CSR in China

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CSR in an emerging country: a content analysis of CSR reports of listed companies

Yongqiang Gao
School of Management, Huazhong University of Science and Technology, Wuhan City, Peoples Republic of China
Abstract
Purpose Given the country-specic characteristics of corporate social responsibility (CSR), there is an increasing interest in studying CSR in developing countries. Such studies play an important role in broadening peoples knowledge of CSR under different economic, social and cultural conditions. The purpose of this paper is to examine the CSR reports (CSRRs) of listed companies in the largest emerging market, namely China. Design/methodology/approach Based on a content analysis of 81 CSRRs (2007) of listed companies in domestic security markets of China (the Shanghai Security Exchanges and Shenzhen Security Exchange), the CSR features of Chinese companies are thoroughly evaluated. Findings The main ndings of the study are as follows. Only 5.05 percent of listed companies published their CSRRs in China, and 4.42 percent of them issued a separate CSRR. Most companies (97.18 percent) use CSRR as the name of their stand-alone CSRRs; 79 percent of companies hold a positive attitude to taking on social responsibilities, while no company holds a negative attitude. Various social issues and stakeholders of companies are addressed in CSRRs. In general, state-owned enterprises (SOEs) have higher propensity to address most of social issues, which may reect that SOEs are more politically sensitive than non-SOEs because most of the social issues are just political slogans proposed by the Chinese Government in recent years. However, non-SOEs have better performance than SOEs in addressing the interests of stakeholders. Meanwhile, industrial rms show higher propensity to address the interests of stakeholders than service rms. Research limitations/implications The results of this study indicate that CSR reporting practice is still at an early stage of development in China. Meanwhile, Chinese companies tend to follow the Chinese guidelines in issuing CSRRs rather than adopt international guidelines. In addition, Chinese companies are somewhat politically sensitive in addressing social issues. A major weakness of this study is that the sample only represents the best companies in assuming social responsibilities in China, thus some results cannot be generalized to all Chinese companies. Originality/value The paper helps people, especially Westerners, to comprehend CSR in China. To the authors knowledge, this paper is the rst of its kind to examine CSR in China. Keywords China, Corporate social responsibility, Private sector organizations, Financial reporting Paper type Research paper
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Received December 2008 Revised June 2009 Accepted October 2009
Introduction Along with the advent of globalization, environmental pollution and shortage of resources have become big social problems all over the world. As a result, corporations are undergoing immense pressure to conduct business in more socially responsible way. The increasing pressure from society forces companies to respond accordingly. Therefore, corporate entities are now very keen to take voluntarily different courses of action either to placate pressure groups or to demonstrate their consciousness of responsibility to society in front of stakeholders. It is now a common practice for organizations in certain
Baltic Journal of Management Vol. 6 No. 2, 2011 pp. 263-291 q Emerald Group Publishing Limited 1746-5265 DOI 10.1108/17465261111131848
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industries and in the more industrialized parts of the world to install environmentally friendly machinery, use recyclable raw materials, rehabilitate sites which may have been damaged by their previous actions, treat employees equally regardless of sex, race, religion, etc. respect the conventions on human rights, disassociate themselves from suppliers of child labor products, make donations for charitable purposes and a host of other socially responsible actions which modern corporations embark on in order to demonstrate responsibility (Idowu and Papasolomou, 2007). A growing number of companies publish an annual social report, also referred to as a public-interest report (Malone and Roberts, 1996), values report (Sillanpaa, 1998), integrated report (Wallage, 2000), ethics report (Adams, 2002), integrity report (Kaptein and Wempe, 2002), sustainability report (Elkington, 1997) or triple-bottom-line (TBL) report (Elkington, 2001), to show their concern on social responsibilities. In 2005, 52 percent of the Global Fortune 250 companies published an annual social report, compared to 45 percent in 2002, 35 percent in 1999 and 12 percent in 1993 (KPMG, 2005). Corporate social responsibility (CSR) reports issued usually go beyond prot maximization to include the companys responsibilities to a broad range of stakeholders including employees, customers, community and the environment (Ofori and Hinson, 2007). According to its proponents, CSR demonstrates the self-regulating capacity of companies; it offers a mechanism to improve the social and environmental performance of companies and represents the instrument par excellence for managing stakeholder relations (Elkington, 2001; Kaptein and Wempe, 1998; Zadek, 2001). However, despite the increasing attention to CSR in recent years in advanced economies in the west, CSR awareness in Asia is rather low, both on the corporate and state level (Ip, 2008). Correspondingly, studies on this topic also concentrate on the CSR practices in Western countries, while very little is known about the CSR practices in developing countries. Belal (2001) notes for example that most of the CSR studies conducted so far have been in the context of developed countries such as Western Europe, the USA and Australia and that we still know too little about practices in ex-colonial, smaller and emerging countries. The author highlights the need for more CSR research in the context of developing countries, given the valuable insights such research could offer to the jaded palettes of Western scholars. There is thus a certain level of lingering academic curiosity about diverging CSR understanding and practice in light of vastly different economic, social and cultural conditions (Jamali and Mirshak, 2007). It is obvious that China acts as a good sample in broadening the understanding of CSR. As an Asian and the biggest developing country in the world, China has totally different culture and political economy from the Wests. It is reasonable to presume that CSR in China is somewhat different from that of its Western counterparts. However, compared to the increasing importance of China in the world, studies on CSR in China are still very limited. This study acts as an attempt to richen the present CSR literature and to broaden the Western scholars understanding of CSR. The main objective of this paper is to provide a prole of social responsibility of listed companies in China, more specically, to discuss how Chinese listed companies formulate their social responsibility reports, what kind of attitude they hold towards assuming social responsibilities and what the social issues and stakeholders reected in their social responsibility reports. The rest of the paper is organized as follows. First, the main previous studies on CSR reports (CSRRs) are reviewed. Second, we introduce the research design in the
third section. Third, the results of the research are reported in the fourth section. Lastly, the results are discussed and a brief conclusion is proposed. Literature review The underlying reasons of CSR reporting From 1990s, worldwide companies began to issue their social reports. Two main reasons that contribute to this trend can be identied easily. The rst one is the increasing pressure from various stakeholders, and the other one is that some companies have realized that reporting their social contribution is a useful way to benet themselves. One of the pressures comes from regulatory bodies. For example, the European Union (EU) has activated the European Modernization Directive that requires all member countries to create legislation with the explicit purpose of reporting employee and environmental matters (Holcomb et al., 2007). Under this requirement, some EU member countries, such as the UK and Denmark, have asked companies to report their social and environmental activities. In addition to regulatory bodies, stock exchanges are compelling listed companies to provide information on their CSR activities (Idowu and Papasolomou, 2007). For instance, in France all companies listed on the Paris Stock Exchange are required to include information about their social and environmental performances in their nancial statements. In South Africa, the Johannesburg Stock Exchange requires that all listed companies must comply with a CSR-based code of conduct. In the UK, several important organizations are requiring information about corporate entities CSR activities. Another pressure comes from investment rating systems such as the Dow Jones Sustainability Index, the Communitys Corporate Responsibility Index and the FTSE4 Good Index, because banks, insurance companies and various funds make their investments in terms of such indexes (Knoepfel, 2001), especially the worldwide growing socially responsible investment funds. Various non-government