The impact of corporate identity on corporate social responsibility disclosure

O R I G I N A L A R T I C L E Open Access
The impact of corporate identity on
corporate social responsibility disclosure
Anne Michaels * and Michael Grüning
Abstract
Corporate social responsibility (CSR) is of increasing importance for the long-term success of corporations. Extending
existing literature this paper explores corporate identity as important determinant for CSR disclosure. The relationship
was examined based on 498 German companies that provided English language CSR reports and responded to a
company survey measuring CSR-oriented corporate identity. CSR disclosure has been analyzed with an automated
content analysis technique using artificial intelligence. Results indicate that value chain and future-oriented dimensions,
which were more pronounced in mature CSR concepts, foster CSR disclosure, while introversive corporate identity
dimensions that were strong in low level CSR concepts hinder the release of CSR information. The paper shows that a
tradition of social responsibility and values results into a low perceived need for legitimacy and outwards communication.
The findings support the view that that a combination of voluntary disclosure theory and legitimacy theory is necessary
to explain the drivers and constraints of CSR disclosure.
Keywords: CSR disclosure, Corporate identity, Content analysis, Survey, CSR determinants
Introduction
Within the last two decades, CSR disclosure by firms moti-
vated an increasing number of research studies examining
the motivation of this disclosure. Findings support that
CSR disclosure is value relevant (Clarkson et al. 2013;
Plumlee et al. 2015), increases earnings quality (Francis et
al. 2008), analyst forecast accuracy (Dhaliwal et al. 2012)
and firm level cost of capital (Michaels and Grüning 2017).
Firms also use CSR disclosure to differentiate from
competitors and as a marketing tool (Porter and Kramer
2006). Empirical evidence suggests that the integration
of CSR in corporate strategy might establish a competi-
tive advantage (Carroll and Shabana 2010). Although
firms may attempt to implement real CSR concepts,
there is a tendency of “greenwashing” (Laufer 2014). In
line with the missing causal link between CSR perform-
ance and CSR disclosure stakeholders mainly regard the
latter as not trustworthy (Newell and Goldsmith 2001).
Volkswagen’s “Diesel Dupe” is a contemporary example.
CSR disclosure credibility increases if aligned with
corporate strategy (McWilliams and Siegel 2001). While
quite some research examined internal determinants to
support the strategic integration of CSR (e.g. Engert et
al. 2016; Lozano 2013, 2015) only a few studies focussed
on the internal aspects facilitating CSR disclosure. Prior
research outlined a scheme to connect corporate identity
and CSR (Otubanjo 2013). The “identity-revealing nature
of CSR activities” is crucial in building a long-term sus-
tainable corporate image (Du et al. 2010, p. 17) and a
successful CSR strategy (Heikkurinen and Ketola 2012)
but has been rarely addressed in the literature. Neverthe-
less, identity-based values and attributes as well as their
communication are considered key factors for entrepre-
neurial success (He and Balmer 2007). Therefore, this
paper examines if the degree of CSR-orientation in cor-
porate identity is an important managerial driver of CSR
disclosure. Results show that corporate identity signifi-
cantly influences CSR disclosure even though they reveal
an ambiguous pattern. Whereas the corporate identity
dimensions “strategic integration” and “CSR application”
facilitate, “employee integration” and “attitude aware-
ness” inhibit CSR disclosure. CSR disclosure is object-
ively measured using an artificial intelligence based
narrative analysis of CSR reports from 2013/14. CSR-
oriented corporate identity is extracted from a company
survey. Whereas the total sample consists of 498
* Correspondence: [e-mail]
Department of Economic Sciences and Media, Institute of Business
Administration, Group Accounting and Managerial Control, Ilmenau
University of Technology, Helmholtzplatz 3, 98693 Ilmenau, GermanyInternational Journal ofCorporate Social Responsibility
© The Author(s). 2018 Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and
reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to
the Creative Commons license, and indicate if changes were made.
Michaels and Grüning International Journal of Corporate Social Responsibility
(2018) 3:3
https://doi.org/10.1186/s40991-018-0028-1

companies, the intersecting sample (providing data for all
main variables) consists of 108 German companies. The
paper contributes to existing literature by revealing in-
sights on so far unobserved determinants of CSR disclos-
ure. It supports that managerial activities can shape
internal drivers of CSR disclosure to obtain related finan-
cial benefits. Moreover, the paper provides quantitative
data to the state of the art of corporate identity profiles
and CSR disclosure of German firms.
