Integrated reporting: exploring supervisory board members’ perspectives on the motives, drivers and benefits

Abstract

Purpose The purpose of this paper is to explore the perceived benefits of integrated reporting (IR) and factors influencing the motives that supervisory board members (SBMs) have for advocating a change towards IR implementation. Design/methodology/approach An exploratory survey study was conducted to investigate the influence of external market conditions, internal organizational conditions and observed benefits on the motivation to advocate IR adoption in companies that have not yet implemented IR. A unique set of survey data from 62 SBMs of Dutch companies was used for analysing the propositions derived from IR literature and based on institutional theory, legitimacy theory and diffusion of innovation theory. Findings The respondents indicated to be supportive of IR adoption. SBMs who had experienced the implementation of IR observed that IR offers benefits. Their motives for advocating a change towards IR in companies that had not implemented IR were influenced most by the observed benefits in IR companies. SBMs only involved in companies that had not adopted IR are motivated to support IR adoption to a similar extent. These findings suggest that directly observed benefits by SBMs need to exceed a considerable minimum level before these SBMs are more motived to advocate IR than their peers who have not witnessed the implementation of IR and that experiences are shared across companies. The motivation of both groups is influenced by external market conditions but not by internal organizational conditions. Practical implications The findings have implications for potential IR adopters and institutions promoting the further diffusion of IR as they emphasize the need for tangible benefits of IR and confirm that sharing good practices and benefits of IR can provide a catalyst for IR adoption. The findings contribute to the understanding of the motivation of SBMs as an important organizational condition for implementing IR as this study provides insights in the factors that drive this motivation of key actors influencing the decision to implement IR. Furthermore, the finding that these factors predominantly comprise tangible results and external market conditions is relevant from an organizational change perspective. Social implications Understanding the mechanisms of IR-adoption decisions provides a relevant basis for deploying programmes promoting IR as a general reporting standard. This could provide society and a broad range of stakeholders with access to information incorporated in integrated reports. It could ultimately have a major impact on society by improving decision-making and increasing the long-term sustainability of organizations and their relations with stakeholders. Originality/value This study provides preliminary empirical evidence concerning the perspectives of SBMs on their motives for advocating IR, based on a unique sample from a country that has been involved with IR from its start.

Towards the Voluntary Adoption of Integrated Reporting: Drivers, Barriers, and Practices

“…Theoretical Approach Integrated reporting can be viewed as an innovation in a company's reporting model with superior qualities compared to traditional reporting. For this reason, in line with previous studies (de Graaff and Steens 2023;Gunarathne and Senaratne 2017;Oktorina et al 2022;Samy 2015, 2020), we believe that the Diffusion of Innovation Theory provides an appropriate theoretical lens to investigate the drivers and barriers of voluntary adoption of integrated reporting, as well as the practices up to the production of an integrated report. Other theories are used to explain the reasons why companies do or do not choose to voluntarily engage in integrated reporting, such as Agency Theory, Voluntary Disclosure Theory, Signaling Theory, Stakeholder Theory, Legitimacy Theory, Institutional Theory, Proprietary Cost Theory, and Behavioral Decision Theory (e.g., Adhariani and de Villiers 2019;Fuhrmann 2019;Oktorina et al 2022;Velte and Stawinoga 2017;Wahl et al 2020).…”

“…Following the publication of the <IR> framework, two strands of empirical research have explored the drivers and barriers to voluntary adoption of integrated reporting: studies on the company and country level determinants of voluntary adoption of integrated reporting (e.g., Bananuka et al 2019;Fernandes and Barbosa 2022;García-Sánchez et al 2021;Girella et al 2019Girella et al , 2022Kılıç et al 2021;Nishitani et al 2021;Oktorina et al 2022); and studies on preparers' perceptions of the benefits and implementation challenges of integrated reporting (e.g., Adhariani and de Villiers 2019;Arora et al 2021Arora et al , 2022Bananuka et al 2019;Chaidali and Jones 2017;de Graaff and Steens 2023;Fuhrmann 2019;Robertson and Samy 2020;Vitolla and Raimo 2018).…”

Guest editorial: Integrated reporting and change: what are the impacts after more than a decade of integrated reporting?

“…However, since the advent of integrated reporting, much of the research has been uncritical and often supportive of the IIRC and its rhetoric (Dumay et al , 2016). Hence, this special issue helps to break that trend with two papers examining performative integrated reporting (de Graaff and Steens, 2023; Stacchezzini et al , 2023) and two papers using a critical management framework (de Villiers and Dimes, 2023; Pigatto et al , 2023). While we have answered the call for more critical research, what next?…”

“…The first paper in the special issue is by de Graaff and Steens (2023), who surveyed board members to investigate the perceived benefits of integrated reporting and their motives for implementing it. We find this paper relevant because all corporations are already producing annual and related reports, so there needs to be a good reason to take on another reporting framework.…”

“…We find this paper relevant because all corporations are already producing annual and related reports, so there needs to be a good reason to take on another reporting framework. As they outline, there is a “need for tangible benefits” for companies to take up integrated reporting (de Graaff and Steens, 2023, p. 1). The need for tangible benefits appears to have been holding back the diffusion of integrated reporting because the IIRC has been critiqued for trying to espouse its benefits through emotionally laden rhetoric ( pathos ) and not backing that up with sound evidence of those benefits (logos) (La Torre et al , 2020).…”