- 1. Issues in Social and Environmental AccountingVol. 2, No. 1
June 2008Pp. 36-60The Case For Reporting Pro-ActiveEnvironmental
Initiatives: A Malaysian Experiment On Stakeholder Influence
Strategies Evangeline Elijido-TenFaculty of Business and Enterprise
Swinburne University of TechnologyAustraliaAbstractThe purpose of
this research is to gain insights on the preferred strategies
chosen by variousstakeholder representatives to influence
management to either provide/not provide environ-mental disclosures
in an experimental setting. A typology of resource relationships
and influ-ence strategies is adapted as a framework to make sense
of the views presented by variousstakeholder representative groups.
To facilitate a Malaysian experiment, qualitative interviewswith
the aid of a hypothetical vignette are conducted to understand how
different stakeholdergroups go about seeking what they want from
the management. The findings in this exploratorystudy indicate that
although the model is useful to understand the influence strategies
taken byeach stakeholder group, its effectiveness is tempered by
the level of significance placed bythese groups on the
environmental initiative and their perception of how the event will
affecttheir stake on the firm.Keywords: Environmental disclosures,
stakeholder influence strategy, Malaysia.INTRODUCTION ACCA, 2005;
KPMG, 2005). It is in this regard that stakeholder theory
hasWorldwide surveys show that stake- gained popularity as it
offers a usefulholder pressures are one of the main framework given
its basic premise thatdrivers for managements increased fo- the
firms success is dependent upon thecus in the area of corporate
social andsuccessful management of its relation-environmental
responsibility leading toship with its stakeholders
(Freeman,increased stakeholder consultation in the1983). Whilst the
stakeholder literaturereporting process (Ernst & Young, 2002;is
replete with research on stakeholderEvangeline Elijido-Ten is
Senior Lecturer of Accounting at Faculty of Business and
Enterprise, Swinburne Universityof Technology, Australia, email:
[email protected]
2. E. Elijido-Ten / Issues in Social and Environmental
Accounting 1 (2008) 36-60 37attributes and concerns on how to man-
Firstly, it contributes to the developmentage them (see for
example, Ullmann,of stakeholder theory by extending its1985;
Roberts, 1992; Mitchell, Agle &application to the means by
which stake-Wood, 1997; Elijido-Ten, 2007), little isholders try to
get what they want fromknown about how stakeholders demandthe firm
particularly when a pro-activewhat they want from the firm
(Frooman, environmental initiative is involved.1999). The purpose
of this research is toPrior studies feature mainly negativegain
insights on the preferred strategiesevents such as corporate
downsizingchosen by various stakeholder represen-(Tsai, Yeh, Wu
& Huang, 2005), possi-tatives to influence management to
pro-ble threat to ecological balance and hu-vide/not provide
environmental disclo- man life (Elijido-Ten, Kloot &
Clarkson,sures in an experimental setting.2007) and environmental
organizations concerns and activism (Hendry, 2005;In this study, a
Malaysian experiment is Frooman & Murrell, 2003, 2005).
Sec-initiated to understand how differentondly, it uncovers
relevant insights onstakeholder groups go about seekinghow various
stakeholder groups demandwhat they want from the
management.environmental disclosures from an exFroomans (1999)
typology of resourceante perspective. Much of previous
envi-relationships and influence strategies isronmental reporting
research providesadapted as a framework to make sense evidence from
an ex post perspectiveof the possible environmental reporting(e.g.
Wiseman, 1982; Patten, 1992; Al-preferences imposed by the
stakeholder Tuwaijri, Christensen and Hughes,representatives on the
management. To2004) thereby excluding the possibilityfacilitate the
experiment, qualitative in- of gaining insights from
stakeholderterviews are conducted with the aid of a views prior to
the disclosure decision.hypothetical vignette to gain insights
onThirdly, it extends the stakeholder influ-the possible interplay
between the man-ence strategy analysis to a wide varietyagement and
various stakeholder repre- of stakeholders. Previous research
hassentatives from an ex ante perspective,focused mainly on one
stakeholderthat is, the environmental reporting pref- group such as
environmental leaders/erences before disclosures are made. The
groups (Frooman & Murrell 2003, 2005;hypothetical vignette
features a pro-Hendry 2005) and employees (Tsai et alactive
environmental initiative taken by 2005). And finally, it brings a
perspec-a prominent publicly listed firm in thetive from a
developing country such asbanking industry. The findings in this
Malaysia into the social and environ-exploratory study indicate
that although mental reporting literature.the model is useful to
understand thepossible influence strategies taken by The motivation
for using the Malaysianeach stakeholder group, its
effectivenesscontext is driven by its inherent back-is tempered by
the level of significance ground in terms of its economic
devel-placed by these groups on environmentalopment and strategic
vision. Malaysiainitiative and their perception of how the offers
an interesting setting since it is theevent will affect their stake
on the firm. only developing country with an explicit timeline to
achieve the developed nationThis study contributes to the existing
status by the year 2020 (Vision 2020). Itbody of literature in a
number of ways.is also one of the fastest growing econo- 3. 38 E.
Elijido-Ten / Issues in Social and Environmental Accounting 1
(2008) 36-60mies in Southeast Asia. Compared to itstion on the
reporting preferences of vari-neighbouring countries, Malaysia has
ous stakeholder groups and how they gorecovered much quicker from
the 1997 about demanding what they want fromAsian financial crisis.
Along with rapid the management particularly when aeconomic
development, however, Ma- pro-active environmental initiative
islaysia has been experiencing intensified concerned.environmental
impact such as the defor-estation, erosion, air and water pollution
The remainder of the paper is organisedlargely brought about by
corporate ac- as follows. The next section provides ativities such
as logging, large scale land brief overview of the literature on
corpo-development, open burning, mining, rate social and
environmental disclo-power stations and dam constructions sures
leading to the introduction of the(Smith, Yahya & Amiruddin,
2007; framework. An explanation of the re-Sumiani, Haslinda &
Lehman, 2007). search methodology employed is pro- vided next
followed by the discussion ofFurthermore, Malaysia has not been im-
results and further analysis. Finally, themune to environmental
disasters such asconcluding comments are provided.the 1993 Highland
Towers erosion, the1997 haze crisis (when the Air PollutionIndex
exceeded the 500 mark) and the LITERATURE OVERVIEW: MA-2004 tsunami
that hit Penang along withLAYSIAN ENVIRONMENTAL RE-other countries
killing more thanPORTING200,000 people. Hence, it appeals to
in-tuition that these adverse experiences As more compelling
scientific evidencecould create higher environmentallink climate
change and global warmingawareness on the part of Malaysian to the
activities inherent in commercialstakeholders which could then
translateindustrialisation, conventional wisdomto higher pressure
for firms to be morewould suggest that environmental
re-environmentally pro-active and to pro- porting will continue to
increase particu-vide environmental reports. This, how- larly if
stakeholders demand for theseever, does not appear to be the case.
Adisclosures increased. Indeed, a numbercase study of Tenaga
Nasional Berhad,of studies provide evidence that stake-the largest
electricity producer in Malay- holder pressures are on the rise.
Ernstsia, shows that its management does notand Youngs study of 147
of the Globalsee the need to provide environmental1000 companies
shows that majority ofdisclosures in their annual reports de-the
key drivers for the managementsspite its adoption of a number of
envi-increased focus in corporate social re-ronmentally-friendly
activities. The fac-sponsibility (CSR) are stakeholder-tors,
identified by the management, at-related:tributing to
non-disclosure include theabsence of mandatory requirements, lack
Surveyed companies identify fiveof awareness, knowledge and
expertise key drivers as influencing the in-as well as lack of
government and publiccreasing business focus on CSR ...pressure
(Abdul Rahman & Ayob,These five drivers are: greater2005).
