Integrating corporate social responsibility into efforts to realize millennium development goals

Int. J. Knowledge-Based Development, Vol. 4, No. 1, 2013 5

Copyright © 2013 Inderscience Enterprises Ltd.

Integrating corporate social responsibility and intellectual capital report: a small sample research

Stefania Veltri* and Maria Teresa Nardo Department of Business Administration, University of Calabria, 87036, Arcavacata di Rende (CS), Calabria, Italy E-mail: [email protected] E-mail: [email protected] *Corresponding author

Abstract: The article illustrates the empirical experiences of some Italian companies which started to integrate social and intangible issues in their voluntary corporate communication report. The main aims of this paper are two-fold. Firstly, using a small sample of companies disclosing their intangibles in a single document, the article describes some general trends in the direction of integrating corporate communication reports. Secondly, using an integrated approach in examining the effects of the investigated case studies on the Italian context, the article provides evidence of how the experiences of companies following a strong integration between CSR and IC report can contribute to model the development of a territory, that of Italy, which is characterised by a low national intellectual capital value, and it is in this that the main originality of the paper lies. The general findings go in the same direction: integrating intangibles’ disclosure is a single document offers advantages for companies and for the context within which companies operate. The main limit of the research lies in the small sample of companies examined. However, the study can provide an impulse for further research on larger samples.

Keywords: corporate social responsibility; CSR; intellectual capital; IC; voluntary disclosure; Italian context; small sample research.

Reference to this paper should be made as follows: Veltri, S. and Nardo, M.T. (2013) ‘Integrating corporate social responsibility and intellectual capital report: a small sample research’, Int. J. Knowledge-Based Development, Vol. 4, No. 1, pp.5–18.

Biographical notes: Stefania Veltri is actually a researcher in business economics within the Faculty of Economics of University of Calabria. Her main research interests are related to value relevance analysis, strategic and management control, the performances of university systems, the systems of measurement intellectual capital. On these research themes, she has published books, book chapters, journal articles and presented papers to national and international congresses.

Maria Teresa Nardo holds a PhD in Business Administration, focused on public organisations. Her main research interests are related to public administration standards, accounting and management control, local governments, corporate social responsibility, and social report. On these research themes, she has published books, book chapters, journal articles and presented papers to national and international congresses.

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1 Introduction

The durability of a firm can reasonably be related to its capacity for creating value in order to satisfy the interests and expectations (both economic and non-economic) of its stakeholders (i.e., shareholders, capital providers, workers, government, and community). There is general agreement in doctrine on what the main purpose of a company is, identified as a firm’s capacity to create sustainable value. It is important to underline that firm value driver’s change constantly in time. In the present economy, known as the knowledge economy, the main company value drivers are considered to be intangible resources and activities (Lev, 2001; Zambon, 2003; Martín-de-Castro et al., 2011). This awareness makes the issue of their measurement and reporting critical. The newest forms of intangibles report, the so-called intellectual capital (IC) reports, have a limited diffusion in Italy, while considerable information on firm intangibles is already included in the environmental, social and sustainability reports which are issued on a voluntary basis by numerous companies (Maccarrone, 2009).

Given these premises, the study focuses on possible integration between the social report (SR) and the intellectual capital report (ICR). The integration of different forms of disclosure included in the company reports is considered to be the aspect that will dominate the future of corporate reporting, and the goal is not simply to provide as much disclosure and information as possible but also to upgrade greater understanding of the company dynamics both from the management and external reporting points of view (Williams, 2008; Bhimani and Soonawalla, 2005).

Recent European Commission research work on intangibles (HLEG, 2003) provides some future research directions for accounting research on intangibles. One of these concerns the relationship between the IC report and traditional financial reporting and, above all, the relationships among the different voluntary reports issued by companies (e.g., corporate social responsibility – CSR report, corporate governance report, etc.). Consistently with this research, we believe that one possible solution to the issue of managing the possible relationships among the different kinds of voluntary report could be to build an integrated corporate reporting system, with a minimal and shared platform, constituted by main information included in the different voluntary reports complementary to the traditional financial report.

