THE POLITICS OF CSR REPORTING PRACTICES: A TRADITIONAL ECONOMY PERSPECTIVE

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Abstract

This study explores the political perspectives of Corporate Social Responsibility (CSR) reporting practices in a traditional economy. Previous studies on CSR reporting have identified a number of drivers/motivations of CSR disclosures including market, community and stakeholder influence. It is also argued that CSR may provide a setting for political patronage and interests, which may eventually lead to the absence of accountability. The possibility of exploiting CSR disclosures in developing countries/ traditional setting as characterized by Weber (1978) is even greater due to the prevalence of family controlled firms, political interference and favoritism, absence of rational corporate governance mechanisms and institutional investors, and inefficient and underdeveloped capital market. Yet, the role of political influence in CSR disclosures still needs to be explored and theorized. This study fills in this gap by drawing on the disclosures of corporations. Borrowing Weber̢۪s notion of traditionalism and traditional society and using the Weberian framework developed by Colignon and Covaleski (1991), this thesis explores deeply into the underlying nature of CSR practices of public limited companies in Bangladesh. Based on the Weberian framework and using the interacting methodologies of Weber, the study analyzes the structural, historical, economic and political conditions of the research site, Bangladesh, sets the tension between tradition and modernity, and identifies whether elements of traditionalism such as personal loyalty, obedience, family domination and kinship provide richer insights into the political aspects of organizations̢۪ CSR practices. The researcher employs mixed methods in this study. The study conducts OLS multiple regression to investigate the influence of political connections on CSR disclosure index. The second part of the research conducts in depth interviews with the current and former Board of Directors, CEOs, current and former policy makers in the government to provide explanatory powers as to why and how the companies use CSR as a political tool to express their allegiance towards the ruling power. The research documents association of political connections with CSRDI and also reports the presence of political motivations behind the CSR practices. The findings show that companies express their loyalty publicly by contributing to the ruling leader̢۪s programs and personal projects as CSR. The interview findings also reflect the presence of elements of traditionalism such as obedience, master-servant relationship, and family domination to understand the politically motivated CSR disclosures. As expected in a traditional setting, accountability and transparency would not transpire from imposed regulations and institutions, rather from the familial political power. This research contributes to the CSR literature by using a novel and alternative theoretical lens to understand the motivations of CSR in traditional societies. In addition, it provides a diverse methodological perspective by introducing mixed methods to critical accounting research. It also provides empirical evidence to a critique of CSR as an accountability mechanism in an arena where business depends fundamentally on political connections and familial power. Thus, the power of accounting as an articulation of accountability relationships is muted, if not ignored, in traditional societies (Dyball, Chua and Poullaos, 2006). This research opens up the scope to use the wealth of the Weberian framework to understand the accounting practices in both traditional as well as modern rational society.

Keyword(s)

CSR Reporting, Traditionalism , Weber, Politics

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