some of 1 CSR refers to the external reporting of social and environmental information mainly contained within the annual reports of companies. 2 Although they may touch on some of the emerging economy CSR studies. 3 Emerging economies include both the developing and newly industrialised economies, according to the call for paper from Research in Accounting in Emerging Economies ( 10th March, 2009). It is accepted that there is no agreed definition of this term. Wallace (1990) referred to this term as developing countries to mean an amorphous and heterogeneous group of countries mostly found in Africa, Asia, Latin America, the Middle East, and Oceania (p.3). Most of these countries had a colonial past. According to Nobes (1998) these countries are generally characterised by limited number of accountants per million of population, less independent audit profession and inefficient business tax system.

4 3 these emerging economies are confronted with the widespread problem of poverty, human rights violations, corruption, inequalities and social exploitations. It is argued that businesses operating in emerging economies have a responsibility to address some of these problems (Pachauri, 2006). They may be held accountable in this regard via complete and transparent disclosures addressing the issues noted above. This review will help us to illuminate some of these tensions and discuss to what extent businesses in emerging economies are rising up to this challenge. This review covers only the empirical studies published in English language accounting journals 4 relating to the period (25 years period). It does not include all published sources, for example, books, book chapters and research reports. We focused on journal articles as they are likely to provide most up to date and authoritative information in a particular field. The reasons for concentrating on empirical studies include the focus of these studies on the motivations for and determinants of CSR. This line of research is a long established tradition within the CSR literature in general (Belal & Owen, 2007; Owen, 2004). The reason for starting with the year 1983 is that this is the year when first study on CSR in an emerging economy (India) was published (as far as we know). Year 2008 was chosen because this is the latest possible year to be covered within this study. 4 Such as Accounting, Organisations and Society, Accounting, Auditing and Accountability Journal, Critical Perspectives on Accounting, British Accounting Review, Accounting Forum, Social and Environmental Accountability Journal (previously Social and Environmental Accounting), The International Journal of Accounting, Advances in International Accounting, Research in Accounting in Emerging Economies (previously Research in Third World Accounting), Abacus and Managerial Auditing Journal. However, we have also identified research from other known journals. We have decided to focus on accounting journals and are to some extent guided by the earlier CSR reviews to keep the current review within a manageable limit. We acknowledge that other non-accounting journals, such as Journal of Business Ethics, Journal of Corporate Citizenship, Business Strategy and the Environment and Corporate Social Responsibility and Environmental Management (previously Eco-management and Auditing), might have included CSR studies from emerging countries.

5 4 To achieve the aim of this paper noted above we have developed a classification framework of CSR studies in emerging economies in the next section. The third section examines CSR research in emerging economies using such classification framework. The final section provides implications for future research through discussion and analysis. It also includes some concluding comments. Classification Framework of CSR Studies in Emerging Economies For a useful review of prior CSR studies a categorisation or classification framework is developed in this section. The framework has been developed by considering the historical context of CSR research in general. Historically, most of the earlier CSR studies used content analysis method to examine the motivations and determinants of CSR. While this trend still continues, recently CSR researchers have moved on to examine managerial and other stakeholders perceptions of CSR more directly by using methods such as in depth interviews (Belal & Owen, 2007; Owen, 2004, 2008). Using the current classification framework in this study, existing CSR research within emerging economy context are reviewed under three categories. Brief descriptions of these categories are provided in Table 1:

6 5 Table 1. Emerging Economy CSR Research By Thematic categories and Research Methods Categories 5 Studies related to extent and level of CSR and their determinants Managerial perceptions studies Stakeholder perceptions studies Research methods Content analysis Questionnaires and interviews Questionnaires and interviews Brief Description Predominantly quantitative studies which indirectly explore corporate motivations behind CSR by measuring the volume and the extent of disclosures. This category also includes studies which examined the determinants of CSR. Predominantly qualitative studies which directly explore corporate motivations behind CSR mainly via in-depth interviews with relevant corporate managers. Predominantly qualitative studies which explore CSR from the stakeholder perspective mainly via indepth interviews with relevant stakeholder groups. CSR studies (Andrew, Gul, Guthrie, & Teoh, 1989; Batra, 1996; Belal, 2000, 2001; Belal, 1997; Choi, 1998, 1999; de Villiers, 1999; de Villiers & van Staden, 2006; Disu & Gray, 1998; Gao, Heravi, & Xiao, 2005; Haniffa & Cooke, 2005; Hegde, Bloom, & Fuglister, 1997; Imam, 1999, 2000; Kamla, 2007; Kisenyi & Gray, 1998; Kuasirikun & Sherer, 2004; Lodhia, 2000; Lynn, 1992; Maali, Casson, & Napier, 2006; Naser, Al-Hussaini, Al-Kwari, & Nuseibeh, 2006; Newson & Deegan, 2002; Rashid & Lodh, 2008; Savage, 1994; Singh & Ahuja, 1983; Thompson & Zakaria, 2004; Tsang, 1998; Williams, 1999; Williams & Pei, 1999; Xiao, Gao, Heravi, & Cheung, 2005) (31) (Belal & Owen, 2007; Islam & Deegan, 2008; Jaggi & Zhao, 1996; Rahaman, 2000; Rahaman, Lawrence, & Roper, 2004; Teoh & Thong, 1984) (6) (Al-khater & Naser, 2003; Kuasirikun, 2005; Lodhia, 2003; Naser & Baker, 1999) (4) 5 This categorisation is far from perfect and subjective. There are studies which can be put into more than one category. For example, Islam & Deegan (2008) can easily fit into both first and second categories. We have showed it under second category as we believe that is where the paper belongs.

