Determinants Of Corporate Social Responsibility (csr) Disclosure In Developed And Developing Countries

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Determinants of Corporate Social Responsibility

(CSR) Disclosure in Developed and Developing

Countries: A Literature Review

Waris Ali,

*Jedrzej George Frynas

and Zeeshan Mahmood

Business Administration, Bahauddin Zakariya University Sub-Campus Sahiwal, Farid Town, Sahiwal, Pakistan

Middlesex University Business School, London, United Kingdom

Bahauddin Zakariya University, Department of Commerce, Multan, Pakistan

ABSTRACT

Based on a survey and content analysis of 76 empirical research articles, this article reviews

the factors driving Corporate Social Responsibility (CSR) disclosure in both developed and

developing countries. We ﬁnd that ﬁrm characteristics such as company size, industry sec-

tor, proﬁtability, and corporate governance mechanisms predominantly appear to drive the

CSR reporting agenda. Furthermore, political, social, and cultural factors inﬂuence the

CSR disclosure agenda. We ﬁnd crucial differences between the determinants of CSR disclo-

sure in developed and developing countries. In developed countries, the concerns of speciﬁc

stakeholders, for example, regulators, shareholders, creditors, investors, environmentalists

and the media are considered very important in disclosing CSR information. In developing

countries, CSR reporting is more heavily inﬂuenced by the external forces/powerful stake-

holders such as international buyers, foreign investors, international media and international

regulatory bodies (e.g. the World Bank). Furthermore, in contrast to developed countries,

ﬁrms in developing countries perceive relatively little pressure from the public with regards

Received 28 June 2016; revised 27 November 2016; accepted 29 November 2016

Keywords: Corporate Social Responsibility; determinants of CSR disclosure; CSR reporting; sustainability reporting; developed

countries; developing countries

Introduction

THE PUBLICATION OF SOCIAL AND ENVIRONMENTAL INFORMATION BY COMPANIES HAS ATTRACTED CONSIDERABLE

attention from the research community. Research on social and environmental disclosure can be traced

back to the early 1980s (most notably, Wiseman, 1982); however the research community’s interest in

disclosure substantially increased from the late 1980s (Belkaoui & Karpik, 1989; Guthrie & Parker, 1989;

Patten, 1991; Roberts, 1992; Gray et al., 1995; Deegan & Gordon, 1996; Hackston & Milne, 1996; Neu et al.,

*Correspondence to: Waris Ali, Bahauddin Zakariya University Sub-Campus Sahiwal, Business Administration, Farid Town, Sahiwal, Pakistan 57000.

E-mail: waris.ali@bzu.edu.pk

Corporate Social Responsibility and Environmental Management

Corp. Soc. Responsib. Environ. Mgmt. 24, 273–294 (2017)

Published online 6 March 2017 in Wiley Online Library

(wileyonlinelibrary.com) DOI: 10.1002/csr.1410

15353966, 2017, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/csr.1410 by Cochrane Netherlands, Wiley Online Library on [13/02/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License

1998), with important contributions published in this journal over two decades (Palmer & van der Vorst, 1997;

Morhardt et al., 2002; Sierra-García et al., 2015; Ortas et al., 2015). Several reviews have collated the existing corpo-

rate social responsibility (CSR) disclosure literature and posed various important research questions (Gray et al.,

1995; Mathews, 1997; Gray, 2002; Parker, 2005; Belal & Momin, 2009; Parker, 2011; Fifka, 2013; Parker, 2014).

However, these reviews have been limited in several respects. First, they have paid more attention to environmental

issues than to other social issues in their studies (Mathews, 1997; Gray, 2002; Parker, 2005, 2011, 2014). Second,

researchers paid more attention to CSR disclosure in developed countries compared with the developing countries

(refer to the meta-analysis of 200 studies by Fifka, 2013). Finally, previous reviews predominantly focused on

highlighting the nature of reporting, the context of the study, the measurement of CSR reporting, the type of theory

used and, only to some extent, the determinants of CSR reporting (Gray et al., 1995; Gray 2002; Mathews, 1997;

Parker, 2005; Belal & Momin, 2009; Fifka, 2013). The present research particularly focuses on the

determinants/motivations for CSR disclosure, encompassing both social and environmental disclosure in both

developed and developing countries.