The paper is structured as follows. The next section
reviews the existing literature and develops the hypoth-
eses. In the third section research design, sample selec-
tion and variable measurement are described. Section
four provides the results. The final section concludes.
Related research and hypothesis development
CSR disclosure
Numerous theoretical frameworks have been used to
understand CSR as a relevant real world phenomenon.
Clarkson et al. (2008) categorizes CSR accounting re-
search into three broad fields of interest; (i) value rele-
vance of CSR disclosure; (ii) determinants and
constraints regarding the disclosure of CSR information;
and (iii) the relationship between CSR performance and
CSR disclosure. Whereas this study relates to the second
group, findings from the third support the hypotheses
development.
As a particular type of voluntary non-financial disclos-
ure, CSR disclosure is believed to reduce information
asymmetry between managers and investors (Dhaliwal et
al. 2011). Voluntary disclosure theory suggests that vol-
untary disclosure is used by well performing companies
to differentiate from low performers in order to avoid an
adverse selection problem (Verrecchia 1983). High CSR
performers disclose more CSR information as they ex-
pect to benefit on financial markets (Reverte 2012). In
contrast, low performers disclose less in order to prevent
negative effects due to capital market participants
expecting a financial risk (Dhaliwal et al. 2011).
Nevertheless, prior studies revealed that CSR disclos-
ure in particular is somewhat different from other types
of non-financial information (Guidry and Patten 2012).
There was much evidence of a severe mismatch between
claims made in CSR disclosure and the implementation
of CSR programs (Baumann-Pauly et al. 2013). There-
fore legitimacy theory contrastingly argues that CSR low
performers disclose more CSR information to legitimate
themselves (Cho et al. 2012, p. 21). In this view, public
pressure from the social and political environment is
regarded as the main determinant of CSR disclosure
(Cho and Patten 2007). While empirical findings support
political cost (Reverte 2012) and increasing stakeholder
pressure (Young and Marais 2012) to affect CSR disclos-
ure, evidence of a causal connection between CSR
performance and CSR disclosure is mixed (Plumlee et al.
2015). Only a few studies empirically explore this rela-
tionship with a limited focus on ecological disclosure
(Cho et al. 2012). As a result, some research assumes a
complementary relationship between both theoretical
concepts; whereas voluntary disclosure theory explains
the volume of CSR disclosure, legitimacy theory eluci-
dates patterns in the disclosure (Clarkson et al. 2008).
As a consequence, prior research explores the individ-
ual determinants of CSR disclosure in greater details
(Hahn and Kühnen 2013) and distinguished internal and
external factors (Fifka 2013). The economic system, na-
tional culture, stakeholder orientation and company visi-
bility, etc. are regarded as external factors. Companies in
state-led market economies are found to report in a
more aggregated way about CSR policies and provide
more information on business behavior, labor concerns
and environmental issues than companies in liberal mar-
ket economies (Young and Marais 2012). In the context
of national culture, companies in countries with a pro-
nounced long-term orientation are considered to dis-
close more CSR information (Once and Almagtome
2014). Stakeholder orientation also positively influences
CSR disclosure (Van der Laan Smith et al. 2005). Finally,
company visibility is found to be an important driver of
CSR disclosure (Gamerschlag et al. 2010). Industry affili-
ation, firm size, financial performance and capital mar-
ket orientation are regarded internal determinants of
CSR disclosure. Previous studies show that companies in
CSR-sensitive industries like chemicals, mining or en-
ergy disclose more CSR information (Shnayder et al.
2016; Young and Marais 2012). In addition, CSR disclos-
ure is considered to improve with increasing firm size
(Wickert et al. 2016), financial performance (Haniffa and
Cooke 2005) and capital market orientation (Heitzman
et al. 2010).
The relevance of corporate identity for CSR disclosure
Further, more abstract internal CSR disclosure determi-
nants received little attention so far but might help to
understand how voluntary disclosure theory and legitim-
acy theory explain CSR disclosure. Du et al. (2010, p. 11)
argue that a perceived “CSR fit” is an important internal
factor driving the credibility of CSR disclosure. This fit
relates to a perceived match between disclosed CSR in-
formation and corporate identity (Hristache et al. 2013).
Corporate identity is derived from shared values and be-
liefs (Van Riel and Fombrun 2007) and comprises what
is central, enduring and distinctive about the company
(Albert and Whetten 1985). Corporate identity attributes
can be detected by observing a company’s strategy, be-
havior, rules, and structure (Melewar and Karaosmano-
glu 2006). Desirable characteristics of corporate identity
are a high quality mentality, supreme products, financial
Michaels and Grüning International Journal of Corporate Social Responsibility (2018) 3:3 Page 2 of 13

stability, an excellent working environment, as well as a
sensitivity for CSR aspects (Einwiller and Will 2002).
