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Corporate Social and Environmental Responsibility Reporting Practices from an Emerging Mobile Telecommunications Market Md. Moazzem Hossain, Murdoch Business School, Murdoch University Angela Hecimovic, The University of Sydney Business School Aklema Choudhury Lema, School of Accounting, Curtin University This study examines corporate social responsibility reporting practices in the rapidly growing mobile telecommunications industry in Bangladesh. This industry sector is one of the fastest growing in the world making it an attractive global investment. Using content analysis we reviewed and analysed the annual reports of four major mobile companies between 2008 and 2011. The findings reveal that mobile telecommunications companies in Bangladesh disclose social and environmental responsibility information across a range of categories. We find that these mobile companies provide significant benefits to education and health in Bangladesh and that their focus on community and development disclosures are motivated in part by seeking to maintain legitimacy in an extremely competitive industry.

raditional financial accounting and reporting fails to provide broader social, environmental and economic responsibility related information to stakeholders. With increasing concern about organisations’ impact on society and the environment there is greater expectation that this information will be disclosed. For organisations’ long-term survival, therefore, there are widespread attempts to incorporate this information into traditional financial reporting and a significant body of academic research in both developed and developing countries in this field continues to question the importance of the annual report as the main source of information (see, e.g., Mathews 1997; Parker 2005; Islam and Mathews 2009). The term ‘corporate social responsibility’ (CSR) has been defined as ‘the process of communicating the social and environmental effects of organisations’ economic actions to particular interest groups within society and to society at large. As such, it involves extending the accountability of organisations (particularly corporations) beyond the traditional role of providing a financial account of capital to shareholders. Such an extension is predicated upon the assumption that companies do have wider responsibilities beyond simply making money for their shareholders’ (Gray et al. 1987: 9). Increased CSR initiatives among organisations globally have developed along with a growing number of diverse standards, such as the United Nations (UN) Global Compact and Principles for Responsible Investment, the International Finance Corporation’s (IFC) Performance Standards, the Global Reporting Initiative (GRI) and the ISO26000. As a

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responsible management strategy to communicate with stakeholders, the reporting of CSR is one channel by which an organisation discloses how it addresses social, environmental and economic issues (Rowe et al. 2009). To date, there are no formal or standardised CSR reporting practices due to its voluntary nature. In addition, reporting varies between developed and developing countries because of socio-economic and cultural differences (Adams 2002; Belal and Momin 2009; Hossain and Rowe 2011; Belal et al. 2013). However, organisations disclose voluntary social and environmental information in the annual report or through stand-alone sustainability reports with the view that organisations are part of a broader social system and they are legitimate to fulfil societal expectations (Deegan 2002; Deegan and Islam 2012). It has been argued that the existence and survival of an organisation would be threatened if organisations fail to legitimate their social and environmental responsible behaviour. In addition, the pressure from powerful stakeholders (e.g., multinationals) also motivates companies to disclose voluntary social and environmental responsibility information (Islam and Deegan 2008; Momin and Parker 2013). Bangladesh, the focus of this study, is no different in its desire for internal and external legitimacy (Deegan and Islam 2012; Momin and Parker 2013). The

Correspondence: Angela Hecimovic, The University of Sydney Business School, Sydney, Australia. Tel: + 61 2 9351 8614; email: [email protected]

doi: 10.1111/auar.12076

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continuing investment in this emerging market and the heightened investor concern with poor disclosure of social and environmental information (EIRIS 2012) makes it even more important to expose and explore Bangladesh’s continued CSR disclosure challenges in light of continued pressure from global organisations. Therefore this study uses a content analysis approach to examine Bangladesh’s disclosure practices, how they are evolving over time, what areas are disclosed and the extent of CSR disclosures within the mobile telecommunications context. This somewhat overly utilised (in a developed country context) and descriptive research method capturing CSR disclosures and organising diverse empirical data is still a credible method (in an emerging country context) as we still know very little about CSR practices in emerging countries (Belal et al. 2013; Islam and Jain 2013). It is important to increase our understanding of markets such as Bangladesh given it is estimated that 70% of world growth over the next few years will come from emerging markets, with China and India accounting for 40% of that growth (Ernst & Young 2011) which will have a flow on effect given China’s already heavy investment into Bangladesh’s mobile industry leading with the provision of cheap mobile handsets. Despite research on social and environmental accounting in emerging and less developed economies such as India and Bangladesh (led by Belal & Owen 2007; Belal 2001; Islam & Deegan 2008; Belal and Momin 2009; Belal & Roberts 2010; Belal et al. 2013; Islam and Jain 2013; Kamal and Deegan 2013), these prior studies have tended to focus on the textile industry and labour practices. This study focuses on the mobile telecom sector in Bangladesh, a fast growing sector with significant foreign investment, not surprising given Bangladesh is a country that is densely populated, flat and with no restrictions on repatriation of profit. The Bangladesh mobile phone sector is proving profitable for investors with its quick, high rate of return, according to a study by the National Board of Revenue with an average of 1.5 million new mobile connections every month (World Bank 2013). In addition the mobile telecommunications market has potential to make significant contributions to Bangladesh’s economic and social development in terms of investment, productivity, employment, social cohesion and poverty alleviation. The mobile telecommunications industry is fertile ground for research because its disclosures are becoming more visible and growing in comparison to other sectors. This study is the first to examine the nature, pattern and extent of social and environmental reporting in the mobile telecommunications industry of Bangladesh. For the purpose of this study, we analysed 16 annual reports (based on report availability) of four major mobile companies between 2008 and 2011 representing 97% of the market share. As in many other countries, CSR is 390