7 6 The categorisation noted in Table 1 is very much the current authors own framework, which has been developed to provide an appropriate structure to the review of CSR literature of emerging economies. Moreover, the aim of such classification is to reflect on the nature of CSR studies and to examine development of CSR research in emerging economies. While the framework used here would not capture all studies in CSR they encapsulate important issues regarding corporate motivation and engagement and empowerment of stakeholders in the CSR process. It is acknowledged that there could be alternative categorisations of CSR literature such as chronological categorisation (See Mathews (1997)). Such categorisation has not been used in this review as it pays too much attention to different time periods while the purpose of this current review is to capture the significant concerns, trends and developments within the CSR from the perspective of emerging economies. We have also used a second categorisation of emerging country CSR studies by regions and countries. For this purpose we have followed the structure used by Hopper, Tsamenyi, Uddin & Wickramasinghe (2009) for their review of management accounting research in less developed countries. The categorisation is reported in Table 2 below:

8 7 Table 2. Emerging Economy CSR Research by Regions and Countries Regions Countries CSR Studies Africa (7) Ghana (2) (Rahaman, 2000; Rahaman et al., 2004) Nigeria (1) (Disu & Gray, 1998) South Africa (3) (de Villiers, 1999; de Villiers & van Staden, 2006; Savage, 1994) Uganda (1) (Kisenyi & Gray, 1998) Asia (23) Bangladesh (8) (Belal, 2000, 2001; Belal, 1997; Belal & Owen, 2007; Imam, 1999, 2000; Islam & Deegan, 2008; Rashid & Lodh, 2008) Hong Kong (3) (Gao et al., 2005; Jaggi & Zhao, 1996; Lynn, India (3) 1992) (Batra, 1996; Hegde et al., 1997; Singh & Ahuja, 1983) Singapore (1) (Tsang, 1998) Malaysia (3) (Haniffa & Cooke, 2005; Teoh & Thong, 1984; Thompson & Zakaria, 2004) Singapore and (Andrew et al., 1989) Malaysia (1) Thailand (2) (Kuasirikun, 2005; Kuasirikun & Sherer, 2004) Korea (2) (Choi, 1998, 1999) Pacific (2) Fiji (2) (Lodhia, 2000; Lodhia, 2003) Middle East (3) Jordan (1) (Naser & Baker, 1999) Qatar (2) (Al-khater & Naser, 2003; Naser et al., 2006) Global (6) Various (6) (Kamla, 2007; Maali et al., 2006; Newson & Deegan, 2002; Williams, 1999; Williams & Pei, 1999; Xiao et al., 2005) The above table shows that we have identified 41 empirical papers from 14 countries spanning over four regions. Table 2 shows that most of the previous studies concentrated in the Asia-Pacific and African regions, particularly in Bangladesh, India, Hong Kong, Singapore and Malaysia.

9 8 CSR Research in Emerging Economies Extent and level of CSR and their determinants Like most of the earlier descriptive CSR studies of developed economies (Brockhoff, 1979; Epstein, Flamholtz, & McDonough, 1976; Ernst & Ernst, ; Grojer & Stark, 1977; Schreuder, 1979; Trotman, 1979) earlier CSR studies of emerging economies ( such as, Singh & Ahuja, 1983; Andrew et al, 1989) were mainly descriptive and quantitative. Most of these studies used content analysis method to measure the volume and extent of CSR. Singh and Ahuja s study (1983) was perhaps the earliest Indian study in emerging economies. Like most of the previous descriptive studies on developed economies Singh & Ahuja also analysed content of annual reports and provided descriptive statistics regarding the extent of CSR and percentage of companies making social disclosures. They studied 40 annual reports of public sector companies for the years 1975/76. Their study developed a disclosure index consisting of 33 social disclosure items and indicated that approximately 40% of the companies disclosed more than 30% of the information included in the disclosure index. They also found that age and size (measured by net sales) were not significantly associated with CSR, but size measured by total assets had a positive impact on CSR. Profitability had a mixed impact on CSR and social disclosures were found to be highly related to the nature of the industry. Significantly, Singh and Ahuja (1983) did not study private sector practices, which are now making an important contribution to the Indian economy. With the increasing privatisation and globalisation especially in emerging economies, a study of the private sector CSR would certainly provide useful insights on CSR practices in India. In addition, the study of Singh and Ahuja (1983) relates to the Indian CSR practices of twenty-five years ago. More recent

