1. Issues in Social and Environmental AccountingVol. 2, No. 1 June 2008Pp. 36-60The Case For Reporting Pro-ActiveEnvironmental Initiatives: A Malaysian Experiment On Stakeholder Influence Strategies Evangeline Elijido-TenFaculty of Business and Enterprise Swinburne University of TechnologyAustraliaAbstractThe purpose of this research is to gain insights on the preferred strategies chosen by variousstakeholder representatives to influence management to either provide/not provide environ-mental disclosures in an experimental setting. A typology of resource relationships and influ-ence strategies is adapted as a framework to make sense of the views presented by variousstakeholder representative groups. To facilitate a Malaysian experiment, qualitative interviewswith the aid of a hypothetical vignette are conducted to understand how different stakeholdergroups go about seeking what they want from the management. The findings in this exploratorystudy indicate that although the model is useful to understand the influence strategies taken byeach stakeholder group, its effectiveness is tempered by the level of significance placed bythese groups on the environmental initiative and their perception of how the event will affecttheir stake on the firm.Keywords: Environmental disclosures, stakeholder influence strategy, Malaysia.INTRODUCTION ACCA, 2005; KPMG, 2005). It is in this regard that stakeholder theory hasWorldwide surveys show that stake- gained popularity as it offers a usefulholder pressures are one of the main framework given its basic premise thatdrivers for managements increased fo- the firms success is dependent upon thecus in the area of corporate social andsuccessful management of its relation-environmental responsibility leading toship with its stakeholders (Freeman,increased stakeholder consultation in the1983). Whilst the stakeholder literaturereporting process (Ernst & Young, 2002;is replete with research on stakeholderEvangeline Elijido-Ten is Senior Lecturer of Accounting at Faculty of Business and Enterprise, Swinburne Universityof Technology, Australia, email: eelijidoten@swin.edu.au

2. E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60 37attributes and concerns on how to man- Firstly, it contributes to the developmentage them (see for example, Ullmann,of stakeholder theory by extending its1985; Roberts, 1992; Mitchell, Agle &application to the means by which stake-Wood, 1997; Elijido-Ten, 2007), little isholders try to get what they want fromknown about how stakeholders demandthe firm particularly when a pro-activewhat they want from the firm (Frooman, environmental initiative is involved.1999). The purpose of this research is toPrior studies feature mainly negativegain insights on the preferred strategiesevents such as corporate downsizingchosen by various stakeholder represen-(Tsai, Yeh, Wu & Huang, 2005), possi-tatives to influence management to pro-ble threat to ecological balance and hu-vide/not provide environmental disclo- man life (Elijido-Ten, Kloot & Clarkson,sures in an experimental setting.2007) and environmental organizations concerns and activism (Hendry, 2005;In this study, a Malaysian experiment is Frooman & Murrell, 2003, 2005). Sec-initiated to understand how differentondly, it uncovers relevant insights onstakeholder groups go about seekinghow various stakeholder groups demandwhat they want from the management.environmental disclosures from an exFroomans (1999) typology of resourceante perspective. Much of previous envi-relationships and influence strategies isronmental reporting research providesadapted as a framework to make sense evidence from an ex post perspectiveof the possible environmental reporting(e.g. Wiseman, 1982; Patten, 1992; Al-preferences imposed by the stakeholder Tuwaijri, Christensen and Hughes,representatives on the management. To2004) thereby excluding the possibilityfacilitate the experiment, qualitative in- of gaining insights from stakeholderterviews are conducted with the aid of a views prior to the disclosure decision.hypothetical vignette to gain insights onThirdly, it extends the stakeholder influ-the possible interplay between the man-ence strategy analysis to a wide varietyagement and various stakeholder repre- of stakeholders. Previous research hassentatives from an ex ante perspective,focused mainly on one stakeholderthat is, the environmental reporting pref- group such as environmental leaders/erences before disclosures are made. The groups (Frooman & Murrell 2003, 2005;hypothetical vignette features a pro-Hendry 2005) and employees (Tsai et alactive environmental initiative taken by 2005). And finally, it brings a perspec-a prominent publicly listed firm in thetive from a developing country such asbanking industry. The findings in this Malaysia into the social and environ-exploratory study indicate that although mental reporting literature.the model is useful to understand thepossible influence strategies taken by The motivation for using the Malaysianeach stakeholder group, its effectivenesscontext is driven by its inherent back-is tempered by the level of significance ground in terms of its economic devel-placed by these groups on environmentalopment and strategic vision. Malaysiainitiative and their perception of how the offers an interesting setting since it is theevent will affect their stake on the firm. only developing country with an explicit timeline to achieve the developed nationThis study contributes to the existing status by the year 2020 (Vision 2020). Itbody of literature in a number of ways.is also one of the fastest growing econo- 3. 38 E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60mies in Southeast Asia. Compared to itstion on the reporting preferences of vari-neighbouring countries, Malaysia has ous stakeholder groups and how they gorecovered much quicker from the 1997 about demanding what they want fromAsian financial crisis. Along with rapid the management particularly when aeconomic development, however, Ma- pro-active environmental initiative islaysia has been experiencing intensified concerned.environmental impact such as the defor-estation, erosion, air and water pollution The remainder of the paper is organisedlargely brought about by corporate ac- as follows. The next section provides ativities such as logging, large scale land brief overview of the literature on corpo-development, open burning, mining, rate social and environmental disclo-power stations and dam constructions sures leading to the introduction of the(Smith, Yahya & Amiruddin, 2007; framework. An explanation of the re-Sumiani, Haslinda & Lehman, 2007). search methodology employed is pro- vided next followed by the discussion ofFurthermore, Malaysia has not been im- results and further analysis. Finally, themune to environmental disasters such asconcluding comments are provided.the 1993 Highland Towers erosion, the1997 haze crisis (when the Air PollutionIndex exceeded the 500 mark) and the LITERATURE OVERVIEW: MA-2004 tsunami that hit Penang along withLAYSIAN ENVIRONMENTAL RE-other countries killing more thanPORTING200,000 people. Hence, it appeals to in-tuition that these adverse experiences As more compelling scientific evidencecould create higher environmentallink climate change and global warmingawareness on the part of Malaysian to the activities inherent in commercialstakeholders which could then translateindustrialisation, conventional wisdomto higher pressure for firms to be morewould suggest that environmental re-environmentally pro-active and to pro- porting will continue to increase particu-vide environmental reports. This, how- larly if stakeholders demand for theseever, does not appear to be the case. Adisclosures increased. Indeed, a numbercase study of Tenaga Nasional Berhad,of studies provide evidence that stake-the largest electricity producer in Malay- holder pressures are on the rise. Ernstsia, shows that its management does notand Youngs study of 147 of the Globalsee the need to provide environmental1000 companies shows that majority ofdisclosures in their annual reports de-the key drivers for the managementsspite its adoption of a number of envi-increased focus in corporate social re-ronmentally-friendly activities. The fac-sponsibility (CSR) are stakeholder-tors, identified by the management, at-related:tributing to non-disclosure include theabsence of mandatory requirements, lack Surveyed companies identify fiveof awareness, knowledge and expertise key drivers as influencing the in-as well as lack of government and publiccreasing business focus on CSR ...pressure (Abdul Rahman & Ayob,These five drivers are: greater2005). Given this, the Malaysian contextstakeholder awareness of corpo-offers a fertile ground for an investiga- rate ethical, social and environ- 4. E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-6039mental behaviour; direct stake-The number of reporting compa-holder pressures; investor pres- nies grew from 25 in 1999, to 35sures; peer pressures and an in- in 2000, reaching 40 companiescreased sense of social responsi-by 2001. This represented 5.3%,bility (Ernst and Young, 2002, 7% and 7.7% of the KLSE mainp. 