organizations (NGOs), such as Friends of the Earth, Green Peace, Amnesty International, the World Wildlife Fund, among others, also press companies to issue social report. These NGOs represent a range of interests (human rights, child labor, forced labor, trade, environment and social) and consider CSR as part of the broader context of sustainable development. Just as Schaltegger et al. (1996) argued, one of the driving forces in the popularity of CSRRs was the need to appease some user groups, e.g. environmental activists. In addition to the increased pressure from various stakeholders, some companies initiate their social reports when there is little pressure from stakeholders. Such companies proactive attitude to reporting CSR should associate with the potential benet from doing it. CSRR has been considered by companies to be a useful tool to manage stakeholders or public relations, to enforce organizational or operational legitimacy and to build good reputation. Crowther (2003) and Idowu and Towler (2004), among others, have pointed out that there are enormous benets that corporations of the twenty-rst century can derive when they are perceived by their stakeholders as being socially responsible. It is often argued that companies report on their social conducts to create and maintain favorable reputations and safeguard their interests in the event of socially irresponsible conduct (Brammer and Pavelin, 2005). As credible signals are often costly but appear to be worthwhile (Houston, 2003, p. 340), many companies who have realized this have been involved in some kind of socially responsible conduct (Margolis, 2001) and have been reporting on their social conduct to maintain their
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reputation (Fombrun, 1995). The overall ndings from previous studies illustrate a positive relationship between corporate reputation and corporate values (Fombrun and Shanley, 1990; Godfrey, 2005; Houston, 2003). Besides, a favorable reputation has been identied as enhancing consumer perceptions of product quality (Grewal et al., 1998), raising employee morale, increasing productivity, improving recruitment and retention (Turban and Cable, 2003) and allowing easier access to capital (Beatty and Ritter, 1986). The above two main reasons are proved in some recent researches. For example, Hedberg and von Malmborg (2003) found companies in Sweden produce corporate sustainability reporting mainly to seek organizational legitimacy. Idowu and Papasolomou (2007) identied plenty of reasons that UK companies issue CSRRs, including responding to an increasing number of stakeholders requesting information on CSR, companies believing that doing so is good for business, to derive positive public relations benets, to comply with the governments request for them to issue information on CSR, etc. CSR reporting and its analysis Due mainly to the two reasons above, though corporate social reports have often been criticized for being anecdotal in character (van Tulder and van der Zwart, 2005), self-laudatory (Hooghiemstra, 2000), threatening to become arbitrary and low in credibility (Belal, 2001); ad hoc, scattered and unstructured (Tsang, 1998), supercial and inconsistent in quality (Kolk, 2005; Newton and Hart, 1997), and leading to complacency and becoming a ritual dance (Zadek, 2002), more and more companies issue their social reports voluntarily (KPMG, 2005). A recent survey of 45 global and large companies operating in the EU showed that over 90 percent of them reported on their mission, vision and values, workplace climate, community involvement, local economic development, market place and environmental impact (DTI, 2001). About 80 percent of FTSE-100 companies provided information in one form or another about their environmental performance, social impact, or both (DTI, 2002). Almost 52 percent of the Global Fortune 250 companies published an annual social report in 2005 (KPMG, 2005). Apart from companies in developed countries such as in the USA and EU, companies in developing countries have also joined in this team, as Thompson and Zakaria (2004), Paul et al. (2006) and Mirfazli (2008) have observed in Malaysia, Mexico and Indonesia, respectively. In the early 1990s, companies focused almost exclusively on the environmental matters in their annual reports (Cormier and Gordon, 2001; Gray et al., 1995; Kolk, 1999, 2003; Ljungdahl, 1999; Roberts, 1991; Stittle et al., 1997). However, the environmental disclosures have been criticized for being biased and self-laudatory (Azzone et al., 1997; Cerin, 2002; Deegan and Rankin, 1996; Ljungdahl, 1999), only showing what the company is good at, and leaving the bad perspectives aside. As a result, the reliability of the reports is in doubt. Following the discussions on sustainable development and the increasing stakeholders interest in CSR, several companies have now turned their environmental disclosures into CSRRs or corporate sustainability reports (CSRs) or corporate citizenship reports (CCRs), integrating accounting on environmental, social and economic issues into so-called TBL accounting. The rising of CSR reporting has led to numerous studies on CSRRs, aiming at evaluating companies social performance and nding out their characteristics in CSR reporting. Such researches have been conducted in the UK (Idowu and Towler, 2004;
Parsa and Kouhy, 2008), Demark (Nielsen and Thomsen, 2007), Finland (Vuontisjarv, 2006), Mexico (Paul et al., 2006), Malaysia (Thompson and Zakaria, 2004) and many other countries, by taking empirical or content analysis. Table I lists some recent researches conducted to analyze CSRRs. Although the researches on CSRRs have grown up rapidly in recent years, however, their distribution is disproportionate, with many of them conducted in developed countries especially in the USA and EU. In developing countries, similar researches are still limited. Specically, to the best of our knowledge, no such research has been conducted by using Chinese companies as sample and in China. This situation limits our knowledge of CSR, because it is widely believed that CSR is culture specic, and the responsibilities of corporations are believed to be different across cultures (Bowie, 1997; Carroll, 1993; Donaldson, 1997; Donaldson and Dunfee, 1994). A growing body of evidence suggests that CSR is differently comprehended under different cultures and in different countries. For instance, in testing peoples beliefs about CSR, Quazi and OBrien (2000) found that business managers from Bangladesh were relatively more orientated toward issues affecting the social welfare than the Australian managers who were more likely to place importance on making a prot. Basing on a survey conducted in France, Germany and the USA, Maignan (2001) found that French and German consumers appeared to be more willing to support responsible businesses than their US counterparts. US consumers valued rst, the economic responsibilities of corporations, while French and German consumers concerned most about businesses conforming to legal and ethical standards. A study conducted by Abreu et al. (2005) on the CSR-related experience and practice of Portuguese companies noted cultural differences, pointing to the need for more research on the socio-cultural determinants of CSR in the newly expanded European Community. Research conducted by the Kenexa Research Institute (KRI, 2007) to evaluate workers (from Brazil, China, Germany, India, the UK and the USA, respectively) perceptions of their organizations with regard to CSR also found the difference. For instance, favorability regarding their organizations CSR initiatives varies notably among the countries studied. Workers in India are the most favorable while workers in Germany are the least favorable. In India and China, the oldest workers have the most favorable views of their employers support for CSR, while in Germany, the UK and the USA it is the youngest workers who have the most favorable views. From above discussions, it is reasonable to deduce that CSR, under different cultures, has different meanings and characteristics. Therefore, researches on CSR under different cultures and in different countries help to richen the CSR literature and peoples wisdom. CSR in China Modern Chinese society is deeply inuenced by three religions: Confucianism, Buddhism and Taoism (Lou, 1994). Each religion embodies rich CSR thoughts and values. Taking the most signicant religion Confucianism as an example, Confucianism is, in fact, a moral-political philosophy that guides human relationships. Confucian philosophy rests on two primary facets: Ren and Li. Ren is variously described as benevolence, philanthropy and humaneness (Warner and Zhu, 2002). Confucianism believes that the nature of human beings is to achieve happiness and do good. Since human beings are social creatures, they should achieve happiness through relationships: the humane man, desiring to establish himself, seeks to establish others; desiring himself to succeed,
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Author Empirical study
Idowu and Towler (2004)
Thompson and Zakaria (2004)
Perrini (2006)
Vuontisjarvi (2006)
Paul et al. (2006)
Nielsen and Thomsen (2007) Holcomb et al. (2007)
Parsa and Kouhy (2008) Mirfazli (2008)
