Corporate social responsibility research: the importance of context

O R I G I N A L A R T I C L E Open Access
Corporate social responsibility research: the
importance of context
Carol A. Tilt
Abstract
There has, in recent times, been an increasing interest in understanding corporate social (and environmental)
responsibility (CSR) and, in particular, CSR reporting in developing countries. However, many of these studies fail to
investigate fully the contextual factors that influence CSR and reporting in those countries, preferring to rely on
theories and hypotheses developed from studies undertaken in the West, particularly the US, UK and Australasia.
It may be argued that this is appropriate as many emerging economies are experiencing growth and moving
towards having a more market-based orientation. Notwithstanding this, a large number of these countries have an
entirely different socio-political environment, with different political regimes, legal systems and cultural influences.
These factors have a significant effect on the applicability of theories such as stakeholder theory, legitimacy theory
and accountability theory, which are commonly used to explain the phenomenon of reporting.
In State Capitalist countries, such as China, an important influence on companies is the political ideology that
underpins the nation’s government. The nature and impact of ideology and hegemony in China has been
under-studied and, therefore, investigating how the ideology, and competing forces that may mitigate its influence,
manifest themselves in Chinese reporting are essential. In the Middle East, countries such as Saudi Arabia have no
free press, are ruled by a royal family, have a market dominated by the oil industry, and potential religious
influences. Such socio-cultural differences mean societies develop different understandings of concepts such as
sustainability and social responsibility. Finally, countries such as Sri Lanka have some similarities to other developing
countries, but their economy is set against a background of a recent civil war – operating in a post-conflict
economy is a factor rarely considered in social and environmental disclosure, yet has important influence on policy
in these areas.
This paper discusses three contextual issues that warrant more and improved consideration in CSR research, with
particular emphasis on CSR reporting research.
Keywords: Corporate social responsibility, Corporate environmental reporting, Government, Ideology, Hegemony,
Politics, State capitalism, Economic development, Developing countries, China, Sri Lanka, Middle East
Background
More and more corporations worldwide are involved in
corporate social responsibility activities, and as a result are
providing more social and environmental information to
the public. Following from this, CSR disclosure, or report-
ing, has become one of the major fields of investigation by
accounting scholars (Deegan 2009; Mathews 1997; Tilt
2001). Research that considers both CSR activity and CSR
reporting has traditionally focused on companies in more
developed economies, predominantly the US, UK, Australia
and New Zealand (Burritt and Schaltegger 2010; Frost et al.
2005; Gray 2006; Gurvitsh and Sidorova 2012; Othman and
Ameer 2009; Patten 2002; Sahay 2004), but recently there
has been increasing interest in understanding the
phenomenon in developing countries particularly as they
experience growth and move towards a more capitalist
orientation (Sumiani et al. 2007). Of the research that does
exist, a number of papers suggest that ‘country’ is a deter-
minant for CSR involvement and for the level of disclos-
ure, but do not go much further.
Many of the studies of developing countries however,
choose a framework for their investigation based on
those shown to be meaningful for explaining disclosure
Correspondence: [e-mail]
School of Commerce, University of South Australia Business School, GPO Box
2471, Adelaide 5001, South AustraliaInternational Journal ofCorporate Social Responsibility
© 2016 Tilt. Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 International
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Tilt International Journal of Corporate Social Responsibility (2016) 1:2
DOI 10.1186/s40991-016-0003-7

in developed, capitalist economies. That is, they fail to
investigate fully the contextual factors that influence
firms and their reporting in those countries that have a
different social, political, legal and/or cultural context.
It may be argued that this is appropriate as many
emerging economies are experiencing growth and moving
towards having a more market-based orientation. How-
ever, this is rarely acknowledged or questioned in these
papers. Yet, it is reasonable to suggest that these factors
have a significant effect on the applicability of theories
such as stakeholder theory, legitimacy theory and account-
ability theory, which are commonly used to explain the
phenomenon of reporting.
