Does context matter for sustainability disclosure? Institutional factors in Southeast Asia

• Date: 01 April 2020
• Published date: 01 April 2020
• DOI: http://doi.org/10.1111/beer.12265
• Author: Mi Tran,Eshani Beddewela

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  wileyonlinelibrary.com/journal/beer Business Ethics: A Eur Rev. 2020;29:282–302.© 2020 John Wiley & Sons Ltd

1 | INTRODUCTION

Corporate sus tainability has been at t he forefront of business fir ms’

corporate agen das during the las t decade. It s integration of ‘so cial

and environmen tal concerns wit hin business op erations and th eir

interactions with stakeholders’ makes corporate sustainability com-

plex, multif aceted, and inhe rently contex t-specific (Fassin et al.,

2015; Marrewijk & Werre , 2003, p. 107). There are also dif ferences

in the types of co rporate sustai nability issues b eing addressed ac ross

countries (Mao n, Swaen, & Lindgreen , 2017; Welford, 2005), primar-

ily as a result of count ry-level insti tutional dif ferences (Cam pbell,

2007; Chapple & Moo n, 2005; Hahn & Kuhn en, 2013; Williams &

Aguilera, 2008). However, our understanding of how a country's

institutions influence corporate sustainability, is largely limited at

present to Wester n countries (Kim & Moon, 2015).

In this regard, re gions such as Asia , not only prese nt nuanced

differences i n their national institution al environments, such as the

role of state, powe r concentration in countries' eco nomic, politi cal,

ethical, and r eligious syste ms (Kim & Moon, 2015), but also consist

of dynamic socio economic sys tems (Gond & Moon , 2011). For in-

stance, count ries in the South East Asia (SE A), a sub-region in Asia,

which has divers e socioeconomi c issues, rang ing from povert y, cli-

mate change, to huma n rights violat ions, child labo ur, and corrup-

tion (Belal, Co oper, & Roberts , 2013) have proactive ly underta ken

institutional reforms to influence corporate sustainability practices

(Srinivasan, 2011). Nevertheless, as extant research examining in-

stitutional i nfluences on corporate sus tainability in non-wes tern re-

gions, is limited to s ingle country studi es (See Hermawan & Gunard i,

2019; Hu & Loh, 2018; Janggu, D arus, Zain, & Sawani, 2014; Zahid,

Ghazali, & Rah man, 2016), we do not have a comparat ive cross-coun-

try level unde rstanding of how country-level institutional influences

could differ between co untries within a non-weste rn region (Fifka &

Drabble, 2012; Vash chenko, 2017), and how those influences could

engender corp orate sustainability p ractices, specific ally that of sus-

tainability disclosure (SD) in that region (Pa tten & Shin, 2019; Tilt ,

2016).

We therefore adopt a m ulti-countr y approach to exa mine the

relationship between the institutional environment (depictive of

Received: 9 May 2019 

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  Revised: 15 Decem ber 2019 

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  Accepted: 2 Januar y 2020

DOI:10 .1111/beer.1 2265

ORIGINAL ARTICLE

Does context matter for sustainability disclosure? Institutional

factors in Southeast Asia

Mi Tran  | Eshani Beddewela

Huddersfield Business School, University of

Huddersfield, Huddersfield, UK

Correspondence

Mi Tran, Hudders field Business S chool,

University of Huddersfield, Queensgate,

Huddersfield HD1 3DH, UK.

Email: t.tran@hud.ac.uk

Abstract

Corporate sust ainability is a dynamic, socially co nstructed concept. Relatedly, to un-

derstand th e variations in the discl osure of corporate sust ainability activities across

countries, we need to in herently explore t heir underlying sociopolitical con texts. At

present our under standing in this re gard, is deficient . We respond to this exta nt re-

search gap by adoptin g a multi-country ap proach to investigate th e relationship be-

tween countries' in stitutional enviro nments and firm s' sustainabilit y disclosure (SD)

practices, ac ross six countries in th e Southeast Asia n region. Our findi ngs reflect a

common focus of Southe ast Asian firms o n community and hum an resources (HRs)

related disclosures . Nevertheless, nuanced diff erences in their overall SD levels con-

firm the influence of di ffering legal, n ormative, and socio cultural system s in engen-

dering greater disclo sure and transpare ncy at a national level. B y quantifying th e

institutional environment and identifying external influencing factors, our study pro-

vides a useful fram ework grounded in neo-institutional t heory to widen the existing

understand ing of how institutional pressures ca n be measured and compared across

different contex ts.

    

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TRAN ANd BEd dEWELA

institution al pressures) and firms' SD pract ices. We focus our study

upon six SEA cou ntries; Indonesia, Malays ia, Philippines, Singapo re,

Thailand, and V ietnam, representative of t he most dynami c econo-

mies in the region ( Amran, Ooi, Wong, & Ha shim, 2016). These coun-

tries consist of different institutional environments, with divergent

legal environments, levels of economic development, population

sizes, religious af filiations, and la nguages, which makes t hem an ideal

study contex t to examine how country-level institutional influences

could engender SD.

Our study the refore contribu tes to extant li terature in the fo l-

lowing ways; firs t, by locating our study withi n the SEA regio n, we

extend the existing discussion in global comparative sustainability

literature by add ressing ext ant gaps in data in re lation to SD from

a non-western, p erspecti ve (Jamali, 2016; O'Co nnor, Parcha, &

Tulibaski, 2017). Second , we also address calls by r esearchers to con-

sider the impor tance and relevance of “ins titutional nestedness a nd

configuratio ns in shaping nonmarket ou tcomes” such as SD (Jamali &

Carroll, 2017, p. 323; Hartma nn & Uhlenbruck, 2015), by ident ifying

commonalities and nuanced differences in institutional influences

across countrie s in relation to SD (Br ammer, Jackson, & Mat ten,

2012; Khan, Lew, & Park , 2015; Reimann, Ehr gott, Kaufma nn, &

Car ter, 2 012).