Table I. Some researches on CSRRs in recent years Method Key results CSR reporting in the UK is still in its infancy; two distinct practices adopted in CSR reporting: separate report and a section in the annual report; CSRRs disclose information about four main perspectives: environment, community, marketplace and workplace Content analysis Companies make disclosure on employees and human resources (40 percent), products and consumers (24 percent), community involvement (22 percent) and environment (16 percent) Content analysis The reports named sustainability report (37 percent), CSRR (31 percent), social report (10 percent), social and environmental report (10 percent), environmental report (7 percent) and HSE report (3 percent); the stakeholders identied are human resources, environment, community, customers, suppliers, government and public authorities and shareholders; different dimensions of the stakeholders are identied and analyzed Content analysis Social reporting practices are still at an early stage of development in Finland; the analysis to human resource reporting found the frequently reported themes are: training and staff development, participation and staff involvement, employee health and wellbeing, work atmosphere and job satisfaction; disclosures lack overall consistency and comparability with each other and quantitative indicators were disclosed by few Comparative Only a few companies issue CSRRs; most of the social reports were published on an case study occasional basis; only one company reports external verication; all social reporting mentioned stakeholders; ISO 9000 and ISO 14000 certication is mentioned by most of companies, while GRI is rarely mentioned; many of companies report they awards or honors; the environment, donations and volunteerism are common topics; all reports in Spanish, and half in English too Critical discourse Reports are dissimilar in topics and dimensions and discourses expressed in analysis perspectives, stakeholder priorities, contextual information and ambition levels Statistical 80 percent reported charitable donations, 60 percent reported a diversity policy and 40 analysis percent mentioned social responsibility in their vision or mission statement; lack reporting were environmental, vision and value Empirical test SMEs report social information regardless of their nancial constraints, most likely in the same manner as large companies do Content analysis The main foci of social disclosure are labor theme (51.6 percent), customer theme (19.4 percent), society theme (14.7 percent) and environmental theme (14.3 percent); no signicant difference in the social disclosure amount in all themes between basic and chemical industrial companies and companies in other industries
Sample
UK (17)
Malaysia (257)
Europe (90 from the Ethical Index Euro)
Finland (205)
Mexico (10)
Denmark (6)
Hotel industry (10)
UK (100 SMEs)
Indonesia (43)
helps others to succeed (Liu, 1998, p. 18). Li represents the activities performed by individuals and reects patterns of behavior developed through generations of human wisdom. Li reects the rules and norms of society that dictate acceptable behavior (Liu, 1998). What you do not wish for yourself, do not do to others is the golden rule of Confucianism (Hutton, 2006). This rule cannot only be applied for human beings, but also for companies. Carrying out Confucius golden rule enables companies to run their business effectively (McMahon, 1986). However, though Confucianism embodies rich CSR thoughts, it is challenged by the perennial war taken place in neoteric China, the Cultural Revolution during 1966-1976, and the introducing of Western culture, values and thoughts after the opening up in 1978. As a result, the impact of Confucianism has been gradually weakening in China (Chaibong, 2000; Rozman, 2002). Although the term CSR was widely used in other countries as early as the 1970s, it is a relatively new concept in China (Yang, 2008). From 1949 to mid-1990s, China adopted a centrally planned economic system. The state or government controls all major sectors of the economy and formulates all decisions about their use and about the distribution of income (Myers, 2004, p. 288). The planners decide what should be produced and direct enterprises to produce those goods (Ollman, 1997, p. 12). As a result, state-owned enterprises (SOEs) are not an independent economic unit but afliates of the government. Meanwhile, the private enterprise was severely restricted and underdeveloped. Since 1993, China has been leading an economic system reform aiming at building a socialist market-oriented economy. Under this reform, many SOEs are privatized and private enterprises grow up rapidly. However, the chief aim of the economic system reform is to faster economic development. Social responsibilities of enterprises such as environmental pollution, energy conservation and so on have been ignored to a great extent. Only after Chinas joining in World Trade Organization in 2001, was CSR taken seriously in China due to the severe results caused by the social irresponsible behavior (labor scandals, product safety, air pollution, etc.) of business in China and the criticism from overseas. In recent years, the Chinese Government, some Chinese corporations and civil society have promoted and advocated various CSR practices (Yang, 2008). The evolution of CSR in China is well reected by the social reports issued by companies (Figure 1). Before 2002, there were no listed companies who published CSRRs openly[1]. In 2003, only one listed company issued its social reporting, though the CSRR was not openly published. However, over the last three years, China has seen a huge leap
90 80 70 60 50 40 30 20 10 0 81
Number of companies
32 6 1 2003 2 2004 2005 2006 2007
Notes: The 2007 CSR reports are calculated from January 1, 2008 to October 28, 2008; reports issued after October 28, 2008 are not included
Figure 1. The number of companies issued CSR-like reporting (2003-2007)
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in CSR. The number of China-based CSRRs has increased exponentially (Brubaker, 2008). In 2006, a total of 32 listed companies published their CSRRs. Considering the CSRR (2006) is published in 2007 (companies need time to collect data and compile the report), several occurrences may have contributed to the rising of CSRRs. First, the Shenzhen Stock Exchange released the Social Responsibility Guidelines for Listed Companies[2 ] in September 2006. Listed companies are encouraged to follow its CSR mechanisms and develop CSRRs according to this guideline (Yin et al., 2007). Second, on the Chinas Central Conference on Economic Work held in year-end 2006, President Hu Jingtao pointed out that companies should assume their social responsibilities actually. Finally, in April 2007, Shanghai Banking Regulatory Bureau released Corporate Social Responsibility Guidelines for Shanghai Banking Financial Institutions that encourages banking nancial institutions to publish their CSRRs. By October 28, 2008, 81 listed companies had issued their CSRRs (2007), which accounts for 5.05 percent of the total listed companies in China. During the period of publishing CSRRs, State-owned Assets Supervision and Administration Commission (SASAC) of the State Council, the regulatory body of SOEs in China, released The Guiding Advice on Fullling Social Responsibility by Central Enterprises. This guideline stressed the exemplary role that central corporations should play in carrying out social responsibility, and included principles and implementation measures of CSR development (SASAC, 2008). However, despite the rapid increase in reporting CSR, academic research falls far behind. No special research has been done to examine the characteristics or contents of CSRRs issued by Chinese companies. Research design Research aims and the sample The aim of this study is to evaluate the social performance of listed companies in Chinese Stock Exchanges. More specically, ve aspects of CSR are to be discussed: (1) the form, name and structure of CSR resports; (2) companies attitude on assuming CSR; (3) the social issues addressed in CSRRs; (4) the stakeholders and their interests addressed in CSRRs; and (5) the similarities or differences between non-SOEs and SOEs and between industrial and service rms. In order to answer the ve questions above, a content analysis is conducted against the CSRRs or sustainable development reports (CSDRs) or CCRs issued by the listed companies in China, from January 1, 2008 to October 28, 2008. According to Neumann (2003, p. 219):
[. . .] content analysis is a technique for gathering and analyzing the content of text. The content refers to words, meanings, pictures, symbols, ideas, themes, or nay message that can be communicated.
The technique has been widely used in determining the extent and nature of corporate social reporting (Adams et al., 1995; Adams and Harte, 1999; Gray et al., 1995; Mirfazli, 2008; Perrini, 2006; Thompson and Zakaria;, 2004; Vuontisjarvi, 2006).