Given this, the Malaysian contextstakeholder awareness of
corpo-offers a fertile ground for an investiga- rate ethical,
social and environ- 4. E. Elijido-Ten / Issues in Social and
Environmental Accounting 1 (2008) 36-6039mental behaviour; direct
stake-The number of reporting compa-holder pressures; investor
pres- nies grew from 25 in 1999, to 35sures; peer pressures and an
in- in 2000, reaching 40 companiescreased sense of social
responsi-by 2001. This represented 5.3%,bility (Ernst and Young,
2002, 7% and 7.7% of the KLSE mainp. 6)board listed companies in
1999, 2000 and 2001 respectively.Likewise, a survey of the worlds
largest(ERMM, 2002, p. 8).250 companies reveals that, apart fromthe
Global Reporting Initiative (GRI) Another descriptive study
(Thompsonguideline, stakeholder consultation isand Zakaria, 2004)
confirms that Malay-commonly used as the basis for CSRsian
environmental reporting is still at itsreport content (KPMG,
2005).infancy and that majority of environ-mental disclosers are
large companiesOne of the most commonly used vehi- with seven of
the top 10 companies pro-cles to inform the public of the firms
viding mostly general policy statementsocial and environmental
accountability accompanied by some unsubstantiatedis the annual
reports (Wiseman, 1982; declarative statements.Neu, Warsame &
Pedwell, 1998;Cormier, Gordon & Magnan, 2004). Al-There is,
however, an increase in thethough much of the financial informa-
number of studies examining the moti-tion is mandated, todays
annual reportsvations behind Malaysian environmentalcontain more
voluntary information than disclosures using different
theoreticalbefore (Anderson & Epstein, 1995). So-perspectives.
Adopting the contractingcial and environmental accounting re- and
political cost perspective, Ahmad,searchers around the world appear
toHassan and Mohammad (2003) examineagree that environmental
reporting in the voluntary annual report environ-annual reports and
other communicationmental disclosures (AREDs) of 299media has
increased over time (Patten,KLSE-listed companies using
logistic1992; Gray, Kouhy & Lavers, 1995; regressions. Their
results suggest lack ofKPMG, 2002, 2005; Elijido-Ten, 2007).
support for the general hypothesis thatfirms voluntarily disclose
environmentalStudies focusing on Malaysian environ-information to
mitigate contracting andmental reporting, however, have not ap-
political costs. They attribute this resultpeared in the literature
until the turn ofto the argument that the commonly heldthe
millennium. In a study conducted by theoretical framework of
principal-agentthe Environmental Resources Manage- relationship may
not hold in the Malay-ment Malaysia (ERMM, 2002), the sian context
(p.85). On the other hand,analysis of annual reports and stand-
Ahmad and Sulaiman (2004) employalone environmental reports of
compa- legitimacy theory in their study of KLSEnies listed in the
Kuala Lumpur Stock Main Board listed companies from theExchange
(KLSE) shows that environ- construction and industrial products
sec-mental reporting is not widely practisedtors. Using
quantitative analysis, theirin Malaysia. The report, however, high-
results provide limited support for legiti-lights an increase in
environmental re- macy theory given the very low level ofporting,
albeit minimal:disclosure. This implies that there is no 5. 40 E.
Elijido-Ten / Issues in Social and Environmental Accounting 1
(2008) 36-60serious attempt on the part of the compa-quantitative
studies (Ahmad, et al, 2003;nies to appear legitimate to
society.Smith, et al, 2007) seem to suggest that some expectations
from the variablesThree recently published Malaysian directly
derived from developed-countrystudies (Yusoff, Lehman and Nasir,
studies may not hold true in Malaysian2006; Sumiani, Haslinda and
Lehman,context. Third, the theoretical frame-2007; Smith, Yahya and
Amiruddin,works used in previous studies (Ahmad2007) adopt no
specific theoreticalet al, 2003; Ahmad & Sulaiman 2004)model.
In examining the AREDs of top achieve limited support. It is in
this light50 companies listed in KLSE, Yusoff, etthat the adoption
of stakeholder theoryal (2006) use the qualitative method ofusing
exploratory qualitative method iscontent and discourse analysis.
Consis-deemed appropriate in this study.tent with the findings by
KPMG (2005),their analysis shows that majority ofdisclosures made
were around the mo- THEORETICAL FRAMEWORK:tive of stakeholders
concern (p. 140). STAK EHO LDER I NF LUENCESumiani, et al (2007)
also examine the STRATEGIESdisclosures made by top 50
Malaysianpublic companies to explore the report-The term
stakeholder is originally intro-ing behaviour of ISO-certified
compa-duced by Stanford Research Institutenies. They find that 13
companies are(SRI) to refer to those groups withoutISO14001 and all
provide some form ofwhose support the organisation
wouldenvironmental disclosure in their annual cease to exist
(Freeman 1983). In devel-reports. Smith, et al (2007) concentrate
oping stakeholder theory, Freemanon the disclosing companies
identified (1983) introduces the stakeholder con-by the ERMM (2002)
study in an at- cept in two models: (1) a business plan-tempt to
find whether relationships existning and policy model; and (2) a
corpo-between environmental disclosures andrate social
responsibility model of stake-certain corporate characteristics. Of
theholder management. In the first model,explanatory factors
examined, only fi- the focus is on developing and evaluat-nancial
performance is found to be sig-ing the approval of corporate
strategicnificant. However, contrary to expecta-decisions by groups
whose support istion, it is negatively associated with dis-required
for the firms continued exis-closures prompting their conclusion
that tence. The stakeholders identified in thisenvironmental
reporting practices inmodel include the owners, customers,Malaysia
appear to differ from those public groups and suppliers.
Althoughelsewhere, which may be partly attribut- these groups are
not adversarial in na-able to the maturity of reporting proc-ture,
their possibly conflicting behavioress (p. 195). is considered a
constraint on the strategy developed by management to best matchThe
Malaysian studies reviewed high- the firms resources with the
environ-light a number of important points. First, ment. In the
second model, the corporatealthough environmental reporting in
Ma-planning and analysis extends to includelaysia is still very
limited, majority are external influences which may be adver-driven
by stakeholder concerns (Yusoff sarial to the firm. These
adversarialet al, 2006). Second, previous Malaysian groups may
include the regulatory bod- 6. E. Elijido-Ten / Issues in Social
and Environmental Accounting 1 (2008) 36-60 41ies, environmentalist
and/or special in-what they want from the firm?terest groups
concerned with social is-sues. The second model enables manag-
Froomans (1999) typology of influenceers to consider a strategic
plan that isstrategies, which borrows heavily fromadaptable to
changes in the social de-resource dependence theory, is used
tomands of non-traditional stakeholderextend the development of
stakeholdergroups. theory that accommodates the view fromthe
stakeholders perspective. The basicCorporate environmental
responsibilitypremise central to resource dependenceis one area in
which much community theory is that an entitys need for
re-awareness has developed given the in- sources provides
opportunities for otherscreasing manifestations of the effects of
to control the firm. Power is a centralglobal warming,
deforestation, air, landtheme in the argument because the na-and
water pollution. As proposed by ture of the relationship is
determined bystakeholder theory, this increased levelwho is
dependent on whom and howof environmental awareness creates
themuch. Frooman explains that operation-need for companies to
include non-alising power under resource depend-traditional
stakeholders like the regula- ence theory is quite different. He
quotestory adversarial groups in their corporatePfeffer and
Salancik (1978):plans to adapt to changing social de-mands. The
literature hints that compa-For the dependence between twonies
provide disclosures voluntarily for organisations to provide one
or-various reasons (Gray & Bebbington,ganisation with power
over the2001; Buhr, 2007), most of which could other, there must be
asymmetry inbe related to satisfying various stake-the exchange
relationship (p. 53)holder groups including adversarialPower, thus,
is defined in rela-stakeholders. Furthermore, given thattive terms,
that is, A has powermajority of Malaysian environmentalover B if B
is more dependent ondisclosures are motivated by stake-A relative
to As dependence on Bholders concerns (Yusoff et al, 2006) (p.