6)board listed companies in 1999, 2000 and 2001 respectively.Likewise, a survey of the worlds largest(ERMM, 2002, p. 8).250 companies reveals that, apart fromthe Global Reporting Initiative (GRI) Another descriptive study (Thompsonguideline, stakeholder consultation isand Zakaria, 2004) confirms that Malay-commonly used as the basis for CSRsian environmental reporting is still at itsreport content (KPMG, 2005).infancy and that majority of environ-mental disclosers are large companiesOne of the most commonly used vehi- with seven of the top 10 companies pro-cles to inform the public of the firms viding mostly general policy statementsocial and environmental accountability accompanied by some unsubstantiatedis the annual reports (Wiseman, 1982; declarative statements.Neu, Warsame & Pedwell, 1998;Cormier, Gordon & Magnan, 2004). Al-There is, however, an increase in thethough much of the financial informa- number of studies examining the moti-tion is mandated, todays annual reportsvations behind Malaysian environmentalcontain more voluntary information than disclosures using different theoreticalbefore (Anderson & Epstein, 1995). So-perspectives. Adopting the contractingcial and environmental accounting re- and political cost perspective, Ahmad,searchers around the world appear toHassan and Mohammad (2003) examineagree that environmental reporting in the voluntary annual report environ-annual reports and other communicationmental disclosures (AREDs) of 299media has increased over time (Patten,KLSE-listed companies using logistic1992; Gray, Kouhy & Lavers, 1995; regressions. Their results suggest lack ofKPMG, 2002, 2005; Elijido-Ten, 2007). support for the general hypothesis thatfirms voluntarily disclose environmentalStudies focusing on Malaysian environ-information to mitigate contracting andmental reporting, however, have not ap- political costs. They attribute this resultpeared in the literature until the turn ofto the argument that the commonly heldthe millennium. In a study conducted by theoretical framework of principal-agentthe Environmental Resources Manage- relationship may not hold in the Malay-ment Malaysia (ERMM, 2002), the sian context (p.85). On the other hand,analysis of annual reports and stand- Ahmad and Sulaiman (2004) employalone environmental reports of compa- legitimacy theory in their study of KLSEnies listed in the Kuala Lumpur Stock Main Board listed companies from theExchange (KLSE) shows that environ- construction and industrial products sec-mental reporting is not widely practisedtors. Using quantitative analysis, theirin Malaysia. The report, however, high- results provide limited support for legiti-lights an increase in environmental re- macy theory given the very low level ofporting, albeit minimal:disclosure. This implies that there is no 5. 40 E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60serious attempt on the part of the compa-quantitative studies (Ahmad, et al, 2003;nies to appear legitimate to society.Smith, et al, 2007) seem to suggest that some expectations from the variablesThree recently published Malaysian directly derived from developed-countrystudies (Yusoff, Lehman and Nasir, studies may not hold true in Malaysian2006; Sumiani, Haslinda and Lehman,context. Third, the theoretical frame-2007; Smith, Yahya and Amiruddin,works used in previous studies (Ahmad2007) adopt no specific theoreticalet al, 2003; Ahmad & Sulaiman 2004)model. In examining the AREDs of top achieve limited support. It is in this light50 companies listed in KLSE, Yusoff, etthat the adoption of stakeholder theoryal (2006) use the qualitative method ofusing exploratory qualitative method iscontent and discourse analysis. Consis-deemed appropriate in this study.tent with the findings by KPMG (2005),their analysis shows that majority ofdisclosures made were around the mo- THEORETICAL FRAMEWORK:tive of stakeholders concern (p. 140). STAK EHO LDER I NF LUENCESumiani, et al (2007) also examine the STRATEGIESdisclosures made by top 50 Malaysianpublic companies to explore the report-The term stakeholder is originally intro-ing behaviour of ISO-certified compa-duced by Stanford Research Institutenies. They find that 13 companies are(SRI) to refer to those groups withoutISO14001 and all provide some form ofwhose support the organisation wouldenvironmental disclosure in their annual cease to exist (Freeman 1983). In devel-reports. Smith, et al (2007) concentrate oping stakeholder theory, Freemanon the disclosing companies identified (1983) introduces the stakeholder con-by the ERMM (2002) study in an at- cept in two models: (1) a business plan-tempt to find whether relationships existning and policy model; and (2) a corpo-between environmental disclosures andrate social responsibility model of stake-certain corporate characteristics. Of theholder management. In the first model,explanatory factors examined, only fi- the focus is on developing and evaluat-nancial performance is found to be sig-ing the approval of corporate strategicnificant. However, contrary to expecta-decisions by groups whose support istion, it is negatively associated with dis-required for the firms continued exis-closures prompting their conclusion that tence. The stakeholders identified in thisenvironmental reporting practices inmodel include the owners, customers,Malaysia appear to differ from those public groups and suppliers. Althoughelsewhere, which may be partly attribut- these groups are not adversarial in na-able to the maturity of reporting proc-ture, their possibly conflicting behavioress (p. 195). is considered a constraint on the strategy developed by management to best matchThe Malaysian studies reviewed high- the firms resources with the environ-light a number of important points. First, ment. In the second model, the corporatealthough environmental reporting in Ma-planning and analysis extends to includelaysia is still very limited, majority are external influences which may be adver-driven by stakeholder concerns (Yusoff sarial to the firm. These adversarialet al, 2006). Second, previous Malaysian groups may include the regulatory bod- 6. E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60 41ies, environmentalist and/or special in-what they want from the firm?terest groups concerned with social is-sues. The second model enables manag- Froomans (1999) typology of influenceers to consider a strategic plan that isstrategies, which borrows heavily fromadaptable to changes in the social de-resource dependence theory, is used tomands of non-traditional stakeholderextend the development of stakeholdergroups. theory that accommodates the view fromthe stakeholders perspective. The basicCorporate environmental responsibilitypremise central to resource dependenceis one area in which much community theory is that an entitys need for re-awareness has developed given the in- sources provides opportunities for otherscreasing manifestations of the effects of to control the firm. Power is a centralglobal warming, deforestation, air, landtheme in the argument because the na-and water pollution. As proposed by ture of the relationship is determined bystakeholder theory, this increased levelwho is dependent on whom and howof environmental awareness creates themuch. Frooman explains that operation-need for companies to include non-alising power under resource depend-traditional stakeholders like the regula- ence