The CSRRs (or CSDRs or CCRs) of Chinese listed companies are gathered in the following ways. First, we got all the listed companies from Shanghai Security Exchange (www.sse.com.cn) and Shenzhen Security Exchange (www.szse.com.cn). We collected 844 and 761 listed companies from Shanghai Security Exchange and Shenzhen Security Exchange, respectively. Second, we searched www.cninfo.com.cn, www.google.com and www.baidu.com, respectively, to check if a listed company has issued CSRR recently. www.cninfo.com.cn is the ofcial web site appointed by the regulatory agency The China Securities Regulatory Commission to issue company news, including news about CSR. The widely used searching engine www.google.com and www.baidu.com act as a complement to searching news about CSR. If there is a CSRR online, we downloaded it. However, if there is no CSRR online, we further searched the ofcial web site of the company and checked the annual report (2007) of the company, to see if there was a CSRR on its ofcial web site or a section about CSR in its annual report. Last, since some companies publish CSRRs in print other than online, we contacted every company by e-mail to get their CSRRs (two companies declared they issued printed CSRR, however, only one company sent us its printed CSRR). The CSRRs searching process ended on October 28, 2008. By the approaches above, a total of 81 CSRRs were collected. All 81 CSRRs were used as sample in analyzing the CSR performance, while only the companies with a stand-alone CSRR were used as sample in discussing the structure of CSRRs. This is because the CSRRs structure contained in the annual report has a limited format. Codication We followed the typical content analysis procedures used by Yan and Gray (1994). Two trained coders with master degree level education analyzed and coded the data. The coders did not know the intent of this study, but were asked to code the relevant information in CSRRs, including characteristics of the companies, companies attitude to CSR, the structure of CSRRs, social issues and stakeholders (including the items/contents under each stakeholder) addressed in CSRRs. After intensive training, both coders were given 20 randomly selected and identical companies within the sample and made an initial analysis independently. Then their judgments were compared, and any disagreements were resolved through discussions between themselves and with the author. Inter-coder reliability was 92.3 percent of all the items coded, which was acceptable for this type of study (Kassarjian, 1977). The coders subsequently analyzed the remaining items during a period of two week, coding a total of 5,832 data items. Two weeks later after the completion of the analysis, 10 percent of the items were re-analyzed and the test-retest agreements were 98.7 percent. The coding rules about ownership, industry and attitude of company in this paper are as follows: . Ownership. The distinction among different ownership companies is based on the identity of the leading or largest shareholder. A company is coded as SOE when its leading shareholder is the agent of the state (e.g. the state or local SASAC) or another SOE. If the leading shareholder of a company is a foreign company or a foreign institution (including company or institution from Hongkong, Macao and Taiwan), it is coded as a foreign company. If the leading shareholder is a domestic individual or private company, it is coded as a private company. A company is coded as collectively owned enterprise (COE) when its leading shareholder
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is a group such as the labor union of the company or a village committee. The foreign, private and collectively owned companies are all non-SOEs. Industry. The distinction among different industrial companies is based on the core business of the companies. Core business here refers to the business which accounts for the biggest proportion of the total income in a company. For example, if an automobile company also runs business about real estate, but the operating income from selling automobile exceeds selling houses, then it is coded as an automobile company rather than a real estate company. Companys attitude to CSR. A companys attitude is coded as positive when it expresses any idea that taking on social responsibility contributes to the long-term success or has other positive effect on the company as a whole. On the contrary, a companys attitude is coded as negative when it expresses any thought that sharing social responsibility has a negative effect on the company as a whole. The remainders are coded as neutral.
Findings Characters of the sample The targeted sample is 81 CSRRs (2007) issued by corresponding public companies in China during January 1, 2008-October 28, 2008. The 81 companies contain one foreign company, 25 private companies, two COEs and 53 SOEs (Table II). The foreign company is Ping An of China. It was once a domestic company but has been share controlled by a foreign company since 2007. The two COEs are NingXia YingLiTe Chemicals Co., Ltd and Gree Electric Appliances Inc. situated in Zhuhai city. They belong to chemical and pharmacy and home electronics, respectively.
Characters of sample companies Ownership Foreign company Private company Collectively owned enterprise State-owned enterprises Industry Banking/insurance Mining and smelting Home electronics Chemical and pharmacy Textile Machinery Automobile, iron and steel Transportation Real estate Telecommunication Business/trade Electric power Grocery/beverage Note: n 81
Number of company(-ies) 1 25 2 53 10 10 9 9 7 6 6 5 5 4 4 3 3
Percentage of total n 1.2 30.9 2.5 65.4 12.3 12.3 11.1 11.1 8.6 7.4 7.4 6.2 6.2 4.9 4.9 3.7 3.7
Table II. Characters of sample companies in China
The 81 companies belong to 13 industries, respectively (Table II). The rst ve industries are banking/insurance (ten), mining and smelting (ten), home electronics (nine), chemical and pharmacy (nine) and textile (seven). Private companies distribute in textile, home electronics, telecommunication machinery and real estate industries, with no private companies locate in automobile, iron and steel, transportation and grocery/beverage industries. However, in order to nd the similarities and differences among different industries, we integrated 13 industries into two groups according to the Industrial Classication Standard (2003) of China: (1) Industrial rms group (including mining and smelting; home electronics; chemical and pharmacy; textile; machinery; automobile, iron and steel; and electric power), which contains 50 companies. (2) Service rms group (including banking/insurance, transportation, real estate, telecommunications, business/trade and grocery/beverage), which contains 31 companies. Such a distinction is based on the presupposition that rms with different industrial nature (industrial versus service) may have different preference in sharing social responsibilities. Social report: form, name and structure Among the 81 listed companies, 71 (or 87.7 percent) issued a stand-alone CSRR while the other ten (12.3 percent) published their CSR information in their annual reports. On the list of stand-alone CSRRs, most of the companies (69 or 97.2 percent) used the name CSRR, while one company used corporate sustainability report and another one used CCR, respectively (Table III).
Item (total n) Form (81) Stand-alone CSRR CSR in annual report Name of stand-alone CSRRs (71) CSRR Corporate sustainability report Corporate citizenship report Structure of stand-alone CSRRs (71) Preface or introduction Address of CEO Content Brief introduction of company Strategic planning Mission or targets of company Culture or values Business or organizational or structure Important accidents record Social responsibility performance Authentication by a third party Self- or social evaluation Prospect/gap and improvement Number of companies 71 10 69 1 1 57 20 24 32 30 49 49 37 20 71 41 6 61 Percentage of total n 87.7 12.3 97.2 1.4 1.4 80.3 28.2 33.8 45.1 42.3 69.0 69.0 52.1 28.2 100 57.7 8.5 85.9
Table III. Name, approach and structure of corporate social reports
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As far as the structure of separate CSRRs is concerned, many reports have components as preface or introduction (57 or 80.3 percent), mission or targets of company (49 or 69 percent), culture or values (49 or 69 percent), business or organizational or structure (37 or 52.1 percent) and prospect/gap and improvement (61 or 85.9 percent). Some reports have columns like address of CEO (20 or 28.2 percent), content (24 or 33.8 percent), brief introduction of company (32 or 45.1 percent), strategic planning (30 or 42.3 percent) and important accidents record (20 or 28.2). Few companies have self- or social evaluation of their CSR (6 or 8.5 percent). Of course, all companies report their social responsibility performance (Table III). Guidelines of CSRR compiling and companies attitude to CSR The CSRRs of Chinese listed companies are compiled by referring to several guidelines (Table IV). The guideline frequently referred to is Social Responsibility Guidance for Listed Companies issued by Shenzhen Security Exchange, with 34 (about 42 percent) companies adopting it. Four companies refer to The Guiding Advice on Fullling Social Responsibility by Central Enterprises issued by SASAC of the State Council in China when they compile their CSRRs. Some international CSR reporting guidelines are also referred to, with seven companies referring to the Global Reporting Initiative (GRI) and one company referring to Global Compact. Several companies refer to more than one guideline. For example, China Shenhua Energy Company Limited refers to GRI, Social Responsibility Guidance for Listed Companies and The Guiding Advice on Fullling Social Responsibility by Central Enterprises simultaneously. However, there are still 38 companies did not express clearly whether they have referred to any guidance or guideline or not in compiling their CSRRs. Companies hold different attitudes to sharing social responsibilities. Among the 81 listed companies who issued CSRRs, 64 (or 79 percent) hold a positive attitude to sharing CSR, and 17 (or 21 percent) hold a neutral attitude, while no companies hold a negative attitude (Table V). SOEs show a more positive attitude to assuming CSR than non-SOEs, with 88.7 percent (or 47) SOEs holding a positive attitude to CSR while only 60.7 percent (or 17) non-SOEs holding such an attitude. A x 2-test (using SPSS 13.0) of attitudes between the two types of rms yields a x 2-value of 29.630 ( p 0.000). It indicates that a signicant difference exists between the attitudes of SOEs and non-SOEs. Similarly, industrial rms hold a more positive attitude towards assuming social responsibilities than service rms, with 80 percent industrial rms holding a positive attitude while
