wee8

Communication of Corporate Social

Responsibility: A Study of the Views

of Management Teams in Large Companies Susanne Arvidsson

ABSTRACT. In light of the many corporate scandals,

social and ethical commitment of society has increased

considerably, which puts pressure on companies to com-

municate information related to corporate social responsi-

bility (CSR). The reasons underlying the decision by

management teams to engage in ethical communication are

scarcely focussed on. Thus, grounded on legitimacy and

stakeholder theory, this study analyses the views manage-

ment teams in large listed companies have on communica-

tion of CSR. The focus is on aspects on interest, motives/

reasons, users and problems related to corporate communica-

tion of CSR information. A questionnaire survey and

in-depth interviews confirm that there is a distinct trend shift

towards more focus on CSR in corporate communication.

Whilst this trend shift started as a reactive approach initiated

by the many corporate scandals, the trend shift is now argued

to be of a proactive nature focussed at preventing legitimacy

concerns to arise. These findings are significant and inter-

esting, implying that we are witnessing a transit period

between two legitimacy strategies. Furthermore, the find-

ings suggest that the way respondents argue when it comes to

CSR activities coincides with consequentialism or utilitari-

anism, i.e. companies engage in CSR activities to avoid

negative impacts instead of being driven by a will to make a

social betterment or acting in accordance with what is fun-

damentally believed to be right to do. This provides new

input to the ongoing debate about business ethics. The

findings should alert national and international policy makers

to the need both to increase the vigilance and capacity of the

regulatory and judicial systems in the CSR context and to

increase institutional pressure to enhance CSR adoption and

CSR communication. Furthermore, stakeholders need to be

careful in assuming that CSR communication is an evidence

of a CSR commitment influencing corporate behaviour and

increasing business ethics.

KEY WORDS: corporate social responsibility, CSR

communication, legitimacy, stakeholders, utilitarianism

Introduction

In recent years, we have witnessed alarming reports of

amplified consumption of natural resources, increased

pollution, multinational companies’ exploitation of

child labour, the Enron affair and similar, gigantic

management bonuses and so forth. In this context,

the awareness and environmental, social and ethical

commitment of society have increased. As has

widespread mistrust towards how management teams

run our companies (Goodman, 2009; Holder-Webb

et al., 2008; SOU (2004:47), 2004b). This has influ-

enced society to impose new restrictions on compa-

nies to prevent them from engaging in inappropriate

behaviour (see Sutantoputra, 2009). Both on national

and international levels different actions have been

taken to better govern companies and, thereby,

milder the public opinion and restore society’s trust in

companies and in those managing them. Examples of

actions taken are, e.g. increased power to the SEC

(Security Exchange Commission) and its equivalents,

the introduction of national ‘‘Code of Conduct’’

and ‘‘Code of Corporate Governance’’.

Also on company level, actions have been taken to

turn the negative trend by meeting the demand for

more information related to their environmental,

social and ethical activities. This area of information

is, hereafter, referred to as corporate social responsi-

bility (CSR), which is defined by the European

Commission (2001, p. 5) as a concept by which

‘‘…companies decide voluntarily to contribute to a better society and a cleaner environment’’ by

‘‘…going beyond compliance and investing ‘‘more’’ into human capital, the environment and the relations

with stakeholders’’ (p. 8). A decade ago, companies

Journal of Business Ethics (2010) 96:339–354 � Springer 2010 DOI 10.1007/s10551-010-0469-2

devoted very little focus on communicating CSR

(Arvidsson, 2003; Bukh et al., 2006); today it appears

as if this area of information receives increased focus in

corporate communication (Arvidsson, 2009; Ihlen,

2008). Claims for transparency and accountability

have pressured companies to place CSR on the

agenda. However, this poses problems related both to

implementation of CSR strategies and to communi-

cation of CSR achievements. From a management

team perspective, the communication problems arise

in establishing which and how CSR information

should be communicated in order to satisfy the

information needs of stakeholders and, thereby, to

legitimate their behaviours. Due to the lack of

an established framework for how to communi-

cate consistently about CSR, Ellerup Nielsen and

Thomsen (2007) argue that many companies are

completely unprepared for this task.

Grounded on legitimacy and stakeholder theory,

the aim of this study is to analyse the views man-

agement teams in large listed companies have on

corporate communication of information on CSR.

The focus is on aspects on interest, motives/reasons,

users and problems related to corporate communica-

tion of CSR information. The data are based on a

questionnaire survey followed by in-depth inter-

views with investor relation managers (IRMs) at the

largest companies listed on the Stockholm Stock

Exchange. The selection of the largest companies is

motivated by their position as first-adopters and

trend setters when it comes to corporate commu-

nication (compare the development of the Generally

Accepted Accounting Practices, GAAP, in the 1930s).

This study contributes to a richer understanding of

CSR communication, which is an area that has

received limited attention within the body of CSR

research (Birth et al., 2008). Whilst CSR disclo-

sures (annual reports, websites, 10 K reports) have

received some attention, there is a distinct lack of

studies that have examined how management teams

de facto reason when it comes to communication of

CSR information. Thus, this study paves the way for

a discussion of the challenges and opportunities

perceived with CSR communication. Both man-

agement teams and policy makers at national and

international level may find insights on how to

develop relevant and effective CSR communication

by drawing on the multiple aspects focussed upon in

this study. This study builds further on the findings

in Arvidsson’s (2009) questionnaire survey focussed

on how management teams in large companies

communicate non-financial information via the

annual report.

This article has been structured as follows: first the

theoretical and empirical foundations motivating this

study are discussed. Then, the methodology under-

lying this study is presented. Next, the results from

the interviews are discussed, and finally some con-

cluding remarks are presented.