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voluntary in Bangladesh and these years were chosen given they were the only years where annual reports were publicly available. The results indicate there is an increasing trend toward CSR disclosures among all categories, however, the mobile telecommunications companies in Bangladesh provide more focus on community and development activities, providing significant benefits to education and health. As expected market size was found to be an important factor for CSR disclosure. The increase in CSR practices amongst the Bangladeshi mobile telecommunications companies may be attributed to attempts to maintain legitimacy or to fulfil societal expectations (Deegan 2002; De Villiers and Van Staden 2006) as ‘failure to act in accordance with community expectations is perceived to have negative implications for the ongoing survival of the organisation’ (Deegan and Islam 2012: 5). Furthermore, the competitive nature of the mobile telecommunications market may also motivate organisations to be involved in CSR activities. Prior CSR Research The term CSR has been interpreted widely in the literature. Post (2003) considers CSR to be a social obligation of organisations to society and the community. Bowen (1953) conceptualised CSR from the broad perspective of business responsibilities, which include social responsiveness, stewardship, social audit, corporate citizenship and basic stakeholder theory (Windsor 2001). Each of these aspects has its own literature, including, for example, social responsiveness (Carroll 1999), corporate citizenship (Sethi 1975), ethical responsibility (Donaldson and Preston 1995), stakeholder theory (Freeman 1984; Donaldson and Preston 1995), corporate sustainability and the triple bottom line (Elkington 1997). Although CSR reporting is not mandatory, it is commonly found in organisations’ annual reports or in stand-alone sustainability reports. Adams and Ambika (2005) argue that organisations disclose social and environmental responsibility information because of some perceived benefits to the organisation (Adams and Ambika 2005), including ‘increased customer loyalty, more supportive communities, the recruitment and retention of more talented employees, improved quality and productivity and the avoidance of potential reputational risks which may arise from environmental incidents’ (Idowu and Towler 2004: 423). CSR reporting combines information related to organisations’ environmental impact, energy consumption, ethical business practices, corporate governance practices, product/service responsibility, human rights and human resource information, community involvement and other relevant information that might affect corporate image (Trotman and Bradley 1981; Guthrie and Parker 1989; Gray et al. 1995). There have been a number of studies investigating corporate social and environmental reporting using both  C

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quantitative and qualitative research methods (see, e.g., Singh and Ahuja 1983; Guthrie and Parker 1990; Patten 1991; Roberts 1992; Gray et al. 1995; Deegan et al. 2002). Trotman and Bradley (1981) investigated the annual reports of 207 companies and identified the relationship between corporate social and environmental disclosure with corporate characteristics, such as corporate size, systematic risk, social constraints and management decision making. They found that both systematic risk and size have a positive relationship with the CSR of Australian companies. Guthrie and Parker (1990) conducted a comparative study using a sample of the 50 largest listed companies in the United States (US), the United Kingdom (UK) and Australia to investigate the level of CSR disclosures. While disclosure was increasing in all three countries, Australian companies were less likely to disclose social and environmental information voluntarily in the annual report. Several studies examine the relationship between CSR disclosure and corporate characteristics (see, e.g., Cowen et al. 1987; Deegan and Gordon 1996; Adams et al. 1998). A number of studies examine the influence of general contextual factors on CSR and find that the extent, volume and pattern of CSR disclosure depends on an organisation’s country of origin, suggesting that the level of CSR disclosure varies between developed and developing countries (Ness and Mirza 1991; Adams and Kuasirikun 2000). The social and economic context also influence CSR disclosure (Tinker and Gray 2003), as do as cultural values (Hofstede 1980; Adams and Kuasirikun 2000). A number of recent studies report a positive relationship between corporate governance elements (such as audit committee, board of directors, non-executive directors on the board, female director proportion, CSE duality, etc.) and corporate social and environmental responsibility reporting (see, e.g., Sharma et al. 2009; Khan et al. 2013; Rao et al. 2012). Public ownership, foreign ownership, board independence and presence of audit committee have a high positive impact on organisations’ CSR reporting practices (Khan et al. 2013). While most studies examining organisations’ social and environmental reporting rely on secondary data, such as content analysis of annual reports, an increasing number of studies explore CSR reporting via semistructured interviews with senior managers and focus on managerial motivation to undertake CSR reporting (Teoh and Thong 1984; O’Dwyer 2002; Rahaman et al. 2004; Qian et al. 2011). There is a focus in these studies on the role of powerful stakeholders such as governments, regulatory authorities, NGOs and external agencies in the adoption of CSR reporting (O’Dwyer 2003; Belal and Owen 2007; Islam and Deegan 2008). Another avenue of CSR research relates to stakeholder perceptions. The prior literature suggests that organisations adopt CSR reporting in response to stakeholder  C

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expectations (Lodhia 2003; Kuasirikun 2005; Belal and Roberts 2010). However, it would not be appropriate to generalise the results of these studies from the developed country context to developing countries because of their economic, social, environmental and political differences.

Theoretical Perspectives A range of theories has been applied to CSR research. Many researchers rely on political economic theory to explain organisations’ CSR. Political economic theory accepts that society, politics and economics are inseparable so that economic issues cannot be considered in isolation from social and environmental issues (Deegan and Blomquist 2006). Legitimacy theory, stakeholder theory and institutional theory are all widely applied in the CSR research field (Williams and Pei 1999; Islam and Deegan 2008). A number of prior studies have used legitimacy theory to explain organisations’ CSR practices in terms of organisational motivation (Gray et al. 1995; Deegan 2002; O’Donovan 2002; Cormier et al. 2004; Deegan and Islam 2012; Islam and Jain 2013) and argue that organisations act legitimately in order to secure their existence and survival in society and therefore disclose social and environmental information in annual reports or through stand-alone sustainability reports. Legitimacy theory is based on the notion of a social contract between an organisation and society. Organisations use different strategies to legitimate their behaviour in order to continue operations within the boundaries of what society recognises as socially acceptable (Newson and Deegan 2002; O’Donovan 2002; Adams and Zutshi 2004). The threat of legitimacy is a major concern for organisations because if society perceives that an organisation has breached its social contract, the organisation’s survival may be threatened by customers, suppliers or other stakeholders through the boycotting of products/services (Deegan 2002; Adams and Zutshi 2004). Organisational legitimacy is a dynamic concept (Lindblom 1994) and a legitimacy gap might arise when an organisation’s activities do not meet stakeholders’ expectations (Sethi 1975). Lindblom (1994) argues that voluntary disclosure of CSR activities may be used by an organisation to communicate with stakeholders in an attempt to close the legitimacy gap. Recent interviews with management of multinational corporation subsidiaries in Bangladesh suggest that pursuing internal legitimacy with their parent company serves as motivation to disclose CSR information; however, they still fear negative publicity (Momin and Parker 2013). Stakeholder theory is used to explain communication made for the purpose of influencing stakeholders, defined as ‘any group or individual who affect or is affected by the achievement of firm’s objectives’ (Freeman 1984: Australian Accounting Review

