■ 国際会計研究学会 年報 2019 年度第 1・2 合併号
Ⅳ

査読論文

Quest for a Single Theory to Explain Managerial
Motivations for Sustainability Disclosures:
Legitimacy Theory, Stakeholder Theory orInstitutional Theory

Md Tapan Mahmud
九州大学大学院生

要旨

経営者がサステナビリティ情報を開示する動機を説明する際，研究者は正統
性理論，ステークホルダー理論，制度論といった 3 つの基礎理論を参照し，様々な仮説のために利用する。正統性理論は利己的である企業は開示を通じて企業経営を行っていくための社会的承認を求める，ステークホルダー理論は企業が「強力な」ステークホルダーを特定し，彼らのための開示を構築する，制度論は企業は「同型化」を追求し，サステナビリティ開示を含む社会分野および産業分野のさまざまな側面を模倣すると主張する。本稿の目的は，前述の経営者の動機に関する説明を容易にするために，上記の 3 つの理論のなかから単一の（適切な）理論を提示することである。本稿は文献レビューに基づく分析である。
「単一理論」に関する結論に達する前に，それらの各理論を「単一理論」と（仮定的に）見なし，3 つの理論を比較する。つまり，各理論が単一理論として選択されたと仮定して，各理論の長所と短所を分析する。結論として，大部分の状況において，制度論がステークホルダー理論と正統性理論の両方を補完可能であり，サステナビリティ開示に関する経営者の動機を説明できる単一の理論であることが明らかになった。ただし，制度論が「単一理論」として選択された場合でも，特定のシナリオにおいては，ステークホルダー理論または正統性理論が制度論よりも優れている。本稿での考察をもとに，研究者は，サステナビリティ開示に関する問題を理解，説明，規定できるのとともに，前述の理論に関わる概念的枠組みを作成することができるであろう。
（2019 年 11 月 25 日審査受付

2020 年 3 月 27 日掲載決定）135

Ⅰor related stakeholder groups. This contrasting

Introduction

phenomenon has pushed numerous academics

Organizations want to tune themselves withto dig deep to understand the managerial

theirsurroundings,

communicate

with

and

hence,

they

motivations behind such voluntary disclosuressocietyandrelated(Deegan, 2014b; Deegan, 2002; Guthrie andstakeholders (Coopers and Lybrand, 1993).
There

are

numerousorganizational
advertising,channels

communication,

publicrelationssuch

Parker, 1990).

forTo make the assessments more complex,asthere remain varied sources of managerial

brochures,motivationsforpublishingvoluntary

employee newsletter, annual report and sosustainability information (Holder-Webb eton (Deegan, 2002; O’Dwyer, 2001; Deeganal., 2009). In most cases, managers are

and Rankin, 1999); among these, annual

motivated

report is the most commonly accepted andhowever, few managers are motivated fromrecognized communication vehicle (Buhr, 2002).

corporate responsibility-based perspectives

Following the popularity and acceptance oftoo. Furthermore, managers with irrational

the annual reports, sustainability-related

motivation,

disclosures used to be a tiny part of it.

pressures are also existent. To explain or

However, nowadays, there are composite

interpretreport (integrated report)—holding traditional

threeannual report and sustainability disclosures

accepted—and standalone report (sustainability report),

legitimacy theory, stakeholder theory andwhich contains only sustainability-related

institutional theory. Choice of theory—for

information; both the reports hold ESG

the researchers—in explaining managerial-(Environmental, Social and Governance)

motivations

related issues.

individual value judgment (Deegan, 2014a).

frominterest-based

pursuingsuchandinstitutionalized

managerial

fundamental

differs

motivations,

theories

practicedinangles;

are

upon,

vastlynamely,accordancewithAccounting reports (i.e., annual report,

These three theories share some common

integrated report, sustainability report) arefeatures and have some contrasting ones too.

broadly considered as social, political andDissimilarities among these theories denoteeconomic documents, that could influencethat depending on a given context, a certain

economic and political arrangements andtheory might have better explanatory power

may also vibrate the private interests of acompared to the others; the contribution of

given firm. Interestingly, Corporate Social

this

Reporting(CSR)(1),i.e.,sustainability

paper

comes

from

this

angle

of

dissimilarity.

disclosures, are mostly voluntary; yet, firms

This paper attempts to find out whether

publish sustainability information and takethere could be a ‘single theory’—either

such efforts seriously to communicate varied

legitimacy theory, stakeholder theory or

categories of information to a given community

institutional theory—that generally fits into

136

Quest for a Single Theory to Explain Managerial Motivations for Sustainability
Disclosures: Legitimacy Theory, Stakeholder Theory or Institutional Theory

all the contexts for explaining the managerial
motivationforpublishingsustainability

disclosures. In other words, can a ‘single
theory’ complement the other two theories in

Ⅱ Conceptual Framework:
Legitimacy Theory, Stakeholder
Theory and Institutional Theory

a comprehensive manner? Before approaching

Prior to the discussion related to the three

the said question, this paper also offers afundamental CSR-explanting theories, one

comprehensive comparison of the threeshould remember that theory can only offer

theories, along with a detailed presentation

an abstract version of reality withoutof the sources of managerial motivations forcomprehensive insights regarding phenomena

publishing sustainability disclosures. In this(Deegan, 2014a). Again, researchers’ diversified

context, it is mention-worthy that there isvalue judgments are vital determinants inanother paper—Fernando and Lawrence

the theory selection process while conducting(2014)—that used these same three theories

a study (O’ Leary, 1985).

to build a framework and tried to connect

Legitimacy theory, stakeholder theory and

CSR motive or behavior with those. However,institutional theory are three frequently

this paper adds values in a couple of ways: a)

used

it

motivation

integrates

the

idea

of

managerial

theoriesfortointerpret

publishingmanagerial
sustainability

motivation for CSR in a detailed way and b)

information (Deegan, 2014a). According to

it attempts to find out an all-rounder theory

Gray et al. (1996), organizations are a part ofthat may complement the other ones in mosta social system, consisting with various

scenarios. This is a desktop-research, conducted

entitiesby reviewing numerous pieces of literature

legitimacy theory, stakeholder theory andand positioning related thoughts into theinstitutional theory can be utilized to shedframework of this paper. The rest of thelights on the role of information andpaper is arranged as such: section-2 depicts

disclosure,a conceptual framework and comprehensive

organizations and the said entities. Hence,comparison of legitimacy theory, stakeholder

the mentioned three theories might also betheory and institutional theory; section-3

termed as system-oriented theories.

(e.g.

in

state,

theindividual,

relationships

group);

among

enumerates varied sources of managerialInterestingly, all these theories root backmotivations for publishing sustainability

to a wider theory, named as, ‘political economy

disclosures; section-4 holds findings andtheory’. Political economy (system) consists

analysis,concluding

and

the

remarks

research scope.

last

sectionposts

of the social, political and economic framework.

along

with

futureAdditionally, economic issues are hard to
explain without referring to social, politicalandinstitutionalframeworks.

