A Grounded Theory to Map the Territory of Saudi Corporate Social Responsibility Reporting

This study investigates the practice of corporate social responsibility reporting (hereafter CSRR) in the context of Saudi Arabia. The investigation encompasses a detailed description of corporate social responsibility (hereafter CSR) perception, CSR implementation and CSRR; and an interpretation for reporting practice. The interpretation seeks to provide a grounded theory that is capable of offering a plausible explanation for what shapes this reporting. In addition, the study examines and links the drivers and desired outcomes of CSRR. A primarily interpretive philosophical assumption was employed in the study, utilising the grounded theory methodology and semi-structured interviews as a tool for data collection. The data were collected through three phases of interviews with participants from the Saudi petrochemical and energy industry. The personnel chosen to participate in the research were those with direct CSR involvement who were empowered to make decisions; most of them were leaders or managers. The first two phases were designed to elicit what is understood by CSR within Saudi companies, how it is implemented and how it is then reported. These two phases built the preliminary concepts and categories of the open and axial coding analysis. The third phase of interviews were then used to construct the selective codes and to identify the core concept in order to generate the theory. The use of the grounded theory methodology exactly as instructed is largely absent from the CSR literature. The first part of the findings provides a description of CSR practices. It reveals that despite the uncertainty regarding exactly what CSR means to Saudi companies and what it involves, CSR is perceived as an important concept. A gap between how it is perceived and how it is to be implemented as well as a lack of a systematic CSR strategy and performance measurements were evidenced. CSR is implemented as ‘external’ to business operations and there is a lack of creativity. There is also evidence of a gap between CSR implementation/activities and CSRR. CSRR is arbitrary and inconsistent, lacks a formal mechanism, has many transparency issues, and gains less attention than CSR activities. The second part of the findingsbuilt utilising the first partpresents a grounded theory that is induced to interpret the reporting practices of Saudi companies. The generated theory is illustrated in a textual and diagrammatical model that maps the territory of Saudi CSRR. Based on the managerial perspectives, the map explains what forms and shapes the reporting practices, illustrating and identifying accountability (both tacit and/or explicit) as the core concept/engine of the CSRR mechanism. Accountability in this grounded theory not only reenergises the conventional importance of the concept but also extends its scope. Therefore, accountability is not only society-centred but also organisation-centred. The study concludes by suggesting a number of broad proposals and recommendations for future research and practice, which were developed by considering the challenges faced by companies that were captured during the analysis. It is hoped that the recommendations will improve CSRR. Introduction Although CSR reporting has been developed and transformed from being on the periphery of accounting literature to being in the centre of the research agenda (Parker, 2014), it is still under construction and the organisational practices that are related to CSR reporting still need more exploration (Unerman et al., 2007; Owen, 2008; Gray, 2009; Hopwood, 2009; Liane et al., 2013). For example, according to Tilt (2016), commenting on the previous Adams’ classification: “[w]hile CSR reporting has been studied by a large number of scholars, only a few fall into the second of the categories above, and consider context in detail. This is particularly relevant when considering developing countries. A few papers have specifically reviewed studies on developing countries. ” (p.2). CSR reporting needs to be extended from merely observing the current practice to innovating new approaches (Gray, 2008). Also, it needs to initiate a broader discussion and further engagement of stakeholders’ groups and local government in CSR reporting research, as well as integrating CSR reporting into mainstream accounting education from the views of the broader values of society and ethics (Owen, 2008). In spite of the significant progress in the extent and quality of CSR reporting – even though it is voluntary in general (Milne and Gray, 2007) – reporting is still a developed country phenomenon, due to the fact that the majority of CSR studies have been undertaken in countries and regions such as the USA, the UK, Western Europe, Australasia, North America and Japan (Chapple and Moon, 2005; Tilt, 2016). Very few studies have focused on CSR in developing countries (for example, Hossain et al., 2006; Kamla, 2007; Eljayash et al., 