ORGANISATIONAL LEGITIMACY AND SOCIAL AND ENVIRONMENTAL

REPORTING RESEARCH: THE POTENTIAL OF DISCOURSE ANALYSIS

Dr Helen Tregidga
Faculty of Business and Law
Auckland University of Technology
Private Bag 92006
Auckland 1142
NEW ZEALAND
Tel: (64) 9 921 9999
Fax: (64) 9 921 9990
[email protected]

Professor Markus Milne

Department of Accounting and Information Systems
University of Canterbury
[email protected]

Professor Kate Kearins

Faculty of Business and Law
Auckland University of Technology
[email protected]

Earlier versions of this paper were presented at the 5th Australasian Conference on Social and Environmental
Accounting Research, Wellington, 2006 and the 5th Asia-Pacific Interdisciplinary Research in Accounting
(APIRA) Conference, Auckland, 2007. We would like to thank referees and participants from both events for
helpful and constructive comments. In addition, the authors would like to thank Bill Doolin for comments on an
earlier draft of this paper, and Jan Bebbington for discussants’ remarks at APIRA 2007. This work was funded
through the Royal Society of New Zealand’s Marsden Fund, grant number 02-UOO-120 New Zealand Business
and Sustainability: Critically Analysing Discourse and Practice.
 Organisational Legitimacy and Social and Environmental Reporting Research: The
Potential of Discourse Analysis

Abstract

Purpose: The paper aims to highlight the value of discourse and interpretive approaches to
the study of corporate social and environmental reporting – in particular in the consideration
and analysis of organisational legitimacy.
Design/methodology/approach: Following a discussion of legitimacy and the relationship
between legitimacy and social and environmental reporting, a review of extant social and
environmental reporting research within accounting which considers legitimacy is
undertaken. This review identifies research gaps within the current literature. Drawing on
Thompson’s (1990) framework, an agenda for future research based on a discourse and
interpretive approach to considering corporate social and environmental reports and
legitimacy is provided.
Findings: The paper advocates for a consideration of legitimacy which recognises its
complexities and nuances beyond what has been able to be achieved by content analysis and
benchmarking studies. It promotes research on the production of corporate social and
environmental reports, the messages contained in those reports, and on their reception (or
consumption) and appropriation (or interpretation). It centres attention on the utilisation of
discourse and interpretive approaches to further understanding on how reporting and reports
work to produce and maintain (or not) organisational legitimacy.
Research limitations/implications: Extant accounting research on social and environmental
reporting and organisational legitimacy has now fairly extensively researched ‘who’ is
reporting, ‘what’ they report’, ‘how much’ they report, and to a lesser extent ‘why’ they
might report. How reports and reporting information is constructed, communicated and
interpreted and their potential effect remains underdeveloped. We expose gaps in current
research and approaches to considering organisational legitimacy and social and
environmental reporting from which future research may build.
Practical implications: Drawing on Thompson’s (1990) tripartite approach to the study of
mass communication, we provide a range of suggestions for future research which help
address gaps in the current literature on social and environmental reporting and organisational
legitimacy.
Originality/value: The paper defines research gaps in the study of social and environmental
reporting and organisational legitimacy. It suggests a future research agenda which might be
undertaken to enhance understandings of attempts to produce and maintain organisational
legitimacy through reporting which could also be extended to other corporate communication
initiatives.
Keywords: Organisational legitimacy, social and environmental reporting, discourse
Paper type: Methodological

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 Introduction
Hopwood (2009) calls for more research in accounting and the environment. In particular,
Hopwood (2009) notes two areas where further critical and facilitative research is needed:
accounting and the creation of carbon markets; and corporate environmental reporting. We
build on that call for research here in relation to corporate environmental reporting. In
particular, we argue the potential of discourse and interpretive approaches in the study of
social and environmental reporting, specifically with regards to investigating notions of
organisational legitimacy. We suggest that such approaches can both recognise the
complexity of the notion of organisational legitimacy, and provide insights and tools into its
analysis, than what has been able to be achieved through content analysis and benchmark
studies.

In agreement with Hopwood (2009, p. 434 and 437) once again, we explicitly recognise the
links between corporate social and environmental reporting and legitimacy. It has been
widely accepted that corporate social and environmental reporting has the ability to assist
organisations in gaining, maintaining and increasing legitimacy through disclosure – ideally
through notions of transparency and accountability. It has also been argued (see, for
example, Milne and Gray (2007)) that such reporting has had other effects (intentional or
unintentional) such as obfuscating certain realities – making some things visible while hiding
others. We note here, however, that while a large body of accounting research has
investigated organisational legitimacy and corporate social and environmental reporting and
has added insight into the area, this is still an underdeveloped research area. Indeed, within
the corporate social and environmental accounting and reporting literature legitimacy theory
itself, despite being one of the most common perspectives utilised, remains an
underdeveloped theory (Deegan, 2002; Tilling, 2002).