196).and the increasing need to get the stake-holders involved in
the reporting process Drawing from this power
relationship,worldwide (KPMG, 2005), stakeholder two types of
resource control strategiestheory offers a useful framework for
this are suggested: (1) withholding strategiesstudy but perhaps not
in the conven-- defined as those where stakeholderstional way it
has usually been adapted. discontinue providing a resource to afirm
with the intention of making theThe notion of successful management
firm change a certain behaviour; and (2)appears to have been taken
mostly fromusage strategies - those in which thethe managements
perspective; hence,stakeholder continues to supply a re-much of the
early development in stake- source, but with strings attached,
i.e.holder theory has focused on stakeholdersome conditions must be
met. Froomanattributes and concerns on how to man-and Murrell
(2003; 2005) later labelledage them. As a result, there is a
scarcitywithholding as coerce and usage asof literature addressing
the question:compromise strategies.how will the stakeholders try to
get 7. 42 E. Elijido-Ten / Issues in Social and Environmental
Accounting 1 (2008) 36-60Figure 1: Typology of Resource
Relationships and Influence StrategiesIS THE STAKEHOLDER DEPENDENT
ON THE FIRM?NOYES Is the firm dependentP1: When the relationship is
one P2 : When the relationship is oneon the stakeholder?of LOW
INTERDEPEND-of FIRM POWER, the stake- NO ENCE, the stakehoder
willholder will choose indirect-usagechoose
indirect-withholdingstrategy to influence the firm.strategy to
influence the firm.P3 : When the relationship isP4 : When the
relationship is oneone of STAKEHOLDER of HIGH INTERDEPEND-
YESPOWER, the stakeholder willENCE, the stakeholder willchoose
direct-withholding strat- choose direct-usage strategy toegy to
influence the firm. influence the firm. Source: Adapted from
Frooman (1999, p.200)Another source of power is one thatnor the
stakeholder are dependent oncomes from relationships with others
each other; (2) high interdependence who supply resources to a
focal firm.when both the firm and the stakeholderWhile some
stakeholder groups do not are dependent on each other; (3)
stake-have the power to use either withholding holder power when
the firm is depend-or usage strategies, they could form anent on
the stakeholder; and (4) firmalliance with other stakeholder groups
power when the stakeholder is depend-with whom the focal firm has a
depend- ent upon the firm. The last two relation-ence relationship.
Frooman identifiesships show power asymmetry.this concept as types
of influence path-ways which he divides into two: (1) di-Appealing
to these characterisations,rect pathways those in which the
Froomans typology of resource rela-stakeholder directly manipulates
the tionships and influence strategies sug-flow of resources to the
firm; and (2) gests four propositions relating to theindirect
pathways those where a stake- choice of pathway (direct or
indirect)holder works in concordance with a and strategy
(withholding or usage). Theprincipal despite not having formal
rela-choice of pathway-strategy combinationtionships with the focal
firm. Note that is conditional on the power dependenceboth types of
influence pathways could relationship between the firm and theuse
either withholding or usage strate-stakeholders. These propositions
aregies.shown in Figure 1.Finally, Frooman introduces a typology A
number of studies have adoptedof resource relationships based on
the Froomans model. For example,powerdependence relationship
between Frooman and Murrell (2003, 2005) usedthe firm and the
stakeholders. Four typesexperimental approach with the aid ofof
relationships are observed: (1) low hypothetical vignettes to
solicit re-interdependence when neither the firmsponses from actual
environmental lead- 8. E. Elijido-Ten / Issues in Social and
Environmental Accounting 1 (2008) 36-60 43ers regarding events with
negative im-stake on the firm AND the firm manage-pact, e.g.
recycling used car batteries inment/stakeholder interdependence
struc-a developing country that has no envi-ture WILL determine
whether or not theyronmental regulations. Hendry (2005)will demand
environmental disclosure.conducted interviews with 28
represen-tatives of four environmental organisa- Hence, in
extending the application oftions to understand why they choose
Froomans (1999) typology in the fieldparticular types of strategies
to influence of environmental disclosures, Proposi-firms to change.
And Tsai, et al (2005) tions P1 to P4 will apply, if and only
if,used the model to understand the em-there is a perceived demand
for environ-ployees actions of 18 Taiwanese firmsmental disclosure.
Furthermore, al-involved in business downsizing.though Froomans
typology is useful toanalyse possible strategies which stake-Whilst
these studies provide some em- holders may adopt to demand
environ-pirical support to the usefulness of themental disclosures
from the firm, it ismodel, what is clear from prior researchclear
that the withholding strategy as-is that the model has not been
used insumes that the event or issue has a nega-the context of
environmental reporting. tive connotation necessitating
pressureFurthermore, the use of the model has from the
stakeholder/s to withhold orbeen restricted mainly on negativeeven
withdraw a critical resource. Theevents thereby limiting the
possibility oftypology, therefore, is not entirely suit-gaining
insights from stakeholder prefer- able when the focal event has a
positiveences when a pro-active environmental environmental impact.
Hence, for thisevent is involved. It is also evident thatstudy, the
propositions are slightly modi-the use of the model has so far been
re-fied to replace the withholding strategystricted to a few
stakeholders such aswith promoting strategy. The
rationaleenvironmental leaders/groups (Frooman for this is clear -
those stakeholders who& Murrell 2003, 2005; Hendry 2005)can see
the value of environmentallyand employees (Tsai, et al, 2005). What
friendly practices adopted by the firmis lacking is an attempt to
extend theare not likely to even consider withhold-analysis to a
wide variety of stake-ing their support because of
non-holders.disclosure. Instead, they might evenpromote this event
either directly orThis study addresses these gaps in theindirectly.
Therefore, the four proposi-literature. Froomans model is
adaptedtions emanating from the modifiedas a framework to make
sense of the framework are restated as follows:power-dependence
relationships be-tween the stakeholder groups and firm P1: If the
stakeholder/s place high sig-management. In order to apply
thenificance to the proactive environ-propositions in the context
of environ-mental initiative and their relation-mental disclosure
demand, there is anship with the firm is that of LOWimportant
underlying assumption, thatINTERDEPENDENCE, the stake-is:holder/s
will adopt indirect promot- ing strategy to demand environ-The
stakeholders perception of how themental disclosures.environmental
event will affect their P2: If the stakeholder/s place high sig- 9.
