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Abstract: Perhaps the most profound and widespread legacy of the Bhopal
tragedy has been mandatory disclosure regimes such as the Toxic Release
Inventory in the United States and, subsequently, the phenomenon of
corporations voluntarily reporting on their environmental, societal, and
economic impacts, a practice known as corporate responsibility (CR)
reporting. Data is available on Western executives' experiences with CR
reporting but is scarce on Chinese and Indian executives' attitudes and
experiences. Analysis of cross-cultural differences in perspectives on CR and
CR reporting is also scarce. The authors interviewed executives in China,
India, and Japan to learn about their motivations for adopting CR reporting,
how it was implemented, and the impacts that resulted.
* The research presented in this article was made possible by a Summer Research
Fellowship funded by the Charlton College of Business at the University of Massachusetts
Dartmouth. A preliminary draft was presented at the United Nations and Academy of
Management co-sponsored Business as an Agent of World Benefit Forum (less than 25%
acceptance rate). Business as an Agent of World Benefit Forum, http://www.
bawbglobalforum.org (last visited May 14, 2008).
** Adam J. Sulkowski is an assistant professor of business law at the University of
Massachusetts Dartmouth, Charlton College of Business and a graduate of Boston College
Law School.
* Dr. S.P. Parashar is director of the Indian Institute of Management in Indore, India.
*** Dr. Lu Wei is an associate professor at the University of Science and Technology of
China and director of its MBA program in Hefei and Shanghai, China.
NEW ENGLAND LAW REVIEW [Vol. 42:787
mantra that the ultimate motivations for CR and CR reporting are economic
benefits for their firm or shareholders, even as they agree that CR reporting
is a means to communicate with stakeholders that yields benefits for their
businesses. The authors suggest that Western companies tailor their rhetoric
when explaining motivations for CR and CR reporting to Eastern audiences
to reflect an appreciation for behaving responsibly for its own inherent
virtue.
INTRODUCTION
The Bhopal tragedy of 1984 catalyzed what has been called the third
generation of environmental legislation, known as "informational
regulation."' The most directly associated piece of legislation is the
Emergency Planning and Community Right-to-Know Act of 1986
(EPCRA), 2 which, rather than limiting behavior, only requires companies
to provide emergency response plans and the disclosure, through the Toxic
Release Inventory (TRI), of inventories of specified dangerous chemicals.3
In the ensuing two decades, voluntary corporate responsibility (CR)
reporting-companies publicly disclosing their environmental, societal,
and economic impacts and their efforts to mitigate negative impacts and
enhance positive impacts-has become widely adopted.4 It is alternatively
referred to as Corporate Social Responsibility (CSR) Reporting, Triple
Bottom Line (TBL) Reporting, Citizenship Reporting, or Sustainability
Reporting.5 Of the largest 250 corporations in the world, 64% have adopted
16. Id.
17. Id.
18. Philip Mirvis & Bradley Googins, The Best of the Good, HARV. Bus. REv., Dec.
2004, at 20, 21.
19. Id.
20. Kanji Tanimoto & Kenji Suzuki, Corporate Social Responsibility in Japan:
Analyzing the Participating Companies in Global Reporting Initiative 7-8, 16 (The
European Inst. of Japanese Studies, Working Paper No. 208, 2005), http://swopec.hhs.se/
eijswp/papers/eijswp0208.pdf (last visited May 14, 2008).
NEW ENGLAND LA W REVIEW [Vol. 42:787
21. Dom~nec Mel6, Patricia Debeijuh & M. Cecilia Arruda, CorporateEthical Policies
in Large Corporationsin Argentina, Brazil and Spain, 63.1 J. Bus. ETHICS 21, 33-34 (2006).
22. Bimal Arora & Ravi Puranik, A Review of CorporateSocial Responsibility in India,
47.3 DEVELOPMENT 93, 96-97 (2004).
23. Id
24. Reinhard Steurer, Markus E. Langer, Astrid Konrad & Andr6 Martinuzzi,
Corporations,Stakeholders and Sustainable Development I: A Theoretical Exploration of
Business-Society Relations, 61.3 J. Bus. ETHICS 263,263 (2005).
