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The Adoption of Integrated Reporting in the Human Resources Sector and the Transportation Sector in the Netherlands
Master Thesis Accountancy&Control
Education: Master of Science Accountancy & Control – Accountancy & Control track Faculty: Faculty of Economics and Business, University of Amsterdam
Student: Laura de Bruin Student number: 6076351
First supervisor: Dr. N.A. O’Sullivan Second supervisor: Dr. G. Georgakopoulos Date: June 23th, 2014
2 Acknowledgements
I would like to take this opportunity to thank my supervisor dr. Niamh O’Sullivan for her support during the whole process of conducting research and writing this thesis, her useful and inspiring comments to improve this thesis in the best ways, for her understanding during some difficulties faced during the process and for her enthusiasm that encouraged my own enthusiasm as well.
I am very grateful to the eleven interviewees of this study for their time, the knowledge that they were willing to share and their enthusiasm during the interviews.
I would like to thank my family and friends for their support and patience in the last months while conducting this research and writing the thesis. A special thanks goes to Joost, who continuously supported me wherever he could.
3 Abstract
In recent years it has been recognized that not only the financial aspects of a company influence their success, but also other aspects such as the impact from a company’s business on the environment Therefore the aim of this study is to provide an in-depth understanding about why and how companies in the human resource sector and the transportation sector in the Netherlands adopt Integrated Reporting. This study used a qualitative research method to answer the research question. Eleven interviews are conducted with both small and medium sized companies as well as large companies in the human resources sector and the transportation sector. The findings of this study show that there are different motivations why companies adopt Integrated Reporting. One motivation why companies adopt Integrated Reporting, is pressure from stakeholders. While other incentives derive from within the company has incorporated integrated thinking, which is defined as the active consideration by an organization of the relationships between several organizational units and capitals that are used or affected by the organization. One difference between the interviewed small and medium sized enterprise in the human resources sector and the large company in the human resources sector and the companies in the transportation sector is that the small and medium sized enterprise in the human resources sector did not feel pressure from stakeholders. Two explanations are that the human resources sector has a lower impact on the environment, which means that the pressure to publish sustainability information is lower, and that the exposure of small and medium sized enterprises on their surroundings is too low. This observed difference suggests that the size of a company plays a role in the adoption of Integrated Reporting. The findings also suggest that stakeholders play an important role in the adoption of Integrated Reporting, not only in demanding Integrated Reporting but also actively in the process towards an integrated report.
4 Dutch summary
In de laatste jaren is het duidelijk geworden dat niet alleen de financiële prestaties van een bedrijf hun succes beïnvloeden, maar dat ook niet-financiële prestaties hun succes beïnvloeden. Om deze reden is het doel van dit onderzoek om te zorgen voor een uitgebreid inzicht in de redenen
waarom en hoe bedrijven in de human resources dienstverleningssector en de transport sector in Nederland Integrated Reporting zijn gaan toepassen. Dit onderzoek heeft gebruik gemaakt van een kwalitatieve onderzoeksmethode. In totaal zijn er elf interviews gehouden met midden- en kleine bedrijven en met grote bedrijven, in zowel the human resources sector als de transport sector De resultaten van dit onderzoek laten zien dat er verschillende motivaties zijn waarom bedrijven Integrated Reporting toepassen. Een motivatie is dat bedrijven onder druk staan van hun stakeholders om Integrated Reporting toe te passen. Andere motivaties is dat bedrijven Integrated Reporting toepassen omdat het bedrijf intern geïntegreerd is, zij hebben integrated thinking binnen hun bedrijf. Integrated thinking betekent dat een organisatie constant aandacht besteed aan de relaties tussen verschillende business units en de capitals die de organisatie gebruikt en beïnvloed. Een verschil tussen een midden- en kleinbedrijf in the human resources dienstverleningssector en de grote bedrijven in deze sector en de bedrijven in de transport sector, is dat het midden- en kleinbedrijf in the human resources dienstverleningssector geen druk heeft ervaren van stakeholders om Integrated Reporting toe te passen. Uit de resultaten komen twee verklaringen naar voren waarom zij geen druk hebben ervaren. De eerste verklaring is dat the human resources dienstverleningssector een relatief kleine invloed heeft op het milieu waardoor de druk om hierover te rapporteren lager is. De tweede verklaring is dat de invloed van midden- en kleinbedrijf op de omgeving te laag is. Dit verschil geeft aan dat de omvang van een bedrijf invloed heeft op of bedrijven Integrated Reporting zullen toepassen. De resultaten laten ook zien dat stakeholders een belangrijke rol spelen in het toepassen van Integrated Reporting omdat zij ook een actieve rol spelen in het maken van een integrated report. Hierdoor hebben stakeholders invloed op hoe een bedrijf Integrated Reporting toepast.
5 Table of contents
1. Introduction ... 7
1.1 Introduction ... 7
1.2 Research question and research objective ... 7
1.3 Theory ... 9 1.4 Research method ... 9 1.5 Research contributions ... 10 1.6 Thesis structure ... 10 2. Literature review ... 12 2.1 Sustainability. ... 12
2.2 Prior literature regarding sustainability reports ... 13
2.4 Integrated Reporting ... 16
2.5 Prior literature regarding Integrated Reporting ... 18
2.6 Chapter summary ... 20 3. Theory ... 21 3.1 Legitimacy theory ... 21 3.1.1 Definition of legitimacy... 21 3.1.2 Legitimacy - types ... 22 3.1.3 Legitimacy - strategies... 23
3.1.4 Prior literature using legitimacy theory ... 24
3.2 Stakeholder theory ... 25
3.2.1 Defining stakeholders ... 25
3.2.2 Stakeholder theory - types ... 25
3.2.3 Prior literature using stakeholder theory ... 26
3.3 Legitimacy theory and stakeholder theory – two interrelated theories ... 26
3.3.1 The link between legitimacy theory and stakeholder theory ... 26
3.4 Chapter summary ... 27
4. Research methodology ... 28
4.1 Introduction ... 28
4.2 Philosophy of research... 28
4.3 Qualitative research ... 30
4.4 Qualitative research methods ... 30
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4.4.2 Documentary analysis... 31
4.4.3 Observation ... 31
4.5 Quality of qualitative research ... 31
4.6 Research design ... 32 4.6.2 Interviewees ... 33 4.6.3 Interviews ... 35 4.7 Data analysis ... 36 4.7.1 Data reduction ... 37 4.7.2 Data Display ... 37 4.7.3 Data Interpretation ... 38 4.8 Chapter summary ... 38 5. Research findings ... 40 5.1 Introduction ... 40
5.2 Processes within companies before publishing their integrated report ... 40
5.3 Motivations for publishing an integrated report ... 46
5.4 Stakeholders within the Integrated Reporting process ... 53
5.5 General perceptions regarding Integrated Reporting ... 55
5.6 Chapter summary ... 60
6. Discussion ... 61
6.1 Introduction ... 61
6.2 Legitimacy theory and Integrated Reporting... 61
6.3 Stakeholder theory and Integrated Reporting ... 62
6.4 Chapter summary ... 63
7. Conclusion ... 64
References ... 66
Appendix A: Interview guide ... 70
7 1. Introduction
1.1 Introduction
In recent years it has been recognized that not only the financial aspects of a company influence their success, but also other aspects such as the impact from a company’s business on the environment (Soyka, 2013). Investors nowadays demand more information to improve their decision making. Next to financial information, also non-financial information is demanded by investors. Non-financial information includes for example information about the environment and governance (Eccles & Serafeim, 2011). Stakeholders might pressure companies to give information about their impact on the environment (Matten & Moon, 2008). As Milne & Gray (2007) say: “Organizations now operate in a world where stakeholders are asking for more transparency and accountability than ever before. Sustainability is the new demand. This is a time of profit with responsibility.” (p. 185). So companies are forced to publish more
information about their sustainability, and in that way be more transparent. Companies can publish this information in the form of a sustainability report. With a sustainability report
companies can inform multiple stakeholders about their commitment to sustainable development (Daizy, et al. 2013).