theory is quite different. He quotestory adversarial groups in their corporatePfeffer and Salancik (1978):plans to adapt to changing social de-mands. The literature hints that compa-For the dependence between twonies provide disclosures voluntarily for organisations to provide one or-various reasons (Gray & Bebbington,ganisation with power over the2001; Buhr, 2007), most of which could other, there must be asymmetry inbe related to satisfying various stake-the exchange relationship (p. 53)holder groups including adversarialPower, thus, is defined in rela-stakeholders. Furthermore, given thattive terms, that is, A has powermajority of Malaysian environmentalover B if B is more dependent ondisclosures are motivated by stake-A relative to As dependence on Bholders concerns (Yusoff et al, 2006) (p. 196).and the increasing need to get the stake-holders involved in the reporting process Drawing from this power relationship,worldwide (KPMG, 2005), stakeholder two types of resource control strategiestheory offers a useful framework for this are suggested: (1) withholding strategiesstudy but perhaps not in the conven-- defined as those where stakeholderstional way it has usually been adapted. discontinue providing a resource to afirm with the intention of making theThe notion of successful management firm change a certain behaviour; and (2)appears to have been taken mostly fromusage strategies - those in which thethe managements perspective; hence,stakeholder continues to supply a re-much of the early development in stake- source, but with strings attached, i.e.holder theory has focused on stakeholdersome conditions must be met. Froomanattributes and concerns on how to man-and Murrell (2003; 2005) later labelledage them. As a result, there is a scarcitywithholding as coerce and usage asof literature addressing the question:compromise strategies.how will the stakeholders try to get 7. 42 E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60Figure 1: Typology of Resource Relationships and Influence StrategiesIS THE STAKEHOLDER DEPENDENT ON THE FIRM?NOYES Is the firm dependentP1: When the relationship is one P2 : When the relationship is oneon the stakeholder?of LOW INTERDEPEND-of FIRM POWER, the stake- NO ENCE, the stakehoder willholder will choose indirect-usagechoose indirect-withholdingstrategy to influence the firm.strategy to influence the firm.P3 : When the relationship isP4 : When the relationship is oneone of STAKEHOLDER of HIGH INTERDEPEND- YESPOWER, the stakeholder willENCE, the stakeholder willchoose direct-withholding strat- choose direct-usage strategy toegy to influence the firm. influence the firm. Source: Adapted from Frooman (1999, p.200)Another source of power is one thatnor the stakeholder are dependent oncomes from relationships with others each other; (2) high interdependence who supply resources to a focal firm.when both the firm and the stakeholderWhile some stakeholder groups do not are dependent on each other; (3) stake-have the power to use either withholding holder power when the firm is depend-or usage strategies, they could form anent on the stakeholder; and (4) firmalliance with other stakeholder groups power when the stakeholder is depend-with whom the focal firm has a depend- ent upon the firm. The last two relation-ence relationship. Frooman identifiesships show power asymmetry.this concept as types of influence path-ways which he divides into two: (1) di-Appealing to these characterisations,rect pathways those in which the Froomans typology of resource rela-stakeholder directly manipulates the tionships and influence strategies sug-flow of resources to the firm; and (2) gests four propositions relating to theindirect pathways those where a stake- choice of pathway (direct or indirect)holder works in concordance with a and strategy (withholding or usage). Theprincipal despite not having formal rela-choice of pathway-strategy combinationtionships with the focal firm. Note that is conditional on the power dependenceboth types of influence pathways could relationship between the firm and theuse either withholding or usage strate-stakeholders. These propositions aregies.shown in Figure 1.Finally, Frooman introduces a typology A number of studies have adoptedof resource relationships based on the Froomans model. For example,powerdependence relationship between Frooman and Murrell (2003, 2005) usedthe firm and the stakeholders. Four typesexperimental approach with the aid ofof relationships are observed: (1) low hypothetical vignettes to solicit re-interdependence when neither the firmsponses from actual environmental lead- 8. E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60 43ers regarding events with negative im-stake on the firm AND the firm manage-pact, e.g. recycling used car batteries inment/stakeholder interdependence struc-a developing country that has no envi-ture WILL determine whether or not theyronmental regulations. Hendry (2005)will demand environmental disclosure.conducted interviews with 28 represen-tatives of four environmental organisa- Hence, in extending the application oftions to understand why they choose Froomans (1999) typology in the fieldparticular types of strategies to influence of environmental disclosures, Proposi-firms to change. And Tsai, et al (2005) tions P1 to P4 will apply, if and only if,used the model to understand the em-there is a perceived demand for environ-ployees actions of 18 Taiwanese firmsmental disclosure. Furthermore, al-involved in business downsizing.though Froomans typology is useful toanalyse possible strategies which stake-Whilst these studies provide some em- holders may adopt to demand environ-pirical support to the usefulness of themental disclosures from the firm, it ismodel, what is clear from prior researchclear that the withholding strategy as-is that the model has not been used insumes that the event or issue has a nega-the context of environmental reporting. tive connotation necessitating pressureFurthermore, the use of the model has from the stakeholder/s to withhold orbeen restricted mainly on negativeeven withdraw a critical resource. Theevents thereby limiting the possibility oftypology, therefore, is not entirely suit-gaining insights from stakeholder prefer- able when the focal event has a positiveences when a pro-active environmental environmental impact. Hence, for thisevent is involved. It is also evident thatstudy, the propositions are slightly modi-the use of the model has so far been re-fied to replace the withholding strategystricted to a few stakeholders such aswith promoting strategy. The rationaleenvironmental leaders/groups (Frooman for this is clear - those stakeholders who& Murrell 2003, 2005; Hendry 2005)can see the value of environmentallyand employees (Tsai, et al, 2005). What friendly practices adopted by the firmis lacking is an attempt to extend theare not likely to even consider withhold-analysis to a wide variety of stake-ing their support because of non-holders.disclosure. Instead, they might evenpromote this event either directly orThis study addresses these gaps in theindirectly. Therefore, the four proposi-literature. Froomans model is adaptedtions emanating from the modifiedas a framework to make sense of the framework are restated as follows:power-dependence relationships be-tween the stakeholder groups and firm P1: If the stakeholder/s place high sig-management. In order to apply thenificance to the proactive environ-propositions in the context of environ-mental initiative and their relation-mental disclosure demand, there is anship with the firm is that of LOWimportant underlying assumption, thatINTERDEPENDENCE, the stake-is:holder/s will adopt indirect promot- ing strategy to demand environ-The stakeholders perception of how themental disclosures.environmental event will affect their P2: If the stakeholder/s place high sig- 9. 