25. Peter Lund-Thomsen, Towards a Critical Framework on Corporate Social and
EnvironmentalResponsibility in the South: The Case of Pakistan, 47.3 DEVELOPMENT 106,
106-14 (2004).
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argued that local managers in a collectivist society are less likely to openly
raise issues with superiors because such conduct is considered an affront to
another's face.26
One study suggests that country-specific cultural sensitivities are
salient to CR reporting, inasmuch as CR reports address the issues that are
of greatest concern to a particular society.27 For example, Tanimoto and
Suzuki have documented that Western CR reports disclose more data on
gender equity issues as compared to Japanese CR reports, while Japanese
CR reports disclose relatively more data on environmental impacts.
In addition to external contemporary realities, such as corruption and
traditional cultural factors, one would naturally guess that factors within a
company, such as information systems and firm culture, also affect the
implementation and impacts of CR reporting. Studies have lent this
supposition some credibility. Among CEOs in emerged economies who
have implemented CR reporting, there is a consensus that the internal
intellectual capital, technology, and culture of a firm can impact the success
of the adoption of CR reporting.28 Put another way, the knowledge
management that turns CR reports into sustainable performance
improvements involves people, process, and technology.29
26. Y. Ling, Steven Floyd & David Baldridge, Toward a Model of Issue-Selling by
Subsidiary Managers in MultinationalOrganizations,36 J. OF INT'L Bus. STUD. 637, 644-45
(2005).
27. See Tanimoto & Suzuki, supra note 20.
28. See Pamela Ruebusch, The Triple Bottom Line: What It Means and Why We Need to
Embrace It, CAN. TRANSP. LOGISTICS (Feb. 2002), available at http://www.ctl.ca/columnists/
ruebusch/2002/feb.asp.
29. Carol Gorelick & Brigitte Tantawy-Monsou, For Performance Through Learning,
Knowledge Management Is the CriticalPractice,12 LEARNING ORG. 125, 125-29 (2005).
30. See, e.g., Anita Roper, Proving the Casefor Sustainability at Alcoa, 1 CORP. RESP.
MGMT. 34, 34-37 (2004).
31. See Raine Isaksson, Economic Sustainabilityand the Cost of PoorQuality, 12 CORP.
Soc. REsp. & ENVTL. MGMT. 197, 197-209 (2005).
NEW ENGLAND LAW REVIEW [Vol. 42:787
32. Telephone Interview with Richard Ellis, Head of Corporate Soc. Responsibility,
Boots (June 29, 2006).
33. Ralph Luken & Rodney Stares, Small Business Responsibility in Developing
Countries:A Threat or an Opportunity?, 14 Bus. STRATEGY AND ENv'T 38, 43-52 (2005).
34. Diana C. Robertson & Nigel Nicholson, Expressions of Corporate Social
Responsibility in U.K. Firms, 15 J. Bus. ETHIcS 1095, 1097-1106 (1996).
35. See Bj6rm Stigson, Foreword to CHARLES 0. HOLLIDAY, JR. ET AL., WALKING THE
TALK: THE BUSINESS CASE FOR SUSTAINABLE DEVELOPMENT 8-9 (2002); Marc Gunther,
Tree Huggers, Soy Lovers, andProfits, 147 FORTUNE 98, 98-105 (2003) Oliver Salzmann et
al., The Business Case for Corporate Sustainability: Literature Review and Research
Options, 23 EUR. MGMT. J. 27, 27-35 (2005).
36. CorporateRegister.com - Global CSR Resources, http://www.corporateregister.com
(last visited May 14, 2008) (follow "advanced reports search" hyperlink; then, under
country, search for "People's Republic of China," "Hong Kong," and "India"). Figures
include companies reporting under the GRI Guidelines, AccountAbility's AA1000
Assurance Standard (AA1000AS), and the Global Compact Index. See id.