By having separate financial and sustainability reports, companies do not acknowledge the relationships between their financial and non-financial performance. Therefore a new reporting tool has been developed by the International Integrated Reporting Council (IIRC): Integrated Reporting (IR). Integrated Reporting leads to a periodic integrated report, in which the relationship between the financial and non-financial performance of a company and how a company creates value becomes clear. This report aims to provide more transparency by a better communication strategy, performance and more accountability (IIRC, 2013b). This report also connects the business operations of a company with its sustainability objectives (Kass, 2012).
1.2 Research question and research objective
From previous literature on sustainability reporting, it did become clear that there are several reasons why companies produce a sustainability report, one of the reasons is to gain legitimacy by the public (Deegan & Unerman, 2006; Cho, et al. 2012). The motivations to publish an integrated report are not quite clear yet, but it is recognized that Integrated Reporting (IR) can
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serve as a way to improve decision making for investors and other stakeholders by improving transparency, governance and decision making for organizations (Adams, et al. 2011; Adams & Simnett, 2011; Eccles & Krzus, 2010). Previous literature focused on the advantages and
disadvantages of Integrated Reporting (Adams and Simnett, 2011; Cheng, et al. 2014) but also on the development of Integrated Reporting in the Netherlands (PwC, 2012; GRI, 2013), where the knowledge center of the Dutch accounting profession for small and medium sized audit
companies (the NEMACC) (2013) focuses especially on the advantages and disadvantages of IR for small and medium sized enterprises1 in the Netherlands.
The objective of this study is to provide an in-depth understanding of the adoption process of Integrated Reporting in the human resources sector and the transportation sector in the
Netherlands. The Netherlands was chosen because a study of the GRI (2013) found that, among others, the Netherlands is one of the leading countries in adopting IR. The transportation sector is chosen because the transportation sector is a sector that undergoes high pressure to disclose non-financial information because their business operations have a higher impact on the environment, whereas the services sector has a lower impact on the environment and undergoes less pressure (Gamerschlag et al., 2011). The human resources sector in specific is chosen because this is the only service sector in the Netherlands, at the time this research is conducted, where both a SME and a large company have an integrated report. Therefore, the research question will be: How and
why is integrated reporting adopted in the human resources sector and the transportation sector in the Netherlands?
To answer this research question, interviews in the human resources (HR) sector and the transportation sector will be conducted to get more in depth knowledge about the adoption of Integrated Reporting. In both sectors, one SME is interviewed to examine whether there are differences in adopting IR for SMEs and large2 companies to get a broader understanding of the adoption of IR. The interviewees are all employees that are directly involved in, and responsible for, the production of the integrated report. In the SMEs, the interviewees are the managing directors of the company. In the large companies, the interviewees were the group controller or employee of the accounting and control department, the sustainability/corporate responsibility
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Small and medium sized enterprises have less than 250 employees. Their annual turnover should be less than EUR 40 million or their annual balance-sheet total should be less than EUR 27 million (Europa, 2014).
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manager and one interviewee was from the communication department, because those departments are responsible for the integrated report. By interviewing them, information is gathered from the ones involved in the adoption of IR and in producing the integrated report. Next to the interviews, a documentary analysis will be conducted on the integrated reports of the companies involved in this study, the interviewees will be observed and prior studies about IR will be reviewed.
1.3 Theory
This study will use two theoretical perspectives to explain the adoption of Integrated Reporting and to interpret the reasons for producing an integrated report by companies in the Netherlands. The first theoretical perspective is legitimacy theory of Suchman (1995). This theory is used to understand why and how companies seek legitimacy by using an integrated report. The second theoretical perspective is stakeholder theory. This theory is used to identify the stakeholders who are involved in the production of an integrated report and to identify the value of an integrated report to stakeholders.
Legitimacy theory and stakeholder theory are both systems oriented theories. Systems oriented theories recognize that organizations are part of a large social system in which
organizations influence and are influenced by the society they operate in (Deegan & Unerman, 2006). There are several similarities between those two theories which leads to the use of both legitimacy theory and stakeholder theory.
1.4 Research method
Qualitative research methods will be used in this study. In total, eleven semi-structured
interviews will be conducted. Ten interviews are conducted with employees of companies in the HR sector and the transportation sector who are involved in the production of an integrated report. The employees can be managing directors, managers of the control department, sustainability managers and other employees as long as they are directly involved in the
production of the integrated report. Next to that, one representative of the IIRC is interviewed to get more background information about Integrated Reporting and to validate some of the answers of the other interviewees. Both SMEs and large companies in the HR sector and the
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transportation sector are interviewed to get a broader understanding of the adoption of Integrated Reporting. Next to the interviews, a documentary analysis will be used for two purposes, first: to compare integrated reports, and second: to enable partial triangulation of the research findings. Participant observation will be used to complement the interviews.