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49). The importance and value of stakeholder groups may be crucial for an organisation’s success and therefore it is important for organisations to manage stakeholder groups in order to reduce potential conflicts between organisations and stakeholders. Stakeholder theory has been used in social and environmental accounting research to investigate CSR practices (see, e.g., Ullmann 1985; Guthrie and Parker 1989; Gray et al. 1995; Deegan and Unerman 2006). Ullmann (1985) developed a CSR model and argued that stakeholder power, position and a firm’s past and current economic performance influence an organisation’s CSR activities. There are two branches of stakeholder theory, namely ethical and managerial (Deegan and Blomquist 2006). Ethical stakeholder theory argues that organisations will treat all stakeholders equally and the stakeholders have a right to know the information produced by organisations. According to Donaldson and Preston (1995), the ethical aspect of stakeholder theory is used to interpret the function of the organisation, which includes the identification of the social and environmental responsibility of the organisation. Managerial stakeholder theory posits that organisations only manage their powerful stakeholders (Gray et al. 1995; Adams and Zutshi 2004; Islam and Deegan 2008). Stakeholder theory is used in the literature to explain how stakeholders attempt to act to influence organisations’ decision making. Deegan (2002) reported that both legitimacy theory and stakeholder theory take an open systems view of organisations and regard a two-way open dialogue between organisations and their stakeholders as an important communication and management tool. According to Deegan (2002: 295), ‘legitimacy theory discusses the expectations of society in general, but stakeholder theory provides a more refined resolution by referring to different stakeholder groups within society’. Therefore, stakeholder theory, while implied within legitimacy theory, is more explicitly focused upon the issue of stakeholder power and how a stakeholder’s relative power impacts the ability to ‘coerce’ the organisation into complying with the stakeholder’s expectations (Deegan and Blomquist 2006). Another popular theory used in CSR studies is institutional theory. Institutional theory asserts that the organisation is part of a broader social system in which it operates (Deegan 2002; Adams and Zutshi 2004). From an institutional theory perspective, an organisation gains legitimacy by becoming isomorphic with its environment (Meyer and Rowan 1977). According to Scott (1995: 35), there are ‘coercive pressures from powerful stakeholders such as government authorities, as well as mimetic behaviour where organisations take culturally supported norms and practices for granted’. Institutional stability and inertia are often discussed within institutional theory. DiMaggio and Powell (1983) contended that institutionalisation brings about a homogenisation of or392

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ganisations. This process of homogenisation of organisational structures is viewed as arising from the need for organisations to respond to environmental and social expectations to guarantee their survival and increase their possibilities for success in a particular environment (Larrinaga-Gonzalez 2007).

CSR in the Telecommunications Industry Studies of CSR in the telecommunications industry in Malaysia and Pakistan have noted that it is one of the most dynamic industries in the world because of its power to change a country’s economic situation (Hamid and Atan 2004). Increasingly, telecommunications companies are adopting CSR as part of their business and management practices to satisfy stakeholders (Sachs et al. 2006). Chiu and Hsu (2010) investigate mobile user perceptions of CSR using a questionnaire. The results show that CSR has more positive effect on corporate product image. For example, when an organisation aims for a higher standard of social and environmental responsibility, consumers have more confidence in its products and the corporate product image can be increased. Ali et al. (2010) investigated the CSR of the mobile telecommunications industry in Pakistan and found that customers are not aware of mobile telecommunications companies’ CSR activities in Pakistan. They further noted that consumers are more concerned about pricing strategy than CSR. Most mobile telecommunications companies are part of a large corporate structure. The four companies in this study are owned by multinational telecommunications companies. Therefore, they are expected to conform to the parent companies’ CSR strategies. Johnova (2011) explored the CSR of Czech telecommunications providers. The results show that Czech mobile telecommunications providers are active in their CSR practices and publish reports to stakeholders. Johnova (2011) further argued that CSR reports are now integral to telecommunications providers for their long-term success as customers are increasingly concerned about non-financial information. Mahmoud and Hinson (2012) explored the CSR practices of Ghana’s telecommunications sector and reported that CSR has a significant impact on telecommunications companies’ innovation strategies, which then influence business performance. They further stated that market orientation has a direct significant effect on CSR, which tends to mediate the influence of market orientation on business performance. This study is a first in exploring CSR solely in the Bangladesh telecommunications industry; therefore, this literature review has focused on the CSR literature in general. We seek to address this gap by examining the disclosure practices of mobile telecom companies in Bangladesh in order to understand their disclosures and expose a lack of  C

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transparency in reporting. We predominantly utilise legitimacy/stakeholder theory perspectives to explain our findings.