We believe that this research problem, that is not only conceptual, but that it has also a relevant practical and territorial dimension. The conceptual dimension is related to the consideration that many intangibles are not only included in IC reports, but also in several voluntary company reports. Issues such as environmental and social quality and corporate sustainability require intangible issues to be implemented. The practical dimension is related to problems of informational ‘overload’ in terms of production and disclosure of this new kind of information, poorly coordinated with the traditional financial report and not standardised. Lastly, the territorial dimension is related to the impact on the territory of a CSR/IC integrated communicational approach, as companies are key actors in the development of a given territory.

We believe also that it is important to study this research problem, to verify whether theoretical positions are shared by companies in their behaviour. In recent years, a large number of companies have sought to integrate information regarding the social and the environmental as well as on intangibles, issuing external reports that communicate this

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kind of information to stakeholders in a joint fashion, and our research seeks to focus on the communication practices of companies issuing an integrated report on intangibles.

The research questions at the basis of the paper are the following:

RQ1 How do companies disclose CSR and IC issues in an integrated document?

RQ2 Can such an integrated CSR-IC approach influence the territory within which it is implemented?

Through an analysis of several experiences of organisations issuing integrated reports, the article investigates the reporting structure of the integrated reports disclosed by selected companies in terms of relationships among the CSR and IC issues. To address the first RQ we developed a qualitative study focused on several case studies, in other words, a small sample research conducted through a documentary analysis of the reports disclosed on the selected companies’ websites. To address the second RQ, we focused on how an integrated CSR-IC approach can influence the territory within which it is implemented. Companies have been selected from all over the Italian national territory. The choice to select the case studies within the Italian context is justified by the consideration that Italy presents vast experience in social reporting as opposed to intangible reporting. Several companies have tried to overcome the gap in disclosing intangibles without losing their experiences in reporting social and environmental issues and have started to issue integrated reports. This circumstance therefore provides a fertile environment in which to analyse the diffusion of integrated external reports.

The findings of the paper are the following: from the case studies analysis we can conclude that the majority of the companies that disclose an integrated report, include IC issues in the CSR report, while the analysis of the impact of an integrated CSR/IC approach, carried out through analysis of the story of a SME profoundly embedded in its territory, provides evidence of a positive impact of such an integrated approach on the territorial development.

The contribution of the paper to the literature is twofold. From a theoretical point of view, the article belongs to that literature which is addressed to the investigation of the opportunity of integrating the disclosure of intangibles in a single corporate report. From a practical point of view, the article, highlighting the trends in the integration of intangible disclosure by some selected Italian companies, shows that there is a real possibility of doing this in a single report and that a CSR/IC integrated approach also has a positive reflection on the territorial context within which the companies are included. We believe also that the emerging trends illustrated by the case studies investigated could have relevant policy implications. In other words, that what emerged from the case studies could constitute a relevant basis for thinking about standards for reporting, in an integrated manner, the corporate intangibles.

The remainder of this paper is organised as follows. Section 2 briefly discusses the research question and methodology followed, while Section 3 illustrates the theoretical premises at the basis of the integration of CSR and IC reports. Section 4 illustrates some integrated reports issued by Italian companies. Section 5 examines the implications at national level of the investigated case studies using an integrated approach. Section 6 concludes the paper.

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2 Research question and research methodology

On the basis of the literature examined in the previous paragraphs, we posit the following research question:

RQ1 How do companies disclose CSR and IC issues in an integrated document?

RQ2 Can such an integrated CSR-IC approach influence the territory within which it is implemented?