Theoretical and empirical foundations

A stakeholder perspective on CSR

The idea of CSR, as we understand the term,

developed into a debated area in business society

already in the 1920s. During the Depression and the

World War II the debate went silent and when it

woke in the 1950s, the CSR debate was focussed on

companies’ obligation to society. However, defining

what lies in the concept CSR was regarded to be too

complex and obscure to be handled by the man-

agement teams themselves. In the 1970s, it was

proposed that CSR instead could be viewed as

‘‘corporate social responsiveness’’ to the expectations

and demands society had on companies (Ackerman

and Bauer, 1976; Frederick, 1994). In his seminal

paper, Frederick (1994) outlined a conceptual tran-

sition from the philosophical-ethical concept of

CSR (companies’ obligation to work for social

betterment) to the action-oriented managerial con-

cept of corporate social responsiveness (the capacity

of a company to respond to social pressure). Thus,

society should define social responsibilities and then

the management teams should respond to these

societal demands or expectations on how companies

should act in order to be regarded as socially

responsible. Following the nonfigurative and broad

nature of society, Freeman (1984) introduced the

stakeholder perspective as a way for management

teams to define which part of society they should

respond to regarding CSR. Mitchell et al. (1997)

elaborated further on how stakeholders that count

should be identified by evaluating them in respect to

their possession or attributed possession of three

different attributes: power, legitimacy and urgency.

340 Susanne Arvidsson

In 1970 Milton Friedman published an article in

the New York Times Magazines, in which he

argued that the social responsibility of business is to

increase its profits. Also during the 1980s and the

1990s the overriding mantra in business society was

maximising shareholder value and the prime stake-

holder management teams should respond to was the

shareholder. Thus, the intensified debate around the

CSR concept came to challenge the beliefs of

business society by proposing an inclusion of social

responsibility aspects in the hitherto strict focus

on managing companies towards increased share-

holder value. This proposed augmentation of the

shareholder-value concept came to be known as the

enlightened value maximisation or the enlightened

stakeholder theory, which was introduced by Jensen

(2001) – a former advocate of the shareholder-value

concept. Prior et al. (2008) argue that this means an

adoption of a stakeholder-agency perceptive, where

a company is conceived not as a bilateral relationship

between shareholders and management teams, but as

a multilateral set of relationships amongst stake-

holders.

Corporate scandals provide a hot-bed for CSR

Around the turn of the century, the opinion against

the strict focus on shareholder value grew stronger

with the many corporate scandals taking place on the

social, ethical and environmental arenas (e.g. Enron,

WorldCom, gigantic bonuses, exploitation of child

labour, increased pollution and CO2 emission),

which resulted in a widespread mistrust against

management teams. Kennedy (2000) warned in his

book The End of Shareholder Value for boycotts from

stakeholders if the management teams did not

broaden their focus and acknowledge the needs of

other stakeholders than only shareholders. Ghoshal

(2005) criticised the theory underpinning share-

holder value for having contributed to short-sight-

edness and a lack of moral responsibility amongst

management teams. Similar concerns were raised by,

Gray et al. (2005) in their book Corporate Scandals –

the many faces of greed.

Thus, the corporate scandals with their origins in

the social, ethical and environmental arenas provided

a perfect hot-bed for CSR, which at the time was

highlighted as a means to decrease mistrust and

restore stakeholders’ confident in management teams

(see e.g. SOU (2004:46), 2004a; SOU (2004:47),

2004b). The number of CSR articles published in

the European business press increased from 4 to 273

between 1996 and 2005 (Windell, 2006). The

increase in CSR articles in business papers came a

few years later in Sweden than in the U.S. (Borgl-

und, 2009). During this period also the shareholders’

interest in socially responsible companies awoke.

This was manifested in an increasing will to invest in

companies categorised as managed socially respon-

sible. A direct outcome of this was the introduction

of Dow Jones Sustainability Index, FTSE4GOOD

Index and Ethibel Sustainability Index, which are all

examples of indexes in which companies meeting

globally recognised corporate responsibility standards

are included. Friedman and Miles (2001, p. 523)

argue that one possible outcome with the increase in

making Socially Responsible Investments (SRIs)

might be that companies see ‘‘…a business case, as well as, or as opposed to a moral case, for acting in a

more responsible manner’’. In 2006, the U.N.

introduced PRI – Principles for Responsible Investments,

which is a guideline for how investors should

include perspectives on environmental, social and

corporate governance (ESG) issues when they make

investments. Waring and Edwards (2008) argue that

the use of rankings and screens by fund managers to

decide whether to invest in a company or not,

imposes considerable pressure on companies to pro-

vide attractive track records on the issues of impor-

tance to the fund. In Europe and in the U.S., every

one out of eight dollars invested is subject to a social or

ethical screen (Social Investment Forum, 2006).

The financial focus is, however, not replaced or

marginalised by the introduction of the CSR con-

cept. For example, the idea behind the enlightened

value maximisation ‘‘…accepts maximisation of the long run value of the firm as the criterion for making

the requisite trade-off amongst its stakeholders’’

(Jensen, 2001, p. 298). Maignan et al. (2005) argue

that companies should select stakeholders to respond

to based on the stakeholders’ power to – in different

ways – influence corporate financial results. Accord-

ingly, it is not only shareholders that are put forward

as the company’s prime stakeholder. It is acknowl-

edged that other stakeholders than shareholders

could be influential and, thus, should count. How-

ever, with the increased interest in CSR from

341Communication of Corporate Social Responsibility

shareholders (e.g. manifested in an increase in CSR

investments), the argument that companies should

respond not only to shareholders’ demands but also

to societal demands might be less of a conflict.

Ascertaining a positive relationship between the

investments companies make in CSR activities and

the financial outcome has attracted interest for dec-

ades and still is regarded as important for making the

financial benefits with CSR visible to both man-

agement teams and investors (Eccles et al., 2001;

McGuire et al., 1988; Waddock and Graves, 1997).

Margolis and Walsh (2003) show that of 109

empirical studies exploring the relationship between

corporate social performance and financial perfor-

mance, 54 of the studies confirm a positive rela-

tionship, 7 confirm a negative relationship and the

rest show no or indistinct relationship. van Beurden

and Gössling (2008) also confirm, from their review

of earlier empirical studies, a positive correlation

between corporate social and financial performance.