CSR in Bangladesh The prior literature shows that there has been a number of studies on CSR in Bangladesh using content analysis of annual reports (see, e.g., Belal 1997, 2001; Imam 2000; Azim et al. 2009; Khan et al. 2009; Kamal and Deegan 2013) focusing on the textile industry. As far as social and environmental reporting is concerned, most companies in Bangladesh are reluctant to provide any social and environmental information in their reports. However, there has been considerable improvement in the 1990s (Imam 2000). Using 30 companies’ annual reports, Belal (2001) noted that there is an increasing trend of social and environmental disclosure practices among Bangladeshi companies, for instance, environmental disclosure has increased by 90% in the sample companies. There is a growing demand from stakeholders for more non-financial information in annual reports (Khan et al. 2009). More recently, Kamal and Deegan (2013) investigated social and environmental-related governance practices in textile and garment companies in Bangladesh by using content analysis of annual reports. They asserted that legitimacy pressure from powerful stakeholders like international buyers and a need to meet community expectations motivated organisations to disclose voluntary social and environmental information. The motivations for CSR reporting in Bangladesh are explored by Islam and Deegan (2008), who report that organisations, particularly in the textile sector, disclose social and environmental information in the annual report because of pressure from powerful stakeholder groups. Belal and Owen (2007) asserted that social reporting practice has the potential to enhance corporate accountability, and found that social reporting standards are imposed by developed countries without considering the reality of local culture, economic and social issues. Recent field- and interviewbased research into stakeholder perceptions by Momin (2013) suggests NGO executives are sceptical of current CSR disclosures in Bangladesh, which are perceived as having very low credibility. Much of the CSR research has been focused on the high-profile Bangladeshi textile sector and further research into other sectors such as telecoms is needed to understand how CSR is evolving in a global and local society that expects accountability and transparency (Belal et al. 2013; Kamal and Deegan 2013). This emerging mix of research and methods makes steps towards determining the external drivers behind CSR developments (Momin 2013) as CSR continues to be perceived as an important tool to maximise the positive development impact of corporations and commercial activity in the developing world.  C

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Mobile Telecommunications Industry in Bangladesh Bangladesh is a developing country in South East Asia. With a population of 160 million people and a landmass of 147 570 square kilometres (World Bank 2013), it is among the most densely populated countries in the world. The country is listed among the Next Eleven economies and Global Growth Generator countries (Goldman Sachs 2005). According to the World Bank (2013) development update, the GDP growth rate in Bangladesh is 6%. Bangladesh has received a Millennium Development Goals (MDGs) award from the UN for its efforts to reduce poverty, coupled with increases in life expectancy, literacy rates and per capita income. Bangladesh aspires to be a middle-income country by 2021 although 47% of the population is still below the poverty line (World Bank 2013). Like many other developing countries, Bangladesh has witnessed a number of social and environmental issues. Bangladesh has experienced severe natural environmental degradation such as air pollution, ground water contamination, surface water pollution, encroachment of rivers and other water bodies, improper disposal of industrial, medical and household waste, loss of bio-diversity, and natural disasters and land degradation (Islam 2000). Child labour, workplace safety and working conditions, particularly in the textile industry, have attracted global attention (Burke 2013; Islam and Jain 2013). Bangladesh was the first South East Asian country to introduce mobile telephone technology in 1989. In 1996, the mobile telecommunications industry was deregulated. The initial network coverage and number of subscribers was very limited as the cost per minute was exorbitant. The network and infrastructure has developed significantly with network coverage now reaching the whole of Bangladesh. This sector is considered to be one of the fastest growing industries as well as the most promising in its economic and social contribution with BTRC (2013a, b) reporting the following benefits: providing value-added services and creating employment from direct/indirect firms in the telecommunications sector; increased productivity in businesses as a result of mobile phone usage; and increased involvement and engagement of the population with news and current affairs. According to a Bangladesh Bank (2012) report, approximately US$430 million was invested in the Bangladesh mobile telecommunications sector by telecommunications companies in 2008–2009 and the sector contributes 8% of national revenue. Lane et al. (2006) report that the mobile telecommunications sector added value of US$812 million to the Bangladesh economy in 2005 and the government earned US$256 million by imposing taxes, licensing fees and import duties on capital machinery from this sector Australian Accounting Review

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in 2005. They further stated that the mobile telecommunications sector employed directly and indirectly 237 900 people up to 2005. Research Methods In this study we examine the nature, pattern and volume of CSR disclosure in the annual reports of mobile telecommunications companies in Bangladesh for the years 2008–2011. These years were selected for practical reasons as not all companies had annual reports for the 2012/2013 year as only one of the four companies is listed on the stock exchange. As of 31 December 2012, there are six mobile telecommunications companies operating in Bangladesh. For the purposes of our study, we have selected the top four companies based on market capitalisation, which represents 97% of the total market share of the industry. This method of sample selection is established in the prior literature, which also used size in terms of market capitalisation to select organisations, particularly in CSR research (see, e.g., Guthrie and Parker 1990; Hackston and Milne 1996; Rowe et al. 2009; Kamal and Deegan 2013). The four companies selected are Grameen Phone Limited (GP), Robi Axiata Limited (Robi), Banglalink Digital Telecommunications Limited (Banglalink), and Airtel Bangladesh Limited (Airtel). Annual report Most prior CSR studies have relied on corporate annual reports as the single source of data collection to investigate organisations’ CSR reporting practices (Guthrie and Parker 1990; Unerman 2000). This is because the annual report is a standardised corporate document that reflects the actual financial and non-financial information of an organisation (Bebbington et al. 1999) and is the primary source of information for stakeholders. Campbell (2000) asserts that the annual report is the corporate document most widely distributed to the public and is easily accessible to researchers. Previous CSR studies on the telecommunications sector in Pakistan, for example, also used content analysis of annual reports to examine organisations’ CSR reporting practices (Hamid and Atan 2004; Johnova 2011). A potential limitation of our study is that in contrast to recent CSR studies in a developing country context we did not use stand-alone sustainability reports as only one of the four mobile companies produces them and their web-based disclosures are almost non-existent. Content analysis In this study, we have used content analysis of annual reports (Deegan et al. 2002; Hackston and Milne 1996). 394

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Content analysis is a ‘research technique for making replicable and valid inferences from data according to their context’ (Krippendorff 1980: 21). In order to understand the current disclosure practices in the mobile sector in the Bangladesh context for the first time, content analysis enabled us to reduce the raw data to manageable amounts for study (Kamal and Deegan 2013). As reliability and replicability is a challenge for content analysis (Milne and Adler 1999), researchers suggest the use of multi-coders, constructed instruments and a checklist for decision rules (Hackston and Milne, 1996; Gray et al. 1995), which has been followed in the current study. Two of the authors have cross-checked the content analysis of annual reports to minimise potential errors.