Notably,accounting report, such as CSR is also
considered as social, political and economic
137

documents. Moreover, accounting is anythingclassical and bourgeois branches (Gray et al.,but routine calculations and is a significant

2010; Gray, Kouhy and Lavers, 1995; Gray etmechanismal.,1996).

foreconomicandsocialmanagement (Gray et al., 1996; Guthrie andSuch, attachment of accounting to theParker, 1990; Burchell et al., 1980). Since,bourgeois branch is also criticized. There arelegitimacy theory, stakeholder theory andresearchers who argue that accounting

institutional theory are configured withperceives the society as a pluralistic placesystem-related

CSR

and assumes that the mass can have their(sustainability information) is an economic

voice in the economic practices; whereas, it isdocument, the suitability of these theories tocontrolled by the elites of the society who use

explainfor

accounting as a tool to maintain theirisdominant position. On the contrary, since,

variousaccounting information can influence theresearchers (Deegan, 2002; Gray et al., 1996),

balance and distribution of wealth along

while explaining the relationships among

with income and power in society, it shouldorganizations, states, individuals and groups,

pay heed to the classical branch of politicalsome social and political theories bank on

economy theory, too (Cooper and Sherer,

the role of information and disclosure. These

1984; Lowe and Tinker, 1977).

managerial

publishingquite

concepts,

theories

motivations

sustainability

evident.

areandinformation

Accordingconsideredtoappropriate

ininterpreting sustainability disclosures.
There

two

economy theory: classical and bourgeois. The

measure of the attitude of society toward aclassical branch is sourced to the work of

corporation and its activities. He also pressed

Karl Marx. According to him, there remains

that, legitimacy relies upon the values that ainequality, class interest, and class struggle

society holds and behaviors that it believes

in society, and the state only intensifies

are acceptable. Legitimacy is also understoodthese negativities. Bourgeois branch, on theas a ‘resource’ that an organization may

other hand, holds that power is widely

utilize for its continuous growth and survival

spread in the state and no single individual(Dowling & Pfeffer, 1975; O’Donovan, 2002).

can influence the society significantly, in a

Legitimacy theory assumes that there remains

consistent manner. It assumes that thea ‘social contract’ between the organizationinteractions between the groups are held inand the society. Society supplies various

a pluralistic world. Notably, legitimacy

resources to the organizations—factors oftheory and stakeholder theory are derived

production, approval to operate and sofrom the bourgeois branch of political

on—and expects the organization to provide

economyinstitutionalwith socially desirable goods and services,

theory can be trailed back to both thealong with environmental care (Shocker andHowever,ofLegitimacy theory

According to Suchman (1995), legitimacy is atheory.

branches1.

political

138

are

Quest for a Single Theory to Explain Managerial Motivations for Sustainability
Disclosures: Legitimacy Theory, Stakeholder Theory or Institutional Theory

Sethi, 1974; Mathews, 1993). Logically, if aand strategical requirements, legitimation

firm fails to comply with the ‘social contract’,tactics differ; these are: gaining legitimacy

it may face several negativities: its cost of(when firms approach fresh product/operation),

capital may increase; it may have difficulties

maintaining legitimacy (when firms assume

in accessing resources; it may face variousthat they have a certain level of acceptancesanctions from regulatory bodies; its capitalin the society) and repairing/defending

market standing may be hurt; and, ultimately,

legitimacy (when a firm’s acceptance is

its existence could be threatened (Cao et al.,disturbed and it faces unforeseen crises)

2010; Dirk, 2007; Longenecker et al., 2007;(Deegan 2014a).

Lott et al., 1999).

Various theoretical standpoints—political

When there is an expectation gap between

economy, legitimacy, stakeholder, institutional,

the society and the organization, regarding

agency, positive accounting and accountability

the operations of a given organization, a—have been referred, so far, for explaining‘legitimacy gap’ or ‘legitimacy threat’ appears.

the grounds for publishing sustainability

It happens because social expectation may

information. Among these, the most utilizedchange over time and sometimes previously

one is the legitimacy theory. There remain

hidden information regarding an organization

numerous evidences that when managers

are unearthed. Interestingly, to mitigate

sniff legitimacy threats, they adopt various

such a gap, various disclosure-based strategies

legitimizing strategies, e.g., altering theare mostly pursued by managers. These

perception and expectations of the relevant

strategies also vary according to the objective

publics, justifying the operations and goals—whether to ‘gain’, ‘maintain’ or ‘defend’of the organizations and so on (Belal andlegitimacy—of the organization (O’Donovan,

Momin, 2009; Campbell et al., 2003; Deegan,

2002; Nasi et al., 1997; Lindblom, 1993; Sethi,

2002; Lindblom, 1993; Dowling & Pfeffer,

1977). Ashforth and Gibbs (1990) maintain1975).

that there are two management paths, byHowever, even if legitimacy theory is the

mitigate

most popular one to the researchers while

legitimacy gaps: substantive —doing somethinginterpreting managerial motivations behind

practical to mitigate the gap—management

publishing CSR, it is not without flaw.

and symbolic— showing off to claim thatFirstly, it is assumed that upon detecting athey are doing something practical without

legitimacy gap, managers disclose positive

actually doing it—management. Publishingsustainability information regarding the

fabricatedorganizations and the perceived gap iswhich,

organizations

want

sustainability

toinformation

tominimize the legitimacy threat is one of the

mitigated; sadly, there

most popular symbolic management techniques

measurement technique for understanding

among the managers. Additionally, according

the extent of mitigation in the legitimacy gap

to different phases of organizational life-cycle(Deegan, 2014b). Secondly, it is commonlyisnoobjective

139

believed that a firm publishes CSR to

stakeholder theory embraces the demand oflegitimize itself. Interestingly, there are

all the parties who can influence a given

pieces of evidence that a firm may publish

organization (directly or indirectly) or can besustainability information, not only to

influenced by it. To add, it also acknowledges

legitimize thyself but also to legitimize athe complex relationships between firms andspecific notion of an economic, political andthesocial system (Gray et al., 1995; Archel et al.,relationships are built not only on interest2009). Lastly, legitimacy threats assumed by

but also on responsibility and accountability.

the managers arise from the expectation

On the flip side, Woodward and Woodward

gaps sourced to various individuals of(2001) and Mitchell et al. (1997) argue thatsociety. Nonetheless, managers and the said

stakeholder theory tends to identify theindividuals have different personas that may

stakeholders worthy of management’s focus;

complicate the legitimacy gap assumption-

analysismeasurement process of the managers andrecognize those deserving groups, to whom

expectation gap judgments of diversified

the business should be accountable andindividuals; sadly, it is yet to be addressed bytowards whom the business-efforts might belegitimacy theory (Deegan, 2014a).

channeled. Such diversion leads us to a

stakeholders,fromholding

such

that,

position

such

helps

to

dual-mode discussion of stakeholder theory,

2.