1.5 Research contributions
This study aims at making a number of theoretical and empirical contributions to the existing literature. Firstly, since there has not been much research about Integrated Reporting in general, this study aims to fill this gap in the literature, making a theoretical contribution. This study will especially complement prior research by providing information about Integrated Reporting in the HR sector and the transportation sector for both large companies and SMEs in the Netherlands, which has not been researched before. Secondly, more in-depth knowledge about Integrated Reporting in the HR sector and the transportation sector will be provided, to provide experience with producing an integrated report to other companies. This is the first research that will provide this knowledge and therefore offers an empirical contribution. Finally, this will be the first in-depth study, to the researcher’s knowledge, about the adoption of Integrated Reporting in as well SMEs as large companies in the Netherlands. Although SMEs make up for 98% of all enterprises in Europe in 2011 (Ecorys, 2011)3, there is no in-depth study about the adoption of IR in SMEs yet. This offers another empirical contribution
1.6 Thesis structure
The remainder of this thesis will be structured as follows. Chapter two will discuss relevant concepts in order to understand this study and will discuss prior literature about sustainability reporting and Integrated Reporting. Chapter three will discuss the theoretical perspectives used in this study: legitimacy theory and stakeholder theory and will explain the links between the two theories. Chapter four will discuss the research method used in this study. Chapter five will then discuss and analyze the research findings. Chapter six will elaborate deeper on the findings and
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The study of Ecorys focuses on small and medium sized enterprises in the years 2011 and 2012, when there was a sovereign debt crisis in the euro zone. The report studies the challenges for SMEs in those years and the differences between how SMEs in different countries dealt with those challenges.
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will link the findings to the theoretical perspectives of chapter three. Finally, chapter seven will present the conclusion of this study and will provide suggestions for further research.
12 2. Literature review
In this section an overview of relevant definitions and existing literature is given in order to provide a better understanding of the concepts behind this research. The concepts sustainability; sustainability reporting; sustainability reporting in the HR sector, the transportation sector and in SMEs; Integrated Reporting; Integrated Reporting in SMEs are described along with prior literature about these concepts.
2.1 Sustainability
The term sustainability is used in different disciplines and different contexts. The meaning of the term is dependent on the discipline and context it is issued in (Brown, et al. 1987). One definition is given by Crane & Matten (2007): “Sustainability refers to the long-term maintenance of
systems according to environmental, economic and social considerations”(p. 23). Crane &
Matten (2007) mention that the term sustainability has been used mostly in relation to sustainable development. Sustainable development is in the Brundtland report defined by the World
Commission on Environment and Development as “meeting the needs of the present without compromising the ability of future generations to meet their own needs” (Brundtland, 1987, p.43). Glavič & Lukman (2007) state that there are several definitions for sustainable
development as well but that all definitions appear to be similar to the definition of Brundtland from 1987.
One way for companies to show to their stakeholders that they act in a sustainable
manner, and to provide an explanation for the work-related activities, is by issuing a triple bottom line report or a sustainability report. Those reports can be issued by companies as a stand-alone report or in addition to their financial report. Triple Bottom Line Reporting (TBLR) pays attention to several factors: economic (Profit), environment (Planet) and social (People) factors (Sumanta, 2013). In this way companies provide information on the value they create and destroy regarding economic, environmental and social matters. The purpose of a TBLR is to make
companies more accountable to several stakeholder groups (Sumanta, 2013). Sustainability reporting is the same as TBLR in the sense that the sustainability reports combine long-term profitability (Profit) with social (People) and environmental concerns (Planet) and because sustainability reports are also used for an accountability purpose as well (Daizy, Sen and Das,
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2013). Reporting is important because sustainability is demanded nowadays by stakeholders and those stakeholders hold companies accountable for their behavior (Milne & Gray, 2007). Gray (2001) defines accountability as “identifying what one is responsible for and then providing information about that responsibility to those who have rights to that information” (p. 11). Another definition of accountability is given by Gray, Owen & Adams (1996): “The duty to provide an account or reckoning of those actions for which one is held responsible” (p.38). This means that one needs to take actions responding to its responsibility but also needs to provide an explanation for the actions taken.
Although sustainability reporting is demanded by stakeholders, it is not mandatory in all countries or for all companies listed on a specific stock (Ioannou & Serafeim, 2011). Because it is not mandatory, there are no requirements or standards for the content of a sustainability report, such as with financial reports. But there are several organizations that provide guidelines for those reports. Some examples of organizations are AccountAbility (1999, 2003, 2005),
Fédération des Experts Comptables Europééns (Fee, 2002) and the Global Reporting Initiative (GRI, 2002, 2006, 2012). The guidelines provided by the GRI for sustainability reporting are the most detailed guidelines for those reports. The guidelines are adopted as global standards for sustainability reporting and they are stakeholder oriented (KPMG, 2011).
Another term for sustainability reporting is used by Gray (2001) who refers to
sustainability reporting as social accounting, which is the process of communicating about social and environmental aspects in the form of a report. He identifies four primary objectives why organizations use social accounting: “to discharge accountability to stakeholders; to control stakeholders; to move towards sustainability reporting; or to be an exercise in self-justification” (p. 11). What can be learnt from the past years of social accounting, according to Gray (2001) is that voluntarily disclosed information is usually not the information that will be beneficial to society. The information that organizations do not want to disclose, on the other hand, are more likely to be beneficial to society. Therefore, voluntary disclosure might not lead to increased accountability.
2.2 Prior literature regarding sustainability reports
Several prior studies looked at the use of sustainability reports and the impact of those reports on stakeholders as well as on the environmental strategy of a company. An overview of prior
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literature is given because it might give useful insights for the results of this study. The first review of prior literature presents studies about sustainability reporting in general, the second review presents studies about sustainability reporting in SMEs and finally studies about sustainability reporting in the HR sector and the transportation sector are reviewed.
Buzzelli’s (1991) study showed that it is important that if you want the company’s environmental strategy to work, several aspects are important. The first aspect that needs to be applied is that companies must have a sound environmental focus in their strategy. This requires that all levels within in the company, from lower-level employees to top management, need to be committed to the environmental strategy. The second aspect is that employees must have the opportunities and power to implement ideas for the environmental strategy. The third aspect requires good communicating with the public. This involves showing the public that management empowers employees (point two) and publishes reports about the actions the company takes to follow their environmental strategy and that companies need to keep finding new ways to communicate with all kinds of audiences. Finally the study indicates that public acceptance is needed in order for a company to survive. It is important for the company to listen and to be accountable to the public. From this study we know that it is important to have a committed workforce within the company and that there is communication with all stakeholders.
Cho, et al. (2012) investigated the extent to which a company’s environmental
performance is reflected in perceptions of its environmental reputation and whether voluntary environmental disclosure serves to mediate that effect. Their findings indicate that environmental disclosure is positively associated with environmental reputation as well as with membership in the Dow Jones Sustainability Index (DJSI). The results confirm that companies use voluntary environmental disclosures to compensate for potential reputational effects when they have poor environmental performances. One of the implications of their study is that companies might use voluntary environmental disclosures as a tool for reputation risk management. A consequence of this might be that companies not actually change their environmental behavior but only disclose environmental issues for their reputation.
This is in line with the results that Freedman & Patten (2004) find in their research. They point out that voluntary disclosure might lower the impact of poor environmental performance on the company’s reputation. But that this might also lower the incentives for companies to actually improve their future environmental performance.