The majority of the world’s population lives in devel-
oping countries and each country experiences its own
unique social, political and environmental issues (United
Nations 2013). These countries are in the process of in-
dustrialisation and are often characterised by unstable
governments, higher levels of unemployment, limited
technological capacity, unequal distribution of income,
unreliable water supplies and underutilised factors of
production. As a result of rapid industrial development,
policies are pursued that aim to attract greater foreign
investment, and the investors are often keen to start
benefitting from fiscal incentives and cheap labour.
While these strategies make economic sense, they have
adverse social and environmental effects, including the
use of child labour, low or unpaid wages, unequal career
opportunities, occupational health and safety concerns,
and increased pollution.
In a review of the literature on determinants of CSR
reporting (Morhardt 2010), reports that research on the
impact of different variables in different regions is incon-
clusive due to the lack of enough studies. Factors that may
influence CSR disclosure practices fall broadly into internal
and external (Fifka 2013; Morhardt 2010), but are com-
monly classified further as (Adams 2002: p224):
 Corporate characteristics, such as size, industry
group, financial/economic performance and share
trading volume, price and risk;
 General contextual factors, such as country of
origin, time, specific events, media pressure,
stakeholders and social, political, cultural and
economic context; and
 Internal contextual factors, including different
aspects of corporate governance.
While CSR reporting has been studied by a large
number of scholars, only a few fall into the second of the
categories above, and consider context in detail. This is
particularly relevant when considering developing coun-
tries. A few papers have specifically reviewed studies on
developing countries. For example, (Belal and Momin
2009) categorise the work on developing countries into
three groups: studies of the volume or extent of reporting;
studies of the perceptions of CSR reporting by managers;
and studies of the perception of CSR reporting by stake-
holders. In all the studies reviewed there is little discussion
of the context, other than a description of the country,
and no real thought about the theoretical assumptions
being made.
This paper presents a discussion of the different con-
textual issues or factors that show some evidence or po-
tential to influence CSR and reporting in developing
countries. It focusses on three specific issues and provides
a research agenda for future consideration of the influence
of context in CSR reporting research. The paper is struc-
tured as follows. The next section introduces some broad
contextual factors that warrant consideration in the litera-
ture on CSR reporting. Next, three specific contextual
issues are examined: the role of political ideology and he-
gemony; the influence of cultural understandings; and the
impact of historical economic context. Finally, by way of
conclusion, some recommended areas for further research
are suggested.
Contextual considerations
Adams (2002) talks about the social, political, cultural and
economic context, so some consideration of what this
might mean is needed as each of these concepts them-
selves cover a variety of aspects, and indeed overlap.
While papers may talk about the ‘social context’ in which
the companies being examined operate, this is not well de-
fined and little consideration is given to what this means.
Some things that could be more explicitly considered in-
clude, inter alia: the role of the press; the status of women;
the legal/justice system; the level of corruption; the level
of government control, cultural understandings; and so
on. This paper chooses to highlight three of these areas,
and these are discussed briefly below in broad terms,
followed by a discussion of some specific aspects of each
identified as providing fertile grounds for future research.
Political system
Assumptions are often made about capitalist systems,
whether explicit or implicit, as the vast majority of work
on CSR reporting has been done in the Western context.
However, there is little research looking at CSR report-
ing in socialist or communist countries. Some work has
been undertaken on China (Dong et al. 2014; Gao 2011;
Situ and Tilt 2012), but this work often applies the same
conceptual frameworks as Western studies. What about
the influence of ideology, and hegemony?
Sociocultural environment
Human beings have “distinctive cultural (learned) charac-
teristics, histories and responses to their environment”
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and the term ‘sociocultural’ is commonly used in an-
thropological research to describe these and the “interac-
tions and processes” that this involves (Garbarino 1983:
p1). Some general studies of culture and CSR using
Hofstede exist (Silvia and Belen 2013), but an in-depth
analysis of different understandings and conceptions of
terms such as CSR as a result of sociocultural influences is
lacking. The work that does examine specific factors often
suggests that the Western concept of CSR does not fit
these contexts (Wang and Juslin 2009).