Stakeholder theory

namely, ‘ethical’ and ‘managerial’.

Organizations should focus not only on theirshareholders’ interests but also on theaffect organizations or can be affected by(1) Ethical (normative) branch of stakeholder
theoryFrom a normative perspective, the businessthem. Simply put, stakeholders have a ‘stake’hasat organizations’ operations and output

managers should try to optimize the interest(Freeman et al.,2004; Freeman, 1984). Hence,of all the stakeholders, regardless of their

non-owning stakeholders should be brought

ability (power) to influence the outcome ofunder the firms’ umbrella of consideration

the business. However, in a conflicting

along

scenario, managers must toil to balance theinterests of the other stakeholders, who can

with

the

owning-stakeholders(shareholders).

truesocialresponsibilities.

Hence,

contradictory interests of the stakeholders in

Researchers are divided into two groups

concern, as much as possible (Hasnas, 1998).

while defining the boundary of stakeholder

On most occasions, stakeholders’ interests

theory’s consideration; some are enthusiastic

are considered according to their benefit-based

to consider ‘all and sundry’ (having a stake)relationship with the shareholders. On theand others happen to be more strategicalcontrary, Donaldson and Preston (1995) has

with ‘direct-interest-based’ perception. Wearing

an alternative view and hold that stakeholders’(2005) and Gray et al. (1996) postulate thatinterest should be considered because they140

Quest for a Single Theory to Explain Managerial Motivations for Sustainability
Disclosures: Legitimacy Theory, Stakeholder Theory or Institutional Theory

have intrinsic rights—which should not be1995). In reality, organizations weigh a certain

violated—and not because consideration of

stakeholder group or responsibility towards

such interests will result in a beneficial

it by reflecting upon the group’s impact onshareholder-position. Again, focusing on theshareholder value. Clarkson (1995) aided theaccounting information perspective, O’Dwyer

said pragmatic consideration of stakeholder(2005) embraces that, regardless of thegroups by dividing them into two groups,

capability of stakeholders to directly affectnamely, primary and secondary; the former

organizations’becan have an impact on the survival of theprovided with related information regardingorganization and the later can be influenced

organizations’ impact on them; informationor can influence the organization in anshould be there to aid them, even if they

insignificant manner. Such disagreement

decide not to utilize those. This view

betweensupports the ‘accountability model’ postulated

demands the introduction of the managerial

by Gray et al. (1991), which signifies thatbranch of stakeholder theory.

survival

theyshould

the

ideal

and

real

scenarios

reporting is responsibility-driven—not demanddriven—and agent (firm) should disclose allin corporate social reports, mentioning the(2) Managerial (pragmatic/strategic) branchof stakeholder theory
Introduction to this pragmatic branch ofextent to which they have discharged theirstakeholder theory would clarify managers’

responsibilities. Interestingly, nowadays, someperceptions regarding interest managementtransnational corporations are bigger thanof various stakeholder groups and why they

the economic capacities of the countries in

prefer to embrace a strategic position.

the information for the principal (stakeholders)

It is impractical towhich they operate and are politically

respondtotheconnected too. Such a scenario begets immense

requirements of all the stakeholder groups.

responsibility and accountability on the

Therefore, the organizations will respond toshoulder of those companies to care forthe requirements of only those stakeholder

human rights and the environment (UNRISD,

groups2004).

(stakeholders having control over the supply

Stimulatingly, such moral consideration of

of

who

importantaredeemedasorganizational‘powerful’
resources);stakeholders would lead to an undefinedconsequently, the most powerful ones are(broad)pragmatic

satisfied first (Buhr, 2002; Nasi et al., 1997;

perspective, this type of comprehensive

Ullman, 1985). The concept of ‘powerful’ canconsideration is almost impossible to manage.

also

To add, such a normative position only offers

Interestingly, Mitchell et al. (1997) proposedguidance focusing on the shareholder-baseda framework to identify the importantorganizations, which, may not be empiricallystakeholder groups—from an organizational

viable (Deegan, 2014a; Donaldson and Preston,

perspective—referring to three determinants,boundary.

From

a

be

interpreted

as‘important’.

141namely, power, legitimacy, and urgency.

hold. Gray (2001) postulated that—from thePower refers to the influential capability ofmanagerial perspective—this ranking is notlegitimacy

denotesalways conscious or obvious; however, it canstakeholders’ demand-conformation to norms,

be utilized to understand, why information-

values, and beliefs of society and urgency

demand of some of the stakeholder groups

signifies whether stakeholders’ demands

are met and some are not.

thestakeholders,require immediate action or not. Additionally,

In practice, managers never embracewhile explaining the objective measurement

eitherprocedure of the legitimacy of an organization,

perspective. If it is assumed that there is aHybelscriticalcontinuum of possible positions between the(powerful) stakeholders, e.g., state, public,

two extremes, i.e, ethical and managerial,

financial community, and media.

managers would be obliged to stay at(1995)

identified

four

Gray et al. (1996) tied this pragmaticmanagerial

perception

with

the

different

ethicalpositions

or

of

the

the

managerial

continuum,

stakeholder

according to a given context. Naturally, it isimportance and corporate reporting and held

impossible to introduce ‘moral imaginations’that to manage or to manipulate thewhilestakeholders, i.e., to gain their support or tosimultaneously, it is unwitty to ignore the

distract their disapproval, managers takenotion of ‘right’ and ‘wrong’ too (Deegan,

the aid of corporate reporting, e.g., publishing

2014a; Wicks, 1996).

operatinginthemarket,andfinancial and social accounting information.
Again,

Lindblom(1993)

added

that

3.

Institutional theoryorganizations want to establish a ‘socially

The concept of institution, it’s elements, andresponsible’ image by performing sociallythe molding process form the shape andacceptable

explanatory power of institutional theory.

activities

andpublishing

information regarding those, which is also a

Different types ofpart

isomorphic attitudes

their‘stakeholder

pursuing the institutional-mold and the

management’strategy.

concept of decoupling may also aid to

Nonetheless, this relationship management

interpret the managerial motivations foris not straightforward, since it is complex to

publishing sustainability disclosures.

andparcelrelationshipmanagetheinterests

with

of

heterogeneous

stakeholder‘Institution’ refers to varied rules, regulations,(general)ideas, understanding and cultural frameworks

homogeneoustothat advance to a level of social permanency,

Miles (2002) and Mitchell et al. (1997),

which is subject to a given context. Socially

corporate social disclosures leads to conflicts

permanentamong stakeholders and balancing suchorganizational forms are understood as

conflicts

the‘institutionalized’ and gain ‘taken-for-granted’

stakeholder-groups, based on the power theystatus. Again, when the said accepted aspects

sustainability

142

information.