Past research in social and environmental reporting has now fairly extensively covered ‘who’
is reporting, ‘what’ they report, ‘how much’ they report, and to a lesser extent ‘why’ they
may report. The ‘meaning’ of this reporting and the ‘effects’ of such reporting, however,
have been significantly less well studied. How reporting information is both constructed and
communicated and its potential consequences (both intended and unintended), we suggest,
remains under-investigated. Primarily in the form of content analysis, extant research has
gone some way in providing an understanding regarding report content (i.e. what is and what
is not in the reports), but little is known about the messages that these reports entail, and the
manner in which they are crafted and why. Moreover, only a little is known about the
process and context of reporting, and the production and consumption/interpretation of
messages contained in these reports. We suggest such research is needed if organisational
legitimacy is to be seriously addressed. A task we believe is essential as, by remaining un-
investigated, social and environmental reporting researchers run the risk of reaffirming
organisational legitimacy rather than challenging it.

In achieving our aim of highlighting the value and potential of discourse and interpretive
approaches to the study of corporate environmental and social reporting in the consideration
and analysis of organisational legitimacy we structure the paper as follows. First, we discuss
the notion of organisational legitimacy itself. Second, we recognise the relationship between
social and environmental reporting and organisational legitimacy. Third, we research which
considers legitimacy and social and environmental reporting followed by a discussion of the
some recent emerging literature which does so from a discourse or interpretive perspective.
Next we identify gaps in the literature, and drawing on Thompson (1990), recognise the
potential of discourse and interpretive approaches in addressing these gaps. Here we outline

3
areas for future research. We conclude with comments as to how the potential of such
approaches may be realised.

Organisational Legitimacy
Organisational legitimacy, which has its foundations in the works of Weber and Parsons
(Suchman, 1995), is a vast areas of investigation. Suchman (1995), who provides a review of
the early literature, defines legitimacy as:

Legitimacy is a generalized perception or assumption that the actions of an entity are

desirable, proper, or appropriate within some socially constructed system of norms,
values, beliefs, and definitions (Suchman, 1995, p. 574, emphasis in original).

Suchman (1995) notes three aspects of legitimacy. First, legitimacy is generalised – it

“represents an umbrella evaluation that, to some extent, transcends specific adverse acts or
occurrences” (p. 574). It is in this respect that we note that legitimacy is primarily long-term
rather than short-term. While individual events or actions may impact actual or perceived
legitimacy, legitimacy transcends the specific. Second, legitimacy is a perception or
assumption as it “represents a reaction of observers to the organization as they see it” (p.
574). Third, legitimacy is socially constructed as it “reflects a congruence between the
behaviours of the legitimated entity and the shared (or assumedly shared) beliefs of some
social group” (p. 547). Essential to these last two points is the social aspect of legitimacy; it
involves social relations and practices.

Pfeffer (1981, p. 5) states that organisations seek legitimacy in order to ensure commitment
and support for the organisation from its stakeholders, both external and internal. According
to Dowling and Pfeffer (1975, p. 122) organisations “seek to establish congruence between
the social values associated with or implied by their activities and the norms of acceptable
behaviour in the larger social system of which they are a part”. Organisational legitimacy is
seen to exist when the value systems of organisations which seek legitimacy and the social
systems from which they seek legitimacy from are congruent. There is, therefore, a
‘legitimacy gap’ (Sethi, 1978) when actual or perceived behaviour of an organisation is at
odds with social values and norms.

There are two streams of literature on organisational legitimacy – strategic and institutional.
The strategic approach views legitimacy as somewhat controllable. It contends that
“organizations are able to make strategic choices to alter their legitimacy status and to
cultivate the resources through corporate actions, by adapting their activities and changing
perceptions” (Aerts and Cormier, 2009, p. 3). One of the ways to do so is through
communication. It is perhaps for this reason that the strategic approach, most often
associated with Dowling and Pfeffer (1975), Ashforth and Gibbs (1990) and later Lindblom
(1994), is seen most often in the social and environmental reporting research.