Guidelines referred to Global reporting initiative Global compact Social responsibility guidance for listed companiesa The guiding advice on fullling social responsibility by central enterprisesb Other guidelines No guidance/guideline Number of companies 7 1 34 4 7 38 Percentage of total n 8.6 1.2 42.0 4.9 8.6 46.9
Table IV. Guidelines of CSRRs compiling
Notes: n 81; aissued by Shenzhen Security Exchange in China; bissued by SASAC of the State Council in China
only 77.4 percent service rms holding such an attitude. A x 2-test of the attitudes between industrial and service rms yields a x 2-value of 18.000 ( p 0.000), which shows a signicant difference between them. Preferential social issues Many social issues are addressed in the CSRRs published by Chinese listed companies (Table VI). The preferential social issues include scientic development view (54 or 66.7 percent), sustainable development of economy and society (62 or 76.5 percent), social stability and harmony (67 or 82.7 percent), community construction (76 or 93.8 percent), abiding by laws and rules (73 or 90.1 percent), credit or moral construction (74 or 91.4 percent), anti-commercial bribery (49 or 60.5 percent), safety in production (43 or 53.1 percent); energy saving and pollution reduction (74 or 91.4 percent), environmental protection (76 or 93.8 percent) and charities (77 or 95.1 percent). As far as the difference between SOEs and non-SOEs is concerned, x 2-tests show that they have signicant difference in most of social issues except anti-commercial bribery and safety in production (column 5 of Table VI). In general, SOEs are more likely to address the social issues than non-SOEs except energy saving and pollution reduction. Considering that most of these social issues are just political slogans proposed by the central government in recent years and SOEs have better performance in addressing them, it may be reasonable to conclude that SOEs are more politically sensitive than non-SOEs. Similarly, x 2-tests between industrial rms and service rms show they have signicant differences in most social issues except in anti-commercial bribery and safety in production (see column 8 of Table VI). Moreover, industrial rms seem to be more likely to address the social issues than service rms except scientic development view and sustainable development of economy and society. Stakeholders and their interests Various stakeholders and different aspects of their interests are addressed in the CSRRs issued by Chinese listed companies. Those stakeholders include shareholders, creditors, employees, suppliers, customers/consumers, environment and charity/society. It is obvious that such a taxonomy of stakeholders follows the Social Responsibility Guidance for Listed Companies published by Shenzhen Security Exchange in 2006. Government and competitors are not mentioned in these CSRRs except when the government acts as a shareholder. Community is not an independent stakeholder either in CSRRs. Companies tend to mention it under the name of environment or charity.
Attitude to CSR Positive Negative Neutral Total
Number of rms (percentage of total n) 64 0 17 81 (79.0) (0) (21.0) (100)
Number of Number of nonSOEs (percentage of SOEs (percentage total SOEs) of total non-SOEs) 47 0 6 53 (88.7) (0) (11.3) (100) 17 0 11 28 (60.7) (0) (39.3) (100)
Number of industrial rms (percentage of total industrial rms) 40 0 10 50 (80) (0) (20) (100)
Number of service rms (percentage of total service rms) 24 0 7 31 (77.4) (0) (22.6) (100)
Table V. Attitude to sharing CSR
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Social issues
Scientic development view Sustainable development of economy and society Social stability and harmony Community construction Abiding by laws and rules Credit or moral construction Anti-commercial bribery Safety in production Energy saving and pollution reduction Environmental protection Charities 39 (73.6) 33 (66) 15 (53.6) 14.519 * 44 (83.0) 45 (84.9) 50 (94.3) 48 (90.6) 50 (94.3) 28 (52.8) 30 (56.6) 47 (88.7) 51 (96.2) 51 (96.2) 13 (46.4) 27 (96.4) 25 (89.3) 26 (92.9) 21 (75) 24 (85.7) 25 (89.3) 35.852 * 42.667 * 0.074 0.667 32.667 * 46.296 * 46.296 * 26 (92.9) 42.667 * 22 (78.6) 26.741 * 18 (64.3) 24.000 * 38 (76) 42 (84) 47 (94) 47 (94) 48 (96) 32 (64) 30 (60) 46 (92) 48 (96) 49 (98)
Note: Signicant at: *0.05 and * *0.01 levels
Table VI. Preferential social issues Number of nonNumber of SOEs SOEs (percentage of total non-SOEs (percentage of (28)) total SOEs (53)) x2-test between SOEs and nonSOEs (x2-value) Number of industrial rms (percentage of total industrial rms (50)) Number of service x2-test between rms (percentage industrial and of total service service rms rms (31)) (x2-value) 21 (67.7) 12.893 * * 24 (77.4) 25 (80.7) 29 (93.6) 26 (83.9) 26 (83.9) 17 (54.8) 13 (41.9) 28 (90.3) 28 (90.3) 28 (90.3) 32.143 * * 46.286 * * 85.750 * * 66.036 * * 69.143 * * 3.571 0.000 75.571 * * 82.286 * * 85.750 * *
Number of rms (percentage of total n (81))
54 (66.7)
62 (76.5)
67 (82.7)
76 (93.8)
73 (90.1)
74 (91.4)
49 (60.5)
43 (53.1)
74 (91.4)
76 (93.8) 77 (95.1)
The frequently addressed interests of stakeholders are governance structure (shareholders, 67 or 82.7 percent), long-term relationship (creditors, 69 or 85.2 percent), keeping credit (creditors, 73 or 90.1 percent), people oriented/centered (employees, 76 or 93.8 percent), abiding by labor laws (employees, 69 or 85.2 percent), salary and welfare (employees, 74 or 91.4 percent), education and training (employees, 70 or 86.4 percent), workplace safety and workers health (employees, 66 or 81.5 percent), employment policy (employees, 66 or 81.5 percent), creditable management (customers/consumers, 72 or 88.9 percent), customer/consumer satisfaction (customers/consumers, 68 or 84.0 percent), product/service quality (customers/consumers, 65 or 80.3 percent) and donation to education (charity/society, 65 or 80.3 percent). Shareholders and creditors The interests of shareholders addressed by listed companies include governance structure, information disclosure, return, bonus and shares allotment and rms interests and long-term development, while interests of creditors addressed include long-term relationship, information disclosure and keeping credit (Table VII). As the difference between SOEs and non-SOEs concerned, non-SOEs seem to be more likely to address all the interests of shareholders and creditors above except governance structure. x 2-tests show SOEs and non-SOEs have signicant differences in all the items of interests except return, bonus and shares allotment and rms interest and long-term development (see column 6 of Table VII). The results suggest that non-SOEs pay more attention to the interests of their shareholders and creditors than SOEs. Similarly, the comparison between industrial and service rms shows that industrial rms are more likely to address all the interests of shareholders and creditors than service rms. x 2-tests between industrial and service rms show they have signicant differences in all items of interests except return, bonus and shares allotment (see column 9 of Table VII). The results indicate that industrial rms attach more importance to the interests of shareholders and creditors than service rms do. Employees Various interests of employees are addressed by listed companies. The frequently addressed interests include people oriented/centered (93.8 percent), salary and welfare (91.4 percent), education and training (86.4 percent), abiding by labor laws (85.2 percent), workplace safety and workers health (81.5 percent) and employment policy (81.5 percent) (Table VIII). Firms with different ownerships show different preference for the interests of employees. x 2-tests nd SOEs and non-SOEs are signicantly different in most items of the interests of employees except labor union, protection for female workers, helping employees in trouble and equal pay for equal work (see column 5 of Table VIII). In general, non-SOEs have better performance in addressing the interests of employees than SOEs. They show higher propensity to address most of the items of the interests of employees except workplace safety and workers health, paid holiday and leisure-time activities. As far as business sectors are concerned, industrial and service rms have signicant differences in most aspects of the interests of employees except labor union, protection for female workers, helping employees in trouble and equal pay for equal work, as the x 2-tests suggested (see column 8 of Table VIII). Generally, industrial rms did better in addressing the interests of employees than service rms except for paid holiday.
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Stakeholders Items 67 (82.7) 58 (71.6) 36 (67.9) 22 (78.6) 7.407 * * 44 (83.0) 23 (82.1) 24.000 * * 43 (86) 40 (80)
Shareholder