requiresa

Accordingrankingofactions/processes

andQuest for a Single Theory to Explain Managerial Motivations for Sustainability
Disclosures: Legitimacy Theory, Stakeholder Theory or Institutional Theory

become highly institutionalized, these go

pressurized to copy a certain action or

beyond the discretion of individuals andpractice due to sanctions attached with it,

firms and are considered as legitimate

which may come from regulatory authority,

practices. These institutions have a reality ofprofessional body and powerful stakeholder

their own and create an external coercive

groups); b) normative isomorphism (pursuingforce

standardized benchmarks sourced to socialonindividuals,

which

eventuallyshapes organizational behaviors (Zucker,

values,1987; Meyer and Rowan, 1977; Berger andeducation, and professional networks); c)

Luckmann, 1966).

mimetic isomorphism (copying the operations

norms,

professionalism,

formal

According to Scott (2008), three pillars

and practices of successful peer-organizations

constitute the skeleton of institutional theory,for competitive advantage, e.g., modern

namely, regulative (rules, laws and related

technology, reporting practice and so on).

sanctions), normative (values and norms
reflecting certain collective expectations)The(1) How Organizational fields develop andchange? How institutional changes takeplace?

regulative pillar is tied to government andIsomorphism follows varied ways and meansother influential coalitions; the normative

depending on a given ‘organizational field’.

pillar denotes the notions of morality and is

An organizational field can form aroundinfluenced by educational background andissues that are perceived as vital related toprofessional experience; the cultural-cognitive

the interests and objectives of a given

pillar—a strong psychological reconciliationindustry, such as sustainability disclosure

tool—is subjectively held, yet, exists as apublishing patterns for those organizations

part of objective reality. Organizations want

who want to be seen as ‘responsible’ to theto be in the same footing, pursuing theenvironment (Levy and Kolk, 2002; Hoffman,elements of the said three pillars and their1999). Organizational fields have a significant

goal is to be legitimate—such legitimacy

level of diversity in the initial phase; yet,doesn’t guarantee efficiency, though—in thewhen a given field becomes well established,eyes of the related stakeholders. To reachan unavoidable push towards homogenization

this goal, organizations pick gaps between

becomes dominant (DiMaggio and Powell,their informal practices and approved ones

1983). Various local organizational fields

and embrace various forms of isomorphismspress the shape of sustainability reporting

to mitigate the said gaps (Deegan, 2014a).

practices. Nevertheless, lately, the global

DiMaggio and Powell (1991), explained thatissue-based field of sustainability reportingorganizational

occursis replacing the local-based ones. This global

through three different isomorphic mechanism,

level of institutionalization stems from theandcultural-cognitive

symbolic

viz.,

a)

systemsand(taken-for-granted
meanings).

institutionalization

coercive

isomorphism(feeling

global concept of corporate social reporting143

and varied reporting standards, e.g., GRI,

internal accounting procedure in managing

UN

Disclosure

the environmental issue is arising from a

Project (KPMG, 2011; Kolk, 2011; Kolk,

detailed environmental reporting guideline

2010; Chen and Bouvain, 2009; Kolk et al.,(Kolk, 2005).

GlobalImpact,Carbon2008).

Normative pressures can explain varied
patterns (institutionalization) of sustainability(2) How regulatory and normative regimes
may explain isomorphism of sustainability
disclosure?
Voluntarycorporate

stem from environmental-reporting awardchasing culture lead by a professional

i.e.,organization, mass-acceptance of the necessity

sustainability disclosure, is modified andof external verification of sustainabilitychangedvariousinformation, social expectation regarding

institutionalized influencers, which is andisclosing purchasing practices of firms,

isomorphic process too (Dillard et al., 2004).

political endorsement of publishing ESG

Various regulatory and normative regimes,

information and industry structure forcing

as a catalyst for the said modifications, areto pursue a certain environmental reporting

worth mentioning.

behavior, such as European Eco-Managementinaccordance

reporting,information publication too. Pressures may

withRegulatory regimes vary and may defineand Audit Scheme (EMAS) in Germany

the publication patterns (institutionalization)(Bebbington et al., 2012; Chen and Bouvain,of sustainability information. History of2009;

corporate reporting to regulatory bodies, e.g.,

institutionalization of GRI (Global Reporting

SEC, on environmental issues, goes a long

Initiative)—a universally accepted sustain-

way back in the USA, which gives rise toability reporting standard—is a mixed caseformal legal governance and rationalizes theof normative and regulatory pressure. Firstly,

development of extended voluntary reporting

GRI was embraced by most of the firms,(Kolk, 2005; Kagan and Axelrad, 2000). On

because it became industry norms. Secondly,

the other hand, in EU countries, publishing

GRI occurred simultaneously in an era whenenvironmental information in the corporate

there were extended efforts for harmonizing

reports is partially explainable by referringinternational accounting standards and its

to a recommendation made by EU to its

development process had some involvements

member countries in 2001, that pushed forof international accounting bodies too. The

the legislation of the ESG disclosures (Criado

first one denotes normative pressure and theet al., 2008). Interestingly, in Malaysia, firms

second one regulatory potential (Higgins andare pressurized to abide by the ESG disclosure,

Larrinaga, 2014; Kolk, 2011).

Wenk,

2004).

Interestingly,

theif they want to secure governmental contracts

Institutional theory is one of the most(Amran and Haniffa, 2011). Whereas, in Japan,

dominant theories in organizational researcha quasi-regulatory pressure to specify thefields. It is applied to study various phenomena,144

Quest for a Single Theory to Explain Managerial Motivations for Sustainability
Disclosures: Legitimacy Theory, Stakeholder Theory or Institutional Theory

behavior,

to the bourgeois political economy theory

sustainability

which assumes that the world is a pluralistic

management accounting, auditing, the role

place; institutional theory can also explainof accounting profession and accounting

pursuing the classical political economy

standard-setting process (Deegan, 2014a;

theory, which assumes that there are classChen and Roberts, 2010; Dillard et al., 2004).

struggles and sectional conflicts in society. To

However, institutional theory is not without

add, these three theories are system-oriented,

negativity. According to Hoffman (1999) andi.e., these focus on the nexus between the

Oliver (1991), it is criticized for its inability

organization and the operating environment

to address fluctuations and for neglecting(system) around it. Stimulatingly, all these

the

viz.,

responsible

sustainabilityrolebusiness

reporting,ofsocialinstitutionalization

catalysts

intheare positive in nature and are shaped toprocess.

Again,

interpret, explain and predict organizational‘isomorphism’ and ‘institutionalization’ areandtwo of the vital-most concepts on which

ethical branch of stakeholder theory is an

institutional

exception—being normative in nature—that

theorybanks;

thesetwomanagerial

However,embraces

perspective-based

given

regarding organizational and managerialinterpretation; nevertheless, it may notactions (Deegan, 2014a; Gray et al., 2010;

vouch for efficiency (Carpenter and Feroz,

Hasnas, 1998; Gray et al., 1996).

fora2001; DiMaggio and Powell, 1983).

‘should-shouldn’t’

theconcepts may provide moral or financial
supportaactions.

position

These theories tend to explain a phenomenon
based on its ‘adaptation’ to a certain aspect.