The methodology followed in addressing the two research questions is the case study approach. We choose a case study methodology because it enables the researcher to answer ‘how’ type questions while taking into consideration how a phenomenon is influenced by the context within which it is situated (Yin, 2003; Berry and Otley, 2004; Berry et al., 2009). As regards the configuration assumed by our case study methodology, it can be considered both illustrative, as it describes the use of CSR-IC report practices and exploratory, as it seeks to identify the main recurring features in these reports and generate hypotheses for further investigation (Scapens, 2004). In detail, we used multiple case studies. Multiple case studies have been used to predict similar results (Yin, 2003) and to augment external validity of our research hypothesis (Voss et al., 2002). Our methodology is a small sample research methodology, as the case studies are analysed with the intension of making some generalisation regarding the existing trend of reporting corporate intangibles in an integrated manner. Of course, to consider more than one case study is positive in order to apply an analytic generalisation starting from the findings of the case studies, as several cases support the same research hypothesis (i.e., that companies enjoy a conceptual and practical convenience in integrating corporate intangibles in a single documents). In any event, the study reveals the development of the reporting in 11 organisations and this, if on the one hand it can be seen as a limit because of the small number of case studies included in the research, on the other, it can provide an impulse for further research on a larger sample, starting from the findings of this small sample research.

As for the choice of the case studies organisation, this is justified by the circumstance of their having been among the early adopters of voluntary communication reports and by their willingness to adopt new corporate communication techniques (Moll et al., 2006). In selecting the case studies, we tried to cover all sectors, both private and public, and both manufacturing and non manufacturing. As our sample comprehended some representative cases of Italian firms which report social and intangible issues in the same external communication report, the type of analysis was an analysis of the reports gathered from the firms’ websites (documental analysis).

The reason for selecting our case studies within the Italian national territory is justified for two reasons; the first is cultural, as the cultural attitude towards the disclosure of CSR and IC issues is not the same in the Italian context. Italian firms, in effect, demonstrate valuable expertise in issuing the SR, while they have not achieved the same expertise in disclosing their IC reports. From the CSR point of view, Italy is one of the nations characterised by a wide number of SRs issued by companies, as Italian companies are among the first to have developed CSR reports (Maccarrone, 2009). From the ICR point of view, few companies issue IC reports mainly, apart from cultural reasons, because of problems of information asymmetry (Lev, 2001). This circumstance makes the Italian context stimulating for carrying out research on methods used to

Integrating corporate social responsibility and intellectual capital report 9

integrate IC issues in the CSR reports, as the Italian companies with a lengthy experience in issuing CSR reports are now facing the question of how to include IC issues in their voluntary reports. The second reason is related to the peculiar features of the Italian territory, whose characteristics in terms of SMEs and network organisations represent a unique background in which to test whether an integrated CSR-IC approach affects the territory (D’Orio and Lombardo, 2007). In fact, Italian SMEs are an integral part of the local community and their success is often related to their capability to acquire consensus from local stakeholders such as employees, public authorities, financial organisations, banks, suppliers and citizens (Tencati et al., 2004).

In detail, the companies investigated are the companies that, to the date of 2009, having been disclosing the CSR and IC issues in an integrated manner in a single report and have been publishing the voluntary disclosure report on their web sites. Companies belong to different industries, both private (industry, automotive, and banking) and public (public company, public utilities) and this is important to underline, as it allows us to conclude that the need to integrate was not felt in a single sector, but was perceived as a general need. Our analysis will be not an in-depth content analysis of the web documents. Rather we just investigate the reporting structure of the integrated reports and the relationships among the CSR and IC issues within the integrated report.

In order to investigate whether and how an integrated CSR-IC approach can influence the territory within which it is implemented, we choose to focus only on the case studies applying a strong integration between the CSR and IC report. Among these we choose to focus on SMEs, more likely to consider the territory as a bundle of social relationships, within which to operate, considering also that SMEs represent the peculiar feature of the Italian context. The choice to focus on a few, extreme cases facilitates theory-building because, by being unusual, they can illuminate both the unusual and the typical (Patton, 2002). In other words, in extreme cases, the dynamics being examined tend to be more visible than they might be in other contexts.