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37. The authors identified companies in China, India, and Japan as leaders in the field of
CR reporting. At each company, at least one executive with experience in implementing CR
reporting was interviewed. Some respondents requested anonymity in exchange for sharing
their candid observations. Some also requested that their company not be named. Twelve
total interviews were conducted involving seventeen participants at nine companies. Four
companies were Japanese, two were Chinese, and three were Indian. All executives cited in
this paper were either CEO level or Vice Presidents accountable for their companies'
reporting.
The companies were selected to serve as rough analogs of each other cross-
nationally. At least one respondent from a heavy industrial manufacturing company was
interviewed in each country; a representative example is Tata Steel. At least one respondent
from a well-known light consumer moveable goods company (referred to in this paper as
light industry companies) was interviewed in each country. These included Huatai Group in
China, ITC in India, and Ajinomoto in Japan. Additionally, an executive and a supporting
manager from an electronics component manufacturer in Japan, NEC, were interviewed.
All interviews were completed in person and based on a common list of questions.
The lead author was present for all interviews to assure uniformity and to observe and
record similarities and differences in both the substance and tone of each response. The
questions covered three main learning areas, namely: ascertaining the motivations for, the
implementation challenges of, and the effects of CR reporting. Within these three areas,
fifteen major questions were asked with several entailing planned follow-up questions. The
interviewers explored unplanned tangents to a reasonable degree and the interviews
typically lasted from one hour to one and a half hours.
NEW ENGLAND LAW REVIEW [Vol. 42:787
38. The assertions presented in this section, and sections V and VI infra, derive from the
in-person interviews described above. See supra note 37. Quoted language has not been
otherwise attributed to protect the survey respondents' confidentiality. All interview records
are on file with the primary author.
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CSR, it is [pursued] more for [the benefit of] society [in Japan].
decision. The Chinese heavy industry company's chairman stated that the
decision to mitigate and monitor environmental impacts was based solely
on his decision to implement his personal vision of "better cars, better
environment." Similarly, the Chinese light industry chairman was the locus
of the decision to engage in CR initiatives and reporting, motivated by his
sense of moral duties. However, the Chinese co-author of this article points
out that there was a long-term self-interested motivation for voluntary
measurement and reporting of environmental impacts. Namely, in the long-
run, it improved relations and established trust between these companies
and the Communist Party. The Communist Party, in its role as resource
allocator and regulator, can be seen as a powerful stakeholder. Therefore,
while the decision to voluntarily report on environmental impacts may truly
have been a single chairman's decision, it was likely prompted by a
combination of personal vision and realization that it would improve
communication and relations with the stakeholder-i.e., Communist Party.
The Indian respondents' answers were more similar to those of the
Chinese respondents than to the Japanese respondents, with a greater
emphasis being placed on the roles of senior executives in driving the
practice. However, consistent with the answers of their Chinese and
Japanese counterparts, the Indian respondents' explanations revealed that
the motivation was to improve communications with stakeholders.
The comments of the light industry company chairman provide the
most vivid example of the extent to which the CR activities and CR
reporting may be driven by the personal convictions of executives:
[I] wouldn't stop [CR activities] if the shareholders were
troubled. It is not a matter of making a rich man richer and
richer .... I am using his money to make society better.... I am
enticing capital to be with me so that I can do something much
better. What gives satisfaction? Not making a rich man richer.
His Vice President for Environment, Health, and Safety then clarified
that the specific motivation for adopting GRI-indexed CR reporting was to
improve stakeholder communications: "We found that our performance
was already very good. We benchmarked, and it looked like we were
complying with 90-95% of GRI guideline requirements.... So we wanted
to communicate what we were already doing but also wanted it audited."
At the Indian heavy industry company, Tata, the answers from several
executives independently and consistently explained that they had a
personal stake in their company's adoption of GRI-indexed reporting
because of their leadership roles in the development and dissemination of
the GRI standards as tools for managing stakeholder relations and
communication. The Indian heavy industry executives went on to articulate
the motivation for adopting GRI-indexed CR reporting: the main benefit of
NEW ENGLAND LAWREVIEW [Vol. 42:787
within the three years prior to the present study. Therefore, the adoption of
CR reporting has yielded noticeable positive impacts in these countries
within three years of adoption.