4. Comparisonoflegitimacy,
stakeholder and institutional
theories

legitimacy theory enumerates the adaptation(1) Similarities

same adaptation from stakeholder groups’

Legitimacy theory, stakeholder theory andrequirements perspective and institutional

institutional theory share the same root,

theory focuses on adaptation based on(almost) same nature and similar orientations.

regulatory, normative and cultural-cognitive

Again, these can be aligned in the same

symbols and meanings (Scott, 2008; Hasnas,

string from the perception of ‘adaptation’ and1998; Mathews, 1993; DiMaggio and Powell,‘decoupling’.

1983).

of organizational operations based on social
contract, stakeholder theory discusses the

All the theories tend to interpret humanOrganizational ‘decoupling’—a discrepancy

activity, in relation to a social, political andbetween organizational activities and its

economic framework, and hence, root back toclaim—is also another criterion on which alla broader theory, namely, political economy

the theories press. Legitimacy theory claims

theory. To clarify, legitimacy theory, stakeholderthat organizations discharge corporate social

theory and institutional theory are sourced

responsibilities not because

they mean145

welfare, but because they care for self-interest.

actions are opportunistic, and it is usual to

Stakeholder theory (ethical branch) holds

manipulatethat firms communicate their care for the

management to pursue their interests, ininterests of all the stakeholders; actuallyrespecting social contract or in selecting(managerial branch), they care for only thosecritical stakeholders. Whereas, institutional

stakeholders who are powerful enough totheory holds that, sector-wide ‘structurationinfluence their survival (Deegan, 2014a;

dynamics’ create cultural pressures andGray et al., 1996). On the same note, even if

force organizations towards isomorphism; insome institutional theory-based researchers

such cases, organizations are irrational (notclaim that the isomorphism process of theopportunistic) and do not have any managerial

firms is irrational and imposed, others

goal to attain. They act in a certain way,

postulate that organizations go through such

simply because their peers do the same, andisomorphism

legitimize

in a specific context, certain actions havethemselves (Higgins and Larrinaga, 2014;

gained ‘taken-for-granted’ status (Higgins

Carpenter and Feroz, 2001).

and Larrinaga, 2014; Suchman, 1995). Thisto(ultimately)

withevocative

symbolic

notion is also evident in the sustainability(2) Dissimilarities

information publishing horizon. In polluting

Legitimacy theory deals at a conceptual

industries—where firms want to legitimize(abstract) level, which is concerned withthemselves to society or a given stakeholder

perceptions of society and processes thatgroup—publishing sustainability information

would uphold that perception, i.e., to honor

is more common, compared to other industries;

the social contract. There is only one general

it supports the thoughts of legitimacy theorysocial contract, without any subdivision. On

and stakeholder theory. Nevertheless, athe other hand, stakeholder theory deals at a

supporter of institutional theory would holdmicro-level, i.e., identifying specific stakeholder

that, in a given industry (organizationalgroups to integrate their interests in thefield), publishing an exaggerated amount oforganizational activities; hence, there aresustainability information might just be an

multiple contracts with different stakeholder

institutionalized pattern (Kolk, 2010; Browngroups. Whereas, institutional theory assumes

and Deegan, 1999; Roberts, 1992).

macro-level isomorphism in various regulatory,

Various theories, along with legitimacy

normative and cultural-cognitive setups,

theory, stakeholder theory and institutional

without any contractual relationships (Scott,theory have been utilized in the area of

2008; Moerman and Van der Laan, 2005;

corporate social reporting, i.e., sustainability

Deegan, 2002; Carpenter and Feroz, 2001).

information publication; each of these focuses

Again, legitimacy theory and stakeholder

on social issues disturbing the firms andtheory both adopt a ‘managerial’ (strategic)

their response against those. However, theseperspective and assume that organizations’

theories differ in two spectrums, namely, the146Quest for a Single Theory to Explain Managerial Motivations for Sustainability
Disclosures: Legitimacy Theory, Stakeholder Theory or Institutional Theory

nature of the issues’ management andCorporate Social Reporting (CSR) practices

motivations behind such management (Deegan,

are highly likely to earn them a corporate

2014a, Nasi et al., 1997; Gray et al., 1996).

reputation among their stakeholders, which,
may also differentiate them among theManagerial Motivations for
Publishing
Sustainability
Disclosures

Ⅲ

responsible firms (Bayoud, et al., 2012;
Mahony, 2012).
Firms want to recruit qualified and loyal
employees, maintaining a low staff-turnoverCorporate communication through annual

ratio. Therefore, they publish sustainability-

reports (mandatory) and other voluntary

relatedreports—integrated reports and sustainability

responsibility

reports—are common these days. Managers

development and how employees’ interests(firms) decide the type, timing, format andare tied with the long-term value creation of

medium of disclosing information. Suchthe firm, so that, the employees possess a

decisions are made at an ‘abstract level’,positive perception regarding the firms. Twomostly without considering the needs of the

popular sustainability disclosure publication

stakeholders (Van der Laan, 2009). This

frameworks—GRI

philosophy of managers denotes that, generally,

firms

they are motivated either by the interest of(Waddock, et al., 2002).

information

follow,

focusing

towards

and

also

on

their

human-resource

IIRC—that

supportthismost
notionthe firm or by their own. Nonetheless, there

Margolis and Walsh (2003), found that theare other sources of managerial motivationsorganizations that engage in CSR activities

for publishing sustainability disclosures,and disclose information regarding those,

sourced to corporate responsibility andhappen to have a positive financial outcome.

institutionalized pressures.

They concluded that there lies a positive
connection

1.

Motivations based on interest

between

CSR

performance/

disclosure and corporate performance.

ESG

Firms disclose voluntary information (more(Environmental, Social and Governance)

than required by laws and regulations), toissues are vital and they want to invest more

air positive signal related to their CSR

inbetterperformances (signaling theory). To add, Value

corporate responsibility related to ESG

of a given firm may increase in the capitalissues. Hence, to the managers, disclosing

market if the firm is ready to disclose credible

ESG-related information happens to be a

private information (sustainability information),

way to show-off that they are responsiblethat lead to risk-reduction of decision making

and worth-investing (Uysal, 2014; Roberts,(Thorne et al., 2014; Mahoney, 2012; Connelly1992).

et al., 2011).

These

the

days,

to

companies,

stakeholders,whoportray

Some firms believe that distinguishable

Organizations may become vibrated by147

several global factors, such as international

assume that whatever business does, itmarket access, international standardization,

points towards ‘profit’. Again, the work offoreign investment opportunities, overseas

Watts and Zimmerman (1986)—regarding

supply chain integration and so on. Publishingpositive accounting theory—tends to explainsustainability information is a befitting

managerial actions related to accounting

measure to take advantage of and to provide

choices and stakeholder groups’ relationships

for the said global determinants (Visser,

based on opportunistic behavior. Motivations2011).

tied to profit or opportunistic behavior may

Mangers/firms

assesstheirrelevant

force us to assume that, sustainability

publics (critical stakeholders) based on theirdisclosures are also driven by the same

influential power over the firms and then to

ground(s). However, there are non-interest-

manage/manipulate the relationship withbased motivations also, which are discussed

them offer proactive sustainability disclosures.

in the next section.

