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

    of listed companiesYongqiang Gao

    School of Management, Huazhong University of Science and Technology,Wuhan City, Peoples Republic of China

    Abstract

    Purpose Given the country-specific characteristics of corporate social responsibility (CSR), there isan increasing interest in studying CSR in developing countries. Such studies play an important role inbroadening peoples knowledge of CSR under different economic, social and cultural conditions. Thepurpose 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 listedcompanies in domestic security markets of China (the Shanghai Security Exchanges and ShenzhenSecurity Exchange), the CSR features of Chinese companies are thoroughly evaluated.

    Findings The main findings of the study are as follows. Only 5.05 percent of listed companiespublished 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 apositive 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-ownedenterprises (SOEs) have higher propensity to address most of social issues, which may reflect thatSOEs are more politically sensitive than non-SOEs because most of the social issues are just politicalslogans proposed by the Chinese Government in recent years. However, non-SOEs have betterperformance than SOEs in addressing the interests of stakeholders. Meanwhile, industrial firms show

    higher propensity to address the interests of stakeholders than service firms.Research limitations/implications The results of this study indicate that CSR reportingpractice is still at an early stage of development in China. Meanwhile, Chinese companies tend tofollow 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 ofthis study is that the sample only represents the best companies in assuming social responsibilities inChina, thus some results cannot be generalized to all Chinese companies.

    Originality/value The paper helps people, especially Westerners, to comprehend CSR in China. Tothe authors knowledge, this paper is the first of its kind to examine CSR in China.

    Keywords China, Corporate social responsibility, Private sector organizations, Financial reporting

    Paper type Research paper

    IntroductionAlong with the advent of globalization, environmental pollution and shortage ofresourceshave become big social problems all over the world. As a result, corporations areundergoing immense pressure to conduct business in more socially responsible way. Theincreasing pressure from society forces companies to respond accordingly. Therefore,corporate entities are now very keen to take voluntarily different courses of action eitherto placate pressure groups or to demonstrate their consciousness of responsibility tosociety in front of stakeholders. It is now a common practice for organizations in certain

    The current issue and full text archive of this journal is available at

    www.emeraldinsight.com/1746-5265.htm

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    Received December 2008Revised June 2009

    Accepted October 2009

    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 environmentallyfriendly machinery, use recyclable raw materials, rehabilitate sites which may have beendamaged 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 ofother socially responsible actions which modern corporations embark on in order todemonstrate responsibility (Idowu and Papasolomou, 2007).

    A growing number of companies publish an annual social report, also referred to as apublic-interest report (Malone and Roberts, 1996), values report (Sillanpaa, 1998),integrated report (Wallage, 2000), ethics report (Adams, 2002), integrity report (Kapteinand 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 profitmaximization to include the companys responsibilities to a broad range ofstakeholders including employees, customers, community and the environment (Oforiand Hinson, 2007). According to its proponents, CSR demonstrates the self-regulatingcapacity of companies; it offers a mechanism to improve the social and environmentalperformance of companies and represents the instrument par excellence for managingstakeholder relations (Elkington, 2001; Kaptein and Wempe, 1998; Zadek, 2001).

    However, despite the increasing attention to CSR in recent years in advancedeconomies in the west, CSR awareness in Asia is rather low, both on the corporate andstate level (Ip, 2008). Correspondingly, studies on this topic also concentrate on the CSRpractices in Western countries, while very little is known about the CSR practices indeveloping countries. Belal (2001) notes for example that most of the CSR studiesconducted 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 inex-colonial, smaller and emerging countries. The author highlights the need for moreCSR research in the context of developing countries, given the valuable insights suchresearch could offer to the jaded palettes of Western scholars.

    There is thus a certain level of lingering academic curiosity about diverging CSRunderstanding and practice in light of vastly different economic, social and culturalconditions ( Jamali and Mirshak, 2007). It is obvious that China acts as a good sample inbroadening the understanding of CSR. As an Asian and the biggest developing countryin 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 itsWestern counterparts. However, compared to the increasing importance of China in theworld, 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 ofCSR. The main objective of this paper is to provide a profile of social responsibility oflisted companies in China, more specifically, to discuss how Chinese listed companiesformulate their social responsibility reports, what kind of attitude they hold towardsassuming social responsibilities and what the social issues and stakeholders reflected intheir social responsibility reports.

    The rest of the paper is organized as follows. First, the main previous studies onCSR reports (CSRRs) are reviewed. Second, we introduce the research design in the

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    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 reviewThe underlying reasons of CSR reportingFrom 1990s, worldwide companies began to issue their social reports. Two main reasonsthat contribute to this trend can be identified easily. The first one is the increasingpressure from various stakeholders, and the other one is that some companies haverealized that reporting their social contribution is a useful way to benefit themselves.

    One of the pressures comes from regulatory bodies. For example, the European Union(EU) has activated the European Modernization Directive that requires all membercountries to create legislation with the explicit purpose of reporting employee andenvironmental matters (Holcomb et al., 2007). Under this requirement, some EU membercountries, such as the UK and Denmark, have asked companies to report their social andenvironmental activities. In addition to regulatory bodies, stock exchanges are

    compelling listed companies to provide information on their CSR activities (Idowu andPapasolomou, 2007). For instance, in France all companies listed on the Paris StockExchange are required to include information about their social and environmentalperformances in their financial statements. In South Africa, the Johannesburg StockExchange requires that all listed companies must comply with a CSR-based code ofconduct. In the UK, several important organizations are requiring information aboutcorporate entities CSR activities.

    Another pressure comes from investment rating systems such as the Dow JonesSustainability Index, the Communitys Corporate Responsibility Index and the FTSE4Good Index, because banks, insurance companies and various funds make theirinvestments in terms of such indexes (Knoepfel, 2001), especially the worldwide growingsocially responsible investment funds. Various non-government organizations (NGOs),

    such as Friends of the Earth, Green Peace, Amnesty International, the World WildlifeFund, among others, also press companies to issue social report. These NGOs representa range of interests (human rights, child labor, forced labor, trade, environment andsocial) and consider CSR as part of the broader context of sustainable development. Justas Schaltegger et al. (1996) argued, one of the driving forces in the popularity of CSRRswas the need to appease some user groups, e.g. environmental activists.