In India, it bears noting that this is a qualified yes. Both companies
said they were less sure that benefits directly accrued from CR reporting as
opposed to CR activities that were already underway. However, they
acknowledged that communications with shareholders and customers have
been to some extent facilitated and that CR reporting allowed them to see
cost savings and creative business opportunities faster. As stated by a
respondent at the Indian heavy industry company:
We would have done all this [CR initiatives] anyway. We were
doing this for 100 years. So what did it [GRI-indexed CR
reporting] accomplish? First, we listed information in a
structured form; second, now that we report in an internationally
recognized format, there has been some refining and addressing
[CR] in business processes.
It bears repeating that relations with the government can be improved
by a company generating CR reports. The Chinese co-author stresses that
this is important to understanding why there is a business case for CR
reporting in China. One's relations with the Chinese government and
Communist Party can be vital in deciding matters of access to resources
and access to business opportunities. Government relations were also noted
to have been facilitated in India by the adoption of CR reporting.
Finally, it is noteworthy that the Japanese responses to the specific
questions in the preceding section most closely matched the pattern of
responses to these same questions in KPMG's 2005 survey of executives in
the sixteen most developed economies. For example, both the respondents
in KPMG's study and in the present study perceive positive impacts of CR
reporting such as boosting employee morale and encouraging employees to
innovate. 39 Another example of a respondent in the present study echoing
the perceptions of KPMG's respondents was the statement of the senior
respondent at the Japanese electronics company: the business case for CR
reporting, in his opinion, includes "risk management, brand, and reputation
and trust and employee motivation."
likewise denied that foreign pressures were salient to their decision to adopt
CR reporting. The Chinese and Indian respondents indicated that executive
leaders made the decision to adopt the practice while the Japanese
respondents did not identify any individuals as accountable for the
decision. Among all respondents, the primary identified function of CR
reporting was to improve communication with stakeholders.
With regard to implementation, none of the respondents in China,
India, or Japan responded that either culture or corruption were significant
factors to take into account. Their responses did suggest, however, that
extra attention to training employees may help overcome initial problems
with data collection. Further, it appears that culture may have played a role
in the resistance of the respondents to accepting the Western utilitarian
mantra that CR reporting was adopted to ultimately serve the self-interest
of the company. Despite some differences in terms of implementation
tactics and anticipated challenges, there was almost a consensus that
executive leadership is the most important determinant of success, with
only the respondents at the Indian heavy industry company asserting that
company culture matters most. Everywhere, the training and participation
of employees was identified as more important than information systems.
As far as impacts, all respondents in China, India, and Japan
perceived CR reporting to improve CR performance and to improve at least
some of the functions of their business. Based on this observation, the
authors suggest that the business case in favor of CR reporting can be
made. Specifically, it appears to be true-in China, India, Japan, and the
West-that within three years, businesses can identify some aspect of their
business that has improved as a result of CR reporting. It bears repeating
that no respondent at any of the companies expected CR reporting to result
in improved financial performance when the practice was adopted; the
Chinese respondents expected higher costs as the only financial impact.
This lends some credibility to their statements with regard to the business
benefits of CR reporting. The specific impacts of CR reporting described in
Western companies, such as a positive influence on employees and
improved shareholder and customer relations, were all to some extent
identified by this group of Eastern executives.
Given the observations above, the authors advise that adopting CR
reporting can yield noticeable benefits for businesses operating in China
and India. The observable benefits appear to be largely consistent with
those noticed at Western companies. Corruption does not appear to be an
insurmountable obstacle. However, some additional emphasis on employee
training may be helpful where corruption is an element in the business
climate. Similarly, cultural differences in China, India, and Japan should
not be seen as a major factor in the details of implementing CR reporting
mechanisms. However, culture may play a role in defining the values of
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