Measurement of CSR For the purposes of empirical analysis, we have used two measures: number of sentences and location of disclosure to investigate CSR reporting practices by Bangladeshi mobile telecommunications companies. Previous studies have used word counts (Deegan and Gordon 1996; Islam and Deegan 2008), although some researchers argue that words no not convey any meaning without the sentence to provide the context (Deegan and Rankin 1996; Milne and Adler 1999). Other researchers have used number of sentences (Hackston and Milne 1996; Unerman 2000), or proportion of page, however, this method has been criticised as font size, margin and graphs vary (Tilt 1994; Campbell 2000). Consistent with Hackston and Milne (1996) and Islam and Mathews (2009) we identified number of sentences as more relevant and appropriate for this study.

Themes of CSR We have developed a CSR reporting index based on prior literature (Ernst & Ernst 1978; Guthrie and Parker 1989; Guthrie and Parker 1990; Gray et al. 1995; AlNaimi et al. 2012). CSR information is categorised into five major headings: CSR Strategy and Communication; Market Place and Supply Chain; Workplace and People; Environment; and Community Development. We further reviewed the GRI’s G3 Guideline (Global Reporting Initiative 2006) and UN Global Compact Principles (UNGC 2013) to ensure the content instrument checklist was appropriate and relevant to the current study. It is important that the choice of themes and subthemes is relevant to the country of study and industry (AlNaimi et al. 2012) because of contextual differences. A list of items included in each category can be found in Appendix A.  C

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Number of Disclosures (in sentences)

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800 700 600 500 400 300 200 100 0 2007

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Number of Disclosures

2008

2009

2010

2011

2012

Year

Figure 1 Overall trend of CSR disclosure 1000 900

Number of disclosures

800 700 600

GP

500

Robi

400

Banglalink

300

Airtel

200 100 0 2008

2009

2010

2011

Total

Year

Figure 2 CSR disclosure by mobile companies in Bangladesh

Findings Overall level and trend of CSR reporting An analysis of the sample annual reports over the period (2008–2011) reveals that all four mobile telecommunications organisations in Bangladesh disclose social and environmental information in the annual report as part of their CSR policy, which is not surprising given their multinational affiliations. We found an increasing trend in the disclosures of social and environmental information by the mobile telecommunications companies in Bangladesh (see Figures 1 and 2). This may be because the companies were attempting to improve communication to stakeholders or, perhaps more likely, hoping to gain a competitive advantage in the market, using CSR as a tool to establish corporate image in a competitive and rapidly growing market (O’Dwyer 2002; Islam and Deegan 2008). It could also be argued from a legitimacy perspective that the motivation for increased disclosure of social and environmental information and growth between 2008–2011 coincides with the introduc C

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tion of labour laws in Bangladesh where, for example, company GP has agreed to share 5% of its profits with its employees. This emphasis may have been a legitimacy strategy, a potential avenue to portray themselves as acting in a way consistent with legal labour requirements and therefore, social expectations. The government is also encouraging the private sector to invest more in the telecom sector recognising the sector has a vital role in developing the socio economic structure of the country and in meeting employee and community needs. Whilst this finding may provide the Bangladeshi government with further incentives to provide these companies with better guidelines on reporting CSR practices and make it mandatory for all multinational affiliations, it is likely that these companies will continue to be faced with different legitimacies (Lindblom 1994). Namely, there will be various competing stakeholder groups with conflicting expectations between telecommunications companies and the government, employees and multinational affiliations in terms of which CSR disclosures are required to encourage transparency and accountability. Australian Accounting Review

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The findings indicate a positive relationship between company size and CSR performance (Trotman and Bradley 1981; Cowen et al. 1987; Patten 1991). GP’s total market share in the telecommunications industry in Bangladesh is 42% with more than 42.37 million mobile subscribers and it is the number one company in Bangladesh based on market capitalisation. Banglalink is second in terms of market share (26%) but in terms of social and environmental disclosure Banglalink has the lowest disclosure rate, meeting our expectations that the relative size of the company does affect its CSR disclosures. This is consistent with the view that GP, given its market share and size, undertakes more activities, makes a greater impact on employees and the local community, therefore their annual report has more relevant information. In theory stakeholders have a right to know the information produced by organisations and it follows that pressure from the Bangladeshi community may have the potential to increase CSR activities and arguably these bigger mobile companies have the resources to comply.

Category-wise disclosure Table 1 shows CSR disclosure by category. The overall community involvement of the mobile companies gradually increased over the period of the study. This may be explained by the change in labour laws and by Bangladesh’s recognition that image is very important for attracting foreign investors to the mobile sector (World Bank 2013). While environmental disclosure grew across all mobile companies (20.24% of total disclosure) there was much greater emphasis on communityrelated activities. This suggests a culturally specific context, in which companies in Bangladesh are more concerned with the community than the environment, possibly to address stakeholders’ concerns. Given the presence of widespread corruption, an unstable political situation and negative publicity as evidenced in the textile industry (Kamal and Deegan 2013), it can be argued in this mobile industry context, stakeholders such as employees demand to be provided with information about how they are affected by the firm’s activities and the firm in turn voluntarily discloses to meet real and perceived stakeholder expectations. This is consistent with a ‘legitimacy’ view (Deegan and Islam 2012) that organisations utilise public disclosures as a means of persuading the community that the organisation is either currently conforming or taking steps to comply with community expectations. This emphasis is further evidenced by the increased disclosure in workplace/human rights-related disclosure, which is 19.36% of total disclosures and almost all the companies provide qualitative statements of employee benefits and training programs. 396

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Table 1 CSR disclosure by category Organisations’ CSR categories