44E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60 nificance to the proactive environ-a useful framework for an examination, mental initiative and their relation-the processes involved in selecting these ship with the firm is that of FIRMstrategies are still not very much under- POWER, the stakeholder/s will stood. Inductive methodologies like adopt indirect usage strategy to qualitative interviewing techniques are demand environmental disclosures.generally favoured for this type of ex-P3: If the stakeholder/s place high sig-ploratory research primarily because the nificance to the proactive environ-choices of strategies are mainly subjec- mental initiative and their relation-tive. ship with the firm is that of STAKEHOLDER POWER, the Research Design and Methods stakeholder/s will adopt direct pro- moting strategy to demand environ- This study is organised into two phases. mental disclosures.The first part is the pilot phase aimed atP4: If the stakeholder/s place high sig-exploring how Froomans model can be nificance to the proactive environ-used in Malaysian context given that mental initiative and their relation-little is known about how Malaysian ship with the firm is that of HIGHbusiness psyche may affect business de- INTERDEPENDENCE, the stake- cisions. This phase used both secondary holder/s will adopt direct usage (website perusal and relevant news arti- strategy to demand environmental cles using Factiva database) and primary disclosures. data in the form of unstructured/semi-structured qualitative interviews. Quali-These propositions are consistent withtative interviews is the preferred term toresource dependence theory in that thedistinguish this method from the highlylevel of interdependence between thestructured line of questioning normallyfirm and stakeholder plays a significantused in survey research (Rubin & Rubin,role in the choice of strategy used. For2005). Since the responses provided byexample, when the firm has a low levelthe participants in this phase are triangu-of dependence on the stakeholder (as in lated against secondary data gatheredP1 and P2), the firm does not need to befrom media and website releases, fiveresponsive to the stakeholders demands,interviews are considered sufficient.leaving the stakeholder no choice but tofind an ally to indirectly influence theThe insights gathered from this phasefirm. On the contrary, when the firmprovide the platform for the identifica-depends heavily on the stakeholder fortion of the salient stakeholders. Mitchell,survival, the stakeholders will have no Agle and Woods (1997, p.873) stake-hesitation to express their demands di- holder salience typology propose thatrectly to the firm (as in P3 and P4). stakeholder salience will be positivelyrelated to the cumulative number ofstakeholder attributes power, legiti-RESEARCH METHODOLOGYmacy, and urgency perceived by man-agers to be present. Although, it is notThe previous section revealed that whilethe purpose of this research to directlyresource dependence theory and stake- test this proposition, the typology is use-holder influence strategies may provide ful in identifying the salient stakeholders 10. E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60 45to be included in the main phase of thisviews tends to be around 15 +/- 10.study.Most of the interviews are conducted inMalaysia in 2005. As all the targetedIn line with Frooman and Murrell (2003, stakeholder groups are represented and2005), the main phase adopted an ex-given the time and geographic con-perimental approach using a hypotheti-straints, 15 interviews are consideredcal vignette to solicit the views of thesufficient in the main phase of this ex-interviewees representing a wide arrayploratory study.of stakeholders identified from the pilotphase. A structured interview question- Analysis Techniquesnaire is designed to include both closedand open-ended questions (see the Ap- Analysis for the unstructured/semi-pendix). Given that the questionnaire structured qualitative interviews in theasks for the informants opinions and pilot phase is done in two stages. In thereactions regarding the chosen environ- first stage, all the interviews are tran-mental issue/event, it is considered im-scribed word-for-word. Then in the sec-portant not to select the participants ran- ond stage, the transcripts are analysed.domly. A number of authors argue that Memoing is used to summarise the re-qualitative samples tend to be purposivesponses and to tie together differentrather than random (Kuzel, 1992; Milespieces of data into clusters of recognis-& Huberman 1994). Hence, the partici- able concepts. Memoing is a data reduc-pants are chosen based on the criteriation analytical technique that allows thethat, at least, each can represent theresearcher to write memos to self sum-stakeholder groups identified in the pilotmarise the responses and to identify re-phase and most importantly, that theircurring themes (Miles & Huberman,current/previous positions and experi-1994, p.72). The primary data are sup-ence would allow them to provide realis-plemented with secondary data fromtic responses to the hypothetical ques- news reports/relevant websites.tions asked. Snowball sampling (Patton,1990) is used since this approach is use- In the main phase, the responses to theful for locating information-rich key in- closed and open-ended interview ques-formants. Initially, the names/contacttions are separately analysed. Responsesdetails of prospective participants are to the closed interview questions aretaken from relevant company websitestabulated. Then, quantitative techniquesand from recommendations of the inves-such as weighting and ranking are used.tigators former colleagues. Once con-On the other hand, responses to thetacts are established, the participants open-ended interview questions are fullyintroduced other prospective informants.transcribed and the qualitative tech-niques of question-by-question matrixAnother fifteen interviews are conductedand memoing are used. Both the quan-in the main phase. Kvale (1996, p.101)titative and qualitative analyses arenotes that, in designing an interview linked using a conceptual matrix or astudy, it is important to interview as pattern matching technique. Miles andmany subjects as necessary to find outHuberman (1994, p. 127) explain that awhat you need to know in current in- conceptually clustered matrix has itsterview studies, the number of inter- rows and columns arranged to bring to- 11. 46 E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60gether items that belong together. Thispractices is formulated. The vignetteoutcome can happen in two ways: con- features a firm in the banking industryceptual the analyst may have some awhich promotes sustainability and so-priori ideas about items that derive fromcially responsible initiatives. The focalthe same theory or relate to the sameevent is the investment on a state of theoverarching themes; or empirical dur-art technology that enables recycling,ing early analysis you may find that in- reduction of waste and energy consump-formants answering different questions tion. Details of the vignette are shown inare tying them together or are givingthe appendix.similar responses. These techniques areuseful in conducting qualitative studies.Another important aspect of the pilot phase is the identification of the salient stakeholders. The stakeholder literatureRESULTS AND DISCUSSION hints that while there could be an infinite number of stakeholders out there, aIdentification of Relevant Environ-coalition analysis (Freeman, 1983; 1984)mental Issues and Stakeholders would suggest that certain stakeholders can be grouped together as they mayThe qualitative interviews and the pe- have similar demand/stake on the firm.rusal of relevant media/website reportsUtilising Mitchell, et als (1997) typol-point to a number of significant environ-ogy characterised by the attributes ofmental issues that are specific in the Ma- power, legitimacy and urgency, a list oflaysian setting. For example, the popularthe stakeholder groups commonly re-media (New Straits Times via Factiva)ferred to by the respondents in the pilothighlights a number of environmental phase is collated. The groups identifiedissues such as:consist of both primary and secondary or adversarial stakeholders. The primary Toxic wastes and chemicals used by stakeholders include the long-term credi-companies destroying the ecologicaltors, customers, suppliers, employees,balance; relevant government agencies and the Health risks due to rampant air pollu- shareholders. It is decided to split thetion arising from toxic wastes and for-shareholder stakeholder group into two:est fires; major