    In addition to the increased pressure from various stakeholders, some companiesinitiate their social reports when there is little pressure from stakeholders. Suchcompanies proactive attitude to reporting CSR should associate with the potentialbenefit from doing it. CSRR has been considered by companies to be a useful tool tomanage stakeholders or public relations, to enforce organizational or operationallegitimacy and to build good reputation. Crowther (2003) and Idowu and Towler (2004),

    among others, have pointed out that there are enormous benefits that corporations of thetwenty-first century can derive when they are perceived by their stakeholders as beingsocially responsible. It is often argued that companies report on their social conducts tocreate and maintain favorable reputations and safeguard their interests in the event ofsocially irresponsible conduct (Brammer and Pavelin, 2005). As credible signals areoften costly but appear to be worthwhile (Houston, 2003, p. 340), many companies whohave 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 findings from previous studies illustrate apositive relationship between corporate reputation and corporate values (Fombrun andShanley, 1990; Godfrey, 2005; Houston, 2003). Besides, a favorable reputation has beenidentified 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 corporatesustainability reporting mainly to seek organizational legitimacy. Idowu andPapasolomou (2007) identified plenty of reasons that UK companies issue CSRRs,including responding to an increasing number of stakeholders requesting informationon CSR, companies believing that doing so is good for business, to derive positive publicrelations benefits, to comply with the governments request for them to issue informationon CSR, etc.

    CSR reporting and its analysisDue mainly to the two reasons above, though corporate social reports have often beencriticized for being anecdotal in character (van Tulder and van der Zwart, 2005),self-laudatory (Hooghiemstra, 2000), threatening to become arbitrary and low incredibility (Belal, 2001); ad hoc, scattered and unstructured (Tsang, 1998), superficialand inconsistent in quality (Kolk, 2005; Newton and Hart, 1997), and leading tocomplacency and becoming a ritual dance (Zadek, 2002), more andmore companies issuetheir social reports voluntarily (KPMG, 2005).

    A recent survey of 45 global and large companies operating in the EU showed thatover 90 percent of them reported on their mission, vision and values, workplace climate,community involvement, local economic development, market place and environmentalimpact (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 annualsocial report in 2005 (KPMG, 2005). Apart from companies in developed countries suchas 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 inMalaysia, Mexico and Indonesia, respectively.

    In the early 1990s, companies focused almost exclusively on the environmentalmatters 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 environmentaldisclosures have been criticized for being biased and self-laudatory (Azzone et al., 1997;Cerin, 2002; Deegan and Rankin, 1996; Ljungdahl, 1999), only showing what thecompany 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 theincreasing stakeholders interest in CSR, several companies have now turned theirenvironmental disclosures into CSRRs or corporate sustainability reports (CSRs) orcorporate citizenship reports (CCRs), integrating accounting on environmental, socialand economic issues into so-called TBL accounting.

    The rising of CSR reporting has led to numerous studies on CSRRs, aiming atevaluating companies social performance and finding out their characteristics in CSRreporting. Such researches have been conducted in the UK (Idowu and Towler, 2004;

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    Parsa and Kouhy, 2008), Demark (Nielsen and Thomsen, 2007), Finland (Vuontisjarv,2006), Mexico (Paul et al., 2006), Malaysia (Thompson and Zakaria, 2004) and manyother countries, by taking empirical or content analysis. Table I lists some recentresearches 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 developedcountries especially in the USA and EU. In developing countries, similar researches arestill limited. Specifically, to the best of our knowledge, no such research has beenconducted by using Chinese companies as sample and in China. This situation limits ourknowledge of CSR, because it is widely believed that CSR is culture specific, and theresponsibilities 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 underdifferent cultures and in different countries. For instance, in testing peoples beliefsabout CSR, Quazi and OBrien (2000) found that business managers from Bangladeshwere relatively more orientated toward issues affecting the social welfare than theAustralian managers who were more likely to place importance on making a profit.Basing on a survey conducted in France, Germany and the USA, Maignan (2001) foundthat French and German consumers appeared to be more willing to support responsiblebusinesses than their US counterparts. US consumers valued first, the economicresponsibilities of corporations, while French and German consumers concerned mostabout businesses conforming to legal and ethical standards. A study conducted byAbreu et al. (2005) on the CSR-related experience and practice of Portuguese companiesnoted cultural differences, pointing to the need for more research on the socio-culturaldeterminants of CSR in the newly expanded European Community. Research conductedby 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 theirorganizations CSR initiatives varies notably among the countries studied. Workers inIndia are the most favorable while workers in Germany are the least favorable. In Indiaand China, the oldest workers have the most favorable views of their employers supportfor CSR, while in Germany, the UK and the USA it is the youngest workers who have themost 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 differentcultures and in different countries help to richen the CSR literature and peoples wisdom.

    CSR in ChinaModern Chinese society is deeply influenced by three religions: Confucianism, Buddhism

    and Taoism (Lou, 1994). Each religion embodies rich CSR thoughts and values. Takingthe most significant religion Confucianism as an example, Confucianism is, in fact, amoral-political philosophy that guides human relationships. Confucian philosophy restson two primary facets: Ren and Li. Ren is variously described as benevolence,philanthropy and humaneness (Warner and Zhu, 2002). Confucianism believes that thenature of human beings is to achieve happiness and do good. Since human beings aresocial 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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    helps others to succeed (Liu, 1998, p. 18). Li represents the activities performed byindividuals and reflects patterns of behavior developed through generations of humanwisdom. Lireflects 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 alsofor companies. Carrying out Confucius golden rule enables companies to run theirbusiness effectively (McMahon, 1986). However, though Confucianism embodies richCSR thoughts, it is challenged by the perennial war taken place in neoteric China, theCultural Revolution during 1966-1976, and the introducing of Western culture, valuesand thoughts after the opening up in 1978. As a result, the impact of Confucianism hasbeen 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 arelatively new concept in China (Yang, 2008). From 1949 to mid-1990s, China adopted acentrally planned economic system. The state or government controls all major sectors ofthe economy and formulates all decisions about their use and about the distribution ofincome (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-ownedenterprises (SOEs) are not an independent economic unit but affiliates of the government.Meanwhile, the private enterprise was severely restricted and underdeveloped. Since1993, China has been leading an economic system reform aiming at building a socialistmarket-oriented economy. Under this reform, many SOEs are privatized and privateenterprises grow up rapidly. However, the chief aim of the economic system reform is tofaster economic development. Social responsibilities of enterprises such asenvironmental pollution, energy conservation and so on have been ignored to a greatextent. Only after Chinas joining in World Trade Organization in 2001, was CSR takenseriously 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 criticismfrom overseas. In recent years, the Chinese Government, some Chinese corporations andcivil society have promoted and advocated various CSR practices (Yang, 2008).