10 9 studies are needed to shed light on current CSR practices in the South Asian countries in general and India in particular. Study results regarding the determinants of CSR in emerging economies are not conclusive. A recent study (Gao et al., 2005) from the Asian region (Hong Kong) differed from Singh & Ahuja s study and also from an earlier Hong Kong study by Lynn (1992) in that it found positive association between company size measured by sales and level of CSR. Gao et al (2005) also found that industrial affiliation is an important determinant of CSR level. Their study confirmed the earlier findings by Lynn (1992) that utility companies disclosed more than the property and banking firms. From the Middle Eastern perspective Naser, Al-Hussaini, Al-Kwari & Nuseibeh (2006) examined the extent and the determinants of CSR from the Qatari perspective. Using a disclosure index approach they found that CSR in Qatar is associated with firm size measured by market capitalisation, business risk measured by leverage and corporate growth (p.1). They also found that average disclosure score was only 33% out of a possible 34 disclosure items. Maali, Casson & Napier (2006) carried out a content analysis of annual reports (related to the year 2000) of 29 Islamic banks in 16 countries (mostly in the Middle East). They found that average level of disclosure was only 13.3 percent and average amount of disclosure was only 25 sentences. They concluded that both the level and amount of disclosure were far less than the expectations of the Islamic community. In East Asia, Andrew et al (1989) carried out a survey of 119 companies based in Malaysia and Singapore using annual reports related to the year ending December, 1983.

11 10 They found that only 31 (26 %) companies made social disclosures and that the main category of disclosures was related to human resources. Their study also found that larger foreign-owned companies disclosed more social information than smaller domestic companies. In their opinion, the reason could be the greater visibility of larger companies and their close monitoring by the host government. So by employing a CSR strategy these companies can, they argue, overcome the criticism of concentrating on the exploitation of resources of the emerging economies. More recently, from the Malaysian perspective Haniffa & Cook (2005) examined the association between CSR and culture and corporate governance. They used content analysis method to measure the extent and level of CSR. Culture was measured by directors and shareholders ethnicity whereas corporate governance was measured by proportion of non-executive directors in the board, chairman with multiple directorships and proportion of foreign shareholders. Their results indicate a significant relationship between corporate social disclosure and boards dominated by Malay directors, boards dominated by executive directors, chair with multiple directorships and foreign share ownership (p.391). There are a number of empirical studies available on CSR practices in Bangladesh. The study of Belal (1997) on green reporting practices in Bangladesh observed that out of 50 companies only 3 (6%) companies made environmental disclosures. The data year of this study was 1994/95. A later study by Belal (2000) found that although 27 (90%) companies out of 30 studied made environmental disclosures, the percentage of companies disclosing environmental information comes down to 20 only if disclosure related to expenditure on energy usage is excluded. The study also noted that increasing number of companies is making environmental disclosure compared to number of companies reported in the earlier study. This increasing trend was also confirmed in

12 11 another study by Imam (1999) which shows that the number of companies disclosing environmental information increased from only four in to seven in out of 34 companies surveyed. None of these studies explored why number of disclosers increased, which could have provided some useful insights into the environmental disclosure practices in Bangladesh. Imam (2000) conducted another survey of CSR practices in Bangladesh. The study reported that all companies included in the survey (40 in total) made some form of human resource disclosure, 25% community, 22.5% environmental and 10% consumer disclosures. The study concluded that the disclosure level was very poor and inadequate. One of the major limitations of this study is that it failed to locate social disclosures in Bangladesh in a broader socio-political and economic context. However, a more recent study by Belal (2001) described social reporting practices in Bangladesh by exploring their socio-economic contexts. The study goes someway towards explaining why a particular social disclosure category is more prevalent than others in Bangladesh. For example, it notes that the reason for highest number of disclosures in the employee category is probably the presence of a unionised labour force and the emphasis on workers welfare in the current Labour Policy of Bangladesh. The most recent study available from the context of Bangladesh is that of Rashid & Lodh (2008) which further extends the above body of research on Bangladeshi CSR and adds a new dimension to the existing research on Bangladesh by examining the influence of ownership structure and board composition (measured by the percentage of independent directors) on CSR. Their findings suggest a smaller influence of ownership structure but a significant influence of board composition. On the basis of these findings Rashid and Lodh (2008) recommended mandatory CSR in Bangladesh.