shareholders and minor sharehold- Push for companies to adopt environ- ers, since it is conceivable that the twomentally-friendly technology and prac- groups are able to exert their power ontices. the firm in different manners. The sec- ondary stakeholder groups identified byGiven that the purpose in this study is to the respondents include the media andgain insights on stakeholder reporting the environmentalists.preferences when pro-active environ-mental initiative is involved, attention isEstablishing Power-Dependence Rela-focused on the third environmental is- tionshipsue. Hence, a hypothetical vignette con-taining an environmental event thatPart I of the structured interview ques-simulates the popular media coverage ontionnaire (see the Appendix) starts byenvironmentally-friendly technology andasking the participants to provide gen- 12. E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60 47eral information like their current/and pattern matching analyses con-previous position and the type of stake-ducted. Note that despite the majorholder they are most likely to be classi- shareholders (MJS) being perceived tofied based on their past/current experi-be the most important stakeholder groupence. They are also asked to rank the to company survival (ranked 1), the rela-stakeholder groups identified from thetionship established is one of high inter-pilot phase in the order of their per-dependence. This is because their po-ceived relevance to the companys sur-tential to threaten firm survival is neu-vival with 1 being the most important tralised by their high cooperation poten-and 9 being the least important. The pur- tial. The major shareholders, by virtue ofpose here is to understand the respon-their substantial investment, are depend-dents perceived power-dependence re- ent on the firm for their capital growth.lationship between the stakeholders and However, the firm is equally dependentthe management. on them for funding. Despite the lowerranking (ranked 4) for long-term credi-It appeals to intuition that the higher the tors (LTC), the same rationale appliesmean ranking is (i.e. closest to 1), thefor companies highly dependent onmore probable it is for that stakeholderlong-term debt for funding.group to exert their power over the firm(i.e. stakeholder power) given that these In the absence of any urgent event, ad-groups are most important to companyversary stakeholders like the mediasurvival. In the same token, the lower(MED) and environmentalists (ENV)the mean ranking is (i.e. closer to 9), the virtually have neither power nor legiti-less probability there is for that stake- mate claim against the firm, i.e. theirholder group to have influence over the potential to threaten or cooperate withfirm suggesting firm power. This rank-the firm is generally low. As confirmeding analysis, however, is not likely to by the low ranking of MED and ENVgive an indication as to whether there is (shown in Table 1), the firm does notperceived high/low interdependence. depend on them for survival, hence theThus, a follow-up open-ended question relationship is expected to be one of lowasking the respondents to elaborate oninterdependence.their reason for ranking is necessary toestablish the perceived potential of theWhile the customers (CUS) and the rele-stakeholder to threaten or cooperate with vant government agency (RGA), to athe firm. An analysis of the stakecertain extent, may depend on the firmholders threat and cooperation potential for various reasons such as the supply ofis likely to give an indication on the per- goods/service (for CUS) and socio-ceived level of interdependence between economic progress (for RGA), the analy-the firm and the identified stakeholder sis shows that the firm is dependent ongroups. these groups more than they are to thefirm, i.e. stakeholder power. This isTable 1 shows the overall mean rankingbecause of the stakeholders ability toand qualitative findings summary. The threaten the firms existence in terms oflast column shows the established lost business (for CUS) as well as penal-power-dependence relationship based onties, sanction or even closure (for RGA).the findings from the conceptual matrix 13. 48 E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60 Table 1: Summary of Power-Dependence AnalysisStake- Overall Qualitative Findings Summary: Power-DependenceholderMean Analysis of Threath/Corporate Potential Relationship Estab-GroupRanking Shown in brackets [ ] are interviewee number lishedLEGEND: LO Low; ME Medium, HI - HighPOTENTIAL FOR THREAT (PT) HI High Interdependence:MJS 1 POSSESS CONTROL & POWER TO MAKE DECISIONS [6,8,11,13,16,17,20] -both the potential to cooper-(2,30)POTENTIAL FOR COOPERATION (PC) HI ate and threaten the firm areBECAUSE OF CAPITAL INVESMENT [15,20] equally high.POTENTIAL FOR THREAT (PT) HI Stakeholder PowerCUS 2 WITHOUT CUSTOMERS SUPPORT, THE COMPANY CANT SURVIVE -highly important for firm(3,36)[10,14,16,18,19] survival with high threatPOTENTIAL FOR COOPERATION (PC) LODEPENDENT ON HOW MUCH THE CUSTOMER RELY ON THE FIRM BUTpotential and low potentialGENERALLY LOW BECAUSE OF COMPETITION [10,14,19]to cooperate.POTENTIAL FOR THREAT (PT) LO to HI Firm powerEMP 3 HI Employee skills/services are vital [12,16] -although quite highly(4,20)ME Employee skills/dedication is needed [19] ranked; Malaysian employ-LO Employee generally have not say......[18]POTENTIAL FOR COOPERATION (PC) HIees are more likely to coop-POTENTIAL (FINANCIAL) SUCCESS IS CRUCIAL TO EMPLOYEES JOBerate than to threaten firmSECURITY [8,14,18] survival.POTENTIAL FOR THREAT (PT) LO to HI High InterdependenceLTC 4 NOT ALL COMPANIES DEPEND ON LTC BUT MANY DEPEND ON BANKS -for companies relying more(4,67)FOR FUNDING; POSSESS POWER TO RETRACT FUNDING [11,18] on LTC, both potential toPOTENTIAL FOR COOPERATION (PC) LO to HICOMPETITIVE INVESMENT & L-TERM RELATIONSHIP [11,15]cooperate and threaten will be high.POTENTIAL FOR THREAT (PT) HI Stakehoder PowerRGA 5 DEPENDING ON THE INDUSTRY [8], POSSESS PUNITIVE & OTHER-despite low to high poten-(4,77)POWER; COULD STOP COOPERATION IF NECESSARY [13,16,18,20] tial to cooperate, their sanc-POTENTIAL FOR COOPERATION (PC) LO to HIPOLICIES CAN PROVIDE CONDUCIVE INVESMENT CLIMATE TO ASSIST tion and punitive power isTHE COMPANYenough to threaten company survival.POTENTIAL FOR THREAT (PT) LO Firm PowerSUP 6 BECAUSE OF BUSINESS OPPORTUNITY & COMPETITION [14,15,18,19]-given the low ranking and(5,43)POTENTIAL FOR COOPERATION (PC) HI low threath potential butMUTUAL BUSINESS RELATIONSHIP NECESSITATES SUPPLIER COOP-ERATION [17,18,20] high cooperation potential.POTENTIAL FOR THREAT (PT) LO Firm PowerMIS 7 POSSESS NO POWER INDIVIDUALLY; -given the low ranking and(5,57)CANT MAKE DECISION [8,16,20] low threath potential butPOTENTIAL FOR COOPERATION (PC) LO to HICAPITAL INVESMENT CAN BE EASILY LIQUIDATED [8,9] high cooperation potential.POTENTIAL FOR THREAT (PT) LO to HILow InterdependenceMED 8 MEDIA COULD PLAY A ROLE BUT NOT SO POWERFUL BECAUSE ITS -without any urgent issue,(6,77)GOVERMENT-CONTROLLED [3] [15] [18] [19] [20] threat and cooperationPOTENTIAL FOR COOPERATION (PC) LO to HIDEPENDING ON POLITICAL CONNECTIONS [18] [15] [19]potential are both low.POTENTIAL FOR THREAT (PT) LO to HI Low InterdependenceENV 9 Could create a lot of trouble for company if there is a need [20] -without any urgent issue,(7,77)POTENTIAL FOR COOPERATION (PC) LO to HI threat and cooperationDEPENDING ON WHETHER THE COMPANY ADOPTS ENVIRONMEN-TALLY FRIENDLY PRACTISE OR NOT [11,15,16,18,19,20] potential are both low.LEGEND: MJS major shareholder; CUS customers; EMP employees; LTC long term/major creditors; RGA relevant goverment agency; SUP supplier; MIS minor shareholder; MED media; ENV enviromentalist.Finally, the employees (EMP), suppliers firm to find another supplier. Moreover,(SUP) and minor shareholders (MIS) arein the Malaysian setting, the employeesfound to fall under the firm power rela-(EMP) and minor shareholders (MIS),tionship since they are more likely torarely exercise their prerogative to ques-depend on the firm for their survival tion management decisions. Thus, thethan vice versa. Generally in a highlypower lies mainly with the firm manage-competitive market, the suppliers needment. Although the above discussionthe firm more because