Third, by measuring multiple institutional pressures de-

rived from neo-in stitutional t heory (See G authier, 2013; Hahn &

Kuhnen, 2013; Miska , Szocs, & Schiff inger, 2018; Smith, Hani ffa,

& Fairbrass, 2011), and cons tructed up on the three pill ars of in-

stitutions; re gulative (depic ted as those pres sures exerted by

country-level l egal systems (L EGs) and regulations), no rmative

(identified to b e pressures pla ced by internation al standard s

and business associations), and cultural-cognitive (identified as

pressures enge ndered by the nat ional culture) (Scot t, 1995), we

address ext ant research de ficiencies in fo cusing upon a single in-

stitutional f orce (Kim, Amaeshi, Ha rris, & Suh, 2013), thus ignor ing

the influence of multiple institutional influences upon SD (Aguinis

& Glavas, 2012; Mar tínez-Ferrero & G arcía-Sánchez, 2 017).

Herein, we ackn owledge the need to not only ide ntify institutional

factors but a lso to measure the extent of their influ ence upon com-

panies' SD practices (Mainar des, Alves, & R aposo, 2011; Matten

& Moon, 200 8). Potentially, our appr oach to the measur ement of

institution al pressures in t his study, therefor e, offers an alte rna-

tive framework i n identifyi ng external inf luencing fac tors thus,

widening the existing understanding of how institutional pressures

can be measure d and compared ac ross different c ontexts (Jam ali

& Carroll, 2017).

The remainder of t he paper is str uctured as fol lows. In the

next secti on, we present th e definition of SD and a r eview of the

current literat ure. We then provide a s ummary of the co ntext of

sustainability and SD in SEA. Subsequently, we focus on discuss-

ing the theoret ical framewo rk based on which i nstitutiona l fac-

tors are identif ied and relevan t hypotheses are d eveloped. Nex t,

we describe the research design and report the empirical results.

The paper concl udes with a discu ssion and summar y of our main

findings.

2 | LITERATURE RE VIEW

Corporate SD has become an impor tant and urgent i ssue for cor-

porations (Be lal & Momin, 2009; Waller & Lanis , 2009), largely due

to increased st akeholder pre ssures for corpo rate accountab ility

pertaini ng to their social an d ecological im pacts (Vac hon, 2010;

Vehkaperä, 20 04). Neverth eless, the def inition and sco pe of SD

remains diverse, with the use of multiple terminologies, such as

Corporate Social Responsibility Disclosure, CSR reporting, sustain-

ability repo rting, and social auditin g (Gray, 2002; Parker, 1986). We

conceptualise SD as information that fir ms disclose to communicate

with stakehol ders regarding the s ocial and environment al impacts of

their corpor ate performance (Schrec k & Raithel, 2018). It comprises

of diverse issues (G ray, Kouhy, & Lavers, 1995), such as information

about the prod ucts, labour, and environmen tal effects of corpora te

practices a nd their politi cal and charit able contribu tions, and so

forth. (Williams, 1999).

Extant SD literature focusing on why companies disclose sus-

tainabilit y information (De V illiers & Alex ander, 2014), have in-

vestigated it s nature, patte rns (e.g., Buhr & Free dman, 2001),

and determinants (e.g., Chakroun & Matsoussi, 2012; El-Halaby

& Hussainey, 2015; Ghaza li, 2007). In this r egard, factors such as

organisatio nal characteristi cs, such as firm size (See Es a & Ghazali,

2012; Mio & Venturelli, 2013; Ra hman, Zain, & A l-Haj, 2011),

profitabilit y (See Anas, R ashid, & Annuar, 2015; Cowe n, Ferreri,

& Parker, 1987; El-Halaby & Hussainey, 2015), indu stry type (See

Chan, Watson, & Woo dliff, 2014; Naser & Hassa n, 2013; Parsa &

Kouhy, 2008), and corp orate governance m echanisms (See H aji,

2013; Jizi, Salama, Di xon, & Stratling , 2014; Khan, Mutt akin, &

Siddiqui, 2013), have be en identified a s key determinant s of SD.

Nevertheless, national institutional environmental influences upon

SD, have received much les s attention (Jac kson & Aposto lakou,

2010; Martínez-Ferrero & García-Sánchez, 2017). Although there

have been a few studies examining this relationship in recent years

(See Mzembe, Meli ssen, & Novakovic, 2019; Rao-Nic holson, Khan,

& Marinova, 2019), majorit y of these studies have b een conducted

using a qualitat ive approach whi ch limits the ab ility to genera lise

findings above the studied settings.

Given that SD is inherently connected to the broader societal

context (Camp bell, 2007; Muthuri & Gilbe rt, 2011), the lack of focus

upon this contex t, especially from a qua ntitative perspec tive, leaves

us with a lack of unde rstanding abo ut whether variations of SD across

countries can b e explained from a contex tual view. Nevertheless , as

institution al environments are dynamic an d complex (Ali, Frynas, &

Mahmood, 2017; Gallén & Pe raita, 2018), any res earch examini ng

their influenc es upon SD requires a comparative approach. Present

SD studies condu cted in the SEA region in this re gard however, has

been dominated b y single countr y case studie s (See Hermawan &

Gunardi, 2019; Hu & Loh, 2 018; Janggu et al., 2014; Zah id et al.,

2016).

Thus, in respo nse to these gaps and the call for e xtending the

understa nding of how cross-national diffe rences influence organ-

isational sustainability decisions (Jamali & Carroll, 2017), we move