The institutional perspective (DiMaggio and Powell, 1991; Meyer and Rowan, 1991), in
contrast, views legitimacy as a “set of constitutive beliefs” (Suchman, 1995, p. 576). Under
this perspective managers’ decision making is downplayed – as too is conflict between
organisations and constituents. The institutional perspective identifies that a “manager’s
decisions often are constrained by the same belief systems that determine audience reactions”
(Suchman, 1995, p. 576). Thus, from an institutional perspective, legitimacy empowers
organisations “primarily by making them seem natural and meaningful; access to resources is
largely a by-product” (Suchman, 1995, p. 576, emphasis in original). From an institutional

4
perspective therefore, focus is not placed solely on organisational communication strategies,
but considers broader contexts and recognises them as fundamental in the constitution of
organisational life.

These different perspectives have an effect on the way in which researchers approach the
study of organisational legitimacy. However, as we discuss below, we see the potential for
discourse and interpretive approaches in furthering the study of organisational legitimacy in
social and environmental reporting research in both perspectives. We believe that such
discursive and interpretive approaches can be used to consider both the strategic and
institutional perspectives of legitimacy. Indeed, we suggest taking a comprehensive approach
to legitimacy and reporting may in fact involve the consideration of both traditions. Before
identifying the potential of such approaches however, we first discuss the links between
legitimacy and social and environmental reporting, and thus why the study of such reports is
relevant in the study of organisational legitimacy; and second, present extant literature in the
social and environmental reporting field which claims to investigate legitimacy.

Organisational Legitimacy and the Social and Environmental Report

We draw the links between organisational legitimacy and social and environmental reporting
by following Suchman’s (1995) definition noted above of legitimacy being generalised, a
perception or assumption, and socially constructed.

First, organisational legitimacy is generalised (rather than based on the specific), and
therefore a long-term, rather than short-term, construct. As Suchman (1995, p. 574) notes,
legitimacy “transcends specific adverse acts or occurrences; thus, legitimacy is resilient to
particular events, yet it is dependent on a history of events”. Legitimacy is also never fixed
but an ongoing process by which the perceived legitimacy of an organisation is continuously
evolving and (re)constituted through social enactment. The processes by which corporations
seek to create, increase or maintain perceived legitimacy are essential elements in exploring
corporate behaviour and corporate communication in relation to society and the environment
(Bansal and Clelland, 2004; Phillipe, 2006). Social and environmental reporting, being a key
way in which organisations communicate with their stakeholders, is therefore a useful site for
investigation.

Second, the concept of legitimacy is directly tied to context and audience – it relies on
constituent (Ashforth and Gibbs, 1990; Perrow, 1970). Legitimacy is, “the outcome of, on
the one hand, the process of legitimation enacted by the focal organization, and on the other,
the actions affecting relevant norms and values taken by other groups and organizations”
(Dowling and Pfeffer, 1975, p. 125). “Legitimacy is a perception or assumption in that it
represents a reaction of observers to the organization as they see it; thus, legitimacy is
possessed objectively, yet created subjectively” (Suchman, 1995, p. 574). Organisations in
modern society are accountable to a number of stakeholder groups who frequently hold
conflicting expectations and views. This accountability to multiple parties is particularly
evident with regards to social and environmental concerns. The process of legitimacy,
therefore, is often seen as involving the ‘management’ of these stakeholder groups or
individuals. Management of conflicting groups and/or individuals can be problematic as, for
example, an attempt to increase/maintain/gain legitimacy with one group can trigger a series
of events that can ultimately decrease it. Ashforth and Gibbs (1990) refer to this as the
double-edge of organisational legitimacy.

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Lastly, organisational legitimacy is socially constructed. It can be seen as a discursive
product, achieved and maintained through social dialogue (Phillips, Lawrence and Hardy,
2004; Boje, Oswick and Ford, 2004; Suchman, 1995), and reliant on corporate
communication (Allen and Caillouet, 1994; Arndt and Bigelow, 2000; Ashforth and Gibbs,
1990; Elsbach and Sutton, 1992; Lindblom, 1994; Pfeffer, 1981; Sethi, 1977; 1978; Westphal
and Zajac, 1998). As Phillips et al. (2004, p. 64, our emphasis) argue, “actions that lead
actors to try to gain, maintain and repair legitimacy are likely to result in the production of
texts that leave traces. In such cases, texts are produced in order to establish, verify or
change the meaning associated with the action.” Phillips et al. go on to argue that individual
texts are more likely to become embedded in and influence discourse, and ultimately become
legitimate and institutionalised (taken for granted), if they are produced by those with
authority, are produced such that they conform to recogniseable and interpretable genres, and
draw on other existing (and familiar) texts.