3 Integrating the voluntary disclosures on CSR and IC: theoretical premises

Firms report the information on their social and intangible dimension in two different kinds of report, the SR and the ICR, which focus on information beyond the traditional financial reporting framework in an integrative perspective, reporting, on a voluntary basis, information on intangible firm value drivers and addressing stakeholders’ information needs. According to the newest definition of CSR, which we adopt in this article, CSR means the way in which a company’s business models, strategies and practices impact on stakeholders and the environment (Waddock, 2008), while IC can be identified as the system of intangible resources and activities based on knowledge, whose effective management, jointly with the management of capital employed, is at the basis of the creation and maintenance of a firm’s competitive sustainable advantage, responsible for performance variations (Veltri, 2007).

CSR and IC reports differ in their purposes and in their audience. The CSR report has the aim of disclosing the socially and environmentally correct behaviour of the company in carrying out its activities, while the IC report has the aim of highlighting the role of intangibles in corporate value creation dynamics. The CSR report is addressed to the all corporate stakeholders, while the IC report is addressed to shareholders, potential

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investors and financial analysts. Nevertheless, these reports also have some points of contact, that can be summed up in their twofold aim (management and communication), in the items surveyed (as some information included in the IC reports is also included, though with a different focus in the CSR report) and in their focus on corporate sustainability. Moreover, CSR and IC concepts are also related to the stakeholders, as CSR focuses on the way in which company strategy and practices affect stakeholders and developed (Waddock, 2008).

4 Towards an integrated report: the Italian experience

The degree of maturity in issuing SR and ICR is not the same in the Italian context. In effect, Italian firms demonstrate valuable expertise in issuing the SR, while they have not achieved the same expertise in disclosing their IC. From the CSR point of view, Italian companies are among the first to have developed SRs. This circumstance has led to Italy being one of the nations characterised by its having a wide number of SRs issued by companies (Maccarrone, 2009). From the ICR point of view, few companies issue ICRs, mainly because of cultural reasons or because of problems of information asymmetry (Lev, 2001).

Historically, in Italy the premises for social reporting were laid out in the twenties, but only in the nineties was there a boom in reporting social issues, and large, important firms published their SRs (Secchi, 2006; Perrini et al., 2006). While initially the relative investment on CSR was made above all by the large companies, this is now spreading to the SMEs (Longo et al., 2005; Del Baldo, 2012; Perrini and Minoja, 2008). The reasons which have conditioned this attention to CSR in Italy and the development of several political initiatives are both structural (the predominance of SMEs and the role of industrial districts) and historical (the importance of cooperative movement) (D’Orio and Lombardo, 2007; Albareda et al., 2008; Perrini, 2007). Nowadays, the sectors which record the highest diffusion of SRs are the banking sector, since in 2000 the Italian Banking Association (ABI) created a working group for the definition of SR guidelines, and public local authorities, because in 2001 guidelines to draft a SR were issued by the Ministry of ‘Funzione Pubblica’. Recently, social enterprises have been obliged to issue a SR (Law 155/2006). As regards the IC report, there are a few experiences, originated by a pilot study by a consultancy company (Summit), which led to the publication of IC reports by four companies (Banca Agrileasing, Intercos, Brembo and Plastal), from the late 1990s. At present, the only relevant experience of IC reporting is that of the Brembo group, even though it can be said that many companies are starting to prepare an embryonic IC report (Veltri, 2007). Recently, several companies have started to issue a sort of integrated report, in which intangibles are reported in a section of the sustainability reports (Nardo, 2007). In order to show the trend of companies in publishing integrated reports, we illustrate some Italian case studies, using documentary analysis. The choice of the organisations to investigate was made on the basis of a true representation of all the different sectors in the overall territory. The companies investigated in the paragraph are: Sabaf, Box Marche, Brembo, Italia Lavoro, Aimag, Mediolanum Group, Granarolo, Social cooperative Universiis, Chamber of Commerce of Verbano Cusio Ossola, University of Trieste, and the University of Ferrara. The case studies have been selected in order to cover different industries, both private (industry,

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automotive, and banking) and public (public company, public utilities, social services, and higher education). The period covered is a ten year one (1999 to 2009).