44E. Elijido-Ten / Issues in Social and Environmental Accounting 1
(2008) 36-60 nificance to the proactive environ-a useful framework
for an examination, mental initiative and their relation-the
processes involved in selecting these ship with the firm is that of
FIRMstrategies are still not very much under- POWER, the
stakeholder/s will stood. Inductive methodologies like adopt
indirect usage strategy to qualitative interviewing techniques are
demand environmental disclosures.generally favoured for this type
of ex-P3: If the stakeholder/s place high sig-ploratory research
primarily because the nificance to the proactive environ-choices of
strategies are mainly subjec- mental initiative and their
relation-tive. ship with the firm is that of STAKEHOLDER POWER, the
Research Design and Methods stakeholder/s will adopt direct pro-
moting strategy to demand environ- This study is organised into two
phases. mental disclosures.The first part is the pilot phase aimed
atP4: If the stakeholder/s place high sig-exploring how Froomans
model can be nificance to the proactive environ-used in Malaysian
context given that mental initiative and their relation-little is
known about how Malaysian ship with the firm is that of
HIGHbusiness psyche may affect business de- INTERDEPENDENCE, the
stake- cisions. This phase used both secondary holder/s will adopt
direct usage (website perusal and relevant news arti- strategy to
demand environmental cles using Factiva database) and primary
disclosures. data in the form of unstructured/semi-structured
qualitative interviews. Quali-These propositions are consistent
withtative interviews is the preferred term toresource dependence
theory in that thedistinguish this method from the highlylevel of
interdependence between thestructured line of questioning
normallyfirm and stakeholder plays a significantused in survey
research (Rubin & Rubin,role in the choice of strategy used.
For2005). Since the responses provided byexample, when the firm has
a low levelthe participants in this phase are triangu-of dependence
on the stakeholder (as in lated against secondary data gatheredP1
and P2), the firm does not need to befrom media and website
releases, fiveresponsive to the stakeholders demands,interviews are
considered sufficient.leaving the stakeholder no choice but tofind
an ally to indirectly influence theThe insights gathered from this
phasefirm. On the contrary, when the firmprovide the platform for
the identifica-depends heavily on the stakeholder fortion of the
salient stakeholders. Mitchell,survival, the stakeholders will have
no Agle and Woods (1997, p.873) stake-hesitation to express their
demands di- holder salience typology propose thatrectly to the firm
(as in P3 and P4). stakeholder salience will be positivelyrelated
to the cumulative number ofstakeholder attributes power,
legiti-RESEARCH METHODOLOGYmacy, and urgency perceived by man-agers
to be present. Although, it is notThe previous section revealed
that whilethe purpose of this research to directlyresource
dependence theory and stake- test this proposition, the typology is
use-holder influence strategies may provide ful in identifying the
salient stakeholders 10. E. Elijido-Ten / Issues in Social and
Environmental Accounting 1 (2008) 36-60 45to be included in the
main phase of thisviews tends to be around 15 +/- 10.study.Most of
the interviews are conducted inMalaysia in 2005. As all the
targetedIn line with Frooman and Murrell (2003, stakeholder groups
are represented and2005), the main phase adopted an ex-given the
time and geographic con-perimental approach using a
hypotheti-straints, 15 interviews are consideredcal vignette to
solicit the views of thesufficient in the main phase of this
ex-interviewees representing a wide arrayploratory study.of
stakeholders identified from the pilotphase. A structured interview
question- Analysis Techniquesnaire is designed to include both
closedand open-ended questions (see the Ap- Analysis for the
unstructured/semi-pendix). Given that the questionnaire structured
qualitative interviews in theasks for the informants opinions and
pilot phase is done in two stages. In thereactions regarding the
chosen environ- first stage, all the interviews are tran-mental
issue/event, it is considered im-scribed word-for-word. Then in the
sec-portant not to select the participants ran- ond stage, the
transcripts are analysed.domly. A number of authors argue that
Memoing is used to summarise the re-qualitative samples tend to be
purposivesponses and to tie together differentrather than random
(Kuzel, 1992; Milespieces of data into clusters of recognis-&
Huberman 1994). Hence, the partici- able concepts. Memoing is a
data reduc-pants are chosen based on the criteriation analytical
technique that allows thethat, at least, each can represent
theresearcher to write memos to self sum-stakeholder groups
identified in the pilotmarise the responses and to identify
re-phase and most importantly, that theircurring themes (Miles
& Huberman,current/previous positions and experi-1994, p.72).
The primary data are sup-ence would allow them to provide
realis-plemented with secondary data fromtic responses to the
hypothetical ques- news reports/relevant websites.tions asked.
Snowball sampling (Patton,1990) is used since this approach is use-
In the main phase, the responses to theful for locating
information-rich key in- closed and open-ended interview
ques-formants. Initially, the names/contacttions are separately
analysed. Responsesdetails of prospective participants are to the
closed interview questions aretaken from relevant company
websitestabulated. Then, quantitative techniquesand from
recommendations of the inves-such as weighting and ranking are
used.tigators former colleagues. Once con-On the other hand,
responses to thetacts are established, the participants open-ended
interview questions are fullyintroduced other prospective
informants.transcribed and the qualitative tech-niques of
question-by-question matrixAnother fifteen interviews are
conductedand memoing are used. Both the quan-in the main phase.
Kvale (1996, p.101)titative and qualitative analyses arenotes that,
in designing an interview linked using a conceptual matrix or
astudy, it is important to interview as pattern matching technique.
Miles andmany subjects as necessary to find outHuberman (1994, p.
127) explain that awhat you need to know in current in-
conceptually clustered matrix has itsterview studies, the number of
inter- rows and columns arranged to bring to- 11. 46 E. Elijido-Ten
/ Issues in Social and Environmental Accounting 1 (2008)
36-60gether items that belong together. Thispractices is
formulated. The vignetteoutcome can happen in two ways: con-
features a firm in the banking industryceptual the analyst may have
some awhich promotes sustainability and so-priori ideas about items
that derive fromcially responsible initiatives. The focalthe same
theory or relate to the sameevent is the investment on a state of
theoverarching themes; or empirical dur-art technology that enables
recycling,ing early analysis you may find that in- reduction of
waste and energy consump-formants answering different questions
tion. Details of the vignette are shown inare tying them together
or are givingthe appendix.similar responses. These techniques
areuseful in conducting qualitative studies.Another important
aspect of the pilot phase is the identification of the salient
stakeholders. The stakeholder literatureRESULTS AND DISCUSSION
hints that while there could be an infinite number of stakeholders
out there, aIdentification of Relevant Environ-coalition analysis
(Freeman, 1983; 1984)mental Issues and Stakeholders would suggest
that certain stakeholders can be grouped together as they mayThe
qualitative interviews and the pe- have similar demand/stake on the
firm.rusal of relevant media/website reportsUtilising Mitchell, et
als (1997) typol-point to a number of significant environ-ogy
characterised by the attributes ofmental issues that are specific
in the Ma- power, legitimacy and urgency, a list oflaysian setting.
For example, the popularthe stakeholder groups commonly re-media
(New Straits Times via Factiva)ferred to by the respondents in the
pilothighlights a number of environmental phase is collated. The
groups identifiedissues such as:consist of both primary and
secondary or adversarial stakeholders. The primary Toxic wastes and
chemicals used by stakeholders include the long-term
credi-companies destroying the ecologicaltors, customers,
suppliers, employees,balance; relevant government agencies and the
Health risks due to rampant air pollu- shareholders. It is decided
to split thetion arising from toxic wastes and for-shareholder
stakeholder group into two:est fires; major shareholders and minor
sharehold- Push for companies to adopt environ- ers, since it is
conceivable that the twomentally-friendly technology and prac-
groups are able to exert their power ontices. the firm in different
manners. The sec- ondary stakeholder groups identified byGiven that
the purpose in this study is to the respondents include the media
andgain insights on stakeholder reporting the
environmentalists.preferences when pro-active environ-mental
initiative is involved, attention isEstablishing Power-Dependence
Rela-focused on the third environmental is- tionshipsue. Hence, a
hypothetical vignette con-taining an environmental event thatPart I
of the structured interview ques-simulates the popular media
coverage ontionnaire (see the Appendix) starts
byenvironmentally-friendly technology andasking the participants to
provide gen- 12. E. Elijido-Ten / Issues in Social and
Environmental Accounting 1 (2008) 36-60 47eral information like
their current/and pattern matching analyses con-previous position
and the type of stake-ducted. Note that despite the majorholder
they are most likely to be classi- shareholders (MJS) being
perceived tofied based on their past/current experi-be the most
important stakeholder groupence. They are also asked to rank the to
company survival (ranked 1), the rela-stakeholder groups identified
from thetionship established is one of high inter-pilot phase in
the order of their per-dependence. This is because their po-ceived
relevance to the companys sur-tential to threaten firm survival is
neu-vival with 1 being the most important tralised by their high
cooperation poten-and 9 being the least important. The pur- tial.