He and Balmer (2013) connect an effective corporate
identity management with an improved corporate image
in the short term and a better corporate reputation in
the long term. Corporate image relates to the perception
of expressed corporate identity (Margulies 1977). Not
the information content of a message but what receivers
perceive is relevant for establishing an corporate image
(Boulding 1956). Balmer & Greyser (2006, p. 735) refer
to corporate image as “various outbound communica-
tions channels deployed by organizations to communi-
cate with customers and other constituencies”. This view
allows managerial activities to significantly affect both,
corporate identity and image (Gioia et al. 2000). Corpor-
ate image is regarded as a direct consequence of corpor-
ate identity that the firm can control comprehensively
(Balmer and Greyser 2003). Accordingly, CSR disclosure
is regarded a major determinant of corporate image.
Hopwood (2009, p. 437) suggest that companies defend
with CSR disclosure by “providing a new face to the out-
side world while protecting the inner workings of the
organization from external view”. Simultaneously, public
scandals uncover unethical corporate activities (Brennan
et al. 2013). Consistently, Michaels and Grüning (2016a)
find that increased CSR disclosure has a positive impact
corporate reputation.
Altogether, prior research revealed an interdependency
between corporate identity and corporate strategy (He
and Balmer 2013). In this context, Otubanjo (2013) as well
as Venturelli et al. (2017) acknowledge the importance of
this connection for CSR concepts. Heikkurinen & Ketola
(2012, p. 332ff) suggest an “awareness approach” for the
integration of CSR into corporate strategy. Here, CSR is
part of the firm’s ethical, political and intrinsic convictions
and a lack of credibility may never exist. Choosing CSR
initiatives that address the entire organization as well as
all dimensions of CSR is crucial in this context (Lozano
2012). Various views exist on the relationship between
CSR performance and CSR disclosure. The adoption of
CSR practices and values may lead to differentiating char-
acteristics in the market (Porter and Kramer 2006). Fol-
lowing this business case approach companies align their
CSR activities to create a competitive advantage that may
increase profits or create additionally value added
(Michaels and Grüning 2016b). Alternatively, the
resource-based view of CSR suggests that companies en-
gage in CSR in order to create positive internal and exter-
nal benefits that enable a “more efficient use of resources”
(Branco and Rodrigues 2006, p. 120). Both view call for an
internal strategic adoption of CSR principles. Critics argue
that these purely economic approaches endanger the
moral foundations of CSR and inhibit its proper imple-
mentation (Nijhof and Jeurissen 2010).
Baumgarth and Binckebanck (2011) note that the estab-
lishment of a CSR-oriented corporate identity and culture
are preconditions to achieve a reliable and trustworthy
image and reputation. Both are highly affected by CSR
disclosure (Guidry and Patten 2012). Consequently, the in-
tegration of CSR into the corporate identity is crucial for a
successful CSR concept (McShane and Cunningham 2011).
Managers utilize corporate identity to give organizational
members “some sense of purpose” that motivates them to
achieve common goals (Cornelissen 2002, p. 266). Corpor-
ate identity management enables the ability to express indi-
viduality, to manifest differentiating attributes, to set and
express strategy as well as to communicate effectively
(Balmer 2001). In most cases the alignment of corporate
identity towards CSR requires the adoption of new values
and beliefs as well as the definition of a new strategy and vi-
sion (Heikkurinen and Ketola 2012). Furthermore, the
adoption of CSR principles requires most companies to re-
vise or establish processes and structures (Hristache et al.
2013). Accordingly, Lozano et al. (2016) found a strong re-
ciprocal relationship for organisational change management
and CSR disclosure.
Credibility is an important issue for CSR disclosure
(Lock and Seele 2016). Inconsistencies between the
current status of CSR implementation and its communi-
cation have severe destructive consequences (Baumann-
Pauly et al. 2013, p. 701). Hence, if companies face
difficulties in creating credibility for their CSR programs,
those companies that dispose over high conformance
would use it to create credibility through increased CSR
disclosure. Accordingly, CSR-oriented corporate identity
is an important internal determinant of CSR disclosure
and the following hypothesis is formulated:
H1: A high level of CSR-oriented corporate identity is
positively associated with the level of CSR disclosure.