Generally speaking, companies can take into account reporting on intangibles by publishing in their sustainability report a section or a paragraph dedicated to the intangible resources (i.e., Cooperative Universiis CSR report 2007) or by including a paragraph that summarises the main results on intangibles in the financial account (i.e., Sabaf Financial Account 2007). Only a few companies opted for a more complex reporting modality, by integrating intangibles and social and environmental issues in one document. Among these, we can cite Brembo and Box Marche. The companies investigated belong to different sectors and have a different degree of maturity in dealing with the IC theme. Brembo, a company operating in the automotive sector, was the first company in Italy to issue, in 1999, an IC statement, and from 2006, it started to issue an environmental, economic and intangibles value report in which the three areas, economic, environmental and intangible, are reported in three different sections. Box Marche, a SME belonging to the packaging industry, published in 2004 its first CSR report. In 2006, Box Marche published a ‘Global Report’ that included the annual report, CSR report and IC report. In Aimag, a public utility company, the disclosure of IC and CSR issues followed a peculiar process. Aimag started in 2004 with two different reports (IC and CSR report), from 2005 to 2006 it published the only CSR report, in 2007 it came back to publish an integrated ‘Sustainability report and IC statement’, that presented two different sections for the CSR and IC issues and in the two-year period following, Aimag did not publish an IC report, just a CSR report. Italia Lavoro, a public company, in 2007 published a SR in which the IC indicators belonging to the three IC dimensions were taken and adapted from the Sustainability Reporting Guidelines GRI 2002 to 2004. Mediolanum Group, a firm belonging to the financial services sector, in 2006 and 2007 published just the CSR reports, but in the twoyear period following included some IC indicators within the CSR report. The University of Ferrara and the social cooperative Universiis followed the same path, issuing, a CSR report in 2006 and in the two-year period following including a section devoted to IC in the CSR report. The University of Trieste, on the other hand, started from 2006 directly issuing a CSR report with a section devoted to IC. Finally, the Chamber of Commerce of Verbano Cusio Ossola, in the three-year period 2004 to 2006 published a CSR report, while in 2007 it started to publish the ‘CSR and IC report’, which integrates these two reports, focusing more on CSR issues. Table 1 summarises the main features of the integrated intangible reports in the Italian context.

The companies have been selected among those which have issued, in the ten year period 1999 to 2009, for two or more years, voluntary disclosure reports on their websites. Among these experiences, we can distinguish companies that started to publish a single document integrating CSR and IC issues (University of Trieste) and companies that, starting from a CSR or an IC report, more frequently from a CSR report, started to issue a report including CSR and IC issues (all the other sampled companies).

According to Del Bello (2006), there exist two possible level of integration:

a a weak integration with common set of indicators between the two kinds of reports

b a strong integration between the two documents which generate a new type of company report.

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Applying this framework to our case studies, we can say that only the Brembo and Box Marche voluntary reports belong to the strong integration category, while the other company reports belong to the weak integration category. Table 1 Integrated intangibles report in the Italian experience

Company Sector Report approach Experience (publication year)

Aimag Public utilities Aimag, from 2006, publishes an integrated ‘Sustainability report and intellectual capital statement’

2004 (CSR report; IC report) 2007 (a single CSR/IC report) 2008 to 2009 (sustainability report)

Box Marche Industry (packing)

Box Marche, from 2007, publishes a Global report, that includes financial account, CSR report and IC report

2004 (CSR report) 2006 to 2009 (integrating CSR, economic and intangibles issues in a single report)

Brembo Automotive Brembo was the first company in Italy to issue in 1999 an IC statement, and from 2006, started to disclose environmental, economic and intangible issues in a single report

1999 (IC report) 2006 to 2009 (integrating environmental, economic and intangible issues in a single report)

Chamber of Commerce of Verbano

Public utilities Starting from 2007 it publishes an integrated CSR/IC report

2004 to 2006 CSR report 2007 to 2009 CSR/IC report

Italia Lavoro

Public Company Italia Lavoro from 2006 published a social report in which the IC indicators belonging to the three IC are taken and adapted from the Sustainability Reporting Guidelines (GRI).