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Although the previous studies indicate that companies voluntarily disclose about
environmental aspects, Daizy, Sen and Das (2013) indicate that there are still several information gaps although more organizations started to disclose information about their performance on social, economic and governance aspects. Companies might face problems when they want to integrate sustainability in their operations with the sternness needed for effective results. The problems with including information regarding sustainability concerns can be overcome by increasing awareness and understanding of the company. This includes actions to build awareness for stakeholders, leading to useful stakeholder engagement and commitment of top management to disclose reliable and transparent information.
One study that included sustainability reporting in the Netherlands is the study of Maignan & Ralston (2002). They found several reasons why companies behave in a socially responsible way. The reasons are (1) top management valued social responsible behavior in its own right; (2) top management believed that this behavior would lead to greater financial performance of the company; and (3) stakeholder groups pressured companies to behave social responsible.
In the last Carrots and Sticks publication of UNEP, GRI, KPMG and the Centre for Corporate Governance in Africa (2013) it is stated that one of the trends regarding sustainability and CSR reporting is that SMEs increasingly report voluntarily about sustainability and CSR. One reason for this increased reporting trend is that SMEs might enhance their market position. It is also said that in the future more attention is paid to voluntary sustainability reporting by SMEs to enhance the growth in reporting by SMEs.
A sector where more attention is paid to sustainability reporting is the service sector. Service companies pay more attention to CSR and this is appreciated by the stakeholders
(Calabrese & Lancioni, 2008). This is contradicting to a study of Gamerschlag et al. (2011) who find that companies in the service sector tend to disclose less CSR information. This seems reasonable when only considering environmental information since their impact on the
environment is less than for the transportation sector. But companies in the service also disclose less information about social issues although employees are a key asset in those companies. They find that the transportation sector is disclosing more information about CSR and the reason for this is that those companies experience more pressure from stakeholders. Although the study of Gamerschlag et al. (2011) indicates that the transportation sector is disclosing more
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information than the services sector, a study about CSR by KPMG (2011) shows that both the transportation sector and the services sector are lagging behind in comparison to other sectors in disclosing CSR information.
In the next section Integrated Reporting and prior literature about Integrated Reporting will be reviewed.
2.4 Integrated Reporting
The International Integrated Reporting Council (IIRC) defines Integrated Reporting as follows: “Integrated reporting combines material information on the company’s strategy, governance, performance and prospects. It does this in such a way that the commercial, social, and sustainability context in which the company operates is portrayed. It gives a clear and concise view of the company’s stewardship and process of value creation” (IIRC, 2011, p. 2).
Integrated Reporting is based on “integrated thinking” and one of the goals is to report about value creation of a company over time. Integrated thinking is defined as: “The active consideration by an organization of the relationships between its various operating and functional units and the capitals that the organization uses or affects. Integrated thinking leads to integrated decision making and actions that consider the creation of value over the short, medium and long term.” (p. 34).
In an integrated report material information about strategy, governance, performance and future prospects is combined. In this way a separate financial and sustainability report is not necessary anymore. As with the sustainability report, the information covers economic,
environmental and social performance in the context in which the companies operate. In this way the integrated report can show the linkages between the different performance areas and explain how the company creates value in the short, medium and long-term. The primary goal is that the integrated report will be the company’s primary reporting vehicle (IIRC, 2011).
Previously, some of the key objectives of integrated reporting are stated, namely to provide a more concise view of the capabilities of a company to create and sustain value in the short, medium and long-term. Another key objective is that the integrated report should contain information about the different sources of value employed by companies and the linkages between them used in reporting and decision making (Adams & Simnett, 2011). Those different
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sources are referred to as “capitals” by the IIRC. Six capitals are identified: financial; manufactured; intellectual; human; social and relationship; and natural (IIRC2013a).
The IIRC is responsible for issuing a framework for Integrated Reporting. Using this framework, the IIRC wants to help organizations to communicate their decisions and their actions related to value creation over time but also to provide better information to investors and other stakeholders so that they can have a better view on the actual performance of companies (IIRC, 2011).
The IIRC originated in 2010 as a collaboration between cross sectional leaders from different backgrounds, e.g. accounting, academic and regulatory. The responsibility of the IIRC is to create consensus for the concept of Integrated Reporting and provide principles-based
guidance to companies that want to issue an integrated report. The principle-based guidance will then be the basis for the International Integrated Reporting Framework (Adams & Simnett, 2011).
In December 2013 the final Integrated Reporting Framework was issued (IIRC, 2013b). In this framework the following guiding principles are indicated to underpin the preparation of an integrated report. The principles are useful for the content of the report as well as how the
information is presented:
- Strategic focus and future orientation. These principles relate to the strategy of a company and the ability of the company to create value in the short, medium and long-term.
- Connectivity of information. In the report the linkages between the companies’ factors that influence their creation of value over time should be clear in order to provide a holistic view of the companies’ ability to create value.
- Stakeholder relationships. The key stakeholders need to be indicated and the ways the company communicates in response to the legitimate needs and interests of these key stakeholders.
- Materiality. The information in the report should matter in the way that it affects the ability of a company to create value over time.
- Conciseness. The report should be concise.
- Reliability and completeness. All the material information should be included without a material error.
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- Consistency and comparability. The disclosed information needs to be consistent over time and the information should be comparable with other companies.
The next paragraph will discuss prior literature regarding IR.
2.5 Prior literature regarding Integrated Reporting
Several studies looked at the development of Integrated Reporting. Some studies specifically studied (small and medium-sized) companies in the Netherlands. There are no prior studies that focused on IR in the HR sector and the transportation sector. Prior studies regarding IR will briefly be mentioned here.
Adams & Simnett (2011) find in their study several advantages and disadvantages of issuing an integrated report. The advantage for stakeholders is that there is increased transparency and they get information about the future and strategic direction of companies. One of the
disadvantages is that companies are tentative to disclose too much information, because they are afraid to disclose sensitive information to their competitors. Another disadvantage is that not all companies have the information available they need to disclose in the integrated report. This might be a barrier to produce an integrated report. Related to this disadvantage is that there might be high costs related to gathering the information needed to produce an integrated report. The last disadvantage mentioned is that it is not clear how the report can be audited. The authors mention here that the concept of materiality is well defined for quantitative elements of financial
reporting, but materiality is not defined for qualitative elements that will be present in an integrated report. This means that a concept as materiality also needs to be defined for an
environmental or social context. The authors point out that the International Integrated Reporting Framework must remain relevant and applicable in different jurisdictions because the Framework is intended for international use.
