Working in foreign markets encourages Russian companies to be more active in disclosing corporate social responsibility, with an emphasis on developing local communities and supporting staff, but paying little attention to environmental issues. These are the conclusions of a joint research by representatives of the Graduate School of Management of St. Petersburg University (GSOM SPbU), the Higher School of Economics, the Vienna University of Economics and Business and the School of Accounting and Finance of the University of Vaasa.
Researchers have published an article The Hunt for International Legitimacy: Examining the Relationship between Internationalization, State Ownership, Location and CSR Reporting of RussianFirms) in International Business Review. The publication is open for free access until June 19. Its authors are Yulia Aray, Associate Professor of the Department of Strategic and International Management, Academic Director of the Master in Management program at GSOM SPbU, Desislava Dikova, Professor of the Vienna University of Economics and Business, Austria, Tatyana Garanina, Associate Professor of the School of Accounting and Finance at the University of Vaasa, Finland and Anna Veselova, Associate Professor at the Department of Strategic and International Management, Academic Director of the Graduate School of Management, Head of the Research and Training Laboratory for Strategies and Operations of International Business at the Higher School of Economics, National Research University Higher School of Economics).
The article examines the relationship between internationalization and corporate social responsibility (CSR) in Russian companies. The authors suggest that the more companies operate on international markets, the more actively they disclose information about CSR, which is explained by the desire of Russian companies to increase their legitimacy abroad.
Interesting results were obtained in terms of the priorities of companies in terms of CSR. For example, Russian enterprises, mainly operating in the markets of the CIS countries, pay less attention to disclosing environmental aspects than others (for example, the development of local communities, employees, and so on).
This can be attributed to historical and cultural reasons. The development of territories and communities in their "zone of influence" has traditionally been the responsibility of domestic enterprises, especially the city-forming ones. Hence - high disclosure of information in terms of social aspects and internal practices to create comfortable working conditions for employees.
In turn, environmental legislation in the CIS and in Russia in contrast to Western countries, is not so strict and demanding in terms of compliance with eco-standards. The relatively modest disclosure of environmental practices is largely a legacy of Soviet traditions in this area. In addition, it can be assumed that, having a bad reputation in the field of environmental protection, Russian companies try not to highlight such initiatives very strongly, so as not to provoke skeptical reactions from stakeholders.
The role of state ownership as a factor influencing this relationship in companies operating in the markets of the CIS countries and beyond is also analyzed. The positive effect is stronger when enterprises internationalize outside the CIS. Researchers explain this by the fact that companies with state participation disclose even more information about CSR activities outside the CIS countries in order to gain legitimacy in non-CIS markets and neutralize the negative perception of Russian state capital in the eyes of the international community.
Governments around the world play an important role in setting rules and regulations related to CSR reporting, which makes this research of GSOM SPbU representatives relevant to lawmakers. Based on the results, the authors formulated a number of recommendations.
Above all, there is a need to strengthen the policy and regulatory principles related to environmental reporting in Russia, which can play an important role in improving relevant CSR reporting among Russian companies. Moreover, stimulating the disclosure of CSR reporting can help state-owned companies to integrate more effectively in global markets.
The research was conducted on panel data of 223 large Russian companies, collected from their annual reports, databases and official websites of firms in 2012-2017. Data includes financial and non-financial indicators as well as company-level characteristics. The results reveal the contextual specifics of CSR reporting.