    The evolution of CSR in China is well reflected by the social reports issued bycompanies (Figure 1). Before 2002, there were no listed companies who published CSRRsopenly[1]. In 2003, only one listed company issued its social reporting, though the CSRRwas not openly published. However, over the last three years, China has seen a huge leap

    Figure 1.The number of companiesissued CSR-like reporting

    (2003-2007)

    90

    Numberof

    companies

    80

    70

    60

    50

    40

    30

    20

    10

    02003 2004

    Notes: The 2007 CSR reports are calculated from January 1, 2008 to October 28, 2008;

    reports issued after October 28, 2008 are not included

    1 26

    32

    81

    2005 2006 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 dataand compile the report), severaloccurrences may have contributed to the rising of CSRRs.

    First, the Shenzhen Stock Exchange released the Social Responsibility Guidelines forListed Companies[2 ] in September 2006. Listed companies are encouraged to follow itsCSR 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 socialresponsibilities actually. Finally, in April 2007, Shanghai Banking Regulatory Bureaureleased Corporate Social Responsibility Guidelines for Shanghai Banking FinancialInstitutions that encourages banking financial institutions to publish their CSRRs.

    By October 28, 2008, 81 listed companies had issued their CSRRs (2007), whichaccounts for 5.05 percent of the total listed companies in China. During the periodof publishing CSRRs, State-owned Assets Supervision and Administration Commission(SASAC) of the State Council, the regulatory body of SOEs in China, released TheGuiding Advice on Fulfilling Social Responsibility by Central Enterprises. Thisguideline stressed the exemplary role that central corporations should play in carryingout social responsibility, and included principles and implementation measures of CSRdevelopment (SASAC, 2008).

    However, despite the rapid increase in reporting CSR, academic research falls farbehind. No special research has been done to examine the characteristics or contents ofCSRRs issued by Chinese companies.

    Research designResearch aims and the sampleThe aim of this study is to evaluate the social performance of listedcompanies in Chinese

    Stock Exchanges. More specifically, five 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 betweenindustrial and service firms.

    In order to answer the five questions above, a content analysis is conducted against theCSRRs or sustainable development reports (CSDRs) or CCRs issued by the listedcompanies 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. Thecontent refers to words, meanings, pictures, symbols, ideas, themes, or nay message that canbe communicated.

    The technique has been widely used in determining the extent and nature of corporatesocial reporting (Adams et al., 1995; Adams and Harte, 1999; Gray et al., 1995; Mirfazli,2008; Perrini, 2006; Thompson and Zakaria;, 2004; Vuontisjarvi, 2006).

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    The CSRRs (or CSDRs or CCRs) of Chinese listed companies are gathered in thefollowing 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 collected844 and 761 listed companies from Shanghai Security Exchange and Shenzhen Security

    Exchange, respectively. Second, we searched www.cninfo.com.cn, www.google.com andwww.baidu.com, respectively, to check if a listed company has issued CSRR recently.www.cninfo.com.cn is the official web site appointed by the regulatory agencyThe China Securities Regulatory Commission to issue company news, including newsabout CSR. The widely used searching engine www.google.com and www.baidu.comact as a complement to searching news about CSR. If there is a CSRR online, wedownloaded it. However, if there is no CSRR online, we further searched the officialweb site of the company and checked the annual report (2007) of the company, to see ifthere was a CSRR on its official web site or a section about CSR in its annual report. Last,since some companies publish CSRRs in print other than online, we contacted everycompany by e-mail to get their CSRRs (two companies declared they issued printedCSRR, however, only one company sent us its printed CSRR). The CSRRs searchingprocess ended on October 28, 2008.

    By the approaches above, a total of 81 CSRRs were collected. All 81 CSRRs were usedas sample in analyzing the CSR performance, while only the companies with astand-alone CSRR were used as sample in discussing the structure of CSRRs. This isbecause the CSRRs structure contained in the annual report has a limited format.

    CodificationWe 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 relevantinformation in CSRRs, including characteristics of the companies, companies attitude to

    CSR, the structure of CSRRs, social issues and stakeholders (including theitems/contents under each stakeholder) addressed in CSRRs. After intensive training,both coders were given 20 randomly selected and identical companies within the sampleand made an initial analysis independently. Then their judgments were compared, andany disagreements were resolved through discussions between themselves and withthe author. Inter-coder reliability was 92.3 percent of all the items coded, which wasacceptable for this type of study (Kassarjian, 1977). The coders subsequently analyzedthe 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 werere-analyzed and the test-retest agreements were 98.7 percent.

    The coding rules about ownership, industry and attitude of company in this paper areas follows:

    . Ownership. The distinction among different ownership companies is based on theidentity of the leading or largest shareholder. A company is coded as SOE when itsleading shareholder is the agent of the state (e.g. the state or local SASAC) oranother SOE. If the leading shareholder of a company is a foreign company or aforeign institution (including company or institution from Hongkong, Macao andTaiwan), it is coded as a foreign company. If the leading shareholder is a domesticindividual or private company, it is coded as a private company. A company iscoded 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. Theforeign, private and collectively owned companies are all non-SOEs.

    . Industry. The distinction among different industrial companies is based on thecore business of the companies. Core business here refers to the business whichaccounts for the biggest proportion of the total income in a company.For example, if an automobile company also runs business about real estate, butthe operating income from selling automobile exceeds selling houses, then it iscoded as an automobile company rather than a real estate company.

    . Companys attitude to CSR. A companys attitude is coded as positive when itexpresses any idea that taking on social responsibility contributes to thelong-term success or has other positive effect on the company as a whole. On thecontrary, a companys attitude is coded as negative when it expresses anythought that sharing social responsibility has a negative effect on the companyas a whole. The remainders are coded as neutral.

    FindingsCharacters of the sampleThe targeted sample is 81 CSRRs (2007) issued by corresponding public companies inChina during January 1, 2008-October 28, 2008. The 81 companies contain one foreigncompany, 25 private companies, two COEs and 53 SOEs (Table II). The foreign companyis Ping An of China. It was once a domestic company but has been share controlled by aforeign company since 2007. The two COEs are NingXia YingLiTe Chemicals Co., Ltdand Gree Electric Appliances Inc. situated in Zhuhai city. They belong to chemical andpharmacy and home electronics, respectively.