CSR communication – a proactive or a reactive approach

towards achieving legitimacy

Although financial benefits with CSR have been

confirmed in several empirical studies, there is pro-

posed to be diminishing returns associated with

CSR. Hallvarsson (2009) argues that these dimin-

ishing returns present themselves when a company’s

investments in CSR activities go beyond laws and

regulations. However, in order to be ranked as

socially responsible and receive the stakeholders’

approval, he stresses that a company might need to

make investments above the level manifested in laws

and regulations. The position of this level is altered

constantly and is determined by the ongoing debate

in society and by which type and scope of invest-

ments other companies make in CSR activities (see

Ihlen, 2008). According to legitimacy theory a

company achieves legitimacy by operating within

the norms and expectations of the society within

which it operates and this, furthermore, implies that

a company engage in voluntary disclosure in order to

gain legitimacy from, maintain or repair legitimacy

with, relevant stakeholders (Deegan, 2002; Dowling

and Pfeffer, 1975; O’Donovan, 2002). Thus, in

order to be regarded as socially responsible, a com-

pany must make its CSR activities visible and

accessible to both internal and external stakeholders

(Maignan et al., 1999). This is achieved through

corporate communication.

In terms of legitimacy theory, large companies are

socially more visible and more exposed to public

scrutiny. According to Branco and Rodrigues (2006),

these companies are considered to experience more

social and political pressure to act in a more socially

desirable manner and, therefore, are more likely to

provide more CSR information. However, com-

municating too much about its CSR activities might

be contra productive. Ashforth and Gibbs (1989) and

Morsing and Schultz (2006) define it as the self pro-

moters’ paradox, i.e. if a company discloses a too high

CSR profile it might hurt its credibility. They argue

that the level and type of investments a company

makes in CSR activities must feel natural in respect to

its business and correspond with what the company

has taken responsibility for historically. Furthermore,

there is a non-negligible scepticism amongst stake-

holders to companies’ CSR communication. The

scepticism lies in a suspicion that CSR is something

you talk about but not act on, i.e. mere window

dressing or some sort of PR invention (Fan, 2005;

Frankental, 2001; Harding, 2005; Loughran et al.,

2009). Borglund (2009) argues that this scepticism can

be decreased if companies have a clear, transparent

and verifiable CSR communication that discloses

both progress and failures.

Both Birth et al. (2008) and Woodward et al.

(2001) found that executives regard the engagement

in and communication of CSR activities as a proac-

tive goal of their company, which is related to image

building. van Staden and Hooks (2007) argue that

companies can follow either a reactive or a proactive

approach towards achieving legitimacy. The reactive

approach means that a company communicates CSR

information in reaction to some event or crisis facing

the company or the industry. The proactive

approach, on the other hand, means that a company’s

CSR communication is designed to prevent legitimacy

concerns to arise. Sethi (1975) defines social responsi-

bility as reactive adaptation and corporate responsiveness

as proactive adaptation. Amongst others, Neu et al.

(1998) emphasise that it might be difficult to know for

certain which legitimating strategy (i.e. reactive or

proactive) a company is following. Building on

Brytting’s (1998) thoughts about consequentialism/

utilitarianism and duty ethics in a corporate context, a

342 Susanne Arvidsson

company can engage in CSR activities either to ob-

tain/avoid certain consequences or to act in accor-

dance with what is fundamentally believed to be right

to do. In line with this, Lantos (2001, p. 600) proposes

the concept of humanitarian/philanthropic CSR,

which involves the ‘‘… interest in doing good for society regardless of its impact on the bottom line’’.

In the absence of mandatory regulations on how

CSR information should be reported and commu-

nicated (see Birth et al., 2008), the investment

society has taken actions. To overcome the diffi-

culties for investors to understand and evaluate a

company’s achievements in CSR activities com-

municated voluntarily in their financial reports, both

investment banks and financial organisations like the

EFFAS (European Federation of Financial Analysts),

DVFA (Society of Investment Professionals in Ger-

many) and SFF (Sveriges Finansanalytikers Förening)

have developed key performance indicators (KPIs).

The objective with these KPIs is that they can assist

in making CSR achievements measurable and, thus,

improve investment decisions. At the European

Commission, these initiatives are welcomed:

…can contribute to a quiet revolution in the way that enterprises who wish can measure and communicate

their non-financial performance, allowing investors

and other stakeholders to use such information in their

decision making processes. There is hardly a more

powerful incentive to consider the strategic role of

corporate responsibility than an investor able to value

the role that it plays for the future prosperity and

sustainability of a business. (Gunter Verheugen, Vice

President, European Commission. Speech given at

the European CSR Alliance Conference, European

Parliament, 4th December 2008)

To enable comparisons between companies in

different countries and, thereby, make corporate

valuation less complicated, The Global Reporting

Initiative (GRI) was developed in 1997 as a global

reporting system for economic, environmental and

social performance. Today more than 1000 company

worldwide report according to GRI.

CSR in a Swedish context

In an international context, the development of a

CSR consciousness came late amongst Swedish

companies. De Geer (2007, 2009) argues that a

plausible explanation to this might be the birth of

the Swedish Model during the interwar period. The

springing idea of the Swedish Model was that the

companies’ social function was restricted to be

prosperous and generate economic returns. These

returns were then to be transferred via taxes to the

public sector, which prime function was to use the

returns to provide for the social needs of the citizens,

i.e. education and care. Thus, following the idea

upon which the Swedish Model rests, the companies

were more or less relieved from being socially

responsible. In this climate it is evident that a CSR

consciousness did not prosper early in the Swedish

business society.

