The Legitimacy of Institutional Theory : The Case of CSR Reporting in Cross-Cultural Settings

This paper puts forward an argument that cultural factors interact with the institutional structures of organizations; and thus influence their CSR reporting system. Observations on 403 annual reports, corporate websites and CSR stand-alone reports of 203 companies in China, Malaysia, India and the UK support the argument. The results show that in China, both the quality and quantity of CSR disclosure increase significantly with the existence of CSR board committees, where the culture is one of collectivism, rather than of individualism. The paper also demonstrated that government-owned companies in Malaysia provide CSR disclosure of a quality higher than non-government owned companies. A similar relationship does not apply to companies in other countries. The results testify to institutional theory — that CSR reporting is influenced by the organizational settings of a country and the culture of a country. For policy makers, it is suggested that CSR reporting policy should be drafted in a way that suits the local culture