    Characters of sample companies Number of company(-ies) Percentage of total n

    OwnershipForeign company 1 1.2Private company 25 30.9Collectively owned enterprise 2 2.5State-owned enterprises 53 65.4

    IndustryBanking/insurance 10 12.3Mining and smelting 10 12.3Home electronics 9 11.1Chemical and pharmacy 9 11.1Textile 7 8.6Machinery 6 7.4

    Automobile, iron and steel 6 7.4Transportation 5 6.2Real estate 5 6.2Telecommunication 4 4.9Business/trade 4 4.9Electric power 3 3.7Grocery/beverage 3 3.7

    Note: n 81

    Table II.Characters of samplecompanies in China

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    The 81 companies belong to 13 industries, respectively (Table II). The first fiveindustries are banking/insurance (ten), mining and smelting (ten), home electronics(nine), chemical and pharmacy (nine) and textile (seven). Private companies distribute intextile, 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 find the similarities and differences among different industries,we integrated 13 industries into two groups according to the Industrial ClassificationStandard (2003) of China:

    (1) Industrial firms group (including mining and smelting; home electronics;chemical and pharmacy; textile; machinery; automobile, iron and steel; andelectric power), which contains 50 companies.

    (2) Service firms group (including banking/insurance, transportation, real estate,telecommunications, business/trade and grocery/beverage), which contains31 companies.

    Such a distinction is based on thepresupposition that firms with different industrial nature(industrial versus service) may have different preference in sharing social responsibilities.

    Social report: form, name and structureAmong the 81 listed companies, 71 (or 87.7 percent) issued a stand-alone CSRR while theother 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 thename CSRR, while one company used corporate sustainability report and anotherone used CCR, respectively (Table III).

    Item (total n ) Number of companies Percentage of totaln

    Form (81)Stand-alone CSRR 71 87.7CSR in annual report 10 12.3

    Name of stand-alone CSRRs (71)CSRR 69 97.2Corporate sustainability report 1 1.4Corporate citizenship report 1 1.4Structure of stand-alone CSRRs (71)Preface or introduction 57 80.3Address of CEO 20 28.2Content 24 33.8Brief introduction of company 32 45.1

    Strategic planning 30 42.3Mission or targets of company 49 69.0Culture or values 49 69.0Business or organizational or structure 37 52.1Important accidents record 20 28.2Social responsibility performance 71 100Authentication by a third party 41 57.7Self- or social evaluation 6 8.5Prospect/gap and improvement 61 85.9

    Table III.Name, approach and

    structure of corporatesocial reports

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    As far as the structure of separate CSRRs is concerned, many reports have components aspreface or introduction (57 or 80.3 percent), mission or targets of company (49 or69 percent), culture or values (49 or 69 percent), business or organizational orstructure (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 or33.8 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 haveself- or social evaluation of their CSR (6 or 8.5 percent). Of course, all companies reporttheir social responsibility performance (Table III).

    Guidelines of CSRR compiling and companies attitude to CSRThe CSRRs of Chinese listed companies are compiled by referring to several guidelines(Table IV). The guideline frequently referred to is Social Responsibility Guidance forListed Companies issued by Shenzhen Security Exchange, with 34 (about 42 percent)companies adopting it. Four companies refer to The Guiding Advice on Fulfilling SocialResponsibility by Central Enterprises issued by SASAC of the State Council in China

    when they compile their CSRRs. Some international CSR reporting guidelines are alsoreferred to, with seven companies referring to the Global Reporting Initiative (GRI) andone company referring to Global Compact.

    Several companies refer to more than one guideline. For example, China ShenhuaEnergy Company Limited refers to GRI, Social Responsibility Guidance for ListedCompanies and The Guiding Advice on Fulfilling Social Responsibility by CentralEnterprises simultaneously. However, there are still 38 companies did not expressclearly whether they have referred to any guidance or guideline or not in compilingtheir CSRRs.

    Companies hold different attitudes to sharing social responsibilities. Among the 81listed companies who issued CSRRs, 64 (or 79 percent) hold a positive attitude to sharingCSR, and 17 (or 21 percent) hold a neutral attitude, while no companies hold a negativeattitude (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 x2-test (using SPSS 13.0) of attitudesbetween the two types of firms yields a x2-value of 29.630 (p 0.000). It indicates that asignificant difference exists between the attitudes of SOEs and non-SOEs. Similarly,industrial firms hold a more positive attitude towards assuming social responsibilitiesthan service firms, with 80 percent industrial firms holding a positive attitude while

    Guidelines referred to Number of companies Percentage of total n

    Global reporting initiative 7 8.6

    Global compact 1 1.2Social responsibility guidance for listed companiesa 34 42.0The guiding advice on fulfilling social responsibilityby central enterprises

    b4 4.9

    Other guidelines 7 8.6No guidance/guideline 38 46.9

    Notes: n 81; aissued by Shenzhen Security Exchange in China; bissued by SASAC of the StateCouncil in China

    Table IV.Guidelines of CSRRscompiling

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    only 77.4 percent service firms holding such an attitude. A x2-test of the attitudesbetween industrial and service firms yields a x2-value of 18.000 (p 0.000), whichshows a significant difference between them.

    Preferential social issuesMany social issues are addressed in the CSRRs published by Chinese listed companies(Table VI). The preferential social issues include scientific development view (54 or 66.7percent), sustainable development of economy and society (62 or 76.5 percent), socialstability and harmony (67or 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 or91.4 percent), anti-commercial bribery (49 or 60.5 percent), safety in production (43 or53.1 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, x2-tests show thatthey have significant difference in most of social issues except anti-commercialbribery 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 pollutionreduction. Considering that most of these social issues are just political slogansproposed by the central government in recent years and SOEs have better performancein addressing them, it may be reasonable to conclude that SOEs are more politicallysensitive than non-SOEs.

    Similarly, x2-tests between industrial firms and service firms show they havesignificant differences in most social issues except in anti-commercial bribery andsafety in production (see column 8 of Table VI). Moreover, industrial firms seem to bemore likely to address the social issues than service firms except scientific developmentview and sustainable development of economy and society.

    Stakeholders and their interestsVarious stakeholders and different aspects of their interests are addressed in the CSRRsissued by Chinese listed companies. Those stakeholders include shareholders, creditors,employees, suppliers, customers/consumers, environment and charity/society. It isobvious that such a taxonomy of stakeholders follows the Social Responsibility Guidancefor Listed Companies published by Shenzhen Security Exchange in 2006. Governmentand competitors are not mentioned in these CSRRs except when the government actsas a shareholder. Community is not an independent stakeholder either in CSRRs.Companies tend to mention it under the name of environment or charity.

