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Identity Claims and Diffusion of Sustainability Report: Evidence from Korean Listed Companies, 2003–2010

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Abstract

This study integrates theories of diffusion and social identity to conceptualize the diffusion of Sustainability Report (SR) as a result of a firm’s identification with its reference groups. Specifically, we first hypothesize four different sources of external stakeholder pressures driving the diffusion. Next, we argue that the source of external stakeholder pressures has a differential effect on the adoption of SR for firms that claim their identity on sustainability management. For firms with organizational identity claims, in-group stakeholder pressure will amplify whereas out-group stakeholder pressure will dampen the adoption. We test our theory using an event-history analysis of 675 publicly traded firms in Korea during the period of 2003–2010. The results show that all four sources of external pressure serve as mechanisms through which SR spread in Korea. More importantly, we find support for the moderating role of organizational identity claims in the effect of external pressures. We discuss how organizational identity matters in the diffusion of corporate social initiatives along with implications for policy makers.

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Notes

  1. We are indebted to one of the reviewers for this insight.

  2. One manager of the first firm to adopt SR in the business group noted, “There is a consensus within our business group that the affiliates should share the sense of unity. Our adoption definitely prompted other firms to take SR into considerations. However, some affiliates in our business group are particularly sensitive to and had special concerns for these issues. As matter of fact, we had some working-level contacts with those firms and shared know-hows on the publication of SR upon their request.” A manager in a later adopter noted, “We know that business group affiliates are concerned with these issues as much as we do so getting help from firms that are publishing SR is a good choice for us as a member of the same group.”

  3. Interviews suggest firms that strongly claim their identity insist SR was adopted by their own initiative and were interested in sustainability issues before the spread of SR. Several interviewees strongly deny the adoption of SR by other firms as the motivation behind the adoption. One manager notes, “We admit that we have benchmarked foreign firms but never other firms in the market. We are the first in this industry to espouse the value.” Furthermore, managers repudiate the relationship with the government regarding the adoption of SR and distanced himself from other firms that adopt under the governmental influence. As one interviewee puts it, “Our SR is not like those of other firms' that are published under the governmental influence. Those reports are very questionable in terms of their originality and sincerity. The contents of those SRs are far from unique because they often have consulting firms and accounting firms to launch it for them.”

  4. AA1000AS is an assurance standard developed by AccountAbility, a global initiative for sustainability reporting assurance based in London, to ensure the quality of sustainability reporting. http://www.accountability.org/standards/aa1000as/index.html.

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Byun, H., Kim, TH. Identity Claims and Diffusion of Sustainability Report: Evidence from Korean Listed Companies, 2003–2010. J Bus Ethics 140, 551–565 (2017). https://doi.org/10.1007/s10551-015-2669-2

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