2002 (CSR report) 2006 to 2009 (IC issues integrated in the CSR report)

Mediolanum Group

Financial services sector

In its CSR report integrates CSR indicators with IC indicators

2006 to 2007 (CSR report) 2008 to 2009 (IC issues integrated in the CSR report)

Sabaf Industry/ manufacture

Sabaf from 2005 published a paragraph that summarises the main results on intangibles in the financial account.

2000 (CSR report) 2002 (IC report 2005/2009 (integrating IC in financial accounts)

Social cooperative Universiis

Social services A section of the CSR report is dedicated to IC disclosure

2007 (CSR report) 2008 to 2009 (IC issues integrated in the CSR report)

University of Trieste

Higher education

The IC issues are summarised in an appendix annexed to the CSR report

2000 to 2009 (IC issues integrated in the CSR report)

University of Ferrara

Higher education

A section within the CSR report is devoted to IC issues

2006 (CSR report) 2007 to 2009 (IC issues integrated in the CSR report)

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The analysis of the reports of the investigated companies reveals a common trend of integration of IC and CSR issues in the corporate voluntary disclosure, highlighted by the following aspects:

• The issuing of an integrated document is not related to the reference industry, instead is a common need felt by companies whatever is the belonging sector.

• The methodologies and techniques of integration are different. Some companies report IC indicators in an appendix of the CSR report (University of Trieste); other companies structure the integrated report with chapters devoted, respectively, to CSR and IC issues (University of Trieste, University of Ferrara), others reports devote just a paragraph to the IC issues (social cooperative of Universiis; Italia Lavoro); other companies just highlight the IC indicators in their integrated report (Mediolanum group); other companies integrate the IC report and also the financial account into the same report (Sabaf, Brembo, Box Marche).

• The reasons why it is common to integrate for the different sampled companies consist in avoidance of duplication, lowering communication costs and making communication towards stakeholders more effective.

The evidence suggest that through the CSR report the companies increase their IC transparency level and overcome some inadequacies of traditional financial statements in reporting some typologies of IC information. The transparency of this information has several positive effects on the company (Nielsen and Madsen, 2009). Through disclosure, companies communicate their CSR behaviour and signal the value of investments in intangibles, thus creating new intangibles and reinforcing their stakeholder relationship.

In any event, we should underline that none of the investigated reports integrate the intangible information starting from the corporate information systems, rather, they are integrated from an external communication perspective.

5 The effects on the territory of an integrated IC-CSR approach

Much of the current academic literature on IC theory and CSR theory has focused on the firm level of analysis (Martín-de-Castro et al., 2011; Waddock, 2008), but in recent years some IC and CSR researchers have shifted their focus from company-level to national level (Salonius and Lönnqvist, 2011; Del Baldo, 2009; Huggins and Ketikidis, 2008).

In the IC literature, recent studies have highlighted the relevance of IC as a strategic source of sustainable competitive advantages for territorial systems, such as nations and regions (Bontis, 2004; Schiuma et al., 2008; Stam and Andriessen, 2009). Recent research work (Schiuma and Lerro, 2008) provides evidence of a significant and positive association between IC and regional development.

The definition of territorial IC adopted in the article is wide enough to include social issues. Consistently with Salonius and Lönnqvist (2011), and Käpylä et al. (2011), we identify territorial IC as a bundle of assets which helps a nation to pursue the aims related to economic, social and environmental development. In the Käpylä et al. (2011) framework, IC investments (e.g., R&D investments) develop national IC, articulated into human, structural and relational but also social capital. In turn, territorial IC drives overall performance, in terms of social, economic and environmental development.

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On the other hand, in the CSR literature, social responsibility for the territory (TSR) is a concept whose perspective shifts from the notion of social responsibility of the business to a more collective vision. The aim of TSR is therefore to improve the community’s quality of life and the well-being of the territory (Del Baldo, 2009).