    Attitudeto CSR

    Number offirms

    (percentageof total n)

    Number ofSOEs

    (percentage oftotal SOEs)

    Number of non-SOEs (percentageof total non-SOEs)

    Number of

    industrial firms(percentage oftotal industrial

    firms)

    Number of servicefirms (percentage

    of total servicefirms)

    Positive 64 (79.0) 47 (88.7) 17 (60.7) 40 (80) 24 (77.4)Negative 0 (0) 0 (0) 0 (0) 0 (0) 0 (0)Neutral 17 (21.0) 6 (11.3) 11 (39.3) 10 (20) 7 (22.6)Total 81 (100) 53 (100) 28 (100) 50 (100) 31 (100)

    Table V.Attitude to sharing CSR

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    Socialissues

    Numberof

    firms

    (percentageof

    tota

    ln

    (81))

    NumberofSOEs

    (percentageof

    totalSOEs(53))

    Numb

    erofnon-

    SOEs(percentage

    oftotalnon-SOEs

    (28))

    x2-testbetween

    SOEsandnon-

    SOEs(x

    2-value)

    Numberof

    industrialfirms

    (per

    centageof

    totalindustrial

    firms(50))

    Numberofservice

    firms(percentage

    oftotalservice

    firms(31))

    x2

    -

    testbetween

    industrialand

    servicefirms

    (x2-value)

    Scientific

    development

    view

    54

    (66.7)

    39(73.6)

    15

    (53.6)

    14.519*

    33(66)

    21(67.7)

    12.893**

    Sustainable

    developmentof

    economyand

    society

    62

    (76.5)

    44(83.0)

    18

    (64.3)

    24.000*

    38(76)

    24(77.4)

    32.143**

    Socialstability

    andharmony

    67

    (82.7)

    45(84.9)

    22

    (78.6)

    26.741*

    42(84)

    25(80.7)

    46.286**

    Community

    construction

    76

    (93.8)

    50(94.3)

    26

    (92.9)

    42.667*

    47(94)

    29(93.6)

    85.750**

    Abidingbylaws

    andrules

    73

    (90.1)

    48(90.6)

    25

    (89.3)

    35.852*

    47(94)

    26(83.9)

    66.036**

    Creditormoral

    construction

    74

    (91.4)

    50(94.3)

    24

    (85.7)

    42.667*

    48(96)

    26(83.9)

    69.143**

    Anti-commercial

    bribery

    49

    (60.5)

    28(52.8)

    21

    (75)

    0.074

    32(64)

    17(54.8)

    3.571

    Safetyin

    production

    43

    (53.1)

    30(56.6)

    13

    (46.4)

    0.667

    30(60)

    13(41.9)

    0.000

    Energysaving

    andpollution

    reduction

    74

    (91.4)

    47(88.7)

    27

    (96.4)

    32.667*

    46(92)

    28(90.3)

    75.571**

    Environmental

    protection

    76

    (93.8)

    51(96.2)

    25

    (89.3)

    46.296*

    48(96)

    28(90.3)

    82.286**

    Charities

    77

    (95.1)

    51(96.2)

    26

    (92.9)

    46.296*

    49(98)

    28(90.3)

    85.750**

    Note:Significantat:*0.05and**0.01levels

    Table VI.Preferential social issues

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    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 90.1percent), people oriented/centered (employees, 76 or93.8 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), employmentpolicy (employees, 66 or 81.5 percent), creditable management (customers/consumers,72 or 88.9 percent), customer/consumer satisfaction (customers/consumers, 68 or84.0 percent), product/service quality (customers/consumers, 65 or 80.3 percent) anddonation to education (charity/society, 65 or 80.3 percent).

    Shareholders and creditorsThe interests of shareholders addressed by listed companies include governancestructure, information disclosure, return, bonus and shares allotment and firmsinterests 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 morelikely to address all the interests of shareholders and creditors above except governancestructure. x2-tests show SOEs and non-SOEs have significant differences in all theitems of interests except return, bonus and shares allotment and firms interest andlong-term development (see column 6 of Table VII). The results suggest that non-SOEspay more attention to the interests of their shareholders and creditors than SOEs.

    Similarly, the comparison between industrial and service firms shows that industrialfirms are more likely to address all the interests of shareholders and creditors thanservice firms. x2-tests between industrial and service firms show they have significantdifferences in all items of interests except return, bonus and shares allotment(see column 9 of Table VII). The results indicate that industrial firms attach more

    importance to the interests of shareholders and creditors than service firms do.

    EmployeesVarious interests of employees are addressed by listed companies. The frequentlyaddressed interests include people oriented/centered (93.8 percent), salary andwelfare (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 employmentpolicy (81.5 percent) (Table VIII).

    Firms with different ownerships show differentpreference for theinterestsof employees.x2-tests find SOEs and non-SOEs are significantly different in most items of the interests of

    employees except labor union, protection for female workers, helping employees introuble 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 showhigher propensity to address most of the items of the interests of employees exceptworkplace safety and workers health, paid holiday and leisure-time activities.

    As far as business sectors are concerned, industrial and service firms have significantdifferences in most aspects of the interests of employees except labor union, protectionforfemale workers, helping employees in trouble and equalpay forequal work,as thex

    2-tests suggested (see column 8 of Table VIII). Generally, industrial firms did better inaddressing the interests of employees than service firms except for paid holiday.

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    StakeholdersItems

    Numberof

    firms

    (percentage

    oftotaln

    (81))

    Numberof

    SOEs

    (percentageof

    totalSOEs

    (53))

    Nu

    mberofnon-

    SOEs

    (percentageof

    totalnon-SOEs

    (28))

    x2-test

    between

    SOEsand

    non-SOEs

    (x2-value)

    Nu

    mberof

    industrialfirms

    (percen

    tageoftotal

    industrialfirms

    (50))

    Numberofservice

    firms(percentage

    oftotalservice

    firms(31))

    x2-testbetween

    industrialand

    servicefirms

    (x2-value)

    Shareholder

    Governanc

    e

    structure

    67(82.7)

    44(83.0)

    23(82.1)

    24.000**

    43(86)

    24(77.4)

    25.920**

    Informatio

    n

    disclosure

    58(71.6)

    36(67.9)

    22(78.6)

    7.407**

    40(80)

    18(58.1)

    18.000**

    Return,

    bonusand

    shares

    allotment

    43(53.1)

    24(45.3)

    19(67.9)

    0.296

    27(54)

    16(51.6)

    0.320

    Firms

    interestsand

    long-term

    developme

    nt

    51(77.7)

    30(56.6)

    21(75)

    1.185

    33(66)

    18(58.1)

    5.120*

    Creditor

    Long-term

    relationship

    69(85.2)

    45(84.9)

    24(85.7)

    26.741**

    45(90)

    24(77.4)