There has been some interest from research

society in examining if the increased focus on CSR

in media and amongst stakeholders has had an effect

on corporate communication. This focus has pre-

dominantly been on examining CSR disclosures and

not on analysing the reasons for engaging in CSR

communication. When examining the corporate

social reporting practises in Western Europe, Adams

et al. (1998) found that Swedish companies do not

disclose as much CSR information as the German

and British companies. This finding was supported

by Arvidsson (2003) who confirmed that in 1999

this was the category of non-financial information,

which Swedish companies disclosed least informa-

tion on in their annual reports. Examining 105

international analyst reports from the same year,

revealed that none of the reports discussed issues

related to environmental and social responsibility

(ibid). In line with these findings are the findings in

Bukh et al. (2006), where information on CSR was

found to be least disclosed in Initial Public Offering

(IPO) prospects. This might imply that there

was no or at least not a great demand from investors

for this kind of information before the turn of the

century. Maybe this was true also in 2005, where

Swedish companies still did not position themselves

as leaders when it came to CSR reporting (KPMG,

2005). However, in 2009 Arvidsson (2009) found

that 73% of the IRMs at the largest Swedish com-

panies consider that information related to CSR has

increased in their annual reports. Thus, the finding

that three of four IRMs today confirm an increased

extent of this type of information in annual reports

indicates that there has been a shift or at least an

343Communication of Corporate Social Responsibility

eye-opener when it comes to communicating

CSR information. However, according to H&H

Webranking (2008), which focuses on CSR infor-

mation on websites and annual reports from 600

companies in 15 countries, Swedish companies as a

group is still not ranked amongst the best in a

European context. The Swedish companies were

ranked as number seven. This is rather surprising

since Swedish companies in an international context

are regarded to be amongst the first-adopters when it

comes to acting on new trends in corporate com-

munication (FASB, 2001). Moreover, in a Nordic

context, Swedish companies are confirmed to be the

precursors when it comes to disclose voluntary

information in annual reports (see Arvidsson, 2003).

Research design and empirical methodology

Motivation of research methods

There are a number of methods that might be

applied to analyse how CSR is communicated to

stakeholders on the stock market, including disclo-

sure studies, questionnaire surveys, structured and

semi-structured interviews and different forms of

observations. Each of the above methods has its own

strengths and weaknesses, and no single method is

likely to be the ultimate choice when it comes to

provide insightful results. Hence a combination of

research methods may provide the most useful re-

sults, enabling reasonable coverage to be achieved

whilst at the same time allowing some in-depth

understanding to be obtained. Thus, in this study a

questionnaire survey and semi-structured interviews

are used as research methods. Besides the above

discussed advantages of using a combination of re-

search methods, a questionnaire survey preceding

semi-structured interviews is motivated due to the

findings in Arvidsson (2009) where an increased

focus in corporate communication on information

related to CSR was found. Starting with a ques-

tionnaire survey, thus, enables a further exploration

and a confirmation of this trend shift before

in-depths interviews are conducted with the objec-

tive of analysing the views management teams in

large listed companies have on corporate commu-

nication of CSR information.

Questionnaire survey

As mentioned above, the widespread mistrust with

management teams rendered by the last few years of

scandals in the business society paired with the in-

tense climate debate both on national and interna-

tional level have resulted in increased awareness and

environmental, social and ethical commitment of

society. Based on this and the findings in Arvidsson

(2009), the objective with the questionnaire survey

was to explore whether there de facto is a trend shift

towards a more pronounced focus on CSR in cor-

porate communication. Consequently, a question-

naire consisting of two sections was constructed.

The first section requests demographic information

including gender, position, years of experience and

educational level. The second section consists of the

following question:

Do you see any new trend(s) for the future when it

comes to communication of non-financial information?

To best capture new trends and, thereby, confirm

if information related to CSR is emphasised as a new

trend in corporate communication, an open-ended

question with no listed alternatives was agreed upon.

The respondent was requested to elaborate his/hers

answer and was provided with considerable space

where this could be done. Since the questionnaire

only focuses on one distinct question, the probability

of respondents experiencing misapprehension and

confusion is considered to be negligible. Thus, the

questionnaire was not pilot tested.

Like in Arvidsson (2009), the questionnaire was

directed to the companies represented in the index

‘‘OMX Stockholm 30’’ (OMXS30), which includes

the 30 most traded shares at Stockholm Stock

Exchange. After adjusting for companies with more

than one of its shares in the index, the final list of

companies included 27 companies (see Appendix 1).

The selection of the largest companies was moti-

vated by their position as first-adopters and trend

setters when it comes to corporate communication

(compare the development of the Generally

Accepted Accounting Practices, GAAP, in the 1930s;

see AAA, 1936; Artsberg, 1992). Thus, the results

will provide management teams in both large com-

panies and small and medium enterprises (SMEs) an

understanding of challenges ahead and trends within

344 Susanne Arvidsson

the area of CSR communication. In terms of legiti-

macy theory, large companies are socially more

observable and are more exposed to public scrutiny,

which the period of corporate scandals has beard

witness on. Considering that they are believed to

experience greater social and political pressure to act

in a more socially desirable way and to provide

information in different areas of social responsibility,

they are argued to be more likely to communicate

CSR information (see e.g. Branco and Rodrigues,

2006), which, given the aim of this study, further

motivates the sample selection. Although, the single-

country focus of this study could be argued to limit

the possibility to generalise outside the region, the

selected companies are multinational companies

present at the international business arena, which

implies that the results besides being applicable to

SMEs in the region also can be generalised to other

multinational companies regardless of their domicile.

The choice to select the IRM as respondent was due

to his/hers position in the company as responsible for

structuring and managing the corporate communi-

cation directed to external stakeholders. As their title

reveals there is a focus on shareholders, however, this

focus has broadened over the years. Besides being

responsible for upholding a dialogue with present and

potential investors, they are involved in the contin-

uous corporate communication process of developing

communication strategies, structuring annual reports,

preparing company presentations and so forth.

Before the questionnaire was sent, each IRM was

contacted by telephone and presented with the pur-

pose of the study and the area of focus, i.e. exploring

new trends in corporate communication related to

non-financial information. In order not to influence

the respondents, the actual area of focus, i.e. CSR, was

intentionally not mentioned during the conversation.

After this telephone conversation, the questionnaire

was sent both by regular mail and by email (not as an

electronic version) to the IRMs. After 1 and 2 months,

respectively, the non-respondents were personally

reminded to encourage participation. 18 replies were

received, equal to a satisfying response rate of 67%.

Semi-structured interviews

The objective of the interviews was to conduct an

in-depth analysis of the views management teams in

large listed companies have on corporate commu-

nication of CSR information. The results of the

interviews provide data which are in many ways

richer than that provided by the questionnaire sur-

vey where the respondents were restricted to elab-

orate on one question. Due to the nature of the

questionnaire survey, it was not even sure that the

respondents were to discuss CSR in a corporate

communication context. Thus, the results of the two

methods should provide some mutual reinforce-

ment.