While these points clearly highlight the links between legitimacy and social and
environmental reporting, it is for also for these reasons that we see the potential for discourse
and interpretive studies to contribute to the field of research. We see value in investigating
the legitimising function of the report, in particular, organisational attempts to maintain
and/or (re)create organisational legitimacy through social and environmental reporting (i.e.
how the corporate report legitimises organisations and systems of organising, for example see
Tregidga, Milne and Kearins (2009) for an analysis of the construction and legitimising
nature of organisational identity in relation to sustainable development). Before we turn to
how such an approach may be taken, however, we review extant research in the field.

Social and Environmental Reporting Research and Legitimacy

Legitimacy theory has been embraced by many social and environmental accounting and
reporting researchers, many of whom claim to ‘test’ legitimacy and find support, or limited
support, for the concepts it entails (Brown and Deegan, 1998; Deegan and Gordon, 1996;
Deegan and Rankin, 1996; Deegan, Rankin and Tobin, 2002; Deegan, Rankin and Voght,
2000; Magness, 2006; Patten, 1992; 1995; Walden and Schwartz, 1997).1   A number of these
studies, we observe, favourably cite Lindblom’s (1994) development of Dowling and Pfeffer
(1975) and Sethi (1975; 1978; 1979), and emphasise the role of corporate social and
environmental reporting/disclosures in (1) correcting public misunderstandings of
organisational performance, (2) altering the publics’ expectations of organisational
performance, (3) communicating improved (social and environmental responsibility)
performance, and (4) distracting the publics attention away from poor organisational
performance. Yet, we also observe that these potential outcomes of corporate reporting are
rarely, if ever, explicitly investigated empirically. Instead, and in the absence of investigating
“publics” and their perceptions of disclosures, the presence of increased volumes or variety of
corporate disclosures are assumed to fulfil some or all of these roles.

Except for a notable few studies (e.g., Buhr, 2002; Milne and Patten, 2002; Mobus, 2005;
O’Donovan, 2002; O’Dwyer, 2002), legitimacy theory within accounting literature has been
concerned largely with the reactive nature of organisational disclosure. In addition, a
significant proportion of this research has focuses on industries that have been affected by a
‘disaster’ or ‘event’, and often one that is covered by the media (Deegan, Rankin and Voght,
2000; Patten, 1992; 2002; see also Allen and Caillouet, 1994; Elsbach and Sutton, 1992;

                                                            
1
See Deegan (2002) for a more comprehensive overview of published social and environmental accounting
research which utilises legitimacy theory.

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Elsbach, 1994). These studies, therefore, tend to focus on the corporate attempt to (re)build
or repair legitimacy, and investigate legitimation as a reactive and short-term phenomenon.
The strategic perspective discussed above, a view that legitimacy is to a certain extent
controllable by organisations, has therefore been the overriding approach in this social and
environmental disclosure research (Aerts and Cormier, 2009). Moreover, as Phillipe (2006)
notes in respect to studies in management, but which seem equally as applicable to
accounting-based work (Milne and Patten, 2002), most studies of organisational legitimacy
focus on the antecedents of corporate communication, and fail to examine the outcomes or
impact of that communication on organisational legitimacy and notions of legitimacy.

We would also argue that this previous empirical research has taken a somewhat limited and
narrow view of legitimacy. Here we seek to highlight the earlier debate which occurred
within the social and environmental accounting literature which questioned the ability of
accounting to provide social and environmental accountability (see, Gray, Owen and
Maunders, 1988; 1991; Parker, 1986; 1991; Puxty, 1986; 1991; Tinker, Lehman and
Niemark, 1991). We suggest that research is needed which explores the concern that social
and environmental accounting within corporations, in particular the corporate report,
legitimises the corporation, and thus promotes continuing social injustice and environmental
damage, rather than reducing it by putting the environment and society at the core.

As mentioned, content analysis is often utilised in studies of corporate social and

environmental reporting associated with legitimacy theory examining amounts of disclosure
in relation to size, industry membership and media pressure. While this approach yields
some valuable information regarding the reporting of social and environmental information,
in particular identifying ‘how much of what’ is being reported and by whom, it fails to add
insight into ‘how’ this information is being communicated and with what effects. Apart from
a few exceptions (e.g. Adams, 2002; Buhr, 2001; 2002; Harte and Owen, 1991; Owen, Swift
and Hunt, 2001), research in the area prominently takes the form of quantitative analysis.
Qualitative techniques, and specifically those focused on language, are well established
within the accounting field (e.g. Cowton and Dopson, 2002; Hoskin and Macve, 1986; 1994;
Loft, 1986). They are also beginning to emerge as a means to study corporations and their
relationship with society and the environment, in particular with respect to reporting and
communication.