    32.000**

    Informatio

    n

    disclosure

    58(71.6)

    36(67.9)

    22(78.6)

    29.630**

    47(94)

    25(80.7)

    38.720**

    Keeping

    credit

    73(90.1)

    47(88.7)

    26(92.9)

    32.667**

    48(96)

    25(80.7)

    42.320**

    Note:Significantat:*0.05and**0.01levels,respectively

    Table VII.Interests of shareholdersand creditors

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    Items

    Numberoffirms

    (percent

    ageof

    totaln(81))

    NumberofSOEs

    (percentageof

    totalSOEs(53))

    Numbe

    rofnon-

    SOEs(p

    ercentage

    oftotalnon-SOEs

    (2

    8))

    x2-testbetween

    SOEsandnon-

    SOEs(x

    2-value)

    Numberof

    industrialfirms

    (percentageoftotal

    industrialfirms

    (50))

    Numberofservice

    firms(percentage

    oftotalservice

    firms(31))

    x2

    -testbetween

    in

    dustrialand

    servicefirms

    (x2-value)

    People

    oriented/

    centered

    76(93.8)

    49(92.5)

    27(96.4)

    35.852**

    48(96)

    27(87.1)

    42.320**

    Abidingby

    laborlaws

    69(85.2)

    42(79.2)

    27(96.4)

    16.667**

    44(88)

    24(77.4)

    28.880**

    OHSAS18001

    certification

    14(17.3)

    8(15.1)

    6(21.4)

    26.741**

    10(20)

    4(12.9)

    18.000**

    Laborunion

    41(50.6)

    28(52.8)

    13(46.4)

    0.074

    28(56)

    12(38.7)

    0.720

    Salaryand

    welfare

    74(91.4)

    47(88.7)

    27(96.4)

    29.630**

    47(94)

    26(83.9)

    38.720**

    Workplace

    safetyand

    workers

    health

    66(81.5)

    44(83.0)

    22(78.6)

    21.407**

    43(86)

    22(71.0)

    25.920**

    Employment

    policy

    66(81.5)

    42(79.2)

    24(85.7)

    16.667**

    42(84)

    23(74.2)

    23.120**

    Education

    andtraining

    70(86.4)

    45(84.9)

    25(89.3)

    24.000**

    45(90)

    24(77.4)

    32.000**

    Protectionfor

    female

    workers

    34(42.0)

    21(39.6)

    13(46.4)

    2.667

    22(44)

    12(38.7)

    0.720

    (continued)

    Table VIII.Interests of employees

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    Items

    Numberoffirms

    (percent

    ageof

    totaln(81))

    NumberofSOEs

    (percentageof

    totalSOEs(53))

    Numbe

    rofnon-

    SOEs(p

    ercentage

    oftotalnon-SOEs

    (2

    8))

    x2-testbetween

    SOEsandnon-

    SOEs(x

    2-value)

    Numberof

    industrialfirms

    (percentageoftotal

    industrialfirms

    (50))

    Numberofservice

    firms(percentage

    oftotalservice

    firms(31))

    x2

    -testbetween

    in

    dustrialand

    servicefirms

    (x2-value)

    Protectionfor

    minority

    workers

    16(19.8)

    10(18.9)

    6(21.4)

    21.407**

    12(24)

    4(12.9)

    13.520**

    Helping

    employeesin

    trouble

    41(50.6)

    30(56.6)

    11(39.3)

    0.667

    29(58)

    12(38.7)

    1.280

    Paidholiday

    16(19.8)

    13(24.5)

    3(10.7)

    14.519**

    9(18)

    7(22.6)

    20.480**

    Equalpayfor

    equalwork

    31(38.3)

    20(37.7)

    11(39.3)

    3.630

    20(40)

    11(35.5)

    2.000

    Opportunity

    equality

    28(34.6)

    18(34.0)

    10(35.7)

    6.000*

    18(36)

    10(32.3)

    3.920*

    Workers

    satisfaction

    54(66.7)

    34(42.0)

    20(71.4)

    4.741*

    38(76)

    16(51.6)

    13.520**

    Leisure-time

    activities

    55(67.9)

    36(67.9)

    19(67.9)

    7.407**

    36(72)

    19(61.3)

    9.680**

    Note:Significantat:*0.05and**0.01levels

    Table VIII.

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    Suppliers and customers/consumersVarious interests of suppliers and customers/consumers are addressed by listedcompanies (Table IX). For suppliers, the most frequently addressed interest is long-termrelationship (65.4 percent), while for customers/consumers, the most frequently

    addressed interests are creditable management (88.9 percent), customer/consumersatisfaction (84.0 percent) and product/service quality (80.2 percent).

    As firms of different ownerships concerned, SOEs and non-SOEs show no significantdifferences in addressing the interests of suppliers except intellectual propertyprotection (see column 6 of Table IX), as x2-tests suggested. Non-SOEs show higherpropensity to address intellectual property protection than SOEs. However,significant differences are found in addressing the interests of customers/consumers.Non-SOEs care more about the interests of their customers/consumers than SOEs exceptanti-commercial bribery.

    As business sectors concerned, it seems that industrial firms did better than servicefirms in addressing the interests of suppliers. x

    2-tests show that industrial firms havesignificantly higher propensity to address the interests of suppliers such as respectingcontract and long-term relationship than service firms, while no significantdifferences are found in addressing other interests between them (see column 9 ofTable IX). Similarly, industrial firms show better performance than service firms inaddressing the interests of customers/consumers such as creditable management,customer/consumer satisfaction and product/service quality, while there is nodifferences in ISO 9000 series certification and anti-commercial bribery.

    EnvironmentVarious aspects of environment have been addressed in the CSRRs issued by listedcompanies. 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 firms of different ownerships are concerned, SOEs show significantlyhigher propensity to address the environmental issue environment policy, whilenon-SOEs are significantly more likely to address the environmental issues likeISO 14000 series certification, energy saving, recycle economy and greening,as x2-tests suggested (see column 6 of Table X). There is no significant differences inother issues such as environment investment, pollution control or reduction andcleaner production between SOEs and non-SOEs. Therefore, it seems that non-SOEsdid better in general in sharing environmental responsibility.

    As business sectors are concerned, x2-tests suggest that industrial and service firmsshow significant differences in all the environmental issues except greening. Besides,

    industrial firms show a higher propensity to address all the significant issues thanservice firms. It is thus reasonable to conclude that industrial firms have betterperformance in sharing environmental responsibility than service firms.