Since, in this article, we unite an integrated vision of IC and CSR at firm-level, we intend to use an integrated IC-SR approach in examining the effects of the investigated case studies in the Italian context. The best practices of socially and IC-oriented companies can contribute to model the development of a territory, the Italian one, characterised by a low national IC value, as evidenced by a recent research study (Stam and Andriessen, 2009). The relevance of the contribution of actors with a higher awareness of intangible and social issues, whose behaviours reflect this vision, is even more important in the particular socio-economic context of Italy, whose IC value is under the average value of IC for the 19 European countries investigated (Stam and Andriessen, 2009). These actors therefore can play a propulsive role, actively promoting the sustainability of collectiveness in the territory in which they operate. Organisations are an integral part of the local community, and their success is often related to their capability to acquire legitimacy and consensus from local stakeholders from the territory (Tencati et al., 2004). The territory thus becomes the place in which sustainable development can be concretely constructed.

The Italian context represents a unique background for testing whether an integrated CSR-IC approach affects the territory (D’Orio and Lombardo, 2007). The Italian industrial system, in fact, is characterised by a large number of SMEs and networks of firms, that are an integral part of the local community and their success is often related to their capability to acquire consensus from local stakeholders such as employees, public authorities, financial organisations, banks, suppliers and citizens (Tencati et al., 2004).

To investigate the impact of an integrated CSR/IC communicational approach on the Italian territory, we selected, among the case studies analysed, the experiences of companies that applied a strong integration between the CSR and IC report. Of these, which were Brembo, a large automotive industry and Box Marche, a small-sized packaging industry, we selected Box Marche, as it is more likely for SMEs to consider the territory as a bundle of social relationships, within which to operate. In small sized enterprises the human capital element is more relevant, due to the wide systems of personal relationship developed by the firm’s owner in the territory and inside the organisation. These factors characterise the Italian context and make it different from competitors (Del Baldo, 2012). Being an extreme case, the history and standing that characterise Box Marche gave us a real opportunity to study the impact of a CSR/IC integrated communicational approach on the territory.

Box Marche is a small (50 employees), family-owned firm, a typical model in the Italian context, behaving competitively in its context and with evolved managerial assets (it is a Spa in which organs of governance and ownership are separated). Box Marche comes from a particular region in Italy, the Marches, in a territory characterised by diffuse entrepreneurship. The Marches is a territory articulated into local systems and districts, in which SMEs have developed without upsetting the pre-existent agricultural and artisan vocations, thus preserving socio-economic structure of relationships embedded in the territory (Del Baldo, 2012). Box Marche exemplifies a strategic and structured approach to CSR aligning business values, shared by leaders of the firm and diffuse throughout the organisation, purpose and strategy with the social and economic needs of stakeholders and devoted to spreading best CSR practices in the local and

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extra-local context in which it operates (in its global report, Box Marche defines itself ‘an agent of civilisation’). In particular, the impact of the communicational strategy of Box Marche in the socio-economic context of the Marchegian Region is mainly due to the social orientation of its managers and of their wide web of relationships in the territory, typical of SMEs (Del Baldo, 2012). The Box Marche 2006 Global Report, in which the organisation discloses CSR and IC issues in an integrated way, won the Balance Oscar 2007, the first prize for the SMEs category and in 2006 it won the Confindustria Award for Excellence, for being a “business champion for the valorisation of the territory:” (Box Marche Global Report, 2007). The linkage with the territory is testified by several initiatives, ranging from corporate giving to diffusion of good practices to participation in events in which Box Marche also promotes its territory (Del Baldo, 2009).

The best practices of this socially-SME highlights how a company following an integrated CSR-IC approach can contribute to modelling territorial development.

6 Concluding considerations

This study sheds light on the issue of the possible integration between social and sustainability report and IC reports.

We started from the following research questions:

RQ1 How do companies disclose CSR and IC issues in an integrated document?

RQ2 Can such an integrated CSR-IC approach influence the territory within which it is implemented?