Discourse and Interpretive Research on Social and Environmental Reporting

Our call for more research taking a discourse approach to the study of corporate social and
environmental reporting and legitimacy can be seen as both a reflection of, and an addition
to, the growing interest and appeal in discourse analytic studies. Discourse based research
publications studying corporations and their relationship with the environmental and society,
and particularly with respect to reporting, have a short history. Many of the studies do not
look specifically at corporate social and environmental reports (for example, Ice, 1991;
Livesey, 1999; 2001; 2002b; Milne, Kearins and Walton, 2006; Tsoukas, 1999), but some do.
Studies that analyse language use in reports, one of the areas which we identify the need to
build, are Buhr and Reiter (2006), Laine (2005), Livesey (2002b), Livesey and Kearins
(2002), Milne, Tregidga and Walton (2009), and Tregidga and Milne (2006). Spence (2007a
and 2007b), analyses reporting and its effects through interviews with social and
environmental reporting managers, this is another area in which we recognise the need for
further investigation below.

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Buhr and Reiter (2006) explore how one company’s (Noranda) disclosure contributes to and
reflects the broader discourse of environmentalism over time. Buhr and Reiter analyse six
reports (three early reports and three more recent reports) to examine how Noranda constructs
its relationship with nature and society, and also to consider the various environmental
philosophies embedded in the reports. From their analysis of the reports they note an overall
anthropocentric approach throughout and the dominance of the social contract stance.
Furthermore, with respect to the ‘meaning’ of sustainable development, Buhr and Reiter note
that “Noranda’s use of the term sustainable development (as well as other related concepts)
changes from year to year” (p. 23).

Acknowledging that sustainable development means different things to different people in

different contexts, Laine (2005) critically assesses how the concept of sustainable
development is constructed in the report disclosures of Finnish listed companies. Using the
analytical method of interpretive textual analysis, he examines meanings attached to the term
‘sustainable development’ in report disclosures. From this analysis, Laine (2005, p. 409)
concludes that “Finnish listed companies employ the rhetoric of weak sustainability in their
disclosures related to sustainable development, subsequently reinforcing the societal
discourse of ‘business can deliver sustainable development’”.

The studies conducted by Livesey (2002a) and Livesey and Kearins (2002) engage in
discourse analysis of corporate sustainable development reports by leading international
reporters Shell and the Body Shop. In her 2002 study, Livesey analyses Royal Dutch/Shell
Group’s 1998 report and the discursive struggle that occurred as the organisation ‘embraced’
the concept of sustainable development; she reveals the knowledge/power dynamics within
reporting. Overall, Livesey (2002a, p. 314) concludes that “Shell’s ‘embrace’ of the concept
of sustainable development has transforming effects on the company and on the notion of
sustainability itself”. Livesey and Kearins (2002) focus on metaphor use and its implications
in The Body Shop’s 1997 and Shell’s 1998 reports. Livesey and Kearins (2002) use
Foucauldian-inspired discourse analysis to show how these texts both reflect and influence
the socio-political struggle over the meanings and practices of sustainable development.
They find that the metaphors of transparency and care are prominent when describing the
rationale for such reporting and identify that these metaphors both influence, and have the
potential to reconstruct the relationship between business and society.

Two studies investigate language use in New Zealand corporate reports. Tregidga and Milne
(2006), in a longitudinal analysis of one NZBCSD member organisation’s reports (Watercare
Services) investigate the link between text and context. From their analysis, they conclude
that through the rhetoric of management expertise, leadership and the triple bottom line,
Watercare presents itself as ‘doing’ sustainable development. Milne et al. (2009) investigate
the language used in eight New Zealand Business Council for Sustainable Development
(NZBCSD) member reports and in pronouncements made by the NZBCSD itself. They
identify themes utilised in the construction of sustainable development and begin to show
how organisations and the reports which they produce, while engaging in the discourse
around sustainable development, may serve to reinforce the business as usual position. This
study also finds examples of language and theme ‘sharing’ between the corporate reports and
the NZBCSD pronouncements.

Studies by Spence (2007a; 2007b) also take a discourse or interpretive approach to the study
of social and environmental reporting. Spence (2007a) interviews social and environmental
reporting managers to investigate target audiences of social and environmental reports.

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Spence (2007a), drawing on autocommunication theory, surmises that corporate employees
are targeted in order to embellish the corporate ego. In a further study Spence (2007b),
informed by Laclau and Mouffe’s discourse theory, explores the construction or reproduction
of capitalist discourse through the social and environmental reports. Spence (2007b) finds
that “the business case appears to shape and constrain the ideologies that underpin and are
communicated through SER” (p. 855) and characterises social and environmental reporting as
“an organisational practice that discursively alights business interests with extra-business
interests” (p. 856).