Consequently, this paper aims to determine the factors driving the CSR disclosure agenda in both developed and

developing countries by reviewing the existing research literature and to highlight avenues for future research. The

review is based on a survey and content analysis of 76 empirical research papers. Given our interest in actual –

rather than hypothesized –disclosure, the survey focused solely on empirical (rather than conceptual)

papers/articles examining the determinants of CSR disclosure.

This paper is organized as follows. The next section discusses the methodology of this research. The main section

reviews the CSR disclosure literature. The ﬁnal section provides the conclusion and future research directions.

Methodology

To identify the relevant research papers on the determinants of CSR disclosures published in academic journals, we

conducted systematic searches in Google Scholar using different keywords. The keywords used and the number of

articles accessed are listed in Table 1.

Previous literature review studies have incorporated different classiﬁcation frameworks to present their literature.

For example, Belal and Momin (2009) classiﬁed CSR disclosure studies into three categories: (1) extent and level of

CSR disclosure and their determinants, (2) managerial perceptions studies, (3) and other stakeholders’perceptions

studies. Mathews (1997) offered a chronological categorization to structure the existing CSR disclosure literature.

Gray et al. (1995) structured the extant literature into (1) the subject areas of disclosures and (2) the volume of disclo-

sures. Most pertinent to our study, Adams (2002) also reviewed studies on the determinants of CSR disclosure and

he divided the literature into three groups: (1) company characteristics, (2) general contextual factors, and (3) internal

contextual factors. Adams’s (2002) classiﬁcation framework will serve as a guide for this research. To advance our

Keywords Articles Accessed

Determinants of CSR disclosures 44

Motivations of CSR disclosures 38

Determinants of social disclosures 32

Motivations of social disclosures 30

Determinant of environmental disclosures 20

Motivations for environmental disclosures 20

Total articles 184

Overlapping articles 97

Remaining articles 87

Non-available articles 11

Total articles accessed 76

Table 1. Sample of articles

274 W. Ali et al.

DOI: 10.1002/csr

understanding of the determinants of CSR disclosure, we categorized the studies into those on developed countries

(having GDP per capita income above $12 276) and developing countries (World Bank, 2012).

CSR Disclosure in Developed Countries

CSR disclosure studies in developed countries predominantly focused on North America (Canada, United States),

Australia, and North-Western Europe (e.g. UK, Denmark, Finland, and France) and paid less attention to Southern

Europe (e.g. Italy and Spain) and Eastern Europe (e.g. Poland and Slovenia), which falls in line with the results in

Fifka’s (2013) meta study.

CSR disclosure studies conducted in developed countries predominantly used the content analysis research

method in determining the factors inﬂuencing CSR disclosure (Table 2), again in line with the Fifka (2013) study.

Furthermore, these studies largely examined the determinants of environmental disclosure or CSR disclosure,

using quantitative (e.g. extent or level) measures (Table 2), and paid little attention to other dimensions of CSR dis-

closure including human resources, community involvement, and products and consumer disclosure. The

inferences drawn from the review of existing CSR disclosure studies in developed countries (Table 2) accord with

the previous observation that researchers have paid more attention to environmental disclosure issues (Mathews,

1997; Gray, 2002; Parker, 2005, 2011). Most of the reviewed studies used a speciﬁc theory (or a combination of the-

ories) to explain the determinants/motivations of CSR disclosure (Table 2), with legitimacy theory being the domi-

nant theoretical lens.

The factors examined in the social and environmental disclosure studies conducted in developed countries

mainly fall into the categories of company characteristics and general contextual factors (Table 2). Below we discuss

these factors in turn.