Creditor 69 (85.2) 58 (71.6) 73 (90.1) 47 (88.7) 36 (67.9) 45 (84.9) 24 (85.7) 22 (78.6) 26 (92.9)
Note: Signicant at: *0.05 and * *0.01 levels, respectively
Table VII. Interests of shareholders and creditors Number of nonNumber of Number of SOEs SOEs rms (percentage (percentage of (percentage of total non-SOEs total SOEs of total n (28)) (53)) (81)) x2-test between SOEs and non-SOEs (x2-value) Number of Number of service x2-test between industrial rms (percentage of total rms (percentage industrial and of total service industrial rms service rms rms (31)) (50)) (x2-value) 24 (77.4) 18 (58.1) 25.920 * * 18.000 * * 43 (53.1) 24 (45.3) 19 (67.9) 0.296 27 (54) 16 (51.6) 0.320 51 (77.7) 30 (56.6) 21 (75) 1.185 26.741 * * 29.630 * * 32.667 * * 33 (66) 45 (90) 47 (94) 48 (96) 18 (58.1) 24 (77.4) 25 (80.7) 25 (80.7) 5.120 * 32.000 * * 38.720 * * 42.320 * *
Governance structure Information disclosure Return, bonus and shares allotment Firms interests and long-term development Long-term relationship Information disclosure Keeping credit
Items
Number of rms Number of SOEs (percentage of (percentage of total SOEs (53)) total n (81))
Number of nonSOEs (percentage of total non-SOEs (28)) x2-test between SOEs and nonSOEs (x2-value)
Number of industrial rms Number of service x2-test between (percentage of total rms (percentage industrial and of total service industrial rms service rms rms (31)) (50)) (x2-value)
76 (93.8) 48 (96) 44 (88) 10 (20) 28 (56) 47 (94) 42 (79.2) 8 (15.1) 28 (52.8) 47 (88.7) 27 (96.4) 29.630 * * 6 (21.4) 13 (46.4) 26.741 * * 0.074 27 (96.4) 16.667 * *
49 (92.5)
27 (96.4)
35.852 * *
27 (87.1) 24 (77.4) 4 (12.9) 12 (38.7) 26 (83.9)
42.320 * * 28.880 * * 18.000 * * 0.720 38.720 * *
69 (85.2)
14 (17.3) 41 (50.6)
74 (91.4)
66 (81.5) 42 (79.2) 45 (84.9) 21 (39.6) 13 (46.4) 2.667 25 (89.3) 24.000 * * 24 (85.7) 16.667 * *
44 (83.0)
22 (78.6)
21.407 * *
43 (86) 42 (84) 45 (90) 22 (44)
22 (71.0) 23 (74.2) 24 (77.4) 12 (38.7)
25.920 * * 23.120 * * 32.000 * * 0.720 (continued)
66 (81.5)
People oriented/ centered Abiding by labor laws OHSAS 18001 certication Labor union Salary and welfare Workplace safety and workers health Employment policy Education and training Protection for female workers
70 (86.4)
34 (42.0)
Table VIII. Interests of employees
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Items
Protection for minority workers Helping employees in trouble Paid holiday Equal pay for equal work Opportunity equality Workers satisfaction Leisure-time activities 10 (18.9) 30 (56.6) 13 (24.5) 20 (37.7) 18 (34.0) 34 (42.0) 36 (67.9) 19 (67.9) 20 (71.4) 10 (35.7) 11 (39.3) 3.630 6.000 * 4.741 * 7.407 * * 11 (39.3) 3 (10.7) 0.667 14.519 * * 6 (21.4) 21.407 * *
Table VIII. Number of nonSOEs (percentage of total non-SOEs (28)) x2-test between SOEs and nonSOEs (x2-value) Number of industrial rms Number of service x2-test between (percentage of total rms (percentage industrial and of total service industrial rms service rms rms (31)) (50)) (x2-value) 12 (24) 29 (58) 9 (18) 20 (40) 18 (36) 38 (76) 36 (72) 4 (12.9) 12 (38.7) 7 (22.6) 11 (35.5) 10 (32.3) 16 (51.6) 19 (61.3) 13.520 * * 1.280 20.480 * * 2.000 3.920 * 13.520 * * 9.680 * *
Number of rms Number of SOEs (percentage of (percentage of total SOEs (53)) total n (81))
16 (19.8)
41 (50.6) 16 (19.8)
31 (38.3)
28 (34.6)
54 (66.7)
55 (67.9)
Suppliers and customers/consumers Various interests of suppliers and customers/consumers are addressed by listed companies (Table IX). For suppliers, the most frequently addressed interest is long-term relationship (65.4 percent), while for customers/consumers, the most frequently addressed interests are creditable management (88.9 percent), customer/consumer satisfaction (84.0 percent) and product/service quality (80.2 percent). As rms of different ownerships concerned, SOEs and non-SOEs show no signicant differences in addressing the interests of suppliers except intellectual property protection (see column 6 of Table IX), as x 2-tests suggested. Non-SOEs show higher propensity to address intellectual property protection than SOEs. However, signicant differences are found in addressing the interests of customers/consumers. Non-SOEs care more about the interests of their customers/consumers than SOEs except anti-commercial bribery. As business sectors concerned, it seems that industrial rms did better than service rms in addressing the interests of suppliers. x 2-tests show that industrial rms have signicantly higher propensity to address the interests of suppliers such as respecting contract and long-term relationship than service rms, while no signicant differences are found in addressing other interests between them (see column 9 of Table IX). Similarly, industrial rms show better performance than service rms in addressing the interests of customers/consumers such as creditable management, customer/consumer satisfaction and product/service quality, while there is no differences in ISO 9000 series certication and anti-commercial bribery. Environment Various aspects of environment have been addressed in the CSRRs issued by listed companies. Most frequently addressed environmental issues include energy saving (76.5 percent), environment policy (75.3 percent) and recycle economy (75.3 percent) (Table X). As far as rms of different ownerships are concerned, SOEs show signicantly higher propensity to address the environmental issue environment policy, while non-SOEs are signicantly more likely to address the environmental issues like ISO 14000 series certication, energy saving, recycle economy and greening, as x 2-tests suggested (see column 6 of Table X). There is no signicant differences in other issues such as environment investment, pollution control or reduction and cleaner production between SOEs and non-SOEs. Therefore, it seems that non-SOEs did better in general in sharing environmental responsibility. As business sectors are concerned, x 2-tests suggest that industrial and service rms show signicant differences in all the environmental issues except greening. Besides, industrial rms show a higher propensity to address all the signicant issues than service rms. It is thus reasonable to conclude that industrial rms have better performance in sharing environmental responsibility than service rms. Charity/society Various interests of charity/society are addressed by listed companies. Frequently, addressed charity issues include donation to education (80.2 percent) and support local or community construction (69.1 percent) (Table XI).
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Stakeholders Items 48 (59.3) 53 (65.4) 32 (39.5) 38 (46.9) 49 (60.5) 72 (88.9) 68 (84.0) 65 (80.2) 26 (32.1) 43 (53.1) 16 (30.2) 27 (50.9) 39 (73.6) 41 (77.4) 27 (96.4) 26 (92.9) 10 (35.7) 16 (57.1) 45 (84.9) 27 (96.4) 28 (52.8) 21 (75) 0.296 26.741 * * 16.667 * * 12.519 * * 8.963 * * 0.000 21 (39.6) 17 (60.7) 2.667 16 (30.2) 16 (57.1) 8.963 * * 26 (52) 29 (58) 31 (62) 47 (94) 43 (86) 43 (86) 19 (38) 26 (52) 31 (58.5) 22 (78.6) 1.852 41 (82) 26 (49.1) 22 (78.6) 0.000 38 (76)
Supplier
Customer/ consumer
Table IX. Interests of suppliers and customers Number of nonNumber of Number of SOEs (percentage SOEs rms (percentage of (percentage of of total non-SOEs (28)) total n (81)) total SOEs (53)) 10 (32.3) 12 (38.7) 6 (19.4) 9 (29.0) 18 (58.1) 25 (80.6) 25 (80.6) 22 (71.0) 7 (22.6) 17 (54.8) x2-test between SOEs and non-SOEs (x2-value) Number of industrial rms (percentage of total industrial rms (50)) Number of service rms (percentage of total service rms (31)) x2-test between industrial and service rms (x2-value) 13.520 * * 20.480 * * 0.080 1.280 2.880 38.720 * * 25.920 * * 25.920 * * 2.880 0.080
Respecting contract Long-term relationship Intellectual property protection Caring about suppliers interests Anticommercial bribery Creditable management Customer/ consumer satisfaction Product/ service quality ISO 9000 series certication Anticommercial bribery
Items 41 (77.4) 40 (80) 18 (36) 32 (64) 45 (90) 35 (70) 41 (82) 41 (82) 30 (60) 12 (22.6) 32 (60.4) 40 (75.5) 31 (58.5) 38 (71.7) 33 (62.3) 34 (42.0) 23 (82.1) 15 (53.6) 3.630 4.741 * 23 (82.1) 10.667 * * 15 (53.6) 1.185 22 (78.6) 14.519 * * 14 (50) 1.852 10 (35.7) 16.667 * * 20 (71.4) 16.667 * * 21 (67.7) 4 (12.9) 14 (45.2) 17 (54.8) 11 (35.5) 20 (64.5) 15 (48.4) 19 (61.3)
Number of rms (percentage of total n (81)) Number of SOEs (percentage of total SOEs (53)) x -test between SOEs and nonSOEs (x2-value)
2
Number of nonSOEs (percentage of total non-SOEs (28))
Number of Number of service industrial rms (percentage of total rms (percentage of total service industrial rms rms (31)) (50))
x2-test between industrial and service rms (x2-value) 18.000 * * 3.920 * 3.920 * 32.000 * * 8.000 * * 20.480 * * 20.480 * * 2.000
61 (75.3)
22 (27.2)
46 (56.8)
62 (76.5)
46 (56.8)
Environment policy ISO 14000 series certication Environment investment Energy saving Pollution control or reduction Recycle economy Cleaner production Greening
61 (75.3)
56 (69.1) 49 (60.5)
Table X. Interests of environment
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Stakeholders Items 45 (55.6) 65 (80.2) 41 (50.6) 48 (59.3) 41 (50.6) 44 (54.3) 28 (52.8) 16 (57.1) 28 (52.8) 13 (46.4) 0.074 0.074 31 (58.5) 17 (60.7) 1.185 29 (54.7) 12 (42.9) 0.296 43 (81.1) 22 (78.6) 21.407 * * 41 (82) 24 (48) 30 (60) 23 (46) 26 (52) 32 (60.4) 13 (46.4) 1.852 29 (58)
Charity/ society
SA 8000 certication CSR awards 20 (24.7) 40 (49.4) 16 (30.2) 30 (56.6)