it is easy for themay appeal to intuition, without a par- 14. E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-6049ticular event that could change the The analysis shows that 8 out of 15 re-power/interdependence relationships, thespondents consider the featured event toanalysis is incomplete. This is where be between Very Significant (2) and Sig-Part II of the questionnaire is deemednificant (3). On average, however, theuseful. results suggest that the perceived ur-gency of the event is relatively low withPerceived Significance of the Event mean average of 3.33 indicating some-where between Significant to Moder-In order to understand management/ately Significant. Furthermore, none ofstakeholder behaviour, the literature the stakeholders represented consider thehints that there is a need to feel and seeevent to be Extremely Significant (1),the world from their perspectives. Free-whilst 4 perceive the event to be Notman (1984) suggests that role playing isSignificant (5) at all.an effective way to synthesise and fullyunderstand the objectives and beliefs ofIt appears that pro-active environmentalparticular stakeholders. Role playing,initiatives are not given much kudos ashowever, can only be effective if the indicated in the following comments:participants have some first-hand knowl-edge of the role they are playing from here in Malaysia, its quitetheir own experience. This is why it iscommon that when youre doingconsidered crucial for this research thatwell, you wont get much atten-participants are chosen on the basis oftion. If youre doing prettytheir exposure to Malaysian business badly ... then you get the atten-environment and on the presumption tion [Interviewee 7]that their current/previous position en- In Malaysia, its very much profit-ables them to represent the stakeholderoriented It doesnt work In-groups identified. terviewee 8] I think in our environment here,Hence, in Part II of the questionnaire,this [environmental] event is notthe interviewees are asked, after readingsignificant What they care isthe hypothetical vignette, to assume the just making profit - the bottom-role of the stakeholder they are mostline. [Interviewee 9]likely to be associated with given theirprevious/current professional experi- The above sentiments are shared by theence. They are then asked how signifi-majority of the respondents like Inter-cant the featured event is to them, on aviewees 12, 14, 15, 16, 18 and 19 whoscale of 1 (Extremely Significant) to 5 expressed their belief that because Ma-(Not Significant), in deciding whether to laysian environmental awareness is gen-provide continued support to the com- erally low, the local customers and em-pany. They are also asked to elaborateployees would less likely find this eventtheir reasons for providing such signifi- very high in their priority list. The localcance level. The purpose here is to elicitcustomers and the employees are thethe respondents perception on how ur-closest representatives of the Malaysiangent the environmental issue/event is topublic in this study.them. 15. 50E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60Demand for Environmental Disclo-munication with press conference/sures release as the most preferred mediumfollowed closely by some form of inter-The purpose in Part II Questions 2 (Q2) nal communiqu such as newsletters,and 3 (Q3) is to understand whether emails and memos. Of the 3 respondentsthere is a demand for environmental dis-who expect not to receive disclosuresclosures from each stakeholder represen-from other means, one represents thetatives concerning the featured event.local customer [Interviewee 19], whileQuestion 2 aims to solicit the partici- the other two include a representativepants Annual Report environmentalfrom the media [Interviewee 15] and thedisclosures (AREDs) preference whileenvironmentalist [Interviewee 17].Question 3 asks if they are likely to de- When asked to explain why they wouldmand environmental disclosures in other not expect the firm to provide disclo-ways of communication. Of the 15 re-sures through other means, their com-spondents, only twoa minority share- ments are:holder and a local customer representa-tive [Interviewees 18 and 19] - will not-Im taking the stand that I am notdemand AREDs. The implication is sucha good corporate citizen whichthat while pro-active environmentalmeans Im not really interestedevent is not given the highest priority, with pro-active environmentalthere is a demand from various stake-initiatives. [19]holders for this event to be disclosed inIts already good, theres no needthe companys Annual Report. Whento promote. Its just like having aInterviewees 18 and 19 are asked to ex-good programme, it will sell byplain why they will not demand AREDs,itself. [15]the necessity for government regulationHonestly, I really wouldnt botheris raised: whether the company do it or not [i.e. provide other disclosures],You see the problem is, there is noI will still support this company.statutory requirement to provide [17]this type of disclosure I reckon,as long as the government will notAlthough the response provided by In-make a legal requirement to doterviewee 19, once again, confirms ear-so, I dont think many companieslier comments on low environmentalwill bother to provide voluntaryawareness, the explanations offered bydisclosure. [18]Interviewees 15 and 17 give an entirelyI think at the end of the day, onedifferent view, that is, not demandingdepends on the government todisclosure does not tantamount to non-drive the environmental issues. Inappreciation of the companys pro-activethe Malaysian context, a lot de-environmental efforts. Hence, it is clearpends on the government to take that direct answers provided to questionsthat leadership role. [19]pertaining to environmental disclosuredemand are not sufficient. The answersFurthermore, in response to Q3, all but to the open-ended questions asking themthree of the respondents prefer to seeto elaborate on their reasons provide athis event featured in other ways of com- rich data source for further analysis. 16. E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-6051 Table 2: Summary of ResponsesINTERVIEW NUMBERS13181011 168919 20 7 14 1215 617STAKEHOLDERMJS MIS LTC LTCRGA EMPEMPCUSCUSSUP SUPMED MEDENVENVQ1-Perceived signifi- 5 3 4 22555 2 322 4 24cance of featuredeventQ2-Will demand AREDs?Yes NoYes YesYes YesYesNo YesYes YesYes YesYesYesQ3-Will demand disclo- Yes Yes Yes YesYes YesYesNo YesYes YesYes No YesNosure elsewhere?Q4-Preferred Actionba b bcbaa c bbc c ccLegend Stakeholder MJS major shareholder; CUS customers; EMP employees; LTC long term/major creditors; RGA relevant government agency; SUP supplier; MIS minor shareholder; MED media; ENV environmentalist.Legend Q1 : (5) Not Significant; (4) Moderately Significant; (3) Significant; (2) Very Significant; (1) Extremely SignificantLegend Q4: (a) Ignore the environmental event and continue supporting the company. (b) Encourage the firm to make environmental disclosure & continue supporting the firm. (c) Continue supporting the company and attempt to influence other to do the same.These comments clearly have further who either feel strongly about environ-implications in their preferred actionmental issues and/or see the need for thewhich is discussed next.firm to publicise its pro-active environ-mental initiatives. Table 2 provides thePreferred Stakeholder Actionsummary of direct answers to theclosedended questions Q1 to Q4 in PartIn Question 4 (Q4), participants areII of the structured questionnaire.asked to choose the most likely actionthey would take if they are aware of theThe result shows that majority (12 out offeatured environmental event and the15 respondents) see some value in en-company did not provide any environ-couraging the firm to make environ-mental disclosure. Three possible ac-mental disclosures (Options b and c)tions are provided as follows: with six respondents going further as topromote and influence others to do the(a) Ignore the environmental event andsame (Option c). Only three respondentscontinue supporting the firm. choose to ignore the event (Option a). Of(b) Encourage the company to make en- these three, the local customervironmental disclosure and continue a nd e mpl o ye e r e pr e s e nt a t i ve ssupporting the company. [Interviewee 19 & 9] believe that the(c) Continue supporting the company environmental event is not significantand attempt to promote this initiative(consistent with their response to Q1),by influencing others to do the same. hence they do not see the need to compelthe management to provide disclosures.Option (a) is likely to be chosen by thoseIt is, however, interesting to probewho believe that environmental consid-deeper as to why the minority share-erations are not significant and/or are not holder representative [Interviewee 18]likely to affect their stake on the firm. consider the event significant and yet heOn the other hand, Options (b) and (c)chose to ignore the event (Option a).are likely to be chosen by stakeholders 17. 