Cheng, et al. (2014) wrote a paper about the way IR has been used so far. The authors state that IR is still a new concept with the first framework only introduced in 2013. The
problems of a financial report and a sustainability report are that they do not give all information that is demanded nowadays by stakeholders but also that stakeholders do not understand the links between the two reports. In an integrated report those problems can be minimized by providing a link between the financial information from the financial report and the non-financial information from the sustainability report. This will allow stakeholders to assess the future performance of a company. In most countries IR is on a voluntary basis. But since 2010 companies listed on the
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Johannesburg Stock Exchange are required to produce an integrated report on a comply or explain basis. To conclude, the authors mention that there is still much to discover regarding Integrated Reporting.
That there is still much to discover is also recognized by Eccles & Serafeim (2014) who study the functions of corporate reporting and how IR responses to the two functions of corporate reporting. The first function of corporate reporting is the “information function”. Investors can make investment decisions based on gathering information from a corporate report by comparing this information to the information gathered from other companies in the same sector. The second function of corporate reporting is the “transformation function”. This is the result of input from stakeholders about the resource allocation decisions of companies after the company engaged with their stakeholders. The authors mention that separate financial reports and sustainability reports are no longer sufficient to satisfy those two functions. IR can give investors a better understanding of the link between the financial performance and the non-financial performance of a company (“information function”). But an integrated report can also serve as a starting point for discussions with stakeholders (“transformation function”). As also mentioned by Cheng, et al. (2014) companies listed on the Johannesburg Stock Exchange are required to produce an
integrated report on a comply or explain basis. But the authors add that even in South Africa, where IR is mandatory, there are no strict guidelines, rules or standards about what a company should include in the integrated report.
Although the framework is new and there is still much to discover about IR, the GRI (2013) conducted research to evaluate the trend of increased IR. The research focused on patterns and trends in integrated reports. The GRI finds that companies use IR for several reasons: it is more efficient to have one report instead of two reports (one financial report and one
sustainability report); to enforce collaboration between departments; to provide stakeholders with one report including information on value creation and material issues. The majority of
companies see IR as a logical response when sustainability is already integrated in the core business. One of the challenges is that companies are not sure what needs to be in the report before it can be classified as an integrated report. The advice to companies who are interested in producing an integrated report is that those companies need to build internal support and support from the top for IR. Besides that, it is important to review how sustainability is already integrated in the core business. The report will then be a reflection of what the company is actually doing.
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Van Tilburg and Hoffman (2014) report about a research carried out by Royal
HaskoningDHV how the 25 largest Dutch companies use IR. They find that some of the Dutch companies are already ahead regarding IR but most of the companies are still in a start-up phase. From the six key questions addressed by the IIRC (Organizational overview and external
environment; Governance; Risks and opportunities; Strategy and resource allocation;
Businessmodel; Performance; and, Outlook) Businessmodel, Performance and Outlook are the key questions that still require improvement in the integrated reports and those are recognized as the main challenges for companies. Also, most of the reports in the study do not contain
quantitative information regarding sustainability performance and do not show links between sustainability performance and financial performance.
The Dutch accounting profession for small and medium sized audit companies, the NEMACC, (2013) published a study about the advantages of IR for SMEs in the Netherlands. The NEMACC acknowledges that SMEs are not yet engaged in IR to the extent that large companies are engaged, but they identify several advantages of IR for SMEs. For the company itself the advantages are: (1) A better understanding of value creation within the company; (2) A better understanding of material aspects within the company; and, (3) A better quality of
disclosed information. Other advantages are that IR leads to a better relation with stakeholders and that companies gain trust when they publish information about their integrated strategy, governance, risks and the consequences strategy on the company and its stakeholders. One of the results in the study of NEMACC is that there is a positive relation between disclosure of
sustainability related information and the competitive advantage of companies. But also disadvantages are identified. Potential disadvantages are: (1) High costs of publishing non-financial information; (2) Insufficient non-financial and employee resources; (3) Insufficient
knowledge about non-financial value creation; and, (4) Insufficient demand by stakeholders for an integrated report.
2.6 Chapter summary
This chapter provided a description and prior literature of sustainability; sustainability reporting; sustainability reporting in SMEs and in the HR sector and the transportation sector; Integrated Reporting and Integrated Reporting in SMEs. In the next chapter the theoretical perspectives will be discussed to better understand the concepts introduced in this chapter.
21 3. Theory
This chapter will present the two theoretical perspectives used in this study to analyze and
structure the research findings. The first theoretical perspective discussed is the legitimacy theory of Suchman (1995). Legitimacy theory is often used to explain why management takes certain actions (Deegan, 2007). This theory is used to understand why and how companies seek legitimacy by using an integrated report. The second theoretical perspective discussed is the stakeholder theory. This theory is used to identify the stakeholders that are able to influence the creation of an integrated report and to identify the value of an integrated report to stakeholders.
3.1 Legitimacy theory
3.1.1 Definition of legitimacy
Suchman (1995) defines legitimacy as “a generalized perception or assumption that the actions of an entity are desirable, proper or appropriate within some socially constructed system of norms, values, beliefs and definitions” (p. 574). Legitimacy refers to organizations behaving in the way society expects them to behave, reflecting collective perceptions and beliefs about the
organization (Suchman, 1995). The way society expects organizations to behave differs over time, this means that organizations also need to change their behavior depending on the changing environment they operate in. This can cause a legitimacy gap when the value system of an organization is not in line with the value system of society (Deegan & Unerman, 2006). There are two major reasons for those gaps to arise. The first reason is that the expectations of society change but the behavior of organizations did not change. When expectations of society change faster than the behavior of an organization, a legitimacy gap occurs (Sethi, 1977). When organizations do not disclose information in which they make clear that they change or have changed to comply with the expectations of society, legitimacy is also threatened (Deegan, 2007). The second reason for legitimacy gaps to occur is that information is disclosed about an
organization that was not previously known. This information can also be disclosed by third parties (Sethi, 1977).
Lindblom (1994) indicates that there is a difference between legitimacy and legitimation. Legitimation is the process which leads to organizations being seen as legitimate. Legitimacy is then the status achieved after the process of legitimation. To obtain legitimacy, it is important how society perceives the actions of an organization (Deegan, 2007).
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An organization’s actions are questioned to be legitimate through an organization’s
accountability, where stakeholders play a key role (Gray, 2001). When society does not see an organization as legitimate, this threatens the survival of the organization. So organizations survive to the extent that society considers them to be legitimate (Deegan, 2007).
Legitimacy theory acknowledges that there is a so called ‘social contract’ between organizations and the society they operate in. This contract includes the expectations that society has about the behavior of organizations. When an organization breaches the social contract, they might get punished by society. The punishment can be in legal restrictions or reduced demand of customers for example. Companies need to keep this social contract in mind while they operate to prevent breaching this contract (Lindblom, 1994).
There are three types of legitimacy (Suchman, 1995) which will be discussed next.