13 12 Many other researchers continued exploring the extent of disclosure and number of companies producing CSR with the main aim of describing CSR practices in different emerging economies viz., Fiji (Lodhia, 2000), Korea (Choi, 1998, 1999), South Africa (de Villiers, 1999; Savage, 1994), Nigeria (Disu & Gray, 1998), and Uganda (Kisenyi & Gray, 1998). Many of these studies used some form of content analysis, developed in Western economies, to examine the level of social disclosures in emerging economies. Yet, there is a real danger in using Western type social reporting methods and techniques in the context of an emerging economy (Kamla, 2007). There is also a danger of using similar CSR categories often established in CSR literature through content analysis of annual reports of corporations in developed economies while describing CSR practices in emerging economies. Many studies categorized under content analysis group (please see Table 1) followed CSR categorisation either developed by Ernst and Ernst ( ) or Gray, Owen & Maunders (1987) in their studies. It may seem that the broad categories of CSR 6 practices are similar, but there is a great deal of variation between economies in the issues recorded within each category. For example, while value-added statements within employee disclosure are an important issue of disclosure in Bangladesh, it is not common in the UK or even in most of the Asian economies (Kuasirikun and Sherer, 2004). There is also a concern that a researcher can miss a particular type of disclosure which is typical to an emerging economy context if strictly focused on categorisation developed in regard to developed economies. More specifically, CSR issues in an emerging economy often need to be carefully identified or explored considering its own socio-cultural and political context. There is, indeed, a cautionary note to explore CSR more within socio-cultural and political context prevailing in emerging economies (Gray & Kouhy, 1993). At present, however, it seems that content analysis based studies in emerging economies have a tendency of merely explaining reasons behind companies undertaking CSR through 6 For example, Community, Customer, Employee and Environmental disclosure categories.

14 13 established categories rather than attempting to explore CSR issues from a contextual analysis of these disclosures. More recently, following the tradition of content analysis, a number of studies (Kamla, 2007; Kuasirikun & Sherer, 2004; Williams, 1999) have started to analyse CSR emphasising on socio-economic and political context of emerging economies rather than simply counting disclosures and describing the practice. For instance, Williams (1999) using a bourgeois political economy perspective 7 in his study of seven Asia-Pacific nations (Australia, Singapore, Malaysia, the Philippines, Indonesia, Thailand and Hong Kong) found that two cultural factors - uncertainty avoidance 8 and masculinity 9 and political and social systems were significant determinants of voluntary CSR across the countries studied. He argues that the socio-political and economic systems of a country influence corporate perceptions regarding what to disclose. They do so both by framing social expectations as well as the desire to avoid the threat of legislation, thus, they shape the rules of the game. Williams claims that this is consistent with bourgeois political economy theory, although in a review of the article, Gray (2000) appears to be unconvinced of the possibility that such theory can be empirically tested. Although the study introduced countries such as the Philippines, Thailand and Indonesia to the CSR literature for the first time it could have provided more insights about the CSR practices in these countries by providing extracts from corporate reports. Another notable international 7 As opposed to a classical political economy perspective, the bourgeois perspective does not consider the structural conflict and class struggle rather assume those as given. It considers the interaction of groups in a pluralistic world, for example, companies and stakeholder groups such as investors, employees, consumers and pressure groups (Gray, Owen, & Adams, 1996). 8 It is the degree to which society is uncomfortable with ambiguity and an uncertain future (Choi, Frost, & Meek, 2002, p.45). 9 It refers to the extent to which gender roles are differentiated and performance and visible achievement (traditional masculine values) are emphasised over relationships and caring (traditional feminine values) (Choi et al., 2002, p.45).