Sample, variable definition, and methodology
Sample selection
The analysis is based on 498 listed and non-listed
German companies. Due to the history of an advanced
social welfare system German companies likely assume a
distinctive social responsibility (Chen and Bouvain
2009). Germany is also known to have an extraordinarily
high number of “hidden champions” (Simon 2012).
These companies are often family-owned and character-
ized by a high social responsibility (Spiegel and Block
2013, p. 12). Capital market sustainability ratings
support the view that German companies have an out-
standing sustainability performance, beating comparable
US, France and Austria firms (Sustainalytics 2012).
In line with other empirical CSR studies (e.g. Fatma et
al. 2016; Huang et al. 2014; Liu et al. 2014) a
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convenience sampling has been applied (Table 1).
Companies are selected based on (i) two German image
and sustainability rankings (172); (ii) a list of the
German ministry of environment containing firms that
publish CSR reports (266); and (iii) randomly chosen
companies of the prime and general standard of the
Frankfurt Stock Exchange (60). Altogether, 327 of the
498 firms (66.6%) English language CSR reports (stand-
alone CSR reports, integrated corporate reports or
website information) could be collected from corporate
websites or the GRI reporting database for reporting
year 2013/2014. The latent construct of CSR-oriented
corporate identity is measured using a company survey.
226 (45.4%) of the 498 sample companies replied of
which 149 (29.9%) firms provide usable answers. In total,
the intersecting sample of firms for which we could ob-
tain CSR disclosure as well as usable answers from the
company survey consists of 108 companies.
AIMD
The dependent CSR disclosure variable is measured
using automated content analysis deviated from Artifi-
cial Intelligence Measurement of Disclosure (AIMD)
(Grüning 2011). AIMD measures the extent to which
text documents refer to specified topics. Different to or-
dinary word count approaches, AIMD is able to partly
consider the context of information, including thesaurus
and syntax (Grüning 2011). In a first step (training
phase) a coding scheme must be developed to identify
certain topics in text documents. In a second step (appli-
cation phase) the topics of large quantities of texts can
be classified using this coding scheme. Figure 1 summa-
rizes the basic procedure. The coding scheme consists of
semantic units (N-grams) that are “connotative categor-
ical equivalents” for a specified type of information
(Grüning 2011, p. 510), i.e. refer to the same topic. Using
various dictionaries N-grams are automatically standard-
ized and the resulting AIMD coding scheme is almost
not affected by grammar and orthography of the under-
lying texts.
Although the coding scheme can be generated manu-
ally, in this paper a fully automated approach is used be-
cause of superior objectivity. In line with linguistic
practice (Archer 2009, p. 2) N-grams appearing
frequently in the CSR reports and not frequently in the
annual reports (excluding CSR related chapters that are
removed manually) are regarded as typical for CSR
reporting. More specifically, for 29 firms from the
German DAX and MDAX CSR annual reports (except
of CSR chapters) for 2014 are enumerated into N-grams
of up to three consecutive words (excluding stopwords).
All N-grams that occur in x annual reports (except of
CSR chapters) and y CSR reports are collected separ-
ately. Lists with y > x are potentially indicative for CSR
reporting. An AIMD content analysis is performed using
each of the 841 = 29 · 29 N-gram lists. The one that best
replicates the CSR content analysis of Gamerschlag et al.
(2010) is finally chosen. The N-gram list that includes all
Table 1 Sample Distribution
1 2 3 4
No. of
companies
in % No. of CSR
reports
in % No. of CSR
surveys
in % No. of companies
with report + survey
in %
Initial sample Full sample
Panel A: Distribution by Industry
Industry
Banks and Insurance 30 6.02 18 5.50 14 9.40 9 8.33
Chemicals, rubber, plastics, non-metallic products 60 12.05 50 15.29 16 10.74 16 14.81
Food, beverages, tobacco 52 10.44 35 10.70 11 7.38 7 6.48
Gas, water, electricity, construction 30 6.02 19 5.81 10 6.71 8 7.41
Machinery, equipment, furniture, recycling 105 21.08 88 26.91 26 17.45 25 23.15
Other services 107 21.49 51 15.60 38 25.50 21 19.44
Post, telecommunications, transport, publishing 37 7.43 26 7.95 12 8.05 10 9.26
Wholesale & retail trade 77 15.46 40 12.23 22 14.77 12 11.11
Total 498 100.00 327 100.00 149 100.00 108 100.00
Panel B: Distribution by Stock market activity
Stock market activity
Listed 139 27.91 109 33.33 46 30.87 41 37.96
Not listed 359 72.09 218 66.67 103 69.13 67 62.04
Total 498 100.00 327 100.00 149 100.00 108 100.00
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