3.1.2 Legitimacy - types
Within legitimacy theory, there are three broad types of legitimacy (Suchman, 1995): - Pragmatic legitimacy. With pragmatic legitimacy, companies act in a self-interested
manner to get support of the company’s most immediate audiences. The support is needed for a company’s practices based on the perceived value of those practices by the
immediate audiences (Kumar & Das, 2007). This type can be seen as a symbolic management approach because the actual behavior does not necessarily change (Suchman, 1995);
- Moral legitimacy. For moral legitimacy, stakeholders need to have a positive opinion of the company and its activities. It is not necessary that the activities have benefits for the stakeholders, but the activities need to be “the right thing to do” (Suchman, 1995, p. 579). The interest of the broader society is important instead of the individual interests of the most immediate audiences. This type can be seen as a behavioral management
approach because companies need to disclose their actual techniques and accomplishments to be perceived as being legitimate;
- Cognitive legitimacy. Companies are seen as necessary and that is why they are accepted (Suchman, 1995). Companies are taken-for granted by the audience because the practices of a company are seen as the only way to have an effect on collective actions taken within
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society. Only for this goal, the companies’ practices are seen as appropriate and acceptable by the audience (O’Dwyer, et al. 2011).
Pragmatic and moral legitimacy includes interaction with the society surrounding the
company. This is not necessary for cognitive legitimacy because cognitive legitimacy is based on cognition, while pragmatic legitimacy is based on interest and moral legitimacy is based on evaluation (Suchman, 1995).
3.1.3 Legitimacy - strategies
Legitimacy theory states that organizations see legitimacy as necessary to survive, therefore they use strategies to be continuously perceived as legitimate. Those strategies are referred to as legitimation strategies and they are aimed to gain, maintain or repair legitimacy (Deegan, 2007). Organizations can use different strategies to gain, maintain or repair legitimacy. The different strategies depend on whether a company wants to be perceived as being pragmatic, moral or cognitive legitimate (Suchman, 1995 and O’Donovan, 2002). The different strategies will be explained next.
To gain legitimacy, organizations can use the following strategies: conform, select and manipulation. The strategies ‘conform’ and ‘select’ will be described because most organizations gain legitimacy by using those strategies. The strategy ‘manipulation’ is not often used by organizations (Suchman, 1995). To gain pragmatic legitimacy using a ‘conform’ strategy, organizations need to meet an essential part of the needs of the most immediate audiences or an organization needs to allow those audiences to participate in decision-making. Organization can use those strategies separately or together. To gain moral legitimacy, organizations need to conform to selfless ideals. To gain cognitive legitimacy, organizations need to conform to set standards (Suchman, 1995). To gain pragmatic legitimacy using a ‘select’ strategy, organizations identify and attract new groups that will value the exchanges that an organization can provide. To gain moral legitimacy, organizations can choose between and can select moral criteria to adjust the organization goals. To gain cognitive legitimacy, some selection can be used by selecting particular certificates that the organization can obtain (Suchman, 1995).
To maintain legitimacy, organizations can use the following strategies: perceiving future changes and protecting past accomplishments. To maintain pragmatic legitimacy by ‘perceiving future changes’, organizations monitor multiple interests of the audiences and, when necessary,
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the audiences are involved in decision-making. To maintain moral legitimacy by ‘perceiving future changes’, organizations include multiple ethics. To maintain cognitive legitimacy by ‘perceiving future changes’, organizations explore multiple prospects (Suchman, 1995). To maintain pragmatic legitimacy by ‘protecting past accomplishments’, the exchanges between the audiences and the organization are unchanging and foreseeable. To maintain moral legitimacy by ‘protecting past accomplishments’, organizations’ activities should demonstrate responsibility. To maintain cognitive legitimacy by ‘protecting past accomplishments’, organizational behavior is explained and appears to be natural and unavoidable (Suchman, 1995).
To repair legitimacy, organizations can use the same strategies as described above for gaining legitimacy (Suchman 1995). The strategies related to repairing legitimacy involve reactive actions to unforeseen problems (Suchman, 1995), whereas the strategies related to gaining legitimacy are proactive and are not related to unforeseen problems (O’Donovan, 2002).
In the next paragraph, prior literature that used legitimacy theory will be discussed.
3.1.4 Prior literature using legitimacy theory
In their study, Deegan & Blomquist (2006) state that companies are constantly seeking ways to ensure that their behavior is seen as legitimate by society. Companies are said to be in a social contract with the society it operates in. This implies that the expectations of society must be met when companies operate, in order to meet the societal expectations in the contract. When the societal expectations are not met, and in that way the social contract is broken, companies might be punished by society.
The results of Deegan & Blomquist (2006) are also recognized by Hrasky (2012). She recognizes that companies disclose information as a way to show to their stakeholders that they act legitimate. When stakeholders perceive the company as being legitimate, the risk for
breaching the social contract is reduced.
This is in line with the result of the study of O’Sullivan & O’Dwyer (2009) who find that organizations need to, or at least need to be perceived, to act accountable in order to be seen as legitimate by their public. They state that accountability is linked to moral legitimacy because both concepts focus about society and expectations, especially on the values of society and the expectations of organizations.
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3.2 Stakeholder theory
From the previous paragraphs it has become clear that by using legitimacy theory, we can find reasons why companies might implement an integrated report. We can complement the reasons deriving from legitimacy theory with reasons to implement an integrated report by addressing also the stakeholders perspectives.
3.2.1 Defining stakeholders
According to Freeman (1984) a stakeholder is an individual or a group that is able to affect a company’s performance or an individual or a group that is affected by the achievement of the company’s objectives. The ones we are accountable to, within the organizational context, are the stakeholders (Gray, 2001).
3.2.2 Stakeholder theory - types
There are two types of branches within stakeholder theory: a moral and a strategic branch (Frooman, 1999). Both branches will be defined to get a better understanding of the stakeholder theory.
In the moral branch, companies primarily balance the different stakeholder interests. This means that all stakeholder interests need to be taken into account by the organization and there are no power differences between stakeholders or stakeholder groups. Within the moral branch the focus is on how organizations can influence the expectations of stakeholders. Stakeholders’ influences on the organization is not necessary in the moral branch since organizations are intrinsically motivated to provide information (Deegan and Unerman, 2006).
In the strategic branch, companies actively manage stakeholders interests. Organizations identify several stakeholder groups and determine how those groups can be managed best in order to be able to survive as an organization. When a company is more dependent on a
stakeholder’s support, the company is more likely to incorporate the stakeholders expectations in their operations. The company will behave as is expected by those stakeholders. Those
stakeholders are seen as powerful stakeholders. In this way a more important stakeholder is a stakeholder with resources that are needed for the organizations survival (Deegan and Unerman, 2006). The stakeholders are assembled in various stakeholder groups where stakeholders with the same characteristics belong to the same group. Here we can make a distinction between primary
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and secondary stakeholder groups. Primary stakeholder groups are groups that need to participate in a company’s business activities to guarantee the survival of a company. There is a mutual dependency between these stakeholders and the company. Examples of primary stakeholder groups are shareholders, investors, employees, customers, suppliers, and governments. Secondary stakeholder groups are affected by the company or affect the company but the company survives also without their participation (Clarkson, 1995).