52 E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60 Figure 2: Analysis of Stakeholder/Firm Interdependence & StrategyFURTHER ANALYSIS OF RE-Recall, however, that these power-SULTSdependence relationships established earlier is based from the respondentsAs is clear from the results presented ingeneral perception of how crucial eachthe previous section, the answers to the stakeholder is to company survival with-closed questions (Q1 to Q4) do not pro-out particular consideration of the fea-vide sufficient basis for further analysis.tured pro-active environmental event.Cognisant of this limitation, these an-swers are analysed further together with The experimental approach is particu-the answers to open-ended questionslarly useful for further analysis as it al-probing deeper into the reasons for theirlows the injection of a particular sce-choice.nario in a relatively controlled environ- ment. As is the case in this study, a pro-The four power-dependence quadrantsactive environmental initiative is intro-of Low Interdependence, Firmduced by a fictitious bank, KeluargaPower, Stakeholder Power and HighBanking Berhad (KBB), and the respon-Interdependence and the respective in-dents are asked to comment and explainfluence strategies corresponding totheir views. In order to gain insights onpropositions P1 to P4 developed earlierthe preferred strategies chosen by vari-are reproduced in Figure 2. In addition, ous stakeholder representatives to de-the stakeholders identified to belong in mand/not demand environmental disclo-each power-dependence quadrant are sures, the answers to the openendednow superimposed in each of the four questions provide a rich data source. Thequadrants. For example, the mediapurpose here is to explore the possibility(MED) and environmentalists (ENV)that if there is a demand and the firmfall into the Low Interdependence Quad-does not provide environmental disclo-rant while the major shareholders (MJS)sures, then these stakeholders may exer-and long-term creditors (LTC) are in the cise their power possibly either directlyHigh Interdependence Quadrant. or indirectly through usage or promote strategy. The results from this further 18. E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60 53analysis are discussed here. sent to the media. [6]Low Interdependence QuadrantInterviewee 6s desire to promoteKBBs initiative through discussionsThe low interdependence quadrant in with other stakeholders including theFigure 2 includes both the environmen-mobilisation of the media is characteris-talists (ENV) and the media (MED).tic of an indirect attempt to help pro-Since neither the firm, KBB, nor themote this event. Furthermore, the influ-stakeholders, ENV and MED rely on ence of the media to inform the public aseach other to fulfil their goals, the rela- shown in the following comments pro-tionship is one of low interdependence. vides some evidence on its ability to useOne can even argue that these groups do indirect promoting strategy.not really have a stake on KBB. How-ever, because of the nature of the fea-This is why I said before that thetured proactive environmental initiative environmental awareness is moreand the nature of the role played by bothor less on the increase because ofthe environmentalists and the media, it is the activities publicised by theconceivable that both groups could takemedia. The media plays a verythis opportunity to use KBB as an exam-important role because they areple to promote this activity. If boththe one who inform the public ongroups feel strongly about increasingwhat is happening [15]environmental awareness, this event cre-ates an indirect stake on the firm. As This view is shared by other respon-such, the slightly modified model pre- dents including the two top executivesdicts that both the media and environ- interviewed in the pilot phase.mentalist representatives will adopt indi-rect promoting strategy. This is evi- Firm Power Quadrantdent from the responses toQ4 (shown inTable 2) with both the environmentalistsSince the employees (EMP), minor[Interviewees 6 & 17] and media repre-shareholders (MIS) and suppliers (SUP)sentatives [Interviewees 12 & 15] choos-depend more on KBB to fulfil their goal,ing Option c. The following directthe relationship is one of firm power.quotes describe their attempt to influ- Hence, P2 suggests that indirect usageence others to follow KBBs example:strategy is likely to be adopted but onlyif the stakeholders place high signifi-Since they are doing somethingcance to the environmental event as sug-good, it would be good to let other gested in the main assumption as indi-stakeholders know so they can set cated earlier. The following quote ex-a good example. [17]plains why the minor shareholder repre-An environmentalist will be mostsentative [Interviewee 18] ignores thecomfortable lending a hand to a environmental event (Option a) despitereputable company that does not the fact that he considers the event sig-just talk but takes the necessary nificant:action Im happy to discuss this I wont even consider encour-initiative with other stakeholders aging the company to make envi-and write an article which can beronmental disclosure they wont 19. 54 E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60take notice of me as a minor between KBB and those of the relevantshareholder anyway. [18] government agency (RGA) and custom- ers (CUS) is one of stakeholder powerDespite the different preferred actionssince KBB is dependent upon thesechosen by the employees [Intervieweesstakeholder groups to continue its exis-8 & 9], suppliers [Interviewees 7 & 14]tence. In the modified model, P3 sug-and minor shareholder [Interviewee 18] gests that, if there is a demand for envi-representatives as shown in Table 2, it is ronmental disclosure, a direct promot-clear that none of them choose Option cing strategy is predicted. However, simi-suggesting that either they do not put lar to the Low Interdependence Quad-high significance on this event or theyrant, it is important to highlight the factdo not care whether it is disclosed or that these strategies will only benot. This is confirmed in the followingadopted, if and only if, these stakeholdercomments by the employee representa- groups feel very strongly about the pro-tives: active environmental initiative, thereby creating a sense of urgency to promoteIf this is a good thing, as in thisthis event. Hence, it all boils down to thecase, it doesnt matter to uspersonal convictions of the stakeholderwhether they disclose or not. Butrepresentatives. It is promising to seeif there is any risk on healththat the relevant government officer andthen we would like to know.