As an aftermath of these sustainability
disclosures, managers/firms expect to havethe support of their critical stakeholders or

2. Motivations based on corporate
responsibility

to distract their disapproval (Neu et al.,

In many economic theories, it is simplified

1998; Gray et al., 1996; Roberts, 1992).

that all human actions are based on self-

Organizations consider ‘legitimacy’ as one

interest. This opportunistic perspective isof their vital resources for continuity andalso held by various researchers while

profit. Hence, they integrate the concept ofinterpreting

legitimacy (gaining, maintaining and defending

sustainability disclosures (Deegan 2014a).

legitimacy) in their ESG-based disclosures.

However, such comprehensive simplification

Most of the researchers assume that for thecovers the positive side of human motivation

organizations, one of the major aims forand deprives us of a plausible alternative

publishing sustainability information is tointerpretation of motivation for publishingmanage legitimacy (Deegan, 2014b, 2000;

sustainability disclosures. Few researchers

Gray, et al., 1995; Ashforth and Gibbs, 1990).

—supporting this positive notion—state that

Interestingly, some recent studies (Bachmannthere are socially responsible organizations

and Ingenhoff, 2016; Castelló and Galang,that have ethical notions built in their2014) are more direct and postulate that in asystem/operations

dynamic

without considering vested interest. To add,

political

andsocialcontext,

themotivation

andmanagerial

the companies) to obtain legitimacy.

sustainability information are sometimes

regarding the objective of business, following
the work of Friedman (1962), one may
148

for

responsibly

sustainability disclosures are the means (forIf anyone embraces a primitive notion

motivations

act

behindpublishing

related to legitimacy, not always (O’Dwyer,
2002; Oliver, 1991).
To some researchers, the emergence ofQuest for a Single Theory to Explain Managerial Motivations for Sustainability
Disclosures: Legitimacy Theory, Stakeholder Theory or Institutional Theory

non-financial

reporting(sustainability

disclosures) can be attached to the corporate

Oliver, 1991).
Organizations/managers want to be in theformolds of the institutionalized actions, practices

various stakeholders. It is also held thatand norms that have already become ‘taken-

providingthefor-granted’ in a given organizational field;

management

they just want to be like others, want tocommitments (accountability) is the vital-mostalign with subtle social pressures and become

internal driver for sustainability reportingan ordinary member of a surrounding (Higgins(ACCA, 2010; Nielsen and Thomsen, 2007).

and Larrinaga, 2014; DiMaggio and Powell,concernofincreasing
required

stakeholders

andtransparency

information
fulfillingto

Organizations engage in various corporate1991). When an organization is perceived as

responsibility-based activities. Nonetheless,somewhat unique or unfit in a given

it is not enough to engage only; they are alsoorganizational field, numerous stakeholders

required to reveal such information to thetend to have less amount of confidence in it,

mass. Hence, firms disclose non-financial

which pushes the organization in an uncertain(sustainability)

reduceoperational terrain. Hence, to avoid suchinformation asymmetry; it allows investors

uncertainty, organizations pursue varied

and other key stakeholders to evaluate vital

isomorphisms (Deegan, 2014a; Higgins andperformance indicators of firms in a better

Larrinaga, 2014). Again, when a firm is notmanner (Huang and Watson, 2015; Holder-

sure regarding the best available practice, it

Webb et al., 2009). Furthermore, Wilmshurst

just follows the industry leader, without

andsurveyknowing the efficiency or ultimate consequence(respondents were CFOs only) to understandof a given practice; it simply wants to follow

the

the

Frost
prime

information(2000)

toconducted

influencerofapublishingsustainability disclosures; surprisingly enough,the respondents marked ‘predictivity of
information’ as the prime one.

institutionalized

corporate

aspects(DiMaggio and Powell, 1983).
Further clarification on sources of motivation
and better explanatory power can be achieved,
if the nature of sustainability disclosures can

3.

Motivations
basedoninstitutionalized compulsion

beascertained,i.e.,whetheragivensustainability disclosure is solicited (NGOs,

When managers find that some social

ethical investment fund researchers, tradepractice/actions, norms and regulations haveunion leaders, information intermediaries

becomenaturally

and others ask for social information fromembrace those without being rational orfirms) or voluntary (information provided byselfish. They follow institutionalized practicemanagers without regulatory pressure) (Vansimply because, their peers do, and such

der Laan, 2009). If a given sustainability

practices have become ‘taken-for-granted’ indisclosure is solicited, managerial motivations

their operating environment (Deegan, 2014b;

can be traced back to a specific stakeholder

institutionalized,

they

149

group, which may be interest or responsibility

managerial

based; on the contrary, if it is voluntary,

sustainability disclosures, notes on diversified

motivations are most likely to be interest-

sources of motivation will bring useful logics

based.

onboard. For the sake of a quick understanding

While

analyzingtheinterpretational

motivationsforpublishinga summary table is presented here:

potentiality of a given theory in explaining
Table 1: Motivational sources of managers for publishing sustainability disclosures
Interest-based sources

Responsibility-based sources

Inviting investments fromshareholders(Uysal, 2014; Roberts, 1992)

Providing transparency andaccountability(ACCA, 2010; Nielsen andThomsen, 2007)

To manage corporate reputation(Bayoud, et al., 2012; Mahony,
2012)

Reducing information
asymmetry for external users
of information(Huang and Watson, 2015;
Holder-Webb et al., 2009)
Increasing predictivity of
information(Wilmshurst and Frost, 2000)

Attracting and retaining qualified
employees (Waddock, et al., 2002)
Fostering corporate performance(Margolis and Walsh, 2003)
Increasing firms’ value throughpositive signaling (Thorne et al.,2014; Mahoney, 2012; Connelly etal., 2011)
Providing for globalization
demand (Visser, 2011)
To manage or manipulate
stakeholders(Neu et al., 1998; Gray et al.,
1996; Roberts, 1992)
Gaining organizational legitimacy(Bachmann and Ingenhoff, 2016;
Castelló and Galang, 2014)
For Profit and for pursuing
opportunistic behavior (Watts
and Zimmerman, 1986;Friedman, 1962)

