Literature Review

Topics: Corporate social responsibility, Management, Strategic management Pages: 113 (28716 words) Published: April 3, 2013
Disclosures About CSR Practices:
A Literature Review
Kavitha W * and Anita P **

Corporate Social Responsibility (CSR) is now prominent and evident more than ever due to the emphasis laid on businesses regarding environmental, social and ethical issues. The level of CSR activities of the firms is made known to public only through the disclosures. This paper reviews the literature on CSR disclosures and the effect of these disclosures. There are various factors which determine the extent of disclosures like the size of the firm, industry, high visibility, etc.

Corporate Social Responsibility (CSR) is now prominent and evident more than ever due to the emphasis laid on businesses regarding environmental, social and ethical issues. This is because over the recent years, there have been social, political and economic pressures on corporate management to pay attention on social and environmental consequences of corporate activities. These pressures motivated the corporate management to actively participate in a wide range of social welfare activities. CSR now-a-days covers almost all issues like the use of child labor; inequality of employment; environmental impact; involvement in local community; products’ safety; company cultures; brand image and reputation. Apart from this, companies are now disclosing these activities in their annual reports, and one of the parameters to judge the performance of a company is CSR reporting.

Corporate Social Responsibility
CSR is defined by Naylor (1999) and mentioned in the work of Douglas et al. (2004) as “the obligation of managers to choose and act in ways that benefit both the interests of the organization and those of society as a whole.”

Commission of the European Communities defines CSR as a concept by which “companies decide voluntarily to contribute to a better society and a cleaner environment”. It states that behaving in a socially responsible way amounts to “going beyond compliance and investing ‘more’ into human capital, the environment and the relations with stakeholders”. Fraser (2005) describes CSR as sustainable development which needs to be carried out by all the publicly held companies. These companies need to be responsible not only for their shareholders, but also its stake holders like the employees, customers, suppliers, government and non-governmental organizations.


Research Scholar, IBS, Hyderabad, India. E-mail:

** Research Scholar, IBS, Hyderabad, India. E-mail: D 2011 IUP. All Rights Practices:
©isclosures About CSR Reserved. A Literature Review


Gray et al. (1996) defined CSR as the “process of communicating the social and environmental effects of organizations’ economic actions to particular interest groups within a society and to society at large”. Rajtongakal et al. (2006) identified three theories on CSR— legitimacy theory, stakeholder theory and political economic theory. According to the legitimacy theory, firm is a part of a broader social construct whose expectations must be met if the firm wants to sustain itself without extreme societal sanctions being forced.

The stakeholder theory focuses on the various stakeholder groups within the society. This theory is divided into two branches. They are the positive/managerial branch and the ethical/normative branch.

The political theory comprises the economics, politics and society. It treats them as indivisible.
The growth in the awareness of CSR has encouraged researchers across the globe to study various aspects of CSR. The CSR activities of the corporations are made public through the reporting that they make. This paper attempts to review the literature on CSR reporting and explores some of the important aspects of CSR.

The paper first discusses the nature of CSR and its disclosures, followed by an analysis of the effect of disclosures on the performance of the firm. It then identifies the antecedents for the...
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