To address the RQ1, we examined the integrated corporate reports of a small sample of Italian companies that have issued a report that in some way integrated CSR and IC issues during the 1999 to 2009 ten year period. The reports were drawn from the websites of the companies.

The examined experiences show how the selected companies integrate CSR and IC issues and, above all, that an integration of these issues is possible. The evidence suggests that, notwithstanding the fact that through such an integrated CSR report the companies increase their IC transparency level and go over some inadequacies of traditional financial statements to report some typologies of IC information, they do not disclose a real integrated report. The definition of an integrated report, in fact, requires a common strategy on social, environmental and intangible issues, an informative system able to collect and process data related to the three typologies of issues and the implementation of a company integrated performance system, able to measure the results obtained within the three mentioned dimensions. We believe that a ‘true’ integrated report must originate from the information systems and start from shared values that model the corporate sustainability strategies, in terms of CSR and IC.

The Italian context has been chosen mainly for the peculiar features of the territory, whose characteristics in terms of SMEs and network organisations represent a unique background for testing whether an integrated CSR-IC approach affects the territory. To investigate the RQ2, we focused on a typical Italian SME well embedded in its territory. Box Marche offers an excellent example of how an integrated CSR-IC approach could affect the territory, as it is managed as a ‘common good’ for the territory, as it defines itself as an agent of civilisation, on account of its ability to gain reputation and social

16 S. Veltri and M.T. Nardo

consensus, for its capability to develop multiple and strict relationships and its stakeholder engagement level, for its rootedness in the socio-economic context, for its capacity to communicate its sustainability and its IC with innovative tools and to testify to good practices.

The story of Box Marche can also be read as evidence of the possible new and relevant role of SMEs in providing good examples of excellent practices which favour the assumption of CSR policies and also the development of the IC of the firm and the territory. In a wider perspective, in fact, managers should consider not only satisfaction of the informational needs of their major stakeholders, but also of the citizens and of the territory in which they operate. In fact, best practices in reporting can contribute to foster sustainable territorial development, allowing companies to play a propulsive role in this process. Therefore, due to the role of the national IC in developing a nation’s competitiveness, only those territories which are able in developing networks between economic actors (mainly firms) and actors coming from civil society and from local politics, will succeed in enhancing the well-being of their citizens. However, there is a lack of research explaining how to produce and measure IC at national level (Bontis, 2004; Käpylä, 2011) and how policy makers can deal with issues related to the national IC (Salonius and Lönnqvist, 2011), considering that public policies can be seen as a key in encouraging a greater sense of CSR and an increasing awareness of the benefits in reporting IC. It also has to be underlined that researching on national IC is complex, because the IC can be really different from one region to another, and this is the case with Italy (Schiuma et al., 2008). Further studies, therefore, are needed to identify shared frameworks of national IC measurement and to explore the impact of the behaviours of the enterprise playing a propulsive role in their territory on the territory’s competitiveness and the well-being of its citizens.

As regards the main study limitations, we have to underline that our study is based on few case studies in a peculiar context, chosen for the relevance played by the SMEs, considered. Also the case study used to analyse the effect of an integrated CSR/IC communication approach on the territory suffered from the usual limitations associated with case study research, that miss statistical significance. However, despite this, we believe that the studies investigated have analytical generalisability in that their purpose is to generalise a particular set of results to some broader theory (Yin, 2003). Future research directions should widen the sample investigated from an empirical point of view and focus on a theoretical report model able to really integrate social and IC issues, not only from an external (communicational) perspective, but above all from an internal (management) perspective, integrating the information system that provides data related to IC and CSR issues in the corporate information systems. Moreover, no direct link has yet been demonstrated between CSR, IC and organisational economic performance. IC performance and company profitability should thus constitute a future subject of research.

Acknowledgements

The authors are grateful to the anonymous reviewers and to the Editor for their helpful comments on an earlier version of this paper. For academic reasons, the contribution can be assigned as follows: Sections 1, 2 and 5 to Stefania Veltri and Sections 3, 4 and 6 to Maria Teresa Nardo.

Integrating corporate social responsibility and intellectual capital report 17

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