    Charity/societyVarious interests of charity/society are addressed by listed companies. Frequently,addressed charity issues include donation to education (80.2 percent) and supportlocal or community construction (69.1 percent) (Table XI).

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    StakeholdersItems

    Numberof

    firms

    (percentageof

    totaln

    (81))

    Numberof

    SOEs

    (percentageof

    totalSOEs(53))

    Numberofnon-

    SOEs(percentage

    oftotalnon-SOEs

    (28))

    x2-test

    between

    SOEsand

    non-SOEs

    (x2-value)

    Numberof

    industrialfirms

    (p

    ercentageof

    to

    talindustrial

    firms(50))

    Numberof

    servicefirms

    (percentageof

    totalservice

    firms(31))

    x2-test

    between

    in

    dustrialand

    servicefirms

    (x2-value)

    Supplier

    Respecting

    contract

    48(59.3)

    26(49.1)

    22(78.6)

    0.000

    38(76)

    10(32.3)

    13.520**

    Long-term

    relationship

    53(65.4)

    31(58.5)

    22(78.6)

    1.852

    41(82)

    12(38.7)

    20.480**

    Intellectual

    property

    protection

    32(39.5)

    16(30.2)

    16(57.1)

    8.963**

    26(52)

    6(19.4)

    0.080

    Caringabo

    ut

    suppliers

    interests

    38(46.9)

    21(39.6)

    17(60.7)

    2.667

    29(58)

    9(29.0)

    1.280

    Anti-

    commercia

    l

    bribery

    49(60.5)

    28(52.8)

    21(75)

    0.296

    31(62)

    18(58.1)

    2.880

    Customer/

    consumer

    Creditable

    manageme

    nt

    72(88.9)

    45(84.9)

    27(96.4)

    26.741**

    47(94)

    25(80.6)

    38.720**

    Customer/

    consumer

    satisfaction

    68(84.0)

    41(77.4)

    27(96.4)

    16.667**

    43(86)

    25(80.6)

    25.920**

    Product/

    service

    quality

    65(80.2)

    39(73.6)

    26(92.9)

    12.519**

    43(86)

    22(71.0)

    25.920**

    ISO9000

    series

    certificatio

    n

    26(32.1)

    16(30.2)

    10(35.7)

    8.963**

    19(38)

    7(22.6)

    2.880

    Anti-

    commercia

    l

    bribery

    43(53.1)

    27(50.9)

    16(57.1)

    0.000

    26(52)

    17(54.8)

    0.080

    Note:Significantat:*0.05and**0.01levels

    Table IX.Interests of suppliers andcustomers

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    Items

    Numberof

    firms

    (percentageof

    totaln

    (81))

    NumberofSOEs

    (percentageof

    totalSOEs(53))

    Number

    ofnon-

    SOEs(percentage

    oftotalnon-SOEs

    (28

    ))

    x2-testbetween

    SOEsandnon-

    SOEs(x

    2-value)

    Num

    berof

    indust

    rialfirms

    (percentageoftotal

    indust

    rialfirms

    (50))

    Numberofservice

    firms(percentage

    oftotalservice

    firms(31))

    x2-testbetween

    industrialand

    se

    rvicefirms

    (x2-value)

    Environment

    policy

    61(75.3)

    41(77.4)

    20(71.4)

    16.667**

    40(80)

    21(67.7)

    18.000**

    ISO14000

    series

    certification

    22(27.2)

    12(22.6)

    10(35.7)

    16.667**

    18(36)

    4(12.9)

    3.920*

    Environment

    investment

    46(56.8)

    32(60.4)

    14(50)

    1.852

    32(64)

    14(45.2)

    3.920*

    Energy

    saving

    62(76.5)

    40(75.5)

    22(78.6)

    14.519**

    45(90)

    17(54.8)

    32.000**

    Pollution

    controlor

    reduction

    46(56.8)

    31(58.5)

    15(53.6)

    1.185

    35(70)

    11(35.5)

    8.000**

    Recycle

    economy

    61(75.3)

    38(71.7)

    23(82.1)

    10.667**

    41(82)

    20(64.5)

    20.480**

    Cleaner

    production

    56(69.1)

    33(62.3)

    23(82.1)

    3.630

    41(82)

    15(48.4)

    20.480**

    Greening

    49(60.5)

    34(42.0)

    15(53.6)

    4.741*

    30(60)

    19(61.3)

    2.000

    Note:Significantat:*0.05and**0.01levels

    Table X.Interests of environment

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    StakeholdersItems

    Numberof

    firms

    (percentageof

    totaln

    (81))

    Numberof

    SOEs

    (percentageof

    totalSOEs(53))

    Numberofnon-

    SOEs

    (percentageof

    totalnon-SOEs

    (28))

    x2-test

    betweenSOEs

    andnon-SOEs

    (x2-value)

    Numberof

    industrialfirms

    (p

    ercentageof

    to

    talindustrial

    firms(50))

    Numberof

    servicefirms

    (percentageof

    totalservice

    firms(31))

    x2-testbetween

    industrialand

    se

    rvicefirms

    (x2-value)

    Charity/

    society

    Volunteers

    activity

    45(55.6)

    32(60.4)

    13(46.4)

    1.852

    29(58)

    16(51.6)

    1.280

    Donationto

    education

    65(80.2)

    43(81.1)

    22(78.6)

    21.407**

    41(82)

    23(74.2)

    20.480**

    Donationto

    hospitaland

    sanitation

    41(50.6)

    29(54.7)

    12(42.9)

    0.296

    24(48)

    17(54.8)

    0.080

    Disaster

    relief

    48(59.3)

    31(58.5)

    17(60.7)

    1.185

    30(60)

    18(58.1)

    2.000

    Support

    sports

    41(50.6)

    28(52.8)

    13(46.4)

    0.074

    23(46)

    18(58.1)

    0.320

    Support

    cultureand

    arts

    44(54.3)

    28(52.8)

    16(57.1)

    0.074

    26(52)

    18(58.1)

    0.080

    Supportlocal

    or community

    construction

    56(69.1)

    37(69.8)

    19(67.9)

    8.963**

    37(74)

    19(61.3)

    11.520**

    Other

    donation

    54(66.7)

    40(75.5)

    14(50)

    14.519**

    33(66)

    21(67.7)

    5.120*

    SA8000

    certification

    20(24.7)

    16(30.2)

    4(14.3)

    8.963**

    8(16)

    12(38.7)

    23.120**

    CSRawards

    40(49.4)

    30(56.6)

    10(35.7)

    0.667

    24(48)

    16(51.6)

    0.080

    Note:Significantat:*0.05and**0.01levels

    Table XI.Interests ofcharity/society

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    It seems that SOEs did better than non-SOEs in addressing the interests ofcharity/society. x2-tests showSOEs have significantly higher propensity than non-SOEsto address the charities such as donation to education, support local or communityconstruction and other donation, while there is no significant differences in other

    charities between them (see column 6 of Table XI).Industrial firms show higher propensity to address charities as donation to

    education and support local or community construction while show lower propensityto address other donation than service firms, as x2-tests suggested. On other charities,there is no significant differences between industrial and service firms.