The major shareholders, by virtue ofpose here is to understand the
respon-their substantial investment, are depend-dents perceived
power-dependence re- ent on the firm for their capital
growth.lationship between the stakeholders and However, the firm is
equally dependentthe management. on them for funding. Despite the
lowerranking (ranked 4) for long-term credi-It appeals to intuition
that the higher the tors (LTC), the same rationale appliesmean
ranking is (i.e. closest to 1), thefor companies highly dependent
onmore probable it is for that stakeholderlong-term debt for
funding.group to exert their power over the firm(i.e. stakeholder
power) given that these In the absence of any urgent event,
ad-groups are most important to companyversary stakeholders like
the mediasurvival. In the same token, the lower(MED) and
environmentalists (ENV)the mean ranking is (i.e. closer to 9), the
virtually have neither power nor legiti-less probability there is
for that stake- mate claim against the firm, i.e. theirholder group
to have influence over the potential to threaten or cooperate
withfirm suggesting firm power. This rank-the firm is generally
low. As confirmeding analysis, however, is not likely to by the low
ranking of MED and ENVgive an indication as to whether there is
(shown in Table 1), the firm does notperceived high/low
interdependence. depend on them for survival, hence theThus, a
follow-up open-ended question relationship is expected to be one of
lowasking the respondents to elaborate oninterdependence.their
reason for ranking is necessary toestablish the perceived potential
of theWhile the customers (CUS) and the rele-stakeholder to
threaten or cooperate with vant government agency (RGA), to athe
firm. An analysis of the stakecertain extent, may depend on the
firmholders threat and cooperation potential for various reasons
such as the supply ofis likely to give an indication on the per-
goods/service (for CUS) and socio-ceived level of interdependence
between economic progress (for RGA), the analy-the firm and the
identified stakeholder sis shows that the firm is dependent
ongroups. these groups more than they are to thefirm, i.e.
stakeholder power. This isTable 1 shows the overall mean
rankingbecause of the stakeholders ability toand qualitative
findings summary. The threaten the firms existence in terms oflast
column shows the established lost business (for CUS) as well as
penal-power-dependence relationship based onties, sanction or even
closure (for RGA).the findings from the conceptual matrix 13. 48 E.
Elijido-Ten / Issues in Social and Environmental Accounting 1
(2008) 36-60 Table 1: Summary of Power-Dependence AnalysisStake-
Overall Qualitative Findings Summary: Power-DependenceholderMean
Analysis of Threath/Corporate Potential Relationship
Estab-GroupRanking Shown in brackets [ ] are interviewee number
lishedLEGEND: LO Low; ME Medium, HI - HighPOTENTIAL FOR THREAT (PT)
HI High Interdependence:MJS 1 POSSESS CONTROL & POWER TO MAKE
DECISIONS [6,8,11,13,16,17,20] -both the potential to
cooper-(2,30)POTENTIAL FOR COOPERATION (PC) HI ate and threaten the
firm areBECAUSE OF CAPITAL INVESMENT [15,20] equally high.POTENTIAL
FOR THREAT (PT) HI Stakeholder PowerCUS 2 WITHOUT CUSTOMERS
SUPPORT, THE COMPANY CANT SURVIVE -highly important for
firm(3,36)[10,14,16,18,19] survival with high threatPOTENTIAL FOR
COOPERATION (PC) LODEPENDENT ON HOW MUCH THE CUSTOMER RELY ON THE
FIRM BUTpotential and low potentialGENERALLY LOW BECAUSE OF
COMPETITION [10,14,19]to cooperate.POTENTIAL FOR THREAT (PT) LO to
HI Firm powerEMP 3 HI Employee skills/services are vital [12,16]
-although quite highly(4,20)ME Employee skills/dedication is needed
[19] ranked; Malaysian employ-LO Employee generally have not
say......[18]POTENTIAL FOR COOPERATION (PC) HIees are more likely
to coop-POTENTIAL (FINANCIAL) SUCCESS IS CRUCIAL TO EMPLOYEES
JOBerate than to threaten firmSECURITY [8,14,18] survival.POTENTIAL
FOR THREAT (PT) LO to HI High InterdependenceLTC 4 NOT ALL
COMPANIES DEPEND ON LTC BUT MANY DEPEND ON BANKS -for companies
relying more(4,67)FOR FUNDING; POSSESS POWER TO RETRACT FUNDING
[11,18] on LTC, both potential toPOTENTIAL FOR COOPERATION (PC) LO
to HICOMPETITIVE INVESMENT & L-TERM RELATIONSHIP
[11,15]cooperate and threaten will be high.POTENTIAL FOR THREAT
(PT) HI Stakehoder PowerRGA 5 DEPENDING ON THE INDUSTRY [8],
POSSESS PUNITIVE & OTHER-despite low to high poten-(4,77)POWER;
COULD STOP COOPERATION IF NECESSARY [13,16,18,20] tial to
cooperate, their sanc-POTENTIAL FOR COOPERATION (PC) LO to
HIPOLICIES CAN PROVIDE CONDUCIVE INVESMENT CLIMATE TO ASSIST tion
and punitive power isTHE COMPANYenough to threaten company
survival.POTENTIAL FOR THREAT (PT) LO Firm PowerSUP 6 BECAUSE OF
BUSINESS OPPORTUNITY & COMPETITION [14,15,18,19]-given the low
ranking and(5,43)POTENTIAL FOR COOPERATION (PC) HI low threath
potential butMUTUAL BUSINESS RELATIONSHIP NECESSITATES SUPPLIER
COOP-ERATION [17,18,20] high cooperation potential.POTENTIAL FOR
THREAT (PT) LO Firm PowerMIS 7 POSSESS NO POWER INDIVIDUALLY;
-given the low ranking and(5,57)CANT MAKE DECISION [8,16,20] low
threath potential butPOTENTIAL FOR COOPERATION (PC) LO to HICAPITAL
INVESMENT CAN BE EASILY LIQUIDATED [8,9] high cooperation
potential.POTENTIAL FOR THREAT (PT) LO to HILow InterdependenceMED
8 MEDIA COULD PLAY A ROLE BUT NOT SO POWERFUL BECAUSE ITS -without
any urgent issue,(6,77)GOVERMENT-CONTROLLED [3] [15] [18] [19] [20]
threat and cooperationPOTENTIAL FOR COOPERATION (PC) LO to
HIDEPENDING ON POLITICAL CONNECTIONS [18] [15] [19]potential are
both low.POTENTIAL FOR THREAT (PT) LO to HI Low InterdependenceENV
9 Could create a lot of trouble for company if there is a need [20]
-without any urgent issue,(7,77)POTENTIAL FOR COOPERATION (PC) LO
to HI threat and cooperationDEPENDING ON WHETHER THE COMPANY ADOPTS
ENVIRONMEN-TALLY FRIENDLY PRACTISE OR NOT [11,15,16,18,19,20]
potential are both low.LEGEND: MJS major shareholder; CUS
customers; EMP employees; LTC long term/major creditors; RGA
relevant goverment agency; SUP supplier; MIS minor shareholder; MED
media; ENV enviromentalist.Finally, the employees (EMP), suppliers
firm to find another supplier. Moreover,(SUP) and minor
shareholders (MIS) arein the Malaysian setting, the employeesfound
to fall under the firm power rela-(EMP) and minor shareholders
(MIS),tionship since they are more likely torarely exercise their
prerogative to ques-depend on the firm for their survival tion
management decisions. Thus, thethan vice versa. Generally in a
highlypower lies mainly with the firm manage-competitive market,
the suppliers needment. Although the above discussionthe firm more
because it is easy for themay appeal to intuition, without a par-
14. E. Elijido-Ten / Issues in Social and Environmental Accounting
1 (2008) 36-6049ticular event that could change the The analysis
shows that 8 out of 15 re-power/interdependence relationships,
thespondents consider the featured event toanalysis is incomplete.