The interview procedure was identical for all

interviewees. Since they all had been contacted in

connection with the questionnaire survey preceding

the interviews, they were familiar with the area of

focus in the survey. Therefore, a telephone call was

made to seven of the OMXS30 companies where

the IRM was presented with the purpose of the

interviews and asked to participate. All of the seven

IRMs approached indicated their willingness to

participate in the continuation of the research pro-

ject, which purpose now was described to them as

being:

A research project aimed at analysing the views man-

agement teams in large listed companies have on

communicating information on CSR.

Although this is a fairly small sample, the com-

panies represent different industries, which suggests

that a reasonable cross-section of different views and

strategies concerning corporate communication of

CSR information would be covered. The industries

represented in the sample are: Consumer products,

Retail fashion, Telecom Services, Engineering,

Banking and Financial Services.

All interviews but one was conducted at the

companies’ headquarters where the interviewee

worked. Due to last minute changes, one IRM had

to reschedule to a telephone interview. The inter-

views were structured around an interview schedule

with the main foci being aspects on interest, motives/

reasons, users and problems related to corporate com-

munication of CSR information. These aspects were

developed based on a review of relevant CSR lit-

erature and on an analysis of the answers in the

questionnaire survey. The questions were open-

ended and the interviewees were encouraged to

elaborate their answers and to raise other matters

345Communication of Corporate Social Responsibility

they considered relevant or of interest given the area

at focus. A definite, conscious attempt was made not

to lead the respondent in the course of the interview

or to express any opinions on statements made by

him/her. The interviews took on average one and a

half hours.

Empirical results

Questionnaire survey

In this section, the results from the questionnaire

survey are presented. The section begins with

demographic information related to the respondents

and then follows the answers to the question: ‘‘Do

you see any new trend(s) for the future when it

comes to corporate communication of non-financial

information?’’

Demographic information

The questionnaire was answered by 18 of the IRMs

from the 27 OMXS30-index companies included in

the survey. From Table I, we see that close to 78%

of the IRMs are men.

More than half of the respondents are MSc. in

Business Administration, whilst three are MSc. in

Engineering and two have an MBA. They have on

average 4.4 years of work experience from being

responsible for the investor relation function at their

present or other previous company/ies. They have on

average worked 9.7 years in the present company,

which implies that they have worked in other posi-

tions in the company before they were appointed

IRM. Their industry experience is on average

12.4 years.

Results from questionnaire survey

Rather unexpectedly, all of the 18 respondents

emphasise that CSR-related information is the new

next trend in corporate communication of non-

financial information. An increased focus, more

information and more detailed information, as well as,

improved disclosures on CSR are emphasised in the

answers. Examples of answers are: ‘‘More focus on

CSR questions and business ethics’’, ‘‘More disclo-

sure on environmental and CSR issues’’, ‘‘More CSR

and Corporate Governance’’, ‘‘More on sustainabil-

ity’’, ‘‘More information on Environment, Health,

Security and Quality (EHSQ)’’ and ‘‘Focus will

increase on communicating CSR issues’’. Thus,

judging from the answers in the questionnaire survey,

the indication in Arvidsson (2009) of a trend shift

towards a more pronounced focus on CSR in cor-

porate communication is confirmed. According to

the respondents, the trend shift is driven by the need

to include CSR-related information in the corporate-

valuation process. This view is manifested in answers

like: ‘‘Non-financial information, like CSR, is get-

ting more important for a correct valuation’’ and ‘‘A

growing importance of non-financial long-term

value drivers’’. Besides the strong focus on CSR, the

endeavour of making non-financial information

measurable is highlighted by some of the IRMs as a

trend area within the corporate communication of

non-financial information.

Semi-structured interviews

In this section, the results from the interview study

are presented. The section begins with demographic

information related to the respondents. Thereafter,

the results are presented in the following order:

Interest in CSR information, Motives/reasons for

communicating CSR information, Users of CSR

information and Problems with communicating

CSR information.

TABLE I

Demographic information of the respondents in the

questionnaire survey

Sex

Male 77.8%

Female 22.2%

Work experience

Total years at the position

or similar position in other company

4.4 (median 3.5)

Year(s) in the company 9.7 (median 10.0)

Year(s) in the industry 12.4 (median 11.0)

Education

MSc. in Business Administration 11

MSc. in Engineering 3

MBA 2

Degree in Political Science 1

Vocational School 1

346 Susanne Arvidsson

Demographic information

Seven IRMs from the 27 OMXS30-index were

included in the interview study. From Table II, we

see that close to 86% of the respondents in the semi-

structured interviews are men. Like in the question-

naire survey, more than half of the respondents are

MSc. in Business Administration, the others are either

MSc. in Engineering (2) or have an MBA (1). They

have on average 3.0 years of work experience from

being responsible for the investor relation function at

their present or other previous company/ies. They

have on average worked 9.2 years in the present

company, which like in the questionnaire survey

implies that they have worked in other positions in

the company before they were appointed IRM. Their

industry experience is on average 15.5 years. The

industries represented in the sample are: Consumer

products, Retail fashion, Telecom Services, Engi-

neering, Banking and Financial Services.

Results from semi-structured interviews

Interest in CSR information. There is a unison view

amongst all the IRMs that the interest in CSR

information has increased significantly during the last

few years. This trend, which they believe, will grow

even stronger in the next few years. The many

corporate scandals resulting in widespread mistrust

are put forward as the reason to this increased

interest. The interest is above all argued to have

come from the actors on the stock market.

According to a majority of the IRMs, they showed

hardly any interest in discussing CSR only a few

years ago. However, at the same time as the stock

market’s interest in CSR information is argued to

have increased, financial analysts’ interest is argued to

be of the character ‘‘…tick ‘check a box’’’ and ‘‘…make sure that the company is not ranked last’’. A few of the IRMs are of the opinion that their

owners and potential investors have a more pro-

nounced focus on CSR than financial analysts.