The above studies, all in different ways, provide insight into the corporate social and
environmental report and reporting and organisational legitimacy. They focus on the role of
reporting in constructing the corporate response to the social and the environment (most often
through the discourse of sustainable development) and also their effect on creating legitimacy
or influencing understandings of what might be considered legitimate organisations. We see
the further potential in this form of analysis in developing insights into social and
environmental reporting and organisational legitimacy. We turn to a discussion of this now
considering the gaps in the field and how discourse based approaches may work towards
addressing such gaps.

Extant Gaps and the Further Potential of Discourse in the Analysis of Social and
Environmental Reporting and Organisational Legitimacy
In outlining the gaps in the extant corporate social and environmental reporting literature in
relation to organisational legitimacy, and in suggesting a future research agenda, we draw on
the work of Thompson (1990). Thompson’s tripartite approach to the analysis of symbolic
constructions also highlights the value of a discursive approach to the analysis of social and
environmental reports and legitimacy (see Ferguson (2007) for his discussion on how
Thompson’s tripartite approach can help address the shortcomings in extant accounting
studies which analyse various accounting texts). Thompson’s three part approach “was
proposed as a method for studying symbolic constructions represented in media where there
is a division between the production and reception of messages” (Arnold, 1998, p. 674).
Thompson’s (1990) tripartite approach consists of: 1) socio-historical analysis and the
production and transmission of the message; 2) an analysis of the construction of the
message; and 3) a socio-historical analysis of the reception and appropriation of the message.
Noting a division between the production and consumption of corporate social and
environmental reporting messages, similar to that identified by Thompson in relation to
media messages, and considering the relationship between reporting and legitimacy explored
above, we extend Thompson’s (1990) approach to both identify gaps in the extant literature
and identify areas for future research.

Thompson’s (1990) tripartite approach, through the acknowledgement of the distance

between the production and consumption of messages, allows for the recognition of the
complexity of the communication process while indicating domains where consideration is
needed in analysis of symbolic constructions. We suggest that it is difficult to do justice to
the analysis of reports and their effects without the consideration of the complex processes of
report production and consumption and the acknowledgement of the context within which the
producers, reports, and audiences are situated. Discourse and interpretive approaches and
methods, we identify, provides a means and focus for analysis of such links, recognising the
complexities involved. We now identify areas where such research is needed and the kinds if
studies which might be undertaken. We explicitly recognise below the potential to enhance
our understanding of social and environmental reporting and organisational legitimacy

9
through data collection methods such as interviews and observation, alongside the analysis of
reports themselves and other forms of corporate communications.

Analysing the Production and Transmission of the Messages

The first domain identified by Thompson’s (1990) tripartite approach, and isolated by Arnold
(1998) is the socio-historical analysis of the production and transmission of the message. We
note that one gap in the literature on corporate social and environmental reporting and
legitimacy is in relation to the production of corporate social and environmental messages.
We suggest that socio-historical analyses explicitly theorising the production of corporate
messages using a discourse or interpretive method are needed.

Building on Adams (2002), O’Donovan (2002), O’Dwyer (2002), Spence (2007a; 2007b),
further investigation of the production of corporate social and environmental reports would
help to understand not only the factors and motives evident in the production of reports, but
also provide insights into the intended and/or avowedly-intended messages and accounts
contained within them. This understanding, we believe, might be achieved by more explicitly
theorising the production of such information as organisational communication, corporate
rhetoric and public relations, impression management and identity construction (e.g., Albert,
Ashforth and Dutton, 2000; Alvesson, Ashcraft and Thomas, 2008; Beniot, 1995; Brown and
Humphreys, 2006; Cheney, 1983; 1991; 1992; Cheney and Christensen, 2001; Cheney and
Dionisopoulos, 1989; Cheney and Frenette, 1993; Cheney and Vibbert, 1987; Elwood, 1995;
Heath, 1992; 1993; 1994; 2000; 2001; Hooghiemstra, 2000; Stanton, Stanton and Pires, 2004;
Toth, 2000). And closely coupled to these ideas are those of organisational reputation and
reputation management (e.g., Bromley, 1993; 2000; Caruana and Chircop, 2000; Deephouse,
2002; Fombrun and Shanely, 1990; Fombrun and Van Reil, 1997; 2003). Skerlap (2001),
however, argues that a great deal of public relations research is not grounded in a theory of
discourse and, following Cheney and Christensen (2001), that much organisation
communication literature ends at the organisational boundary and is overly organisation-
centric – a view we would argue, based on the review above, applies equally to many
analyses of corporate communication found in the accounting literature. Some care is
needed, then, to follow those (e.g., Cheney, Heath) that emphasise the discursive and
rhetorical aspects of organisational communication and public relations and work at the
“intersection of public relations, organisational communication, speech communication and
rhetoric” (Skerlap, 2001, p. 177).