15 14 study involving an emerging economy (Xiao et al., 2005) compared the CSR practices between a developed economy (UK) and an emerging economy (Hong Kong). Unsurprisingly, it found that Hong Kong companies level of CSR was lower than that of UK companies. Xiao et al attributed the reasons for this to the different level of social and economic development in the respective countries. A further study by Kuasirikun and Sherer (2004) involved an analysis of 63 annual reports (related to the year 1993) and 84 annual reports (related to the year 1999) of Thai listed companies. Using content analysis procedures, in addition to measuring the extent of disclosures, the study made an attempt to examine the quality of disclosures. The study used a critical perspective (Gallhofer & Haslam, 1997), taking account of the specific Thai context and concluded that: various aspects of the Thai accounting disclosure that are analysed are disabling, and more generally that Thai accounting practices explored fall short of their potential to function as enabling communication. (p.629) Kamla (2007) provided an account of CSR practices in the Arab Middle East (AME) region namely: Saudi Arabia, Kuwait, Qatar, United Arab Emirates (UAE), Syria, Bahrain, Oman, Jordan and Egypt adopting content analysis method. By analysing 68 annual reports from nine AME countries, she examined volume, quality and nature of social reporting. She concluded that the quality of social reporting found in these countries is similar to the practice in the UK. Although major issues covered in social reporting by companies in AME countries are consistent to what is traditionally covered as content of CSR in European countries, mainly in the UK, differences among themes included under major components of social reporting are country specific. To her, while such similarities indicate dominance of western accounting profession that was developed in these economies within their colonial past, differences in themes reflect each economy s own

16 15 social priorities. Taking post-colonial theoretical perspective, mostly following Said (1978), she, therefore, suggests to consider particular history and culture of a country in social accounting research and also to adopt a more critical approach. As research on CSR in emerging economies has progressed, studies using case methods and longitudinal studies applying more rigorous content analysis techniques have been reported (see for example, Hegde et al., 1997; Tsang, 1998). In exploring corporate motivations for CSR some studies also used theoretical explanations underpinning the reporting initiatives (see for example, Newson & Deegan, 2002; Rahaman et al., 2004; Tsang, 1998; Williams & Pei, 1999). Batra (1996) proposed a CSR framework for Indian companies based on a longitudinal analysis of CSR practices in the Steel Authority of India Limited (SAIL) during to The author observed inconsistencies in the Indian CSR practices arising from lack of uniformity in presentation and also due to lack of conventions, postulates and axioms to guide social accountants in drafting accounts (P.43). In view of inconsistency of social reporting practices in India the study perceived the need for a suitable social reporting framework. Hegde et al (1997) conducted another case study based on the 1993 annual report of the Steel Authority of India Limited (SAIL) which is also a public sector company. They noted that SAIL prepared a social balance sheet and also three separate income statements showing costs and benefits to three groups of stakeholders, namely, employees, community and the general public. The study provides some explanation for undertaking CSR in SAIL: The public sector undertaking, SAIL, espouses social gains rather than profit maximisation, and in conformity with this objective, publishes social balance sheets and income statements, value added statements, and human resource accounts.. Positive social disclosures act as favourable public relations for the government. (p.165)

17 16 Using content analysis techniques, Tsang (1998) conducted a longitudinal study of CSR in Singapore over a 10-year period from 1986 to He covered 33 listed companies and found that 17 (52%) made social disclosures. This study also confirmed the dominance of employee related disclosures, which was followed by community disclosures. The study observed a steady increase in the amount of social disclosure during the late 1980s and then a stable pattern since The possible explanation for such a pattern of disclosure could be related to the socio-economic context of that time in Singapore. Since the mid- 1980s the Singapore Government has emphasised the need for development of its manpower. Moreover, because of the scarcity of natural resources the Government has been launching campaigns for the conservation of energy and water. A cultural ministry was set up to take care of cultural activities which required corporate sponsorships. All these factors contributed to increased social disclosures until Since 1993 the level of social disclosures stabilised and this is due to the voluntary nature of these disclosures. The author suggested that it could be that after making a certain level of disclosures the companies were not motivated to go further. Tsang used legitimacy theory to interpret corporate disclosure strategy in the case of two tobacco companies which significantly increased their social disclosure at a time when the government banned tobacco advertisement in Singapore and widened the restriction on smoking in public places. Williams & Pei (1999) undertook a comparative study of corporate social disclosures in four Asia-Pacific nations (Australia, Singapore, Malaysia and Hong Kong). They compared disclosures on the web sites with those in the annual reports and found that Australian and Singaporean companies made significantly more disclosures on their websites, compared to annual reports, while their counterparts in Malaysia and Hong Kong did not show any significant difference. The authors suggested several reasons to