Whilst some of the IRMs expect the owners/

investors to drive the future interest in CSR, others

expect the investment funds to push for an increased

focus on CSR information. In relation to this, it is

often put forward during the interviews that more

and more investment banks today evaluate compa-

nies’ CSR achievements and environmental profile.

The media’s increased coverage of CSR activities

in business society is pointed out as an important

driving force behind the ongoing public debate on

CSR and different stakeholders’ increased interest in

CSR-related information. However, several of the

IRMs express concern of how media covers and

reports on companies’ CSR activities. They feel that

journalists sole purpose sometimes seems to be ‘‘…to reveal companies at all costs’’ and this ‘‘…witch hunt’’ do they not believe is constructive. During

the interviews several IRMs emphasise that author-

ities today require or, better yet, urge or recommend

companies to disclose more information on their

CSR activities. Although, most of this information

today is voluntary to disclose, they expect a future

trend with more mandatory CSR information.

Several of the respondents, put forward the corpo-

rate scandals as a reason for authorities taking an

interest in companies’ CSR policies and strategies.

During the interviews, a few of the IRMs seems to

find it central to emphasise that CSR information is

not only something that external stakeholders take

an interest in but also something that the manage-

ment team itself considers important to be worked

upon actively within the company. For example,

KPIs related to CSR are argued to be central for the

management control.

Motives/reasons for communicating CSR information

All the IRMs put forward the increased interest from

different stakeholders as an important reason for the

increased focus on CSR information in their cor-

porate communication. Once again the corporate

scandals are argued to be the reason for the increased

TABLE II

Demographic information of the respondents in the

interview study

Sex

Male 85.7%

Female 14.4%

Work experience

Total years at the position or similar

position in other company

3.0 (median 2.5)

Year(s) in the company 9.2 (median 7.5)

Year(s) in the industry 15.5 (median 18.5)

Education

MSc. in Business Administration 4

MSc. in Engineering 2

MBA 1

347Communication of Corporate Social Responsibility

interest from stakeholders and, thus, for why they

have reacted to this by increasing the focus on CSR

in their corporate communication. One IRM

emphasises that ‘‘…today there is an increased de- mand for information on how we handle our

responsibilities within the social and environmental

areas’’. Several of the respondents highlight the need

to be sensitive and listen to the stakeholders or as one

IRM puts it ‘‘You must be sensitive to what kind of

corporate information is requested and then respond

to this request. This is especially central when CSR,

which is a new area, is concerned’’.

The IRMs are of the opinion that the commu-

nication of CSR information manifests if not a direct

‘‘focus shift’’ from shareholders to stakeholders so a

‘‘focus enlargement’’ where other stakeholders than

shareholders also count. Thus, this manifestation is

argued to be a response to the public opinion of the

shareholder focus being to strict/narrow. One IRM

explains the development like this: ‘‘During a long

time, we have had a focus on the maximisation of

shareholder value, but today there is a more and

more pronounced notion that the needs of all

stakeholders should be considered when managing a

company. Employees, customers, the public…’’. The communication of CSR information is also

argued to be motivated by the objective to highlight

that, as two IRMs put it, ‘‘…we are on top of things’’ and ‘‘…that we will not be ranked last when our CSR work is evaluated’’. To meet this objec-

tive, they stress that the achievements in their CSR

work must be made visible through corporate

communication. However, the IRMs do not appear

to strive to being ranked as the company with the

best CSR profile. Instead they all seem to be

focussed on avoiding to be ranked as the company

handling its CSR activities the worst. This view is

highlighted in every interview. One IRM sums it up

like this ‘‘We do not direct more resources to

communicating our CSR work than necessary for

being evaluated as ‘good enough’’’.

Another reason put forward as underlying the

communication of CSR information is the vision to

create an image of ‘‘the responsible company’’. Sev-

eral of the IRMs stress the importance of communi-

cating that the company is managed in accordance

with the public opinion of how CSR-conscious

companies are run. One of the IRMs emphasises that

‘‘It is necessary that our corporate values include a

clear CSR focus’’. Another IRM argues that ‘‘…our CSR image is developed through a ‘‘conscious’’

corporate communication’’.

During the interviews, a majority of the IRMs

return several times to the importance of commu-

nicating CSR information to avoid value destruc-

tion. One IRM puts it like this ‘‘If we do not handle

our CSR the right way, it can have considerable

consequences on our financial performance’’. Yet

another IRM argues that ‘‘Engaging in CSR activ-

ities has become critical for business’’. They all

communicate an awareness of the negative impact

bad handled CSR activities can have on the com-

pany’s performance. According to the IRMs, the

avoidance of this negative impact is handled by

disclosing the work put into CSR activities. Whilst

the fear of value destruction is emphasised by all the

respondents, the capacity to create value by engaging

in CSR activities is only highlighted by one IRM.

He argues that ‘‘There is an economic perspective

with CSR that shows that we can create value when

we engage in CSR activities. This relationship must

be communicated’’.

Users of CSR information

When the IRMs discuss the users of CSR infor-

mation, they mention financial analysts and owners/

investors. No other stakeholders are put forward as

user(s) of CSR information. They do highlight that

other stakeholders’ interest in CSR information has

increased. However, when it comes to discussing for

whom they structure and communicate CSR

information they reveal a clear focus on the actors on

the stock market. Even when CSR information in

annual reports and sustainability reports are dis-

cussed, the prime target group put forward are the

stock market actors. One IRM says that ‘‘The trend

that investment banks evaluate our CSR work

means that we structure the CSR information so that

it meets their requirements’’.

A few of the IRMs put forward the company

itself as an important user. They argue that CSR

information is of importance to the management

team and that it is closely being monitored and used

as input for management control.

Problems with communicating CSR information

All the IRMs consider the communication of CSR

information to be somewhat problematic. According

348 Susanne Arvidsson

to several of the IRMs, the economic outcomes with

CSR activities are important to disclose. However,

the IRMs emphasise that it is difficult to commu-

nicate the economic perspectives of CSR. Above all,

they are concerned with how CSR information

should be communicated in a way that enables it to

be used in a valuation context. One IRM raises the

question ‘‘How should CSR information fit into the

financial analysts’ spread sheets?’’.