Several opportunities exist for researchers interested in social and environmental reporting
and organisational legitimacy in relation to the socio-historical production of messages.
Studies analysing report production could consider the institutions promoting or supporting
reporting internationally or in various locales (see Levy, Brown and de Jong (2009) for a
critical analysis of the Global Reporting Initiative (GRI)), investigate the advice or other
messages they have given over time and track leader-follower behaviours through a focus on
intertextuality and/or interviews with those promoters or supporters. Further, interviews
focused on why the message/reports was written, what was ‘meant’ or intended by the
message, and an analysis of report producers’ reactions to the content of their messages and
reports. Published research in this area has sort to investigate mangers or report writers
motives and factors associated with the production of the report (for example see Adams,
2002; Campbell, 2000) rather than an investigation of why managers/report writers say what
they say, or why they say some things and not others. Studies analysing the construction of
the message or messages, such as the choices made when deciding on ‘what is to be said’ and
‘how it is to be said’ could be undertaken focusing on the use of particular

10
language/image/medium choices, language tools (e.g. metaphors), and style (i.e. layout and
the use of images). In a bid to get beyond corporate platitudes and generalities, we advocate
seeking out actual report-writers and focusing attention on specific features and examples of
text. Opportunities for ethnographic research could also be sought wherein a participant-
observer may be able to sit alongside report producers and attend meetings where elements of
reporting are discussed and decisions made on orientation and content. Such studies need to
recognise the inseparable relationship between text (including images etc) and context and
therefore must consider how context (i.e. the reporting context in the form of such things as
the GRI Guidelines; and the organisational context such as organisational culture and
place/location) affects the production of such corporate messages. We suggest such an
understanding of the production of corporate social and environmental reports is an important
element in addressing the gap in the literature identified and also achieving a more holistic
insight into social and environmental reporting and organisational legitimacy.

Analysing the Construction of the Messages

The second domain identified by Thompson (1990) and isolated by Arnold (1998) is the
discursive analysis of the construction of the message. From a review of the extant social and
environmental reporting literature research into ‘what is said and what is not said’ and in
particular ‘how it is said’ is required. Through recognising the productive nature of discourse
various objects, concepts and subjects become open to investigation. Previous research
undertaken by Laine (2005), Livesey and Kearins (2002), Milne, Tregidga and Walton
(2009), Springett (2003), and Tregidga and Milne (2006) has begun to investigate the
corporate construction of sustainable development. However, how other concepts such as
corporate social responsibility and nature, and individuals or groups such as stakeholder and
organisations themselves (e.g., Tregidga, Milne and Kearins, 2009), are represented within
the texts are also worthy of investigation. Spence (2007b) too, has gone some way to add
insight into the construction of the reporting discourse and its implications. However, more
opportunities exist here.

Furthermore, analysis of the discursive construction of relationships between organisations

and stakeholders (e.g. organisations and indigenous peoples, organisations and the
environment) need to be explored to examine how such relationships are portrayed and
enacted within the discourse. Such research may begin with the reporting archive itself,
tracing changes over time. It may gain permission to interrogate corporate documentation
such as stakeholder surveys or feedback via website engagement seeking out the connections
between that information and what ultimately appeared in the reports. Again, it could
usefully connect with report producers through interviews. It could involve attendance at
organisation-stakeholder meetings as a participant observer comparing the discussion there to
the ensuring report content. Analysis of shadow reports and reporting (see Dey, 2007;
Ruffing, 2007) and their effect (or not) on reporting messages could also be an approach
taken. Further comparisons could be undertaken alongside or beyond the reporting archive
with other corporate communications, such as material appearing on corporate websites,
publicity and advertising. These are areas where future research could assist in providing
insight into the construction of the corporate message and provide clarity surrounding the
intended and/or avowedly-unintended messages and accountings contained within the reports.

Analysing the Reception and Interpretation of the Messages

The third domain proposed in the study of symbolic constructions by Thompson (1990) is a
socio-historical analysis of the reception (or consumption) and appropriation (interpretation)

11
of the message. This, we note, is another gap in the social and environmental reporting and
organisational legitimacy literature.