18 17 explain why Australian and Singaporean companies disclose more on their websites. In particular, they suggested that it could be due to the large amount of investment by these companies in internet technologies as they consider it to be an effective mechanism for disseminating information. Moreover, institutional bodies in these economies may be placing greater emphasis on electronic business and communication, compared to Malaysia and Hong Kong. In another international study of 150 large Australian, Singaporean and South Korean multinational corporations Newson and Deegan (2002) examined the notion that large multinational corporations respond to global expectations rather than simply meeting the information needs of peoples in their home countries. However, results of the study found minimal association between global expectations and the disclosure policies of large multinationals. Informed by legitimacy theory, one of the explanations offered for minimal disclosure is that companies could be focusing on their strengths (for example, employee performance and profile) to deflect attention from other global concerns which is consistent with legitimising strategies suggested by Lindblom (1994). In line with the above CSR studies in emerging economies which used various theoretical perspectives including legitimacy theory a South African study (de Villiers & van Staden, 2006) argued that legitimacy objectives can be achieved by decreasing the level of environmental reporting whereas most of the previous legitimacy based CSR studies contended that legitimacy would be achieved either by maintaining or increasing CSR levels. They undertook a comprehensive content analysis of 140 annual reports over a nine year period

19 18 Managerial Perceptions Studies Although previous studies examined social and environmental disclosures (via content analysis) to develop an understanding of CSR practices in emerging economies a limited number of studies have also probed the managerial perceptions towards CSR more directly via questionnaires and interviews which are now discussed. One of the earliest studies which probed managerial perceptions of corporate social performance and reporting from the Malaysian context was that of Teoh and Thong (1984). They conducted a personal interview questionnaire survey of chief executive officers of 100 companies operating in Malaysia and examined three aspects of social performance, namely, social awareness, social involvement and social reporting. They found that the three most important factors behind social awareness were top management philosophy, legislation, and alignment with the parent company. In the areas of social involvement and social reporting they found that companies are more active in reporting in the areas of human resources and product/service to customers, compared to the community involvement and physical environment a finding which is similar to that of Andrew et al (1989). The reason for emphasis on employees and product/services could be their direct association with profitability, whereas community involvement is only remotely related to profitability. The slightly higher marginal score for physical environment could be attributed to legislative factors such as the Environmental Quality Act which, inter alia, calls for improvement in corporate environmental performance. They noted that the level of social involvement is higher than the level of social reporting. The explanations offered for not disclosing included the desire to keep the annual report as brief as possible and the intention of not telling others what the company is doing. This study also indicated that large foreign owned multinationals were likely to make more

20 19 disclosures in an emerging economy. While the study offers direct insight into motivations behind Malaysian CSR practices via personal interviews it does not offer any rigorous explicit theoretical interpretation of data with widely used CSR theories such as the stakeholder, the legitimacy or the political economy explanations 10. In another exploration of senior management perceptions of social and environmental reporting in Ghana, Rahaman (2000) conducted 28 interviews in 12 Ghanaian companies. The study revealed that most of the companies in Ghana make very little or no disclosure on environmental issues. However, few corporations, including one public sector corporation, Volta River Authority, made some qualitative disclosures. The principal motivations behind such disclosure were pressure from international lending agencies (such as the World Bank and the IMF), management philosophy, government regulation and the desire to achieve listing on the international stock markets. He concluded the study noting that the managerial perceptions of CSR in Ghana were not significantly different from the developed economies, although it can be noted that the motivating factor related to pressure from international agencies, such as the World Bank, is more relevant to the emerging economy context. In a later study, Rahman et al (2004) explored this issue further. Rahman et al (2004) used the legitimacy and institutional theory perspectives and have explored the motivations for CSR in the Volta River Authority. The paper adopted a case 10 Briefly, each of these theories has a distinct point of reference, although there are overlaps and commonalities between them. Political economy theory attempts to interpret social disclosures by relating these disclosures to the social, political and economic context in which they take place. While both legitimacy and stakeholder theories are derived from the broader political economy perspective, legitimacy theory argues that social disclosure could have been employed by the organisations to legitimise their relationship with the society. On the other hand, by changing the level of resolution, stakeholder theory argues that there are different stakeholder groups within society such as investors, employees, customers, suppliers, community and the general public. Corporations might design their CSR strategies with a view to managing their relationship with powerful economically dominant stakeholders.

21 20 study approach and featured interviews with the top management of the organisation and also other relevant government departments. The results of the study indicate that the main driving force behind CSR practices in the organisation is external pressure from international lending institutions such as the World Bank. The study shows how the corporate motivations in emerging economies could be somewhat different from corporate motivations in the developed economies. It indicates that, unlike consumer pressure or pressure from NGOs or civil society groups, the driving force behind CSR in organisations in emerging economies, which depend on foreign loans and aid, could be the external pressure from powerful international lending institutions. It points the way to an institutional theory account (DiMaggio & Powell, 1983). Following the current wave of qualitative interview based works in the CSR literature Belal and Owen (2007) recently examined managerial perceptions of Bangladeshi companies via 23 semi-structured interviews. The findings suggest that the main motivation behind Bangladeshi CSR comes from a desire to manage powerful stakeholder groups. It appears that the ultimate driving force behind emerging CSR agenda in Bangladesh is coming from outside forces via parent company instructions and pressure from international buyers. Islam and Deegan (2008) very recently re-examined motivation behind social reporting in Bangladesh. They used both interview and content analysis method to collect data and considered legitimacy theory as framework of the study. They, thus, studied content of annual reports of a particular organisation, Bangladesh Garments Manufacturer and Exports Association (BGMEA), for 19 years and interviewed some key personnel working in this organisation. They concluded that BGMEA faced pressure from particular

