Do companies manipulate CSR information to retain legitimacy?

Abstract

Corporations’ involvement in activities that are socially responsible, with respect for workers' rights and ethically principled, brings tangible benefits to the enterprise. These CSR benefits include an increase in stakeholders’ assessment of the corporation with a boost in perceived trustworthiness. Companies, however, may treat sustainability reports as a tool to legitimize their actions. This particularly concerns companies from controversial industries. In order to achieve the desired results from CSR activities, companies disclose only selected information to customers, employees and/or owners. We used t-test to verify the hypothesis that companies remove and add the same number of CSR measures in subsequent reports and that corporations from controversial industries change disclosed information to higher extent than companies from other industries. We stated, that companies replace one measure with the new one to keep the impression of the same level of disclosure and to maintain or increase the level of legitimacy. Research of 116 CSR reports from 8 Post-Communist European Countries for two consecutive reporting periods showed that companies change the number and type of disclosed measures and they don’t explain reasons of the changes made in the reports, which may indicate a desire to green the organization by presenting only positive information. However, this hypothesis did not confirm that there is a significant difference in changes of CSR measures revealed between companies from controversial and non-controversial industries. The paper fills a research gap in the research on the reliability of CSR disclosure. It concentrates on the motives and the range of measures unveiled in the sustainability reports to legitimize a company’s activity.

Keywords: measures, corporate social responsibility, Global Reporting Initiative, stakeholders, controversial industries

DOI: http://dx.doi.org/10.5755/j01.ee.29.3.18946