CSR disclosures for the years 2008–2011 (in sentences) 2008

2009

2010

2011

27

19

21

37

18

35

21

42

43

32

57

62

23 39

42 73

38 147

49 112

150

201

284

302

14

9

12

21

19

8

14

32

25

17

28

42

17 24

29 31

47 45

55 74

99

94

146

224

8

12

7

18

8

3

5

11

0

2

7

12

3 7

6 12

12 17

27 24

26

35

48

92

5

11

8

14

11

6

12

17

7

4

12

24

7 12

16 8

8 23

12 13

42 317

45 375

63 541

80 698

Grameen Phone (GP) CSR Strategy and Communications Market Place and Supply Chain Work Place/Human Resources and Rights Environment Community and Development Aktel (Robi) CSR Strategy and Communications Market Place and Supply Chain Work Place/Human Resources and Rights Environment Community and Development Banglalink CSR Strategy and Communications Market Place and Supply Chain Work Place/Human Resources and Rights Environment Community and Development Airtel CSR Strategy and Communications Market Place and Supply Chain Work Place/Human Resources and Rights Environment Community and Development Total disclosures

Location of CSR disclosures Two of the four companies (GP and Robi) reported their social and environmental disclosures in a separate section of the annual report named ‘Corporate Responsibility’. There is also a separate link on their websites to a page about ‘Corporate Social Responsibility’. Banglalink and Airtel do not have a separate section in the annual report; rather they have a small paragraph about ‘Corporate Social Responsibility’ under the Director’s Report. Only  C

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Robi has introduced separate sustainability reporting in 2012 but this is not included in the period of the study because of inconsistency in availability of reports for all four companies. The ‘Corporate Responsibility’ sections in the annual reports of GP and Robi have detailed social and environmental responsibility information. The average length of the corporate responsibility sections of GP and Airtel is not less than four pages. These findings are consistent with the findings of prior studies (Imam 2000; Belal 2001; Azim et al. 2009; Khan et al. 2009). Previous research suggests that the location of social and environmental information in the annual report indicates the importance organisations place on CSR (Roberts 1992). Our finding here suggests that these firms will take action to make sure their behaviour is perceived as legitimate by society and highlights that a firm would voluntarily report its activities as a response to a social expectation to substantiate a company’s image. In these times of rapid growth, these mobile companies realise their potential to increase their subscriber base relies on society’s perceptions of their company. However, what is not clear, and may be subject to further research into the telecom sector, is whether the disclosures are symbolic gestures to secure community support or whether they contribute to real change in corporate behaviour. CSR indicators CSR strategy and communication GP, Robi and Banglalink have specific CSR strategies and policies in the annual report as well as on the corporate website, while Airtel does not. The CSR statement clearly defines and describes the company’s mission and objectives about social and environmental responsibility. For example, Airtel (2011: 146) stated:

Marketplace and supply chain The issue of CSR standards for suppliers was only reported by Robi in a separate section named ‘Marketplace’ in the ‘Corporate Social Responsibility’ section of the annual report. All four companies provided information about product/services development, network coverage and quality of talk time. For example, GP stated in the annual report (2010: 10) ‘ . . . Grameen Phone has been able to maintain its leadership position in the industry by both continuing to deliver innovative and relevant products and services to its customers and by providing a quality network with the widest coverage’. Within the CSR literature the term ‘marketplace’ emphasises both sourcing of goods and services and their sale to customers (Jones et al. 2009). The disclosure of the health and safety risks of products is not reported by any companies. This is somewhat expected as Bangladesh’s minimal CSR disclosures are consistent with the notion of ‘traditional CSR’, which is differentiated from ‘strategic CSR’ (Werner 2009) in terms of motivation, implementation, and lack of connection between business strategy and the needs of the community and suppliers. All four companies provide extensive information about customer service because it is considered important to survival in the competitive mobile telecommunications market. This finding is consistent with that of Jones et al. (2009) who found that high standards of customer service, as well as an organisation’s ability to resolve disputes quickly, is vital for an organisation’s success and integrated approach to CSR. This emphasis is consistent with earlier views (Adams 2002) that CSR disclosures are strongly motivated as a means to improve corporate image to customers rather than a response to regulation or public pressure. Workplace/people/human rights

. . . Many things change in our rapidly evolving industry, but Axiata’s commitment to conducting business responsibly remains constant. We are mindful of our responsibility towards our stakeholders, particularly shareholders, customers, communities and employees, and as such our Corporate Responsibility (CR) efforts integrate social, environmental, and economic concerns so as to ensure that we continue to deliver sustainable value for our long term growth and success. CR is integrated into all aspects of our business and we approach CR from the following perspectives: Marketplace, People, Environment and Community.

Two (GP and Airtel) of the four companies have board committees for CSR with contacts identified in the annual report. The analysis of annual reports shows that no company provides any statement about social and environmental targets or mentions any guidelines for reporting, such as the GRI or UN Global Compact.  C

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All four companies argue that they are committed to employee satisfaction by providing a better working environment and good career prospects. However, only GP and Robi provide information about internal health and safety management in their annual report. Airtel and Banglalink do not provide any information. For example, Robi stated (annual report 2010: 136): . . . Our employees are our greatest assets, the major contributors to our success and critical to achieving our sustainability aims. Realising this, we put strong emphasis on our employees and their development. We have in place various initiatives covering career development, performance management and leadership growth to ensure our employees have every opportunity to fulfil their potential. We believe that with the right employees and skills, we will be better positioned to achieve our Australian Accounting Review

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business objectives, attract and retain talent, respond to our customers’ needs and maintain a competitive advantage. Axiata is committed to harnessing diversity in order to promote a global perspective. To reach this goal, we aim to increase diversity in all our processes for career development and talent management. A diverse team, where everyone contributes with their unique abilities, skills and experiences, presents a competitive advantage and stimulates innovation.