Understanding the consumption/reception and interpretation of corporate social and

environmental messages by internal and external publics is, we believe, critically important to
the study of organisational legitimacy. Despite Mathews’ (1984, p. 204, our emphasis)
definition or Social Responsibility Accounting as the “voluntary disclosure of information,
both qualitative and quantitative, made by organisations to inform or influence a range of
audiences”, we know relatively little about how potential or intended audiences are informed
or influenced. Work that adds to and extends Chan and Milne (1999), Danastas and
Gandenne (2006), Deegan and Rankin (1997), Milne and Chan (1999), Milne and Patten
(2002), O’Dwyer, Unerman and Bradley (2005), O’Dwyer, Unerman and Hession (2005),
and Tilt (1994), therefore, is also needed. Milne’s (with others) work focuses on decision
reactions to environmental disclosures, but is limited to the investment decision reactions of
traditional stakeholders and provides few insights into how such messages are interpreted,
and what they may ‘mean’ to recipients. Similarly, the surveys of O’Dwyer et al., Danastas
and Gadenne, Deegan and Ranking, and Tilt are informative of the information perceptions
of a wider range of non-traditional stakeholders, but are limited to general perceptions of
report attributes (e.g. usefulness, credibility, relevance, sufficiency) and (potential) reporting
regulations (e.g. mandatory audits). As such, they too fail to shed much light on corporate
communication, message reception and interpretation.

Exploring the impact of language on users is as yet not investigated; and consequently, we
know very little about the consumption or interpretation of such messages. Furthermore, the
legitimation potential of such language is also something which has still not been
substantively investigated. Who the audiences (both intended and unintended) are (building
on the work of Spence (2007a)), how they read the reports, and what they focus on in the
reports and why they read such reports are open to analysis. Access to report distribution
lists and report readers’ feedback where the latter is collected by the reporters could be
sought. Interviews with, and surveys of report audiences – eliciting responses from readers
and non-readers – are central to understanding the usefulness of both individual reports and
the reporting genre as a whole. It would be interesting to know whether reporting
information met or even exceeded readers’ expectations. Participant observations in
reporting award decision meetings, if possible, could also add another dimension lacking in
the literature.

Recognising the Potential of Discourse in the Analysis of Social and Environmental

Reporting and Organisational Legitimacy
A key contribution of discourse and other interpretive methods is the ability to investigate the
links between discourse (text, images, social practices etc) and organisational legitimacy.
How organisational legitimacy is (or might be) produced throughout the reporting processes
(at all stages of Thompson’s tripartite framework) and its context is an issue for critical
analysis. It focuses on the politics of discursive struggle, aspects of which may remain
hidden in the textual archive. While literature (e.g., Gray, Kouhy and Lavers, 1995;
Larringa-Gonzalez and Bebbington, 2001; O’Dwyer, 2003; Owen, Gray and Bebbington,
1997) refers to issues of ‘capture’, ‘appropriation’, and ‘agendas’, it is the more subtle
aspects of these notions where we suggest discursive studies can add insight. Owen et al.,
(1997) assert that capture is a complex idea involving the subtle processes that are far from
obvious, and in which language plays a crucial role. We note that how report content, in
particular language/image use within reports, produces legitimacy, either intentionally or

12
otherwise is open to investigation through a discursive or interpretive perspective. Previously,
research has sought to argue that more disclosure occurs due to external (and, in fewer cases,
internal) pressures and more disclosure is an attempt to produce legitimacy. However, little
is said about the nature of these disclosures in terms of the language/image/social practices
they use and create (including what is included and excluded and the adaption and translation
of social issues), and the effect of this language on audiences. We foresee discursive based
studies providing a framework for the development and extension of legitimacy within social
and environmental reporting and accounting research. A discursive approach facilitates the
investigation and production of truths and power and legitimation effects they produce.

We identify the fundamental importance of context in the analysis of social and

environmental reports and organisational legitimacy and advocate a consideration of context
in future analyses. In recognising the effect of context on reports, and also the reverse effect
of reports on context, researchers can gain greater insight into corporate social and
environmental messages. We suggest that there is a need to understand the role of micro-
contextual factors such as auditing, verification, the use of guidelines such as GRI, and
reporting awards at the organisational level, and macro-contextual factors, regulations, media
and political discourse, in the analysis of the production, construction and consumption of
corporate social and environmental messages. As already identified by Milne, Tregidga and
Walton (2009) and Tregidga and Milne (2006), there are clear and evident links between text
and contexts in the construction of corporate messages on or constructions of sustainable
development. These studies begin to explore the links between texts and their context
through analysis of language and discourse, however, we suggest that the potential of
discourse and interpretive analysis to aid understanding in this area (and in considering
images, production of social relations etc) is presently under realised.

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