This is where be between Very Significant (2) and Sig-Part II of
the questionnaire is deemednificant (3). On average, however,
theuseful. results suggest that the perceived ur-gency of the event
is relatively low withPerceived Significance of the Event mean
average of 3.33 indicating some-where between Significant to
Moder-In order to understand management/ately Significant.
Furthermore, none ofstakeholder behaviour, the literature the
stakeholders represented consider thehints that there is a need to
feel and seeevent to be Extremely Significant (1),the world from
their perspectives. Free-whilst 4 perceive the event to be Notman
(1984) suggests that role playing isSignificant (5) at all.an
effective way to synthesise and fullyunderstand the objectives and
beliefs ofIt appears that pro-active environmentalparticular
stakeholders. Role playing,initiatives are not given much kudos
ashowever, can only be effective if the indicated in the following
comments:participants have some first-hand knowl-edge of the role
they are playing from here in Malaysia, its quitetheir own
experience. This is why it iscommon that when youre doingconsidered
crucial for this research thatwell, you wont get much
atten-participants are chosen on the basis oftion. If youre doing
prettytheir exposure to Malaysian business badly ... then you get
the atten-environment and on the presumption tion [Interviewee
7]that their current/previous position en- In Malaysia, its very
much profit-ables them to represent the stakeholderoriented It
doesnt work In-groups identified. terviewee 8] I think in our
environment here,Hence, in Part II of the questionnaire,this
[environmental] event is notthe interviewees are asked, after
readingsignificant What they care isthe hypothetical vignette, to
assume the just making profit - the bottom-role of the stakeholder
they are mostline. [Interviewee 9]likely to be associated with
given theirprevious/current professional experi- The above
sentiments are shared by theence. They are then asked how
signifi-majority of the respondents like Inter-cant the featured
event is to them, on aviewees 12, 14, 15, 16, 18 and 19 whoscale of
1 (Extremely Significant) to 5 expressed their belief that because
Ma-(Not Significant), in deciding whether to laysian environmental
awareness is gen-provide continued support to the com- erally low,
the local customers and em-pany. They are also asked to
elaborateployees would less likely find this eventtheir reasons for
providing such signifi- very high in their priority list. The
localcance level. The purpose here is to elicitcustomers and the
employees are thethe respondents perception on how ur-closest
representatives of the Malaysiangent the environmental issue/event
is topublic in this study.them. 15. 50E. Elijido-Ten / Issues in
Social and Environmental Accounting 1 (2008) 36-60Demand for
Environmental Disclo-munication with press conference/sures release
as the most preferred mediumfollowed closely by some form of
inter-The purpose in Part II Questions 2 (Q2) nal communiqu such as
newsletters,and 3 (Q3) is to understand whether emails and memos.
Of the 3 respondentsthere is a demand for environmental dis-who
expect not to receive disclosuresclosures from each stakeholder
represen-from other means, one represents thetatives concerning the
featured event.local customer [Interviewee 19], whileQuestion 2
aims to solicit the partici- the other two include a
representativepants Annual Report environmentalfrom the media
[Interviewee 15] and thedisclosures (AREDs) preference
whileenvironmentalist [Interviewee 17].Question 3 asks if they are
likely to de- When asked to explain why they wouldmand
environmental disclosures in other not expect the firm to provide
disclo-ways of communication. Of the 15 re-sures through other
means, their com-spondents, only twoa minority share- ments
are:holder and a local customer representa-tive [Interviewees 18
and 19] - will not-Im taking the stand that I am notdemand AREDs.
The implication is sucha good corporate citizen whichthat while
pro-active environmentalmeans Im not really interestedevent is not
given the highest priority, with pro-active environmentalthere is a
demand from various stake-initiatives. [19]holders for this event
to be disclosed inIts already good, theres no needthe companys
Annual Report. Whento promote. Its just like having aInterviewees
18 and 19 are asked to ex-good programme, it will sell byplain why
they will not demand AREDs,itself. [15]the necessity for government
regulationHonestly, I really wouldnt botheris raised: whether the
company do it or not [i.e. provide other disclosures],You see the
problem is, there is noI will still support this company.statutory
requirement to provide [17]this type of disclosure I reckon,as long
as the government will notAlthough the response provided by In-make
a legal requirement to doterviewee 19, once again, confirms ear-so,
I dont think many companieslier comments on low environmentalwill
bother to provide voluntaryawareness, the explanations offered
bydisclosure. [18]Interviewees 15 and 17 give an entirelyI think at
the end of the day, onedifferent view, that is, not
demandingdepends on the government todisclosure does not tantamount
to non-drive the environmental issues. Inappreciation of the
companys pro-activethe Malaysian context, a lot de-environmental
efforts. Hence, it is clearpends on the government to take that
direct answers provided to questionsthat leadership role.
[19]pertaining to environmental disclosuredemand are not
sufficient. The answersFurthermore, in response to Q3, all but to
the open-ended questions asking themthree of the respondents prefer
to seeto elaborate on their reasons provide athis event featured in
other ways of com- rich data source for further analysis. 16. E.
Elijido-Ten / Issues in Social and Environmental Accounting 1
(2008) 36-6051 Table 2: Summary of ResponsesINTERVIEW
NUMBERS13181011 168919 20 7 14 1215 617STAKEHOLDERMJS MIS LTC
LTCRGA EMPEMPCUSCUSSUP SUPMED MEDENVENVQ1-Perceived signifi- 5 3 4
22555 2 322 4 24cance of featuredeventQ2-Will demand AREDs?Yes
NoYes YesYes YesYesNo YesYes YesYes YesYesYesQ3-Will demand disclo-
Yes Yes Yes YesYes YesYesNo YesYes YesYes No YesNosure
elsewhere?Q4-Preferred Actionba b bcbaa c bbc c ccLegend
Stakeholder MJS major shareholder; CUS customers; EMP employees;
LTC long term/major creditors; RGA relevant government agency; SUP
supplier; MIS minor shareholder; MED media; ENV
environmentalist.Legend Q1 : (5) Not Significant; (4) Moderately
Significant; (3) Significant; (2) Very Significant; (1) Extremely
SignificantLegend Q4: (a) Ignore the environmental event and
continue supporting the company. (b) Encourage the firm to make
environmental disclosure & continue supporting the firm. (c)
Continue supporting the company and attempt to influence other to
do the same.These comments clearly have further who either feel
strongly about environ-implications in their preferred actionmental
issues and/or see the need for thewhich is discussed next.firm to
publicise its pro-active environ-mental initiatives. Table 2
provides thePreferred Stakeholder Actionsummary of direct answers
to theclosedended questions Q1 to Q4 in PartIn Question 4 (Q4),
participants areII of the structured questionnaire.asked to choose
the most likely actionthey would take if they are aware of theThe
result shows that majority (12 out offeatured environmental event
and the15 respondents) see some value in en-company did not provide
any environ-couraging the firm to make environ-mental disclosure.