GP and Robi provide specific training to employees about CSR issues. Despite being the second largest mobile telecommunications company in Bangladesh, Banglalink’s employee-related disclosure is very poor. The mobile telecommunications companies do not provide any information about diversity, such as ethnicity, gender and age of employees and no information about freedom of association. Information related to working hours and health care facilities for employees is also absent. However, information about apprenticeship schemes/internship programs is reported by GP and Robi. There is no information for any of the four companies about parental leave, child care or policies for disabled workers. The emphasis for all four companies is on employees’ salary and remuneration and qualitative statements about good working environments. Workplace/people was the third most disclosed category of the CSR categories (see Table 1), suggesting that organisations recognise the importance of the work environment and workplace safety (Camelot 2006). Environment Disclosure of environmental issues increased over the four years of the study. GP and Robi provide more environmental disclosure and climate change-related CSR activities, focusing on carbon footprint goals, energy efficiency and renewable energy, tree plantation, community power projects, and solar panel investment. The rapid growth of the mobile telecommunications industry in Bangladesh has meant large-scale consumption of electricity. All four companies have an environmental policy in their annual reports with GP, Robi and Banglalink including detailed descriptions in their annual report about environmental initiatives. For example, GP stated (annual report, 2010: 142): . . . Our climate is changing very fast and affecting the earth with its adverse consequences. As a responsible business, GP launched its “Climate Change Program” back in 2008 to gain environmental sustainability as well as to help people and community. GP has an environmental roadmap which aims to promote low carbon society, and GP’s first priority is to take responsibility for the excess CO2 emissions generated by its own operations. GP has set a target of reducing 40% carbon

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emission from the business as usual situation considering 2008 as the baseline.

Robi distributed solar panels to villages to produce electricity with less environmental impact. Robi stated (annual report, 2011: 87): . . . In remote rural areas of Bangladesh, electricity is rarely available. People in these areas, particularly in the off-grid region, depend on kerosene or wax candles to meet their demands for light to beat darkness. Robi has intervened in this aspect and provided solar panels to 590 of homes in remote villages in Kurigram, Rangpur. This has not only infused a new lease of life amongst the poor villagers but that their carbon footprints have also been decreased significantly besides facilitating them with savings from buying fuels or candles.

A range of environmental initiatives is found in the companies’ annual reports. Tree planting is common and Banglalink reports a cleaning initiative for the world’s largest sea beach (Cox’s Bazar) to prevent environmental pollution. All four mobile companies made significant investments in modernising their network sites to reduce energy consumption. In addition the largest mobile operator (GP) has regular employee training for environmental issues. That disclosure has increased over the period of the study suggests that the companies are becoming more focused on the environmental impacts of their operations in their bid to secure their legitimacy and to meet Bangladeshi community expectations. It could be construed that some form of coercive influence (emanating from government, employees and/or multinationals) is at play here and these increased disclosures illustrate the organisations’ desire to be seen to be embracing ‘real accountability’ for their social and environmental performance (Deegan and Islam 2012: 10). Community development The mobile telecommunications companies in Bangladesh have impressive community involvement. GP’s annual report shows that their community involvement includes cash donations to natural disasteraffected people, low-cost phones for the disadvantaged, support for education and health, and scholarships for students from poor backgrounds. More recently, it has introduced technology-based online education in cyclone and flood centres. Initiatives by the other companies include water treatment plants in disadvantaged villages, treatment for blind people and opportunities for employees to volunteer in the community. For example, Robi stated (annual report 2008: 27) ‘ . . . Robi has come forward with its “Safe Water, Safe Life” campaign and has set up water treatment plants at major communications hubs such as divisional railway  C

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stations, bus stations and launch stations to ensure that travellers have access to pure drinking water’. Most community initiatives were undertaken by GP and Robi, with Banglalink and Airtel involved in a limited range of activities. For example, Banglalink distributed blankets to homeless people and donated money to orphans. However, these are one-off activities rather than long-term community involvement suggesting they are just ad hoc activities in an attempt to maintain external legitimacy. These one-off gestures raise questions as to whether the increase in disclosures represents real change in core values and accountabilities of these telecommunications companies, or ‘whether it simply represents legitimising activities where corporate disclosures simply respond to changing community concerns and legitimacy-threatening events’ (Deegan and Islam 2012: 10). Based on the insights reported in this paper there remains the question of whether the mobile telecommunications companies have really changed their core views about their business responsibilities, their CSR disclosures and whether they are really committed to driving Bangladesh’s social and economic growth. Concluding Remarks This study provides insights into CSR disclosure practices in the mobile telecommunications industry in Bangladesh. This significant sector continues to grow from local and foreign investment and exposing the extent of CSR disclosures allows for future comparison to other sectors. Our descriptive exposure of CSR using content analysis has practical implications by providing global investors, stakeholders, mobile companies, regulators and the Bangladeshi community with information about increased disclosures from 2008–2011 by the top four mobile companies. This is important given that these companies have the potential to contribute to Bangladesh’s social and economic growth. The findings of this study illustrate mobile telecommunications companies in Bangladesh disclose social and environmental responsibility information in their annual reports across a range of CSR categories. However, it could also be argued from a legitimacy perspective that the motivation for increased disclosure of social and environmental information is not only an attempt to improve communication to stakeholders but a conscious use of CSR to gain a competitive advantage in a rapidly growing market. This finding is consistent with prior CSR research in Bangladesh (in other sectors) and other developing countries where organisations disclose social and environmental information in annual reports or through stand-alone sustainability reports to maintain or gain legitimacy (see, e.g., Jaggi and Zhao 1996; Imam 2000; Belal 2001; Deegan and Islam 2012; Kamal and Deegan 2013).  C