The validity aspect is also discussed as problematic

by several of the IRMs. They regard it to be difficult

to find data and statistics that validate that what is

communicated in relation to their CSR work is true

and not something that is only made up. In relation

to the validity aspects, a majority of the IRMs put

forward the lack of relevant measures or KPIs related

to CSR as further aggravating the communication

problems. One IRM argues that ‘‘…there is a need for standards when it comes to how CSR informa-

tion should be reported. Standards would improve

the comparison between companies’’. A few of the

IRMs emphasise that GRI is a good first step in

overcoming the communication problems related to

CSR information.

Although, the IRMs appear to focus primarily on

how CSR information should be communicated and

structured in a way that meets the requirements of

the actors on the stock market, a few of the IRMs

broaden this focus to also include other stakeholders.

This enlarged focus does, however, raise new

problems. Especially the difficulties paired with

trying to meet all stakeholders request for CSR

information is perceived as a problem.

Discussion and concluding remarks

Already the questionnaire survey confirmed the

findings in Arvidsson (2009) of a trend shift towards

more focus on CSR in corporate communication.

This trend shift became even more pronounced

during the in-depth interviews, where the IRMs put

forward CSR as if not the most important area of

information beside financial figures so one of the

most important. This is a huge change in focus if one

compares with the findings from around the turn of

the century, where this area of information was the

least focussed upon in corporate communication

(Arvidsson, 2003; Bukh et al., 2006).

The argument proposing that the many corporate

scandals, which we have witnessed on the social,

ethical and environmental arenas (e.g. Enron,

WorldCom, gigantic bonuses, exploitation of child

labour, increased pollution and CO2 emission), have

provided a perfect hot-bed for CSR is also con-

firmed by the IRMs. They argue that media’s cov-

erage of the scandals (which some of the respondents

define as being too aggressive and unconstructive)

has increased the overall interest in examining the

nature of companies’ CSR policies and strategies.

The interviews also indicate a belief that the

accepted level for what a company must do to be

considered socially responsible (compare Hallvars-

son, 2009) is higher today than only a few years ago

due to these scandals. The increase of CSR infor-

mation in corporate communication, thus, appears

to be a response to an identified need, which implies

that management teams are sensitive to market

trends and shifts in views and opinions of stake-

holders and that this results in more attention and

resources being directed towards this area. Accord-

ingly, the action-oriented managerial concept of

corporate social responsiveness, as proposed by Fred-

erick (1994), is in line with how the IRMs reason.

Instead of pronouncing the ‘‘responsible’’ part they

emphasise the ‘‘responsiveness’’ part, i.e. they focus

on responding to social pressure. Building on the ideas

of different legitimacy strategies (van Staden and

Hooks, 2007), the interviews indicate that the in-

crease in CSR communication started as a reactive

approach, i.e. a reaction to the corporate scandals

with the aim of restoring the stakeholders’ damaged

confidence and trust in how companies were being

run. However, it seems like if the IRMs, at least

argue, that CSR communication today is more

adopted as a proactive approach focussed at preventing

legitimacy concerns to arise. Maybe we are in some

sort of transit period between two legitimacy strat-

egies. Ascertaining this for certain is, of course, dif-

ficult like Neu et al. (1998) emphasise, so an

indication of a strategy shift might be the best we can

arrive at today.

From the interviews it was also soon established

that the IRMs did not see CSR as a value-creating

activity. Instead it was argued that avoidance of value

destruction was the prime motive behind the deci-

sion to disclose the work the company put into CSR

activities. The risk of experiencing diminishing

349Communication of Corporate Social Responsibility

returns with investing in CSR activities, as discussed

by Hallvarsson (2009), or loosing credibility due to

communicating a too high CSR profile, i.e. being

subjected to the self promotors’ paradox (Ashforth and

Gibbs, 1989; Morsing and Schultz, 2006) is evi-

dently not a problem. The IRMs emphasised frankly

that they did not aim at becoming best-in-show

when it comes to CSR. Instead, ‘‘good enough’’ was

their humble aim. In this respect, the companies

show great similarities to financial analysts, who,

according to the IRMs, only are interested in

making sure the company is not ranked last in any

CSR ranking. Thus, the interviews reveal that their

way of arguing when it comes to CSR activities

coincides with consequentialism or utilitarianism

(Brytting, 1998), i.e. the companies engage in CSR

activities to avoid negative impacts (bad ranking re-

sults, public mistrust, boycotts, fewer potential

investors) instead of being driven by a will to make a

social betterment (Frederick, 1994) or acting in

accordance with what is fundamentally believed to

be right to do. This way of reasoning reveals a rather

delicate and somewhat deceptive balancing act.

They more or less admit that it is not their own

initiative to direct attention and resources to this

area, instead, they emphasise that they respond to the

altered views and needs of the stakeholders. During

the interviews it is, however, emphasised that they

are not interested in devoting too much resources

but settle with being ‘‘good enough’’, which

hopefully earns them the epithet of a responsible

company. Several of the respondents also put for-

ward image building as a critical motive underlying

the decision to focus on CSR in corporate com-

munication. This is in line with the findings in

Woodward et al. (2001) of how British executives

reason. Thus, the above indicates that IRMs adopt a

utilitarian perspective of CSR communication, i.e.

they see a utility of engaging in CSR communica-

tion.

If we consider the information flow between

management teams, financial analysts and investors,

it is clear from the interviews that the increased

interest in CSR information primarily is considered

to come from the actors on the stock market. The

owners and potential investors are put forward as

those with the most pronounced focus on CSR,

whilst financial analysts’ interest in CSR information

is argued to be less distinct. Considering that

financial analysts are viewed as important informa-

tion intermediaries between companies and its

owners and potential investors by mitigating the

problems of information asymmetry by facilitating a

credible information exchange (Barth et al., 2001;

Healy and Palepu, 2001), this tepid interest in CSR

information is rather remarkable, considering that, at

least according to the IRMs, owners and potential

investor – the clients of financial analysts – show a

pronounced interest in CSR information. This could

imply that the access to CSR information is rendered

difficult due to the financial analysts’ unenthusiastic

interest in this area of information. Although a

couple of the IRMs argue that CSR is not only

attracting interest from external stakeholders but also

from inside the company (for example in the area of

management control), the in-depth interviews con-

firm that the increased focus on CSR information in

corporate communication is definitely demand driven

and not supply driven and that the investors are

emphasised as the most interested party of the three

present in the information flow.