Three possible ac-mental disclosures (Options b and c)tions are
provided as follows: with six respondents going further as
topromote and influence others to do the(a) Ignore the
environmental event andsame (Option c). Only three
respondentscontinue supporting the firm. choose to ignore the event
(Option a). Of(b) Encourage the company to make en- these three,
the local customervironmental disclosure and continue a nd e mpl o
ye e r e pr e s e nt a t i ve ssupporting the company. [Interviewee
19 & 9] believe that the(c) Continue supporting the company
environmental event is not significantand attempt to promote this
initiative(consistent with their response to Q1),by influencing
others to do the same. hence they do not see the need to compelthe
management to provide disclosures.Option (a) is likely to be chosen
by thoseIt is, however, interesting to probewho believe that
environmental consid-deeper as to why the minority share-erations
are not significant and/or are not holder representative
[Interviewee 18]likely to affect their stake on the firm. consider
the event significant and yet heOn the other hand, Options (b) and
(c)chose to ignore the event (Option a).are likely to be chosen by
stakeholders 17. 52 E. Elijido-Ten / Issues in Social and
Environmental Accounting 1 (2008) 36-60 Figure 2: Analysis of
Stakeholder/Firm Interdependence & StrategyFURTHER ANALYSIS OF
RE-Recall, however, that these power-SULTSdependence relationships
established earlier is based from the respondentsAs is clear from
the results presented ingeneral perception of how crucial eachthe
previous section, the answers to the stakeholder is to company
survival with-closed questions (Q1 to Q4) do not pro-out particular
consideration of the fea-vide sufficient basis for further
analysis.tured pro-active environmental event.Cognisant of this
limitation, these an-swers are analysed further together with The
experimental approach is particu-the answers to open-ended
questionslarly useful for further analysis as it al-probing deeper
into the reasons for theirlows the injection of a particular
sce-choice.nario in a relatively controlled environ- ment. As is
the case in this study, a pro-The four power-dependence
quadrantsactive environmental initiative is intro-of Low
Interdependence, Firmduced by a fictitious bank, KeluargaPower,
Stakeholder Power and HighBanking Berhad (KBB), and the
respon-Interdependence and the respective in-dents are asked to
comment and explainfluence strategies corresponding totheir views.
In order to gain insights onpropositions P1 to P4 developed
earlierthe preferred strategies chosen by vari-are reproduced in
Figure 2. In addition, ous stakeholder representatives to de-the
stakeholders identified to belong in mand/not demand environmental
disclo-each power-dependence quadrant are sures, the answers to the
openendednow superimposed in each of the four questions provide a
rich data source. Thequadrants. For example, the mediapurpose here
is to explore the possibility(MED) and environmentalists (ENV)that
if there is a demand and the firmfall into the Low Interdependence
Quad-does not provide environmental disclo-rant while the major
shareholders (MJS)sures, then these stakeholders may exer-and
long-term creditors (LTC) are in the cise their power possibly
either directlyHigh Interdependence Quadrant. or indirectly through
usage or promote strategy. The results from this further 18. E.
Elijido-Ten / Issues in Social and Environmental Accounting 1
(2008) 36-60 53analysis are discussed here. sent to the media.
[6]Low Interdependence QuadrantInterviewee 6s desire to promoteKBBs
initiative through discussionsThe low interdependence quadrant in
with other stakeholders including theFigure 2 includes both the
environmen-mobilisation of the media is characteris-talists (ENV)
and the media (MED).tic of an indirect attempt to help pro-Since
neither the firm, KBB, nor themote this event. Furthermore, the
influ-stakeholders, ENV and MED rely on ence of the media to inform
the public aseach other to fulfil their goals, the rela- shown in
the following comments pro-tionship is one of low interdependence.
vides some evidence on its ability to useOne can even argue that
these groups do indirect promoting strategy.not really have a stake
on KBB. How-ever, because of the nature of the fea-This is why I
said before that thetured proactive environmental initiative
environmental awareness is moreand the nature of the role played by
bothor less on the increase because ofthe environmentalists and the
media, it is the activities publicised by theconceivable that both
groups could takemedia. The media plays a verythis opportunity to
use KBB as an exam-important role because they areple to promote
this activity. If boththe one who inform the public ongroups feel
strongly about increasingwhat is happening [15]environmental
awareness, this event cre-ates an indirect stake on the firm. As
This view is shared by other respon-such, the slightly modified
model pre- dents including the two top executivesdicts that both
the media and environ- interviewed in the pilot phase.mentalist
representatives will adopt indi-rect promoting strategy. This is
evi- Firm Power Quadrantdent from the responses toQ4 (shown inTable
2) with both the environmentalistsSince the employees (EMP),
minor[Interviewees 6 & 17] and media repre-shareholders (MIS)
and suppliers (SUP)sentatives [Interviewees 12 & 15]
choos-depend more on KBB to fulfil their goal,ing Option c. The
following directthe relationship is one of firm power.quotes
describe their attempt to influ- Hence, P2 suggests that indirect
usageence others to follow KBBs example:strategy is likely to be
adopted but onlyif the stakeholders place high signifi-Since they
are doing somethingcance to the environmental event as sug-good, it
would be good to let other gested in the main assumption as
indi-stakeholders know so they can set cated earlier. The following
quote ex-a good example. [17]plains why the minor shareholder
repre-An environmentalist will be mostsentative [Interviewee 18]
ignores thecomfortable lending a hand to a environmental event
(Option a) despitereputable company that does not the fact that he
considers the event sig-just talk but takes the necessary
nificant:action Im happy to discuss this I wont even consider
encour-initiative with other stakeholders aging the company to make
envi-and write an article which can beronmental disclosure they
wont 19. 54 E. Elijido-Ten / Issues in Social and Environmental
Accounting 1 (2008) 36-60take notice of me as a minor between KBB
and those of the relevantshareholder anyway. [18] government agency
(RGA) and custom- ers (CUS) is one of stakeholder powerDespite the
different preferred actionssince KBB is dependent upon thesechosen
by the employees [Intervieweesstakeholder groups to continue its
exis-8 & 9], suppliers [Interviewees 7 & 14]tence. In the
modified model, P3 sug-and minor shareholder [Interviewee 18] gests
that, if there is a demand for envi-representatives as shown in
Table 2, it is ronmental disclosure, a direct promot-clear that
none of them choose Option cing strategy is predicted. However,
simi-suggesting that either they do not put lar to the Low
Interdependence Quad-high significance on this event or theyrant,
it is important to highlight the factdo not care whether it is
disclosed or that these strategies will only benot. This is
confirmed in the followingadopted, if and only if, these
stakeholdercomments by the employee representa- groups feel very
strongly about the pro-tives: active environmental initiative,
thereby creating a sense of urgency to promoteIf this is a good
thing, as in thisthis event. Hence, it all boils down to thecase,
it doesnt matter to uspersonal convictions of the
stakeholderwhether they disclose or not. Butrepresentatives. It is
promising to seeif there is any risk on healththat the relevant
government officer andthen we would like to know.[8] one customer
representativeI personally think that if the com-[Interviewees 16
& 20, respectively]pany does something good, they place a high
significance level on thisshould do it willingly. Its not nec-event
(2) and choose Option c (see Tableessary to let other people know
so 2) suggesting that they both find KBBsI dont care whether they
publi- environmental initiative valuable. Incise it or not.