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CSR is voluntary in Bangladesh, like many countries in the world, and almost all studies in the developing country context unsurprisingly reveal poor quality of CSR disclosures among companies. In this study mobile companies and their disclosures are mostly narrative/qualitative and located in the Chairman’s or Directors’ Statement with only ‘Airtel’ producing a separate sustainability report in 2012. Despite slow and inconsistent (across mobile companies) uptake of CSR in Bangladesh, as investors increasingly turn to developing countries as important consumer and labour markets, CSR initiatives and disclosures need to be more than just a legitimising exercise. They need to demonstrate a genuine strong commitment to CSR and reported disclosures should involve substantive material change in organisational goals, structures, processes and reporting (Adams and Zutshi 2004) to develop informed consumers, suppliers, and manufacturing networks such as those between Bangladesh and China. The extensive information on customer service in all four companies’ annual reports appears driven by the need for survival in the competitive mobile telecommunications market yet disconnected because of their inadequate disclosure of employee-related disclosures such as internal health, working conditions, safety management and non-existent information on parental leave, child care or policies for disabled workers. This disconnect is a missed opportunity to strategically integrate CSR initiatives into core business operations. It is perhaps culturally related to concerns around transparency and a lack of CSR maturity, processes and reporting frameworks. In this context, the importance and value of stakeholder groups remains crucial for an organisation’s success and these mobile companies need to align their CSR activities with their perceived employee and society stakeholder expectations as they continue to grow and target community development. Future case study research in this sector will determine whether reporting on specific areas of community and environmental activities are just aimed at grabbing attention or genuinely aimed at improving CSR. Future research should also establish which CSR initiatives are successful strategies to improve competitive positioning. A further reason for organisations’ CSR and improvement in disclosure quality could be to satisfy the demands of parent companies. All four mobile telecommunications companies are majority-owned by multinational mobile telecommunications companies. For example, Telenor owns a major share of GP, Telecommunication of Malaysia owns a major share of Robi and Egypt’s Orascom Telecom owns a major share of Banglalink. These multinational companies have introduced strategic CSR policies to their subsidiaries in Bangladesh. The CSR literature argues that the policies of multinational companies may positively affect subsidiaries’ CSR reporting practices (Chapple and Moon Australian Accounting Review

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2005; Momin and Parker 2013). Further research could explore the role of international consumer groups, international social and environmental NGOs and international fund providers in driving CSR development in Bangladesh (Momin 2013). Another important aspect of this study is the finding that mobile telecommunications companies are endeavouring to place greater emphasis on community-related disclosure, particularly education and health, thereby promoting community development. Poverty alleviation activities are common among all companies and donation for natural disasters is regularly disclosed. Whilst environmental responsibility-related information was found to be the second most disclosed category, the information was mostly qualitative and ad hoc between years, reinforcing the need for not necessarily more volume in disclosures in order to maintain legitimacy but rather a need for a better accountability framework for CSR reporting. Workplace safety and security, including occupational health and safety and training, was moderately disclosed. Workplace/people was the third most disclosed category of CSR and perhaps this was also due to pressure from employee stakeholders as it coincided with the introduction of labour laws. These voluntary ad hoc and inconsistent CSR disclosures provide an incentive for the Bangladesh government/regulators to provide better guidance and make CSR reporting mandatory for large companies in emerging countries. This research has several limitations. The sample includes only four mobile telecommunications companies, and the study period is only four years. As mentioned earlier data were collected through content analysis of 16 available annual reports, however, primary data will ensure more in-depth study of CSR disclosures in future research. Momin and Parker’s (2013) research, interviewing multinational corporations’ managers to unveil their motivations for CSR disclosures in Bangladesh, and Belal et al.’s (2013) recent case study, have motivated us as researchers to interview management in the mobile telecommunications industry to obtain a deeper understanding of their influences, key stakeholder expectations and attempts to integrate CSR initiatives into their core business. As investors continue to invest in emerging countries such as Bangladesh, exposing, understanding and improving the quality of CSR disclosures will inevitably assist the competitive mobile telecommunications industry to strive to meet Bangladeshi and global community expectations. References Adams, C. and Ambika, Z. 2005, ‘Corporate Social Responsibility: Why Business Should Act Responsibly and be Accountable’, Journal of Cost Management, 34 (4): 10–17.

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Appendix A CSR Strategy & Communication Board committee for CSR issue CSR strategy/statement e.g., Chairman’s statement/notes Direct named contacts for CSR CSR/sustainability report/AR/web content Separate CSR department/foundation Reporting guidelines, e.g., GRI, AA1000 Setting objectives and targets for environment indicators Setting objectives and targets for social indicators Report assurance – internal/external Stakeholder engagement, dialogue and response Marketplace & Supply Chain – Product/Service Indicator Required CSR standards for suppliers Product development Network and coverage quality Supplier support initiatives/programs/audits Health and safety management systems Highlight main H&S risks/objectives/accidents Customer-focused initiatives e.g., labelling, health, etc. Products/services safety impacts Products/services quality information Workplace/People Health/HIV-AIDS policy H&S training/prevention program Staff training hours/budget Group-wide employee benefits statement/policy Employee satisfaction surveys – annual, completeness Diversity statistics – race, sex, age, other Diversity initiatives Human rights statement/policy Formal complaints/whistleblower scheme Freedom of association Working hour-related information

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Facility for day care/maternity and parental leave Physical/sexual assault policy Providing low-cost health care for employee Information about apprenticeship schemes Policy for handicapped/disabled people Policy for disadvantaged indigenous (Hill tracts) people Loan to employee Employee share ownership Sports and recreation facility Employee pension scheme Environment Environmental management systems Emissions data Energy/water consumption data Waste production data Energy/water initiatives Renewable energy technology initiatives Effluent treatment plant policy and implementation Global climate change-related policy Waste reduction/recycling initiatives Wildlife conservation policy Training to employees for environmental issues Customer-focused environmental initiatives Community Investment and Development Set Community Investment (CI) criteria – e.g., 2% profit per annum, focus area CI-type of resources, e.g., money, in-kind, volunteering CI monitoring systems/impacts Long-term social projects development UNGC/NDGs alignment Participate emergency crisis/natural disaster Social development through scholarship, medical support, etc. National and international event celebration with community Empowering local community Political donation and service Poverty alleviation policy

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