Company Characteristics

In this category, the most frequently examined determinants are company size and industry sector (Table 2). The

studies in developed countries are coherent and have found that company size has a signiﬁcant positive relationship

with social and environmental disclosure (Brammer & Pavelin, 2008; Reverte, 2009; Chih et al., 2010; Hou &

Reber, 2011; Bouten et al., 2011). Similar to company size, the studies in developed countries have found a strong

relationship between the industry sector and disclosure (Cormier et al., 2005; Brammer & Pavelin, 2008; Reverte,

2009; Tagesson et al., 2009; Hou & Reber, 2011; Bouten et al., 2011). The third most commonly examined

determinant of disclosure is corporate ﬁnancial performance, where some of the studies found a signiﬁcant positive

relationship (Patten, 1992; Cormier & Magnan, 1999; Tagesson et al., 2009), while some found an insigniﬁcant

relationship (Patten, 1991; Hackston & Milne, 1996; Cormier et al., 2005; Reverte, 2009; Chih et al., 2010). In

addition to this, other company characteristics, for example dependence on capital markets (Cormier & Magnan,

2003), media social visibility (Nikolaeva & Bicho, 2011), and age of assets (Cormier et al., 2005) were found to

positively inﬂuence disclosure. However, the results on systematic risk characteristics were found to be inconsistent

in developed countries as some studies found a signiﬁcant positive relationship (Belkaoui & Karpik, 1989; Cormier

et al., 2005), while some showed a signiﬁcant negative relationship (Roberts, 1992; Toms, 2002) with CSR

disclosure.

General Contextual Factors

Disclosure studies in developed countries examined a range of external factors inﬂuencing CSR disclosure (Table 2).

Studies have shown that differences in national contextual factors resulted in the variation in CSR practices in gen-

eral and CSR disclosure, in particular (Adams et al., 1998; Laan Smith et al., 2005; Matten & Moon, 2008; Jackson &

Apostolakou, 2010). Most notably, comparative institutional studies have revealed substantial differences between

the United States and Europe in terms of the effects of the national institutional context on CSR (Doh & Guay,

2006; Matten & Moon, 2008; Sison, 2009), while others also found signiﬁcant institutional variation between Eu-

ropean countries (Schlierer et al., 2012; Fassin et al., 2015; Knudsen et al., 2015). Laan Smith et al. (2005) conducted a

comparative CSR disclosure study of Norway/Denmark and the United States and found that contextual factors (i.e.,

ownership structures, governance systems, and cultural systems) resulted in a signiﬁcant variation in CSR disclosure

275Determinants of CSR Disclosure

DOI: 10.1002/csr

(Continues)

Authors Country Theoretical

perspective

Determinants CSR Disclosure Measurement

Company

Characteristic

External

Contextual

Internal

Contextual

ED* HRD* PCD* CID* TD* Qn* Ql*

Studies used content analysis method

Wiseman (1982) USA N/A* Environmental

performance (0)

✓✓

Belkaoui and

Karpik (1989)

USA AT* Size (+), systematic

risk (+), social

performance (+)

Political visibility (+)

proxied by size

and systematic risk,

leverage ()

✓✓

Guthrie and

Parker (1989)

Australia LT* External pressure (+) ✓✓

Patten (1991) USA LT Size (+), industry

(+), ﬁnancial

performance (0)

Public pressure (+)

proxied by size

and industry

✓✓

Roberts (1992) USA ST* Financial

performance (+),

systematic risk ()

Leverage (+) ✓✓

Gray et al. (1995) UK LT, ST, PE* Size (+) Political development

(+)

✓✓

Deegan and

Gordon (1996)

Australia LT Size (+), industry (+) Environmental

concerns (+) proxied

by membership of

environmental

groups

✓✓

Hackston and

Milne (1996)

New Zealand LT Size (+), industry (+),

overseas listing (+),

ﬁnancial

performance (0)

✓✓

Adams et al.