Ⅳ

Institutionalized
compulsion-based sources
Pursuing the institutionalized
actions, practices, norms andaligning to subtle socialpressures(Higgins and Larrinaga, 2014;
DiMaggio and Powell, 1991)
Avoiding uncertainty (Deegan,2014a; Higgins and Larrinaga,
2014)
Following successful peerorganizations’ practices,
actions and technology(DiMaggio and Powell, 1983)

that might be able to explain diversified

Findings and Analysis

managerial

motivationsforpublishingThis section endeavors to point out thesustainability information. In the said quest,‘singlesalient features of these three theories andtheory’fromlegitimacy

theory,stakeholder theory and institutional theory
150

how

one

theorymaycomplementtheQuest for a Single Theory to Explain Managerial Motivations for Sustainability
Disclosures: Legitimacy Theory, Stakeholder Theory or Institutional Theory

explanatory capabilities of the other(s) aretaking notes from this table is imperative forconsidered. Table 2 presents a comprehensive

understanding

comparison

paragraphs.

amonglegitimacy

theory,theupcoming

analyticalstakeholder theory and institutional theory;
Table 2: Comprehensive comparison summary of the three theories
Factors and references
Perspective(Higgins and Larrinaga,
2014; Gray et al., 1996;
Suchman, 1995)
Root, orientation,
nature(Deegan, 2014a, Grayet al., 2010; Hasnas,
1998; Gray et al., 1996)
General scope(Scott, 2008; Moerman
and Van der Laan,
2005; Hasnas, 1998)
Constituents(Deegan, 2014a,
Higgins and Larrinaga,
2014)
Research coverage(Deegan, 2014a,
Deegan, 2014b,
Higgins and Larrinaga,
2014)
Contract-orientation(Scott, 2008; Deegan,
2002)
Interest interpretation(Higgins and Larrinaga,
2014; Suchman, 1995;
Ullman, 1985)

Legitimacy theory
Resource and strategy
based (managerial)

Stakeholder theory
Balancingstakeholders’ interest
based (managerial)

Institutional theory
Isomorphism andstructuration dynamics
based (imposed)

Bourgeois political
economy theory,
system-oriented,
positive theory

Bourgeois political
economy theory,
system-oriented,
positive and normative
theoryMicro (stakeholder
group)

Bourgeois and classicalpolitical economy
theory,system-oriented,
positive theory
Macro (institutional
field)

Social contract,
legitimacy gap,
sustainability
disclosures, legitimacy
management
Use of sustainability
disclosures inlegitimacy
management (mostly,
gaining, maintaining,
defending legitimacy)
To society (single
contract)

Stakeholders’ rights to
information, theirvaried interests andtheir power, urgency,
legitimacy
Use of sustainability
disclosures inbalancing stakeholders’interests

Selective andself-interest based

Identifying interests ofcritical stakeholder
groupsRegulative, normative,
cultural-cognitive
pillars; organizational
fields and various
isomorphisms
Organizations’ actions,operations and patternsof sustainability
disclosures; why thesefollow a certain
pattern?
No contract, copying
patterns forappropriateness
Imposed, impulsive
and irrational

Micro (abstract orconceptual)

1. Does legitimacy theory have theproperties to be considered asthe ‘single-theory’ explaining
managerial motivations forsustainability disclosures?

To stakeholder groups(multiple contracts)

resource-based strategical ground. Social
contract happens to be a vital assumption oflegitimacy theory, based on which the othercausalities of it revolve around. Thus, theexplanation potentiality of this theory blooms

theorythe most, when there remain legitimacy gap(following table 2), suggested by various

or threat and strategical requirements forresearchers, leads us to an interest andgetting the approval of continuity from aThe

configurationoflegitimacy

151

givencommunityorsociety;objective

only. To add, stakeholder theory can covermeasurement of organizational legitimacy

both(Mahmud, 2018) may aid in detecting such

responsibility-based (ethical) motivational

scenario. Interestingly, this theory fails toground. However, it fails to cover for neutral

address contracts with various stakeholder(peer-firms’ influencegroups in a standalone manner (Deegan,motivation. Moreover, in the real world,

2014a). To add, it is not well-poised to explain

managers do not take any absolute ethical or

corporate responsibility

based—irrational

strategic position; rather, they opt for places

selfless—motivations for publishingthat are in between these two extreme-

sustainability information and is yet tocontinuums, that differ according to varied

relate varied personas of managers shaping

contexts (Rowley, 1998). This diversion of

the assessment of legitimacy gap or threat

theory from the real-world scenario dwarfs

that influence motivation(s) for sustainability

the explaining capability of stakeholder

disclosures (Deegan, 2014b). These limitations

theory.

andinterest-based(managerial)

based)

andsources ofof legitimacy theory hinder it from becomingthe ‘single theory’ that can explain managerial
motivations in all scenarios.

3. Is institutional theory the‘single theory’ having a 360°
coverage?

2. Or, is it stakeholder theory, with
better coverage for explaining
managerial motivations?

Institutional theory possesses an upper hand

Following table 2, it is gathered that thethree pillars (regulative, normative andfocus of stakeholder theory is (broadly)

cultural-cognitive), three isomorphic patterns

maintaining non-owning stakeholders’ interests(coercive,

along with the shareholders one. Such

concept of ‘decoupling’ cover most of theemphasis could be universal, i.e., ethical or

explanatory arsenals of legitimacy theory

stakeholder

and stakeholder theory, and even bettergroups’power-based,i.e.,managerial (strategical). Remarkably, while

as regards to complementing both thelegitimacy theory and stakeholder theory. Its

normative and mimetic) andsome of it.

explaining the motivations for sustainability

The very concept of ‘legitimacy’ is drawn

disclosures, the managerial branch is preferredfrom the ideas of neo-institutional theory

over the ethical branch and such disclosures(the modern version of institutional theory)of a given firm reflect the interest of criticaland legitimacy theory is a specific case of

stakeholders (Friedman and Miles, 2002).

institutional theory’s regulative pillar (Higgins

Stakeholder theory can explain in a detailed

and Larrinaga, 2014). Moreover, Scott (2008)

manner based on individual stakeholder

claims that three pillars of institutional

contract, whereas, legitimacy theory cantheory can be assumed as three distinguishable

explain based on a general social contract

bases of legitimacy and hence can complement

152

Quest for a Single Theory to Explain Managerial Motivations for Sustainability
Disclosures: Legitimacy Theory, Stakeholder Theory or Institutional Theory

legitimacy theory—which doesn’t have suchdisclosures) to portray an unreal image

subdivision—with supplementary logics torelatedinterpret managerial motivations.

performance of their firms (Dillard et al.,tosocialandenvironmental

Even if researchers related to institutional

2004; Ashforth and Gibbs 1990). Such,theory (follow table 2) vouch for the irrational

alternative positions regarding institutionalandmanagerial

theory highlight that it may cover both

motivations, few researchers claim that such

irrational (compulsive) and rational (legitimacy,

compulsion for becoming homogeneous tocompetitive advantage, symbolic management)

peer firms ultimately leads to the urge ofgrounds

organizational legitimacy; invariably, reaching

publishing

to this end-goal happen to be the target forcomplementing legitimacy theory in an

most of the managers. According to Scottextended manner. Supporting institutional(1995), legitimacy is nothing but a ‘condition’theory’s superiority Gray et al. (2010)that aligns with relevant rules, laws, norms

postulated that, legitimacy theory might be

and culture. Additionally, coercive, normative

the dominant theory used in social andand mimetic isomorphism bring legitimacy

environmental accounting (SEA) research,on the table, as regards to organizational

yet, institutional theory would become theforms and processes (Deegan, 2014a; DiMaggio‘mainstream theory’ replacing legitimacy

and Powell, 1983). Unerman and Bennet

theory, in due course of time.