22 21 stakeholders (such as international buyers) since the early 1990s in terms of their social performance which shaped their social policy and disclosure. This echoes the findings of Belal & Owen (2007). They also claimed that such pressure in turns drives social policy and disclosure in the garment industry. However, BGMEA in Bangladesh is only an association which represents the export oriented garment companies. BGMEA is not a garment company itself. Therefore, from this study, it is still far from clear to what extent pressure perceived by BGMEA equally drives social disclosure and social policy of individual garment companies other than only its own disclosure and policy. Perhaps, BGMEA as an industrial association is a powerful stakeholder to all garment companies and therefore has also influenced social policy and disclosure at this individual company level. This interesting link is not explored in this study. Another study Jaggi and Zhao (1996) examined the perceptions of managers and accountants of the environmental reporting practices in Hong Kong. It is found that although managers were concerned about the protection of environment in Hong Kong such concern was not reflected via voluntary environmental disclosures. Accountants also did not show much enthusiasm for environmental disclosures. Stakeholders /Users Perceptions Studies Although many of the above studies concentrated on managerial perceptions only, a Jordanian study by Naser and Baker (1999) explored the perceptions of other relevant user groups such as public accountants, academics and government officials in addition to finance managers. The study used a questionnaire survey method with a total sample size of 206 from all four groups of users. In an exploration of why most of the companies in Jordan do not make social disclosures the study found that the most important reason is

23 the lack of mandatory requirements. The authors suggested that without legal and professional requirements Jordanian companies would be reluctant to disclose voluntarily. The respondent groups in this study were divided in their perceptions regarding managerial motivations behind CSR. Whilst financial managers and public accountants believed that companies should accept wider social responsibilities to the extent it is necessary for the viability of the business, academics and government officials thought that business should be responsible to a wider audience. The authors recommended CSR for Jordan because of its relevance for the country s economic, social and political problems. 22 Al-khater and Naser (2003) provided another interesting perspective of CSR in Arab speaking economies. Their study examined four stakeholder/user groups (viz. accountants, external auditors, academicians and bank officers) perceptions of CSR from the context of Qatar. Their findings indicated a demand for legally required social and environmental disclosures. The respondents believed that such disclosures would help in the betterment of Qatari society and environment. The findings and conclusions of the study are in line with those of Naser and Baker (1999) suggesting some kind of consensus in favour of CSR in the Arab region. Two other studies (Kuasirikun, 2005; Lodhia, 2003) have examined the perceptions of accounting and accounting related professionals towards social and environmental accounting. Using semi-structured interviews Lodhia (2003) examined the potential role of accountants in the development of environmental accounting in Fiji. This study noted that the accountants were less motivated to engage with environmental accounting and reporting activities mainly due to a lack of competence on their own part and the voluntary nature of these disclosures. These findings are largely consistent with earlier

24 studies conducted in the UK (Bebbington, Gray, Thomson, & Walters, 1994) and Australia (Deegan, Geddes, & Staunton, 1995). However, on the basis of a questionnaire survey and a series of interviews the study by Kuasirikun (2005) suggested an overall positive attitude towards social and environmental accounting amongst the accountants, auditors, and accounting-related professionals in Thailand (p.1053). The author suggested that this transformation was due to changes in the nature of the Thai accounting profession which, she believed, would help in the development and implementation of social and environmental accounting in Thailand. 23 Discussion and conclusion Several observations can be made based on the above findings on CSR in emerging economies. Most of the previous studies available from the context of emerging economies used content analysis method as indicated by Table 1. These studies are descriptive. They measured the extent and volume of disclosures contained within the annual reports. However, concern has been raised in the CSR literature that exclusive focus on annual reports might not capture all social and environmental disclosures (Bebbington & Unerman, 2008; Guthrie, Cuganesan, & Ward, 2008). It is argued that stand alone and/or internet reporting (among other forms of reporting) has now become much more common in practice (Bebbington & Unerman, 2008, p.2). We argue that while this observation might be valid from the context of Western developed economies it may not hold in the context of emerging economies given the differences in the level of socio-economic (Xiao et al., 2005) and technological development (Williams & Pei, 1999) between these two groups of countries. With the exception of Williams & Pei (1999) all other content