(1998)

6 European

Countries

LT Size (+), Industry (+) Country (+) ✓✓

✓✓

Adams and

Harte (1998)

UK PE Country (+)

longitudinal study

Management

attitude (+)

✓✓

Neu et al. (1998) Canada LT Shareholder (+),

creditors (0),

environmentalists

✓✓

276 W. Ali et al.

DOI: 10.1002/csr

Authors Country Theoretical

perspective

Determinants CSR Disclosure Measurement

Company

Characteristic

External

Contextual

Internal

Contextual

ED* HRD* PCD* CID* TD* Qn* Ql*

(+), regulators (+),

media concerns ()

Cormier and

Magnan

(1999)

Canada CBF* Size (+), industry (+),

information (+),

ﬁnancial

performance (+)

Regulatory

environment (+)

✓✓

Buhr and

Freedman

(2001)

Canada

and USA

N/A Size (+) History (+),geography

(+), political system

(+), legal system (+),

business climate (+)

✓✓

Deegan et al.

(2002)

Australia LT Media attention to

social issues (+)

✓✓ ✓✓ ✓

Patten (2002) USA LT Size (+) ✓✓

Toms (2002) UK RBV* Systematic risk () Institutional

ownership (+)

✓✓

Wilmshurst

and Frost

(2000)

Australia LT* Perceived importance

of shareholders (+),

investors (+), local

community (+),

suppliers (+),

customers (+)

concerns

✓✓

Adams (2002) UK N/A* attitude towards

reporting,

perceived cost and

beneﬁts of

reporting

Cormier and

Magnan

(2003)

France CBF Size (+), industry (+),

dependence on

capital markets (+)

✓✓

(Continues)

277Determinants of CSR Disclosure

DOI: 10.1002/csr

(Continues)

Authors Country Theoretical

perspective

Determinants CSR Disclosure Measurement

Company

Characteristic

External

Contextual

Internal

Contextual

ED* HRD* PCD* CID* TD* Qn* Ql*

ﬁnancial

performance (+)

Cormier et al.

(2005)

Germany MT* Size (+), industry (+),

age of assets (+),

risk (+), ﬁnancial

performance (0),

routine (+)

Public pressure (+),

ownership (+)

✓✓

Hasseldine

et al. (2005)

UK SigT & RBV* Environmental

Reputation (+) as a

dependent variable

✓✓

Laan Smith

et al. (2005)

Norway and

Denmark

ST Country (+) ✓✓ ✓

Van Staden

and Hooks

(2007)

New Zealand LT ✓✓✓

Brammer and

Pavelin

(2008)

UK N/A Size (+), industry (+) Media exposure (0) ✓✓

Reverte (2009) Spain AT, LT & ST Size (+), industry (+),

ﬁnancial

performance (0)

Media exposure (+),

leverage (0)

✓✓

Tagesson et al.

(2009)

Swedish AT, LT, & ST Size (+), industry (+),

ﬁnancial

performance (+)

Ownership (govt. vs

private) (+)

✓✓

Chih et al. (2010) 34 countries N/A Size (+), ﬁnancial

performance (0)

Level of legal

enforcement (+),

Competitiveness

(+), self-

regulation (+)

✓✓

Hou and Reber

(2011)

USA Size (+), industry (+) ✓✓

Bouten et al.

(2011)

Belgium AccT* Size (+), industry (+) ✓✓

Germany PCT ✓✓✓

278 W. Ali et al.

DOI: 10.1002/csr

External

Contextual

Internal

Contextual

ED* HRD* PCD* CID* TD* Qn* Ql*

Social

Disclosure

✓✓

Competitive

advantage (+)

✓

✓✓

structure (+)

✓✓

attitude (+)

✓

Managers’

attitude

towards

reporting,

reporting

impacts, and

audit (+)

✓A*

(Continues)

279Determinants of CSR Disclosure

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