[9]fact, the only respondent in the Stake- holder Power Quadrant
who choose toAs such, it is highly unlikely that anyone ignore this
event (Option a) is the localof them will use the indirect
usagecustomer representative [Interviewee 19]strategy. A close
examination of the who consistently takes the stand of aresponses
to open-ended questions con- bad corporate citizen. It is clear,
how-firms that none of the respondents in theever, that even the
socially responsiblefirm power quadrant intend to make ancustomer
is very much aware that Ma-alliance with other stakeholders. This
islaysian customers generally are not will-hardly surprising
particularly since ear-ing to forego their own interest in thelier
findings from the pilot phase revealname of sustainability:that
economic concerns are likely to su-persede environmental concerns
magni- If this expenditure of $20 millionfied by the fact that
environmental is out of the banks pocket and itsawareness in
Malaysia is still very low,not affecting their interest ratesalbeit
increasing slowly. they will continue supporting thisbank. They
might not want to sac-Stakeholder Power Quadrantrifice their
benefits though. [20]The analysis reveals that the relationship
Despite this, perhaps the best display of 20. E. Elijido-Ten /
Issues in Social and Environmental Accounting 1 (2008) 36-60
55direct promoting strategy is the one management to pay the
newspa-portrayed by the relevant government per, underline the word
pay, torepresentative in this direct quote: publicise this as a
major event with pictures. I can easily do thatBecause this event
is more of asince Im a major shareholder.private sector initiative,
well look[13]at this positively. What we, asrelevant government
agencies, This suggests that because both the firmwill do is to
establish good net- management and the stakeholders areworking so
that we can look after highly interdependent, the major share-them
as one of our partners as aholders and creditors could directly
de-good example for other companiesmand the use of all means of
environ-to follow. [16] mental disclosures since they have
theability to set certain conditions in theirHigh Interdependence
Quadrant relationship with the management. Fur-thermore, since the
featured event pro-Finally, there is high interdependencevides an
opportunity to improve com-between the management of KBB and pany
image, both parties are in a win-those of the major shareholder
(MJS)win situation as confirmed in theseand long-term creditors
(LTC) represen- quotes from long-term creditor represen-tatives
because of mutual dependence to tatives:achieve profitability
goals. Hence, di-rect usage strategy is expected in Ill encourage
the bank to use dif-proposition P4. It is clear from Table 2 ferent
communication media tothat the major shareholder
[Intervieweeadvertise this initiative since its13] and longterm
creditor representa-good for our image. [10]tives [Interviewees 10
& 11] prefer to if weve been dealing with thisencourage KBB to
provide disclosures company for years, we would feel(i.e. their
most preferred Option is b)very comfortable with this rela-mainly
because it is good for companytionship so we would encour-image.
Their ability to attach strings isage them to disclose this since
itsinherent particularly in this commenta win-win situation.
[11]from the major shareholder representa-tive: Hence, further
analyses reveal that thelevel of interdependence between theIll
just invite the CEO one morn-management and the stakeholder
groupsing over coffee and ask him toas well as the perceived
significance ofexplain what is happening. Ill events have some
bearing on the type ofencourage him to make disclo- influence
strategies used by the stake-sures call a press conference,holders
to demand environmental disclo-make posters and brochures; sures.
It is also clear that the stake-sponsor environmental cam-holders
perception of how the eventpaigns these are mainly exploit- will
affect their stake on the firm willing mechanisms to enhance our
determine the demand.public image. Yes, I will ask the 21. 56E.
Elijido-Ten / Issues in Social and Environmental Accounting 1
(2008) 36-60CONCLUDING COMMENTS veals the usefulness of
Froomans(1999) typology to understand how dif-The purpose of this
research is to gain ferent groups of stakeholders go aboutinsights
into the preferred influence seeking what they want from the
man-strategies adopted by various stake-agement. From the results,
it is clear thatholder groups in demanding environ- there is a
demand for environmental dis-mental disclosures. These insights
areclosures to be provided in the annualimportant given that
worldwide surveysreport and other means of communica-show that
stakeholder pressures are one tion, particularly in the case of a
pro-of the main drivers for increased corpo-active environmental
initiative as fea-rate social and environmental respon- tured in
this Malaysian experiment. Thesiveness. underlying assumption that
the stake-holders perception of how the environ-In examining
stakeholder influencemental event will affect their stake
andstrategies and disclosure preferences,the firm/stakeholder
interdependencethis research extends the application ofstructure
has, indeed, determinedstakeholder theory in the environmental
whether the stakeholders demand envi-reporting area particularly
when a pro- ronmental disclosures. The insightsactive environmental
initiative is in-gathered from the stakeholders demandvolved. This
is a first-of-its-kind as priorfor environmental disclosures lead
to thestudies feature mainly negative events. following
conclusion.Likewise, unlike other studies whichfocussed mainly on
one group of stake-From a practical perspective, the mostholders,
this study extends the stake-pivotal conclusion drawn from this
in-holder influence strategy analysis to a vestigation is that
although the model iswide variety of stakeholders such as theuseful
to understand the influence strate-major shareholders, minor
shareholders, gies adopted by each stakeholder groupcustomers,
suppliers, relevant govern-represented, its effectiveness is
temperedment agency, long-term creditors, em- by the level of
significance placed on theployees, media and environmentalists.
environmental event by the stakeholders.Furthermore, it uncovers
relevant in- Given the considerably low level of en-sights into the
environmental reporting vironmental awareness in Malaysia, it
ispreferences in the context of a rapidly clear from the analysis
that proactivedeveloping economy such as Malaysia efforts such as
the one featured in thisfrom an ex ante perspective. Much ofstudy
is not given a very high signifi-previous research conducted mainly
in cance level by the stakeholders closelydeveloped countries
provides evidence identified with the general public such asfrom an
ex post perspective thereby ex- the employees and the local
customercluding the possibility of gaining an representatives. The
implication is suchappreciation of the processes and ration- that
without mobilising public aware-ale behind the decision to either
discloseness, it is not surprising to see few com-or not disclose
environmental informa-panies adopting environmentallytion. friendly
activities. Hence, while the me-dia and the environmentalists are
seen toThe analysis conducted in this research,push the agenda of
increasing publicalthough based on a small sample, re- awareness,
the onus is still on the rele- 22. E. Elijido-Ten / Issues in
Social and Environmental Accounting 1 (2008) 36-60 57vant
government agencies to exercisetypology, in particular, and
stakeholdertheir power. Many of the stakeholders theory, in
general, has much to offer inrepresented in this study rely on the
rele- our understanding of management/vant government agencies to
regulate thestakeholder behaviour and the demandcompanys
environmental activities andfor corporate environmental
disclosures.disclosures. Thus, without sufficientgovernment
regulations mandating envi-ronmental protection and disclosures,
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Issues in Social and Environmental Accounting 1 (2008) 36-60
APPENDIX: STRUCTURED QUESTIONNAIREPART I: GENERAL
INFORMATIONINTERVIEW NUMBER: ________NAME:
________________________________________________________What/is was
your current/previous position?
_________________________________________________________RELEVANCE
OF STAKEHOLDER: Please rank the following stakeholder in the order
of their importance to acompanys survival with 1 (most important)
to 9 or 10 (least important).Stakeholder TypeRANK RANKMajor
shareholders (Owns>5% shareholding Top 20)CustomerMinor
shareholders (Owns