compulsive

natureofofmanagerial

motivation

sustainability

fordisclosures,(2004) are a bit more specific and tag the

Stakeholder theory (managerial) has its

idea of ‘mimetic isomorphism’ to corporate

focus on identifying powerful stakeholders’social reporting. To them, firms pursue thedemands

reporting practices of successful peers thatpractices and operations according to those.

are perceived as innovative by the external

Such pressure can also be explained or

stakeholders

extendcomplemented by coercive isomorphism oforganizational legitimacy. Again, they add

institutional theory, i.e., powerful stakeholders

that managers are motivated to mime theircan coerce an organization to pursue specificleading peers because they want to maintaininstitutionalized

or enhance their competitive advantage.

(DiMaggio and Powell, 1983). A classic instance

Additionally, a key idea of institutionalof coercive isomorphism—based on the garment

theory, ‘decoupling’ (actual organizational

industry of Bangladesh—was presented bypractices don’t match with shown or claimed

Islam and Deegan (2008). They highlighted

practices), covers another notion of legitimacythat the Bangladeshi garments industry wastheory,symbolic

forced not to use child labor and to improve

management of legitimacy to show-off theirworking conditions due to coercion fromalignment with approved practices andvariedutilizelargescale western buyers, western news

i.e.,

ESG

to

maintainmanagers

disclosures

or

adopt

(sustainability

andpowerfulaligning

practiceorganizationalandstakeholders,

operation

such

153

as

media and activists; this phenomenon can be

motivations and the concept of ‘decoupling’interpreted by both stakeholder theory andmake it a befitting candidate for becoming

institutional theory. Again, if a firm is giving

the ‘single theory’ that may explain diversified

importance to economically marginalized

managerial(not powerful) stakeholders due to industry

sustainability information.

motivationsforpublishingtrait, it can be interpreted by mimetic
isomorphism. According to Unerman andisomorphism of varied practice and operations

4. Are legitimacy theory andstakeholder theory out-of-order,
then?

because they want to maintain or enhanceInstitutional theory has the capability toexternal stakeholders’—both economicallycomplement and cover the explanatory

powerful and marginalized groups—interests.

capacities of both legitimacy theory andHowever, managers consider the interests ofstakeholder theory. However, it doesn’t mean

marginalized stakeholders, given that, suchthat legitimacy theory and stakeholder theory

consideration

are of no use, consequently. Rather, in some

Bennet (2004), managers pursue mimetic

is

acceptedbypowerful

specific scenarios—which are tailormade forstakeholders.
theory’s

the typical explanatory regimes of legitimacy

comprehensive explanatory ability, Higgins

theory and stakeholder theory—these twoand Larrinaga (2014) hold that, sustainability

theories are (perhaps) better poised todisclosure is an aftermath of three isomorphic

interpret.

Addingtoinstitutional

mechanisms, which can take varied forms in

When negativity regarding a specificdiversified contexts and different stages oforganization or industry is universally accepted

institutionalization. Coercive isomorphism

in a society or community (not in a specific

can be used to interpret sustainability

stakeholder group), legitimacy theory is better

disclosures as a response to regulatory,

poised to interpret managerial motivation

capital providers’ and consumers’ demand;for publishing sustainability information.

normative counterpart can be utilized to

For instance, when Exxon Oil Company

explainaspilled oil in Alaska, it disturbed thepersuasion of voluntary efforts backed bylegitimacy of the oil industry, as a wholesocial responsibility; and finally, mimetic(Patten, 1992). Any sustainability disclosure

isomorphism can be considered to explicate

publishedsuch disclosures as a feedback to any taken-

American oil industry after the said incident

for-granted actions in a given organizational

should be interpreted by legitimacy theory.

field.

Besides, when firms introduce new products

sustainability

disclosuresasbycompanies

in

the

North

Institutional theory’s three pillars and threeand struggle against a common accusation,

isomorphic aspects, its ability to interpreti.e., marked as a dirty organization, they try

both rational and irrational (compulsive)

too much to prove their worth to the society;154

Quest for a Single Theory to Explain Managerial Motivations for Sustainability
Disclosures: Legitimacy Theory, Stakeholder Theory or Institutional Theory

subsequently, sometimes they pursue symbolic

Intriguingly, institutional theory is wellmanagement (Ashforth and Gibbs, 1990).

equipped to take over both legitimacy theory

Such scenarios should also be brought underand stakeholder theory and become thethe microscope of legitimacy theory.

‘single theory’ for the said explanation of

On the flip side, if it is evident that amanagerial

motivations,

since

it

can

certain sustainability disclosure is publishedcomplement both the theories to a greattargeting a specific stakeholder group andextent. However, in special scenarios regarding

such disclosure is not common to otherinterpreting motivations, legitimacy theoryorganizations of the industry, stakeholderortheory may be utilized, instead of institutional

institutional theory. Therefore, considering

theory. Recently, UK-consumers are becoming

institutional theory as the supreme theory

more concerned regarding the ‘ethical sourcing’

will not be wise; it should rather be consideredof garments (Morgan Stanley, 2016). In thisas a general theory with the broadest

scenario, if a UK garment retailer publishes

explanatory coverage.

sustainability

mayoverride

Researchers of institutional theory haveconsumers, mentioning its ethical sourcing

considered it as a theory that can explain

ventures,be interpreted byboth irrational (institutionalized compulsion)

stakeholder theory. Furthermore, if a given(Higgins and Larrinaga, 2014) and rationalsustainability disclosure is ‘solicited’, i.e.,(legitimacy, competitive advantage) (Deegan,requested by a certain stakeholder group,

2014a; DiMaggio and Powell, 1983) managerial

stakeholder theory is more likely to come up

motivations; a future research scope lies herewith a better explanation.

to clear or add to this clutter. Again, empiricalshouldtargetingtheoryits

itdisclosures

stakeholder

tests utilizing institutional theory may be

Ⅴ Conclusion and Scope for
Future Research

conducted

insustainability
organizations—tothefuture—considering

disclosuresofvariedestablish

the

There is a tendency among researchers tointerpretational superiority of institutional

opt for a ‘legitimate theory’ for a given

theory over other theories.

research genre. Very few researchers havethe gut to stay outside the accepted region of

Notes

intelligence. Hence, in a specific timeline,（1）Corporate Social Reporting (CSR) is usedsynonymously to sustainability disclosures

one or more theories become popular andconsequently considered as legitimate one(s).
Legitimacy theory is the current ‘legitimate
theory’ for explaining managerial motivations
for publishing sustainability informationand stakeholder theory is also mildly popular.

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