2013) and the existing literature is relatively narrow. However, recently there has been growing interest in studying CSR reporting in developing countries, mainly as a result of the increased tendency towards capitalist systems (Tilt, 2016). Most research conducted in developing countries has concentrated on newly industrialised countries such as Hong Kong, China, Korea and Malaysia (Akrout and Ben Othman, 2013), while few studies have focused on Arab countries. In general, these studies mainly have a social nature, are relatively recent and have an exploratory aim (Visser 2009). The body of CSR and CSR reporting research in Saudi Arabia, considering its political, economic, social and cultural characteristics, is still in its initial stages and shows a dearth of available material in this regard, as will be discussed in detail in Chapter 1. Similar to the international orientation, the scant literature on the context of Saudi Arabia focuses on describing CSR activities and sometimes on CSR conception more than reporting. There is an agreement that there is a growing interest in the concept of Saudi business and society. Also, attitudes towards CSR in Saudi Arabia are extremely influenced by religious and traditional values regarding responsibility (Emtairah et al., 2009; Al-Sabban et al., 2014). It is also noted that CSR practices and policies vary across Saudi businesses. However, there is a lack of theoretical and practical frameworks (Mandurah et al., 2012). Studies on CSR reporting show that the level of CSR disclosure in Saudi Arabia is low and involves non-environmental voluntary issues of interest to stakeholders. There is also an agreement on the positive influence of a company’s size and the engagement of the owners with CSR reporting. International practices have verified that although there are some underlying standards and practices, such as ISO 26000 and GRI, there is no unified pattern for CSR because the practices vary among countries. However, this variation is related to the national business systems rather than the country’s development stage, which in turn reflects the profile of the country of operation rather than the original country (Chapple and Moon, 2005). Because the country and the contextual dependency of CSR are significant factors (Dobers and Halme, 2009; Gjølberg, 2009), it is important to note that: “the concept and practice of [CSR] must be defined by its national and cultural context, if it is to be relevant and effective” (Visser and Tolhurst, 2010, p. xxvi). According to Tilt, (2016), although research is scant, the papers that have been written on the subject of CSR reporting offer the opinion that the ‘country’ factor determines the extent of companies’ engagement in CSR practices and the degree of their reporting, but they do not investigate in any greater depth. However, much of the research on developing nations has utilised developed countries’ frameworks in order to explain the reporting practices. Therefore, for the nations whose social/political, cultural or regulatory context is different, the existing research does not explore the various contextual elements that can affect firms’ CSR practices in such countries. A study by Ioannou and Serafeim (2012) (cited in Halkos and Skouloudis, 2106) indicates that country-related factors explain more than a third of the variations in companies’ CSR engagements. Highlighting variations in CSR practice within different nations identifies the need for more research on the style and method of reporting practices, which should be relevant to the individual country’s own qualities. A more rounded picture of the elements that inform social disclosure might emerge, and knowledge of what amounts to ‘good practice’ should be apparent, not to mention what is classed as ‘bad practice’. Although this may not further the progress of voluntary reporting initiatives, it might stimulate discussion on the success of such initiatives, and if big firms can set accountability as a goal (Gray et al., 1996, p. 164) It can be argued that CSR is more essential in developing countries than in the West, due to its valuable stimulation and rich challenges to the sceptical patterns of Western scholars (Kisenyi and Gray, 1998). Visser (2009) outlines four reasons for distinguishing developing countries and justifying the focus on developing countries when studying CSR: “1) developing countries represent the most rapidly expanding economies, and hence the most lucrative growth markets for business (IMF, 2006); 2) developing countries are where social and environmental crises are usually felt most acutely in the world (WRI, 2005; UNDP, 2006); 3) developing countries are where globalisation, economic growth, investment, and business activity are likely to have the most dramatic social and environmental impacts (both positive and negative) (World Bank, 2006); and 4) developing countries present a distinctive set of CSR agenda challenges that are collectively quite different to those faced in the dev