Corporate social responsibility engagement and disclosure behaviors in China : a stakeholder perspective

Abstract

Corporate social responsibility (CSR) reconciles the idea that businesses can have multiple goals of profitability and ethics, and they should simultaneously fulfill social obligations. The business-case CSR engagement has been generally supported in the literature, which evidences that CSR engagement is beneficial for a firm's stakeholder relationships and eventually, for its financial performance. In addition to a firms' CSR practices, how a firm presents and communicates its practices with stakeholders works as a nexus to transfer CSR information into stakeholder knowledge that serves as the foundation for value creation. This study examines the overall story of CSR engagement and disclosure behaviors, based on annual CSR reports by various firms. A CSR report is an official and comprehensive means of disclosure to deliver CSR information to various stakeholder groups, such as investors, stock analysts, and third-party rating agents. The thesis considers a stakeholder perspective in order to investigate the engagement and disclosure practices in China, antecedents and outcomes, as well as their boundary conditions. The first part of this paper lays out a foundation for further studies by exploring the key factors of CSR practices in China. Based on the explorative content analyses of a preliminary investigation, then I examine the factors that influence a firms' CSR engagement structures, achieved by capturing CSR disclosure emphasis. By adopting resource dependence theory (RDT), I argue that the engagement structure observed from a CSR report is a reflection of a firm's managerial focus when dealing with multifaceted stakeholder relationships. When firms have more available resources at their disposal, they tend to reach out by diversifying their CSR engagement. When a firm's resource environment is concentrated, and they primarily depend on one critical stakeholder to survive, they tend to build a specialized CSR portfolio. From further investigation, I found that CSR in China can be indeed very effective. I examined the consequences of a firm's CSR disclosure tactics in Chapter 5, that is, the degree to which the reporting was informative and comprehensive. I argue that CSR disclosure tactics, in other words, how firms present CSR information to stakeholders, are organizational impression management skills. Proper disclosure tactics would induce positive stakeholder reactions and corporate gains. However, such disclosure tactics are not always welcomed. It is particularly effective for firms with high stakeholder exposure, but it works negatively for firms in which there is a single dominating stakeholder. Further investigation implied that stakeholders may hold certain biases when evaluating a firm's CSR performance (CSP). To test our hypotheses, I collected longitudinal data from listed firms in China. In order to measure the attributes of CSR reports, a two-stage content analysis technique was adopted; it involves both manual coding and computer-aided text analysis. The studies were set in a Chinese context, because China has a unique stakeholder group: the government of China. The government plays a dual role since it serves as both as a policy maker and an economic participant. The government thus functions as a clear benchmark to distinguish stakeholder attributes from those of others. Moreover, CSR research has primarily been applied to Western economies, and it is necessary to shift the focus towards more developing countries in order to provide more contextual heterogeneity. The three phases of the study combine to contribute to a more advanced understanding of CSR engagement and disclosure practices in China. Investigating the structure of CSR engagement, I try to reveal that the divergent CSR profiles now can be seen in the market which are the results of firms' heterogeneous resource environments. Firms tailor their resource allocations according to the resource availability as well as resource distribution among stakeholders. By looking into the main channel through which CSR information is dispersed among stakeholders, the thesis has enriched the knowledge of CSR disclosure behaviors by identifying report attributes that may effectively influence stakeholder reactions, and it has also identified the factors that can further influence stakeholders' judgements to firms' CSR efforts. From a pragmatic viewpoint, our results provide managers with information necessary to use resources more effectively when creating their CSR strategies.