Table XI. Interests of charity/society Number of Number of SOEs rms (percentage of (percentage of total n (81)) total SOEs (53)) Number of nonSOEs (percentage of total non-SOEs (28)) x2-test between SOEs and non-SOEs (x2-value) Number of industrial rms (percentage of total industrial rms (50)) 16 (51.6) 23 (74.2) 17 (54.8) 18 (58.1) 18 (58.1) 18 (58.1) Number of service rms (percentage of total service rms (31)) x2-test between industrial and service rms (x2-value) 1.280 20.480 * * 0.080 2.000 0.320 0.080 56 (69.1) 54 (66.7) 40 (75.5) 37 (69.8) 19 (67.9) 14 (50) 4 (14.3) 10 (35.7) 8.963 * * 14.519 * * 8.963 * * 0.667 37 (74) 33 (66) 8 (16) 24 (48) 19 (61.3) 21 (67.7) 12 (38.7) 16 (51.6) 11.520 * * 5.120 * 23.120 * * 0.080
Volunteers activity Donation to education Donation to hospital and sanitation Disaster relief Support sports Support culture and arts Support local or community construction Other donation
It seems that SOEs did better than non-SOEs in addressing the interests of charity/society. x 2-tests show SOEs have signicantly higher propensity than non-SOEs to address the charities such as donation to education, support local or community construction and other donation, while there is no signicant differences in other charities between them (see column 6 of Table XI). Industrial rms show higher propensity to address charities as donation to education and support local or community construction while show lower propensity to address other donation than service rms, as x 2-tests suggested. On other charities, there is no signicant differences between industrial and service rms. Conclusion and discussion Basing on a content analysis to 81 CSRRs, this study analyzes the characteristics of CSR of listed companies in China. The results show that Chinese companies tend to issue their stand-alone CSRRs (71 or 87.7 percent) than to include CSR in their annual reports (10 or 12.3 percent). Among the separate CSRRs, most (69 or 97.2 percent) are named CSRR, and many of them have components or columns such as preface or introduction, mission or targets of company, culture or values, business or organizational or structure and prospect/gap and improvement. Chinese companies tend to follow their own guidelines in issuing CSRRs rather than to adopt international guidelines. Only 7 (or 8.6 percent) referred to GRI in compiling CSRRs, while 34 (or 42.0 percent) follow the Social Responsibility Guidance for Listed Companies published by Shenzhen Security Exchange in 2006. Of course, many companies did not express explicitly the guideline they adopted in compiling their CSRRs. It does not mean that Chinese companies are self-complacent. Considering the thought of Social Responsibility Guidance of Shenzhen Security Exchange originates from Western stakeholder theory (Freeman, 1984, 1998) and the guidance keeps in line with Western business principles (e.g. the business principles issued by Cox Roundtable), we could conclude that no signicant differences exist between international and Chinese guidelines of CSR. Most companies (64 or 79 percent) hold a positive attitude to sharing CSR, and 17 (or 21 percent) hold a neutral attitude, while no companies hold a negative attitude. SOEs show a more positive attitude to sharing CSR than non-SOEs. Meanwhile, industrial rms show a more positive attitude to sharing CSR than service rms. The social issues frequently addressed by Chinese companies include scientic development view, sustainable development of economy and society, social stability and harmony, anti-commercial bribery, energy saving and pollution reduction and the like. SOEs show higher propensity to address most of the social issues than non-SOEs. Considering many of the social issues are political slogans proposed by the central government in recent years, it might be reasonable to conclude that SOEs are more politically sensitive than non-SOEs. Signicant differences are also found between industrial and service rms, with industrial rms being more likely to address most of the social issues than service rms. The stakeholders frequently addressed by Chinese companies include shareholders, creditors, employees, suppliers, customers/consumers, environment and charities. It is obvious that such a taxonomy follows the Social Responsibility Guidance for Listed Companies published by Shenzhen Security Exchange in 2006. The mostly addressed interests of stakeholders are governance structure (shareholder, 67 or 82.7 percent),
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keeping credit (creditors, 73 or 90.1 percent), people oriented/centered (employees, 76 or 93.8 percent), creditable management (customers/consumers, 72 or 88.9 percent) and the like. In general, SOEs seem to be more likely to address the interests of charity/society, while non-SOEs show higher propensity to address the interests of shareholders, creditors, employees, customers/consumers and environment. SOEs and non-SOEs show no signicant differences in addressing the interests of suppliers. The results may indicate that non-SOEs have better performance in sharing social responsibilities than SOEs. SOEs in China pay much attention to charities but overlook their social responsibilities towards other stakeholders. This may attribute to their political sensitivity. In China, charity is presented as a complementary activity to both the market economy and to the work of the government (ORSE, 2006). The government needs donations to help the poor and the disabled, to back up education and to be used for disaster relief, medical and public facilities. Therefore, SOEs may think that supporting charities especially committing donations are a useful way to build their responsible images in front of the government, since they are supervised by the government. At the same time, industrial rms show higher propensity than service rms to address the interests of shareholders, creditors, employees, suppliers, customers/consumers and environment, while they show different preferences in addressing the interests of charity/society (different charities are underscored, respectively). Therefore, it seems that industrial rms have better performance in sharing social responsibilities than service rms. This may attribute partly to the industrial nature. For example, creditors and suppliers exert very little impact on the operation of some service rms such as banks or insurance companies, while they are inuential to most industrial rms. Meanwhile, service rms often exert relatively less negative impact on environment than industrial rms do. In sum, social reporting practice is still at an early stage of development in China. Such a conclusion is also achieved by Idowu and Towler (2004) in the UK, Vuontisjarvi (2006) in Finland and Paul et al. (2006) in Mexico. Only 81 listed companies issued their CSRRs (2007) (by October 28, 2008), which accounts for 5.05 percent of the total listed companies in China. Moreover, only 20 (or 24.69 percent) companies passed the certication of SA 8000. Companies who passed the serial certications of ISO 9000 and 14000 and the certication of OHSAS 18001 are also limited. However, why did the majority of Chinese companies not issue their CSRRs? The underlying reasons may lie in the following aspects. First, as we mentioned above, the term of CSR was just introduced to China several years ago. Many Chinese companies are not used to compile their CSRRs yet. Second, during the transitional period of China, many companies do not have good records on CSR. For them, it is ironic to publish CSRRs. Third, a social environment that forces companies to issue their CSRRs is still to be built. For example, there were no government agencies urge companies to issue their CSRRs and no guideline was published to guide companies to code their CSRRs before 2006. Besides, NGOs especially the civil society organizations (many NGOs in China are government-organized NGOs) are still underdeveloped in China. The Chinese media, monitored closely by the authorities, has not yet been able to develop a critical view towards business (ORSE, 2006). Under such a situation, most companies feel no pressure to publish their CSRRs. Last, some companies especially the small and medium enterprises (SMEs) may just act as followers in issuing CSRRs. Only when there are
a large enough number of rms issuing CSRRs these companies will follow them to issue their own CSRRs. The main limitations of this study attribute to the sample. First, the sample (81 CSRRs) used in this study probably comes from a small group of companies who keep the best records on CSR in China. Therefore, the results of this study cannot be simply generalized to other Chinese companies. Second, to many companies, their CSRRs are not certied by a third party. As a result, there exists the possibility that rms overstate their performance in sharing social responsibilities. Future studies should aim at answering the following questions. At rst, why some companies issued their CSRRs while others did not do that? What factors help to explain the differences between different companies? Second, why some companies commit their social responsibilities initiatively? Are they doing that for common good or just for corporate image? Third, what the potential benets are by committing social responsibilities? Does CSR line up to corporate values and competencies? Finally, what are the similarities and differences between the CSR characteristics of Chinese companies and that of Western companies.
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CSR in an emerging country: a content analysis of CSR reports of listed companies