[8] one customer representativeI personally think that if the com-[Interviewees 16 & 20, respectively]pany does something good, they place a high significance level on thisshould do it willingly. Its not nec-event (2) and choose Option c (see Tableessary to let other people know so 2) suggesting that they both find KBBsI dont care whether they publi- environmental initiative valuable. Incise it or not. [9]fact, the only respondent in the Stake- holder Power Quadrant who choose toAs such, it is highly unlikely that anyone ignore this event (Option a) is the localof them will use the indirect usagecustomer representative [Interviewee 19]strategy. A close examination of the who consistently takes the stand of aresponses to open-ended questions con- bad corporate citizen. It is clear, how-firms that none of the respondents in theever, that even the socially responsiblefirm power quadrant intend to make ancustomer is very much aware that Ma-alliance with other stakeholders. This islaysian customers generally are not will-hardly surprising particularly since ear-ing to forego their own interest in thelier findings from the pilot phase revealname of sustainability:that economic concerns are likely to su-persede environmental concerns magni- If this expenditure of $20 millionfied by the fact that environmental is out of the banks pocket and itsawareness in Malaysia is still very low,not affecting their interest ratesalbeit increasing slowly. they will continue supporting thisbank. They might not want to sac-Stakeholder Power Quadrantrifice their benefits though. [20]The analysis reveals that the relationship Despite this, perhaps the best display of 20. E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60 55direct promoting strategy is the one management to pay the newspa-portrayed by the relevant government per, underline the word pay, torepresentative in this direct quote: publicise this as a major event with pictures. I can easily do thatBecause this event is more of asince Im a major shareholder.private sector initiative, well look[13]at this positively. What we, asrelevant government agencies, This suggests that because both the firmwill do is to establish good net- management and the stakeholders areworking so that we can look after highly interdependent, the major share-them as one of our partners as aholders and creditors could directly de-good example for other companiesmand the use of all means of environ-to follow. [16] mental disclosures since they have theability to set certain conditions in theirHigh Interdependence Quadrant relationship with the management. Fur-thermore, since the featured event pro-Finally, there is high interdependencevides an opportunity to improve com-between the management of KBB and pany image, both parties are in a win-those of the major shareholder (MJS)win situation as confirmed in theseand long-term creditors (LTC) represen- quotes from long-term creditor represen-tatives because of mutual dependence to tatives:achieve profitability goals. Hence, di-rect usage strategy is expected in Ill encourage the bank to use dif-proposition P4. It is clear from Table 2 ferent communication media tothat the major shareholder [Intervieweeadvertise this initiative since its13] and longterm creditor representa-good for our image. [10]tives [Interviewees 10 & 11] prefer to if weve been dealing with thisencourage KBB to provide disclosures company for years, we would feel(i.e. their most preferred Option is b)very comfortable with this rela-mainly because it is good for companytionship so we would encour-image. Their ability to attach strings isage them to disclose this since itsinherent particularly in this commenta win-win situation. [11]from the major shareholder representa-tive: Hence, further analyses reveal that thelevel of interdependence between theIll just invite the CEO one morn-management and the stakeholder groupsing over coffee and ask him toas well as the perceived significance ofexplain what is happening. Ill events have some bearing on the type ofencourage him to make disclo- influence strategies used by the stake-sures call a press conference,holders to demand environmental disclo-make posters and brochures; sures. It is also clear that the stake-sponsor environmental cam-holders perception of how the eventpaigns these are mainly exploit- will affect their stake on the firm willing mechanisms to enhance our determine the demand.public image. Yes, I will ask the 21. 56E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60CONCLUDING COMMENTS veals the usefulness of Froomans(1999) typology to understand how dif-The purpose of this research is to gain ferent groups of stakeholders go aboutinsights into the preferred influence seeking what they want from the man-strategies adopted by various stake-agement. From the results, it is clear thatholder groups in demanding environ- there is a demand for environmental dis-mental disclosures. These insights areclosures to be provided in the annualimportant given that worldwide surveysreport and other means of communica-show that stakeholder pressures are one tion, particularly in the case of a pro-of the main drivers for increased corpo-active environmental initiative as fea-rate social and environmental respon- tured in this Malaysian experiment. Thesiveness. underlying assumption that the stake-holders perception of how the environ-In examining stakeholder influencemental event will affect their stake andstrategies and disclosure preferences,the firm/stakeholder interdependencethis research extends the application ofstructure has, indeed, determinedstakeholder theory in the environmental whether the stakeholders demand envi-reporting area particularly when a pro- ronmental disclosures. The insightsactive environmental initiative is in-gathered from the stakeholders demandvolved. This is a first-of-its-kind as priorfor environmental disclosures lead to thestudies feature mainly negative events. following conclusion.Likewise, unlike other studies whichfocussed mainly on one group of stake-From a practical perspective, the mostholders, this study extends the stake-pivotal conclusion drawn from this in-holder influence strategy analysis to a vestigation is that although the model iswide variety of stakeholders such as theuseful to understand the influence strate-major shareholders, minor shareholders, gies adopted by each stakeholder groupcustomers, suppliers, relevant govern-represented, its effectiveness is temperedment agency, long-term creditors, em- by the level of significance placed on theployees, media and environmentalists. environmental event by the stakeholders.Furthermore, it uncovers relevant in- Given the considerably low level of en-sights into the environmental reporting vironmental awareness in Malaysia, it ispreferences in the context of a rapidly clear from the analysis that proactivedeveloping economy such as Malaysia efforts such as the one featured in thisfrom an ex ante perspective. Much ofstudy is not given a very high signifi-previous research conducted mainly in cance level by the stakeholders closelydeveloped countries provides evidence identified with the general public such asfrom an ex post perspective thereby ex- the employees and the local customercluding the possibility of gaining an representatives. The implication is suchappreciation of the processes and ration- that without mobilising public aware-ale behind the decision to either discloseness, it is not surprising to see few com-or not disclose environmental informa-panies adopting environmentallytion. friendly activities. Hence, while the me-dia and the environmentalists are seen toThe analysis conducted in this research,push the agenda of increasing publicalthough based on a small sample, re- awareness, the onus is still on the rele- 22. E. Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60 57vant government agencies to exercisetypology, in particular, and stakeholdertheir power. Many of the stakeholders theory, in general, has much to offer inrepresented in this study rely on the rele- our understanding of management/vant government agencies to regulate thestakeholder behaviour and the demandcompanys environmental activities andfor corporate environmental disclosures.disclosures. Thus, without sufficientgovernment regulations mandating envi-ronmental protection and disclosures, ReferencesMalaysian companies are more likely toput economic measures ahead of envi-Abdul Rahman, R. & Ayob, N. 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Elijido-Ten / Issues in Social and Environmental Accounting 1 (2008) 36-60 APPENDIX: STRUCTURED QUESTIONNAIREPART I: GENERAL INFORMATIONINTERVIEW NUMBER: ________NAME: ________________________________________________________What/is was your current/previous position? _________________________________________________________RELEVANCE OF STAKEHOLDER: Please rank the following stakeholder in the order of their importance to acompanys survival with 1 (most important) to 9 or 10 (least important).Stakeholder TypeRANK RANKMajor shareholders (Owns>5% shareholding Top 20)CustomerMinor shareholders (Owns