The document discusses several theoretical frameworks that are relevant to research on corporate sustainability. It describes theories of social contract, corporate hypocrisy, stakeholder theory, institutional theory, accountability theory, and shareholder theory. Social contract theory suggests that without trust between citizens and government, tax collection will decrease. Stakeholder theory argues that firms should create value for all stakeholders, not just shareholders. Institutional theory proposes that business practices are influenced by societal norms and pressures.

1. THEORETICAL FRAMEWORK
Dayana Mastura Baharudin
CORPORATE SUSTAINABILITY

2. Theoretical Framework
THEORIES ARE DEVELOPED BY RESEARCHERS
TO EXPLAIN PHENOMENA, DRAW
CONNECTIONS, AND MAKE PREDICTIONS.
IN THE THEORETICAL FRAMEWORK, YOU
EXPLAIN THE THEORIES THAT SUPPORT
YOUR RESEARCH, SHOWING THAT YOUR
WORK IS GROUNDED IN ESTABLISHED IDEAS.
THERE ARE THEORIES THAT SUPPORT THE
RESEARCH ON SOCIAL AND ENVIRONMENTAL
ACCOUNTING

5. Social Contract
A strong social contract
is a precious resource in
any country.
Without it, citizens will
be reluctant to pay their
taxes;
resulting in governments
being unable to collect
the revenues they need
to offer good quality
public services to their
citizens

6. Corporate Hypocrisy
• defines corporate hypocrisy as the belief that a firm
claims to be something that it is not. In general,
perceptions of a person’s hypocrisy occur when
there appears to be a “distance between assertions
and performance” (Shklar 1984, p. 62)
• organizations, like people, may be perceived as
demonstrating hypocrisy when inconsistent
information about their own statements and
observed behaviours emerges

7. Corporate Hypocrisy in CSR - Starbucks
Reports of firms’ behaviors with
regards to corporate social
responsibility (CSR) are often
contrary to their stated
standards of social responsibility.
For example, the coffee-house
chain Starbucks (2005) has long
and distinctively presented itself
as an avid adopter of fair-trading
practices.
However, the company recently
has been criticized for trying to
inhibit Ethiopian farmers from
securing trademark protection
for their coffee and being able to
obtain a better price for them-
selves (Adamy and Thurow 2007).

9. Stakeholder
Theory
Stakeholder Theory is a view of capitalism
that stresses the interconnected
relationships between a business and its
customers, suppliers, employees,
investors, communities and others who
have a stake in the organization.
The theory argues that a firm should
create value for all stakeholders, not just
shareholders.

10. Stakeholder
Theory
• “The 21st Century is one of “Managing
for Stakeholders.” The task of executives
is to create as much value as possible for
stakeholders without resorting to
tradeoffs. Great companies endure
because they manage to get stakeholder
interests aligned in the same
direction.”
— R. Edward
Freeman

11. Institutional Theory
Institutional theory broadly states that the behavior of firms is governed by its
institutional environment or field.
The constituents of the field include the organization’s social context, the scope
of its activities, and it’s network of social relationships (Doshi & Khokle, 2012).
The institutional field tends to bring uniformity in business practice through
three mechanisms: coercive, mimetic and normative.

12. Coercive – Mimetic - Normative
Coercive mechanisms refer
to pressure techniques that
aim to bring business
practice in line with societal
expectations.
Mimetic practices refer to
peers’ pressure on firms to
conform to certain
behaviours.
Normative practices refer to
internalization of beliefs
about the suitability of
certain behavior (DiMaggio &
Powell, 2000).
Broadly, the institutional
forces drive agent’s behavior
by aligning agent’s beliefs
with societal norms, with
the alignment being caused
by either internalization of
norms or external pressure.

13. Accountability
Theory
• As explained by Vance, Lowry and Eggett
(2015), accountability theory explains how
the perceived need to justify one's
behaviours to another party causes one
to consider and feel accountable for the
process by which decisions and judgments
have been reached.

14. Corporate
Accountability
• Corporate accountability posits that;
• financial performance should not be a
company's only important goal and
• that shareholders are not the only people to whom
a company must be responsible;
• stakeholders such as employees and community
members also require accountability
• Non-financial performance goals – planet pillar and
people pillar within the triple bottom line (People,
Planet & Profit)

15. Shareholder
Theory
Shareholder theory is the view that
the only duty of a corporation is
to maximize the profits accruing
to its shareholders
Under shareholder theory, the only
reason management is working on
behalf of shareholders is to deliver
maximum returns to them, either in
the form of dividends or an
increased share price