The two branches are not separated from each other within organizations. In practice organizations are driven by both branches (Deegan and Unerman, 2006).
3.2.3 Prior literature using stakeholder theory
A study of Buysse & Verbeke (2003) shows that important stakeholders need to be identified in order to have effective environmental management. Important stakeholders may vary depending on the specific strategy or the institutional context in which a company operates.
Using stakeholder theory we can study which stakeholders influence the process of an integrated report and the value of this report for the stakeholders.
3.3 Legitimacy theory and stakeholder theory – two interrelated theories 3.3.1 The link between legitimacy theory and stakeholder theory
Legitimacy theory and stakeholder theory are both systems oriented theories. Systems oriented theories recognize that organizations are part of a large social system where organizations
influence and are influenced by the society they operate in (Deegan & Unerman, 2006). There are several similarities between those two theories and because of those similarities both legitimacy theory and stakeholder theory are used.
The first similarity is that within legitimacy theory it is assumed that an organization is influenced by and also influences the society in which it operates. This is also assumed within stakeholder theory, although stakeholder theory refers to stakeholder groups instead of society in general (Deegan & Bomquist, 2006).
Another similarity is that both theories acknowledge that there is a ‘social contract’ between the groups in society and the organization. Within legitimacy theory, organizations will act in a way that is in accordance with the expected behavior coming from the ‘social contract’
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with society. Stakeholder theory explicitly mentions the presence of stakeholder power to influence organizations’ behavior and recognized several ‘social contracts’ with several stakeholder groups (Deegan & Unerman, 2006).
Both theories identify the disclosure of information as a strategy to gain or maintain support from stakeholders. According to stakeholder theory, information is disclosed to gain or maintain support from stakeholder groups. Disclosure is used as a strategy to manage or even manipulate the demands of those groups and therefore companies are perceived to act legitimate (Gray et al., 1996).
Despite the similarities, the biggest difference between the two theories is that legitimacy theory focusses on the interaction with society as a whole and stakeholder theory focuses on the interaction with several stakeholder groups (Deegan & Unerman, 2006).
3.4 Chapter summary
This chapter firstly discussed legitimacy theory and the different types and strategies of legitimacy. After which it described stakeholder theory and the branches within stakeholder theory. The two theoretical perspectives will be used to explain the process of producing an integrated report by HR and transport companies in the Netherlands.
28 4. Research methodology
4.1 Introduction
This chapter will discuss the differences between qualitative and quantitative research. Also, this chapter will explain why qualitative research methods are chosen in this study. The methods interviewing, documentary analysis and observation will be discussed more thoroughly because those research methods are used in this study. An explanation on how the data will be analyzed will be provided next. Finally, this chapter will be summarized.
4.2 Philosophy of research
“Research is a process of intellectual discovery, which has the potential to transform our knowledge and understanding of the world around us.” (Ryan, et al. 2002, p.7)
Within research methodology two dimensions are recognized: ontology and epistemology (Ryan, et al. 2002). Ontology is concerned with our view of reality. According to Ryan, et al. (2002): “Reality is a difficult concept but is concerned with the construction of existence in objects.” (p. 13). Epistemology refers to our knowledge about reality. Ontology influences epistemology because the way the researcher observes reality will influence his knowledge about reality, which will also influence the research method chosen by the researcher (Ryan, et al. 2002).
In the field of research, we distinguish between positive (quantitative) and qualitative research (Ahrens and Chapman, 2006). In table 1 (page 29) a brief overview of differences between quantitative and qualitative research is given. There is no superior methodology since the chosen methodology depends on the preferences of the researcher (O’Sullivan, 2010).
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Table 1: Distinctions between Quantitative and Qualitative Research
Quantitative Qualitative
Numbers Words
Point of view of researcher Points of view of participants
Researcher distant Researcher close
Theory testing Theory contextual and/or emergent
Static Process
Structured “Unstructured”
Generalization Contextual understanding
Hard, “reliable” data Rich, deep data
Macro Micro
Behaviour Meaning
Artificial settings Natural settings
Source: O'Sullivan, 2010, p. 67
The methods used by both research types may be the same. For example documentary analysis, statistical analysis and interviews are used in both research types. The difference between the methodologies lies in the knowledge the researcher has about his research field. A positive researcher wants to describe or clarify what is seen in the field by doing research, while a qualitative researcher wants to express the field as a social reality. Qualitative researchers
believe that the world depends on the theory used by the researcher. Positive researchers do not acknowledge this because they do not see a different world when using different theories (Ahrens and Chapman, 2006).
Qualitative researchers review their data continuously to reflect the data to the used theories and in that way help to further frame the research question. Data is not seen as a true reflection of reality but instead is seen as several pieces of the reviewed field that are important in the world shaped by the used theories. With qualitative research, there is interaction between the field and the researcher, which means that the researcher cannot control what is observed but the researcher can learn from unexpected observed interactions within the field (Roethlisberger and Dickson, 1949). To prevent becoming overwhelmed by the data, it is important for the researcher to have a theoretical framework to position the data in an orderly manner (Ahrens and Chapman, 2006).
Peshkin (1988) states that subjectivity of a researcher will always have influence on the research, both in quantitative and qualitative research. Furthermore he states that researchers should not try to get rid of their subjectivity since this is not possible. Instead, researchers should
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systematically filter out their subjectivity during the whole research. By monitoring the
researcher’s subjectivity, the subjectivity can be prevented since the researcher can be aware of the subjectivity influencing the observations observation. Therefore it is important in this research to also monitor the researcher’s subjectivity.
In the next paragraph the methodology used in this research, qualitative research, is more broadly defined.
4.3 Qualitative research
The concept of IR is a recent field of study, meaning that prior research is limited. Therefore this thesis will have an explorative character. Qualitative research is a proper method because it enables the researcher to get a deeper understanding of the process that leads ultimately to issuing an integrated report (Silverman, 2000).
When doing qualitative research, qualitative research methods need to be used. Using these methods, it is important that the researcher addresses the research process and explores how data is transformed into the findings and insights derived from the findings (Gephart, 2004).
Within qualitative research the data retrieved from the study is constantly related to the theory because the theory is used to explain the data (O’Sullivan, 2010). Using qualitative research, it is not important to have a large sample. Instead it is more important to have a smaller sample from which the researcher can collect data to gain an in-depth understanding of the
observed reality in its own context. More value is added to having an in-depth understanding than by making generalizations, which is more important when using quantitative research methods.
The qualitative research methods used in this study are interviews, documentary analysis and observation, which will be explained in the next paragraph.