From the interviews it soon became evident that

there is a clear focus on the actors on the stock

market when the IRMs structure the corporate

communication. Maybe not so surprising, since

IRMs has a tradition to focus on this stakeholder

group. However, this focus is believed to have

broadened over the years as the IRMs have become

more involved in the overall corporate communi-

cation process not only the part focussed on share-

holders. Perhaps it could be argued that if you please

the needs stated by the shareholders, who are

regarded to be a demanding stakeholder, the needs

of other stakeholders are, thus, satisfied (compare the

conceptual frameworks underlying IASB’s and

FASB’s reasoning concerning the decision-usefulness

of financial statements). Nevertheless, the IRMs

argue that their communication of CSR information

is selected and structured to please, or better yet fol-

lowing the above discussion, respond to the needs of

the actors on the stock market. Since they show an

increased interest in CSR information a direct out-

come, consequently, is more focus on this area in the

corporate communication. Considering the argu-

ment that companies should select stakeholders to

respond to based on their attributes, e.g. power,

legitimacy and urgency (Mitchell et al., 1997) or

differently put the stakeholder’s power to influence

350 Susanne Arvidsson

financial results (Maignan et al., 2005), it is not sur-

prising that the capital providing nature of this

stakeholder group, makes companies respond, first

and foremost, to their needs when it comes to CSR

information. Thus, the enlightened stakeholder the-

ory (Jensen, 2001) appears not yet to have challenged

the deep-rooted concept of shareholder value.

However, from the interviews we saw that the IRMs

considered the communication of CSR information

per se to be an evidence of if not a direct ‘‘focus shift’’

so a ‘‘focus enlargement’’ where other stakeholders

than only shareholders matters. If this ‘‘focus enlarge-

ment’’ ultimately will result in a ‘‘focus shift’’ is for the

future to tell. Though, CSR seems to be a catalyst in

this process.

The trend shift towards more focus on CSR in

corporate communication is, however, perceived to

be somewhat problematic. All the IRMs put forward,

what I choose to refer to as, the validity aspect and the

economic-outcome aspect as the two most troublesome

when it comes to CSR information. Both lack of

relevant CSR-related measures/KPIs and difficulties

associated with finding data and statistics 1 that validate

CSR information make the IRMs show a (genuine?)

concern of being thought of or even accused of as

window dressing their communication with untrue

CSR information. Thus, the scepticism amongst

stakeholders regarding the validity of companies’

CSR communication as discussed by Borglund

(2009), Harding (2005) and Frankental (2001) seem

to be an identified problem also within the companies.

To overcome this problem, the respondents empha-

sise the need for objective evaluations and standards,

which would facilitate a validation of CSR informa-

tion and, thereby, make it easier for stakeholders to

compare companies’ achievements within the CSR

area. The reporting system GRI and investment

banks’ attempts to make evaluations of companies’

CSR achievements and environmental profiles are

put forward as good initiatives, though, insufficient.

The ongoing work by financial organisations

like EFFAS, DVFA and SFF to develop key per-

formance indicators, which can assist in making

CSR achievements measurable, appear to be highly

relevant and required to overcome not only the

validity problem, discussed above, but also help with

the economic-outcome aspect, which also is put

forward as troublesome by the IRMs. They upright

admit that they find it difficult both to fully unravel

the economic outcome of their CSR work and to

communicate it to external stakeholders. Further

aggravating this problem is that financial analysts

when making company valuations need information

to be in a format suited for spread-sheet calculations

and the majority of CSR information is not regarded

to be even close to being presented in this format.

Consequently, the interviews indicate that the non-

negligible problems related to the validity aspect and

the economic-outcome aspect associated with CSR

information risk resulting in an inefficient flow of

information, which causes negative consequences

both for management teams and for stakeholders.

Thus, there appears to be a critical need for man-

agement teams, financial organisations and national/

international authorities to continue to direct further

attention and resources towards these areas in order

to overcome these problems. The development of

KPIs and standards within the CSR area emerges as

being especially crucial.

Besides giving management teams in both large

companies and SMEs an understanding of challenges

and trends within the area of CSR communication,

this study hopefully provides some insights to legis-

lative and regulatory bodies on how they should

judge the need for developing regulations and setting

standards in the field of CSR reporting and com-

munication. The work by authorities, so far, appears

to be a welcomed contribution by the IRMs. They

feel that the authorities’ introduction of national

‘‘Code of Conducts’’ and ‘‘Code of Corporate

Governance’’ are relevant means of ascertaining that

companies have CSR policies and strategies in stall,

which assist in enhancing comparability, decreasing

the risk of further scandals and, thus, in restoring

stakeholders’ trust in how companies are being run.

Note

1 This concern seems to be applicable not only for

CSR information but for non-financial information in

general. From the questionnaire survey, we saw that the

endeavour of making non-financial information mea-

sureable was highlighted as a trend area within corpo-

rate communication of non-financial information. This

fell outside the focus of this study; however, this area is

highly relevant and needs to be addressed further in

future research.

351Communication of Corporate Social Responsibility

Appendix 1: Companies included

in the questionnaire survey

and semi-structured interviews

Companies

Alfa Laval

Assa Abloy

AstraZeneca

Atlas Copco

Autoliv

Boliden

Electrolux

Eniro

Ericsson

H&M

Handelsbanken

Investor

Nokia

Nordea

SCA

SEB

SKF

SSAB

Sandvik

Scania

Securitas

Skanska

Swedbank

Swedish Match

TeliaSonera

Tele2

Volvo

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Department of Business Administration,

Lund School of Economics and Management,

Lund University,

P.O. Box 7080, Lund, 220 07, Sweden

E-mail: [email protected]

354 Susanne Arvidsson

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