The majority of work that considers sociocultural
factors has looked mainly at religious aspects of CSR,
most commonly by reviewing reporting by Islamic organ-
isation, such as Islamic banks (Maali et al. 2006; Siwar and
Hossain 2009; Sudarma et al. 2010). The teachings of
many religions focus on social responsibility, the relation-
ship with the natural environment, treatment of others,
fairness, justice, etc., so there is a natural expectation that
religion-based organisations may be more likely to engage
in CSR and CSR reporting. A more nuanced consideration
of how this manifests itself in different societies would
improve understanding of the drivers and motivations of
these activities. Similarly, other sociocultural factors, such
as national identity, values, social organisation and lan-
guage, could be incorporated.
Stage of development
The emerging literature on CSR reporting outside the
Western world examines countries that are ‘developing’
(Belal and Momin 2009; Momin and Parker 2013), but little
depth is included about where they are in their develop-
ment journey and how the potential conflict between eco-
nomic and social goals impacts CSR or CSR reporting.
Rostow’s (1962) Stages of Economic Growth model sug-
gests there are five stages (traditional society, preconditions
for take-off, take-off, drive to maturity, and age of high or
mass consumption), yet most literature on CSR classifies
countries only into developed or developing. The ‘develop-
ing’ classification potentially includes countries that are in
Rostow’s first, second or third stage which may have an im-
pact on their response to CSR issues. In addition to eco-
nomic variables however, the United Nations also produces
a Human Development Index (HDI) which considers life
expectancy, education and income to measure how social,
as well as economic, development (UNDP 2015). Both
these concepts are important for consideration of CSR.
Importantly, consideration of just one or two aspects of
these three broader contextual issues may result in misin-
terpretation of the results. Often these things interact, for
example, social issues often cross over with cultural and
religious impacts, or even with political influence where
the regime is more hegemonic. It is thus important to
consider, or at least acknowledge, the holistic nature of
the context of the phenomenon being examined.
It is beyond the scope of this paper to discuss all of
the issues raised here although this would be an import-
ant part of a larger research program. Therefore, three
particular contextual issues, and three specific contexts,
are the focus of this paper: the role of political ideology
and hegemony (China); the influence of cultural under-
standings (Middle East); and the impact of historical
economic context (Sri Lanka).
Politics, ideology and state control
Ideology is a set of common beliefs that are shared by a
group of people, and is “the fundamental social beliefs
that organize and control the social representations of
groups and their members” (Van Dijk 2009: p78). Coun-
tries such as China provide a fertile research setting to
examine the influence of ideology, and hegemonic ap-
proaches of influencing CSR, which have been missing
from most CSR research in the region.
The Chinese political model has some unique charac-
teristics. Among these is the dominance of ‘the party
state’, which exercises control in different forms over
most aspects of the economy that is unmatched when
compared to other state capitalist economies. Political
leaders use a variety of tools (Bremmer 2010) and it is
the combination of three particular tools that sets apart
the Chinese system: the exercise of control as a domin-
ant shareholder, the ability to appoint key positions in
major firms, and the means to influence decision-
making via ideology. First, the party exerts shareholder
power over state-owned enterprises (SOEs). Chinese
SOEs play an instrumental role in society (Du and Wang
2013) and make up around 80 % of the stock market
(Economist T 2012). As protecting the environment is a
major part of the guiding ideology and the nation’s pol-
icy, SOEs are likely to be keen to provide CER. Second,
the party exercises power over the appointment of the
senior leadership in SOEs (Landry 2008). This has re-
sulted in control as they are “cadres first and company
men second. They care more about pleasing their party
bosses than about the global market” (Economist T
2012: p6). Third, party control is exercised through
ideology. The party has cells in most larger firms,
whether private or state-owned, which influence busi-
ness decisions made at board meetings. Given that
China considers the Marxist-Leninist-Maoist ideology as
crucial this distinguishes it most significantly from other
varieties of state capitalism that have a more liberal-
democratic flavour.
There is some evidence that the first form of party
control has been declining in recent times with the
number of SOEs under the SASAC’s control halving
over the last decade (Mattlin 2009). Similarly, since
1999, the share of SOEs in the economy has declined
from 37 % to less than 5 %. This results in greater use of
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