4.4 Qualitative research methods 4.4.1 Interviews
Interviews are used because this is an effective method to collect data in order to understand the process that leads to issuing an integrated report (Patton, 2002).
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There are three interview methods; unstructured, semi-structured and structured
interviews (Patton, 2002). Unstructured interviews have no interview outline and no questions are predetermined, which has the advantage that the researcher has a lot of freedom to ask different questions. Semi-structured interviews identify broad themes and open-ended questions
beforehand. Not all questions are set beforehand, so there is still some freedom for the researcher to ask other, but related, questions. Structured interviews have predetermined questions with a yes or no answer. This interview method is mostly used in quantitative research (Patton, 2002).
This research will use semi-structured interviews. In this way the themes for the questions are clear and there are predetermined open questions. However, the researcher is free to ask other relevant questions and to give the interviewee the opportunity to bring up related subjects.
4.4.2 Documentary analysis
Documentary analysis will be used in this research to complement the data from the interviews and to serve as data triangulation (Patton, 2002). The documents used will be the issued
integrated reports from the past years and information about those reports on the company’s website.
4.4.3 Observation
Participant observations will be used in this research to complement the data from the interviews. Observations include notes and descriptions from the research field (Patton, 2002). Participant observations allows the researcher to extend the data from interviews by analyzing and observing the environment and actions of the interviewees.
The next paragraph will describe the criteria to ensure the quality of qualitative research.
4.5 Quality of qualitative research
In the literature, criteria are proposed to evaluate the quality of qualitative research, which are trustworthiness and authenticity (Bryman, 2008). Trustworthiness consists of the following four aspects: credibility, transferability, dependability and confirmability. Credibility is the confidence in the findings and whether the findings represent the truth. To achieve credibility it is needed that the research is carried out in good practice and that the research outcomes can be
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validated by the respondents within the research, which is referred to as respondent validation, or triangulation. With respondent validation the research findings are returned to the observed participants of the research for their confirmation of the research findings. Triangulation is the use of multiple methods to reduce potential biases from using one method. There are different types of triangulation: method, investigator, theory and data triangulation. With method triangulation, multiple methods are used to derive to the same conclusion. Investigator triangulation means that several investigators examine the same subject. Theory triangulation refers to the use of different theoretical frameworks to interpret the results. Data triangulation means that multiple sources or methods for data collection are used (Denzin, 1970). The second aspect of trustworthiness is transferability. Transferability means that the outcomes of the research are also applicable in other situations. The third aspect is dependability. Dependability means that the research findings are likely to apply at other times as well. One way to achieve dependability is by providing the readers with all details of the research that was conducted such that other researchers are able to repeat the study. This relates to what Lincoln & Guba (1985) refer to as the “inquiry audit” where the researcher needs to document the research process. The fourth aspect is confirmability. Confirmability relates to objectivity of the researcher. When addressing confirmability, it is important that the outcomes are not influenced by the researcher’s own values and preferences.
Authenticity means that the true viewpoint of the participants are presented in the research (Lincoln & Guba, 1985).
In this research we also need to be aware of aspects that could undermine the quality of the research. For this reason, two research methods are used and we will use data and method triangulation to achieve credibility. The interviews will also be send to the interviewees for confirmation.
In the next section, the research design of this study will be explained.
4.6 Research design
This paragraph is divided into 2 subparagraphs. The first subparagraph will elaborate on the interviewees, why they were chosen and how the researcher got in contact with the interviewees. The second subparagraph will elaborate on how the interviews are conducted in this research.
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4.6.2 Interviewees
To get a deeper understanding of the adoption of IR and the production of an integrated report, several companies that published an integrated report will be interviewed. The interviews will be conducted with employees who were directly involved in, or responsible for, the adoption of IR and the production of an integrated report. Being involved or responsible is the main criteria for suitable interviewees. The interviews are conducted in the work environment of the interviewee. In total eleven semi-structured interviews are conducted. Ten interviewees are with employees of a company that have an integrated report and one interviewee is from the International Integrated Reporting Council. By interviewing different employees from different organizations, different views on why and how IR is adopted, are observed.
Four of the interviewees are from the human resource (HR) sector, of which one
interviewee is from a SME, and six interviewees are from the transportation sector, of which one interviewee is from a SME as well. These two sectors are chosen to compare whether the
transportation sector, a sector with a relatively high impact on the environment, has different experiences with and motivations for IR than the HR service sector, a sector with a relatively low impact on the environment. In both sectors one SME is interviewed to observe if there are
differences between their experiences with and motivations for Integrated Reporting compared with large companies in their sector. By also interviewing a representative of the International Integrated Reporting Council, the researcher can get more background information about IR and the interview data can be used to compare experiences and motivations with the companies that adopted IR. An overview of the interviewees is given in table 2. The interviewees are listed in order of the date of the interview.
To gain access to the interviewees of the companies purposive sampling is used. To gain access to the interviewee of the IIRC, snowball sampling is used. Purposive sampling is defined by Maxwell (1997) as a type of sampling in which, ‘‘particular settings, persons, or events are deliberately selected for the important information they can provide that cannot be gotten as well from other choices’’ (p. 87). Snowball sampling is a type of sampling where the sample is established by referrals made by persons to other persons. The referral is made because the first person believes that the second person has knowledge or other characteristics that are of interest for the researcher (Biernacki & Waldorf, 1981).
Access to the interviewees was gained by first selecting SMEs and then large companies in the Netherlands in the HR sector and the transportation sector that published an integrated
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report and then contacting the specific company using the contact details in the integrated report or on the website. Sometimes the contact details were of the person who was suited as an
interviewee. In other cases, the first person that was contacted referred to a colleague that was better suited as an interviewee. Contact with the representative of the IIRC was made through one interviewee that gave access to the contact details of the representative.
Table 2 Overview of interviewees Interview
Number
Sector Function Location of
interview Date Duration I1 Human resources Managing director Zeist 28 April 2014 90 minutes I2 Human resources Managing director group accounting Diemen 30 April 2014 53 minutes I3 Human resources Sustainability manager Diemen 6 May 2014 70 minutes I4 Human resources
Group control Diemen 6 May 2014
93 minutes I5 Transportation Chief editor
annual report Utrecht 9 May 2014 67 minutes I6 Transportation Managing director Alblasserdam 12 May 2014 82 minutes I7 Transportation Sustainability manager Oss 15 May 2014 38 minutes I8 Transportation Group controller Oss 15 May 2014 48 minutes I9 Transportation Corporate Social Responsibility manager Schiphol 16 May 2014 50 minutes
I10 Transportation Program manager Integrated Reporting Rotterdam 22 May 2014 89 minutes
I11 Not applicable International Integrated Reporting Council representative Rotterdam 22 May 2014 64 minutes