CSR in an emerging country 263

CSR in an emerging country 265

CSR in an emerging country 267

Author Empirical study

Idowu and Towler (2004)

Thompson and Zakaria (2004)

Paul et al. (2006)

Nielsen and Thomsen (2007) Holcomb et al. (2007)

Parsa and Kouhy (2008) Mirfazli (2008)

Europe (90 from the Ethical Index Euro)

Hotel industry (10)

CSR in an emerging country 269

32 6 1 2003 2 2004 2005 2006 2007

Figure 1. The number of companies issued CSR-like reporting (2003-2007)

CSR in an emerging country 271

Table II. Characters of sample companies in China

CSR in an emerging country 273

Table III. Name, approach and structure of corporate social reports

Table IV. Guidelines of CSRRs compiling

CSR in an emerging country 275

Attitude to CSR Positive Negative Neutral Total

Number of rms (percentage of total n) 64 0 17 81 (79.0) (0) (21.0) (100)

Table V. Attitude to sharing CSR

Note: Signicant at: *0.05 and * *0.01 levels

Number of rms (percentage of total n (81))

CSR in an emerging country 277

Note: Signicant at: *0.05 and * *0.01 levels, respectively

27 (87.1) 24 (77.4) 4 (12.9) 12 (38.7) 26 (83.9)

42.320 * * 28.880 * * 18.000 * * 0.720 38.720 * *

43 (86) 42 (84) 45 (90) 22 (44)

22 (71.0) 23 (74.2) 24 (77.4) 12 (38.7)

25.920 * * 23.120 * * 32.000 * * 0.720 (continued)

CSR in an emerging country 279

Table VIII. Interests of employees

Note: Signicant at: *0.05 and * *0.01 levels

CSR in an emerging country 281

Note: Signicant at: *0.05 and * *0.01 levels

Number of nonSOEs (percentage of total non-SOEs (28))

Note: Signicant at: *0.05 and * *0.01 levels

CSR in an emerging country 283

Table X. Interests of environment

SA 8000 certication CSR awards 20 (24.7) 40 (49.4) 16 (30.2) 30 (56.6)

Note: Signicant at: *0.05 and * *0.01 levels

CSR in an emerging country 285

CSR in an emerging country 287

CSR in an emerging country 289

CSR in an emerging country 291

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Note: Signicant at: 0.05 and *0.01 levels

Note: Signicant at: 0.05 and *0.01 levels, respectively

Note: Signicant at: 0.05 and *0.01 levels

Note: Signicant at: 0.05 and *0.01 levels

Note: Signicant at: 0.05 and *0.01 levels

Note: Signicant at: 0.05 and *0.01 levels