25 analysis based studies, reviewed in this paper, focused on annual reports. As shown in the previous section of this review even in the case of Williams & Pei s study out of the three emerging countries examined in two countries there were no significant differences between website and annual report disclosures. It must be noted that Williams & Pei s empirical findings are dated now. More research is needed to scrutinise and challenge the observation made above with regard to different CSR media. Using the questionnaire and content analysis method future researchers might pursue the following lines of enquiry or research questions (RQ): RQ 1 What are the different media used for CSR in emerging economies? What is the level and extent of disclosure in each of this media? Are there any significant differences between them? 24 Subject to certain exceptions, content analysis based studies reviewed in this paper provide little emphasis on the contextual issues of emerging economies. In other words, it is still not clear whether CSR agenda in emerging economies is developed as a western fashion or an agenda driven by specific concerns of emerging economies. These studies provide us with little explanation regarding motivations for CSR although some later studies have started to provide limited insights in this regard with legitimacy (Newson & Deegan, 2002; Tsang, 1998) and political economy theory explanations (Williams, 1999) being advanced. In our opinion, CSR research in emerging economies is generally under theorised. Out of the 41 studies reviewed in this paper only a handful of recent studies used specific theories to interpret the findings. Legitimacy theory appears to be the most popular. One challenge for the future researchers would be to engage in serious theorisation of CSR in an emerging economy context given the fact that drivers and motivations of CSR could be different.

26 25 Of late, emerging economy researchers have started to probe managerial motivations directly via in depth interviews with the corporate managers and have found interesting explanations such as pressure of international financial institutions (e.g. World Bank) (Rahaman et al., 2004) and also pressures from international buyers (Belal & Owen, 2007; Islam & Deegan, 2008) and parent companies (Belal & Owen, 2007), which had not been identified in the earlier CSR literature. It appears to be that CSR agenda in emerging economies is mainly driven by the outside forces noted above. There is real concern that such imposition from outside (ignoring the local context) will only encourage passive compliance without any effective change on the ground in terms of greater corporate accountability and transparency (Belal & Owen, 2007). In the process of advancing the emerging agenda of CSR policy makers and researchers in emerging economies should immediately address this issue. More research is needed to explore whether CSR in emerging economies is becoming Western fashion (an imposition from West) or an agenda tailored to the ground realities of emerging economies. In other words, it is necessary to examine the institutional factors driving the CSR agenda in emerging economies. In this regard, from the institutional perspective, a research question (RQ) to be pursued would be (possibly using a combination of questionnaire and interview method): RQ 2 What institutional factors shape or constrain the emergence of CSR agenda in emerging economies? Recent calls for engagement based research by Gray (2002) require exploration of managerial motivations via in depth interviews with corporate managers. Such research is scarce from the developed economies in general and emerging economies in particular. There is scope for further contribution in this regard particularly via rigorous case studies illustrating the why and how of social accounting processes in organisations. Recently,

27 26 few researchers have advanced this line of enquiry via intensive field work based case studies, prominent examples of which include UK s fair trade organisation Traidcraft (Dey, 2007; Gray, Dey, Owen, Evans, & Zadek, 1997) Landcare Research New Zealand (Bebbington & Gray, 2001), Irish Agency for Personal Service Overseas (APSO) (O'Dwyer, 2005) and Ghana s Volta River Authority (Rahaman et al., 2004). None of these case studies were conducted in the context of commercial organisations within emerging economies. It is the social, ethical and environmental accounting practices of the large commercial organisations (such as Shell) which are of main concern to the social accounting researchers not only because they are large multinational but also for social and environmental concerns that arise from their operation in an emerging economy through their subsidiaries. O'Dwyer (2005) notes that there is an urgent need for the examination of social accounting practices from the perspective of the corporate world. In this regard, intensive case study method may be applied to pursue the following type of compelling research question: RQ 3 Why and how is social accounting being undertaken in large commercial organisations (particularly in emerging economies)? Most of the CSR research in emerging economies has focused on the managerial perspective of CSR. Very few studies have explored stakeholder perceptions of CSR. Given the importance of stakeholder engagement in contemporary CSR it is also necessary to explore the story of stakeholders - who are those stakeholders and what are their perceptions regarding CSR within emerging economies perspective. Civil society and NGOs in emerging economies might not be strong enough, as compared to their counter parts in the West, to be able to bring positive influence to bear on the corporate agenda in CSR in those countries (Belal & Owen, 2007). Using questionnaire and