    Conclusion and discussionBasing on a content analysis to 81 CSRRs, this study analyzes the characteristics of CSRof listed companies in China. The results show that Chinese companies tend to issuetheirstand-alone CSRRs (71 or 87.7 percent) than to include CSR in their annual reports (10 or12.3 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 orstructure and prospect/gap and improvement.

    Chinese companies tend to follow their own guidelines in issuing CSRRs rather thanto adopt international guidelines. Only 7 (or 8.6 percent) referred to GRI in compilingCSRRs, while 34 (or 42.0 percent) follow the Social Responsibility Guidance forListed Companies published by Shenzhen Security Exchange in 2006. Of course, manycompanies did not express explicitly the guideline they adopted in compiling theirCSRRs. It does not mean that Chinese companies are self-complacent. Considering thethought of Social Responsibility Guidance of Shenzhen Security Exchange originatesfrom Western stakeholder theory (Freeman, 1984, 1998) and the guidance keeps in linewith Western business principles (e.g. the business principles issued by Cox

    Roundtable), we could conclude that no significant differences exist betweeninternational and Chinese guidelines of CSR.

    Most companies (64 or 79 percent) hold a positive attitude to sharing CSR, and 17 (or21 percent) hold a neutral attitude, while no companies hold a negative attitude. SOEsshow a more positive attitude to sharing CSR than non-SOEs. Meanwhile, industrialfirms show a more positive attitude to sharing CSR than service firms.

    The social issues frequently addressed by Chinese companies include scientificdevelopment view, sustainable development of economy and society, social stabilityand harmony, anti-commercial bribery, energy saving and pollution reduction andthe like. SOEs show higher propensity to address most of the social issues thannon-SOEs. Considering many of the social issues are political slogans proposed by thecentral government in recent years, it might be reasonable to conclude that SOEs are

    more politically sensitive than non-SOEs. Significant differences are also found betweenindustrial and service firms, with industrial firms being more likely to address most ofthe social issues than service firms.

    The stakeholders frequently addressed by Chinese companies include shareholders,creditors, employees, suppliers, customers/consumers, environment and charities. It isobvious that such a taxonomy follows the Social Responsibility Guidance for ListedCompanies published by Shenzhen Security Exchange in 2006. The mostly addressedinterests 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-SOEsshow no significant differences in addressing the interests of suppliers. The results mayindicate that non-SOEs have better performance in sharing social responsibilities thanSOEs. SOEs in China pay much attention to charities but overlook their socialresponsibilities towards other stakeholders. This may attribute to their politicalsensitivity. In China, charity is presented as a complementary activity to both the marketeconomy and to the work of the government (ORSE, 2006). The government needsdonations to help the poor and the disabled, to back up education and to be used fordisaster relief, medical and public facilities. Therefore, SOEs may think that supportingcharities especially committing donations are a useful way to build their responsibleimages in front of the government, since they are supervised by the government.

    At the same time, industrial firms show higher propensity than service firms toaddress the interests of shareholders, creditors, employees, suppliers,customers/consumers and environment, while they show different preferences inaddressing the interests of charity/society (different charities are underscored,respectively). Therefore, it seems that industrial firms have better performance insharing social responsibilities than service firms. This may attribute partly to theindustrial nature. For example, creditors and suppliers exert very little impact on theoperation of some service firms such as banks or insurance companies, while they areinfluential to most industrial firms. Meanwhile, service firms often exert relatively lessnegative impact on environment than industrial firms 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 theirCSRRs (2007) (by October 28, 2008), which accounts for 5.05 percent of the total listedcompanies in China. Moreover, only 20 (or 24.69 percent) companies passed thecertification of SA 8000. Companies who passed the serial certifications of ISO 9000 and14000 and the certification of OHSAS 18001 are also limited.

    However, why did the majority of Chinese companies not issue their CSRRs? Theunderlying reasons may lie in the following aspects. First, as we mentioned above, theterm of CSR was just introduced to China several years ago. Many Chinese companiesare 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 publishCSRRs. 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 theirCSRRs and no guideline was published to guide companies to code their CSRRs before2006. Besides, NGOs especially the civil society organizations (many NGOs in China aregovernment-organized NGOs) are still underdeveloped in China. The Chinese media,monitored closely by the authorities, has not yet been able to develop a critical viewtowards business (ORSE, 2006). Under such a situation, most companies feel no pressureto publish their CSRRs. Last, some companies especially the small and mediumenterprises (SMEs) may just act as followers in issuing CSRRs. Only when there are

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    a large enough number of firms issuing CSRRs these companies will follow them to issuetheir 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 besimply generalized to other Chinese companies. Second, to many companies, theirCSRRs arenot certified by a third party. As a result, there exists the possibility that firmsoverstate their performance in sharing social responsibilities.

    Future studies should aim at answering the following questions. At first, why somecompanies issued their CSRRs while others did not do that? What factors help to explainthe differences between different companies? Second, why some companies commit theirsocial responsibilities initiatively? Are they doing that for common good or just forcorporate image? Third, what the potential benefits are by committing socialresponsibilities? Does CSR line up to corporate values and competencies? Finally, whatare the similarities and differences between the CSR characteristics of Chinesecompanies and that of Western companies.

    Notes

    1. This does not mean that there is no company issuing a CSRR in China. In fact, PetroChinaCompany Limited issued its first Health, Safety and Environment Report 2000 in 2001.However, it was not a listed company in the domestic stock exchange until 2007 when itbegan its initial public offering in Mainland China.

    2. The guidance suggests the stakeholders should be addressed by listed companies, includingemployees, shareholders and creditors, suppliers, customers and consumers, environment andcommunity.

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    About the authorYongqiang Gao (PhD) is Associate Professor at Huazhong University of Science andTechnology. His recent research interests lie in strategic management, business ethics and CSR.He has published papers in academic journals such as Journal of Business Research, Journal of

    Business Ethics, Australian Journal of Management, Baltic Journal of Management, Journal

    of Public Affairs, and Singapore Management Review. Yongqiang Gao can be contacted at:[email protected]

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